Brazil transformed itself into a huge trade surplus country in the past decade. This is mostly agricultural products being exported to China and is unlike anything in the rest of EM. Over time this will give Brazil lift-off from the rest of South America... robinjbrooks.substack.com/p/brazils-re...

October's dollar strengthening. Right now quality is in a holding pattern, and if we are indeed entering a bear market, we're going to see medium term tension with this upswing against assets like Gold. Good time to square away and free up some capital.

The Euro isn't working. High-debt countries have too much power at the ECB, using it for fiscal bailouts. Spain & Italy muddle along with no fiscal space & can't help Ukraine robinjbrooks.substack.com/p/the-princi... robinjbrooks.substack.com/p/why-german... robinjbrooks.substack.com/p/what-the-e...

If you'd told me that we'd have an onslaught of tariffs and global services sector activity would remain solid, I would never have believed you. But that's where we are. There's very solid services sector activity (red) across all major economies, which is really remarkable...

The Dollar is back up to its strongest level since May. Two things are driving that: (i) loss of reserve currency status was never realistic, as there's no credible alternative, especially not the Euro; (ii) markets got way too negative on the US economy... robinjbrooks.substack.com/p/good-thing...

The Euro is like a bad marriage. Many think it should end, but divorce is scary, especially when one side keeps threatening the apocalypse. The truth is that Europe would be stronger without the Euro and better able to confront the many external threats... robinjbrooks.substack.com/p/what-the-e...

So-called hawks at the ECB in 2022 led the introduction of the TPI anti-fragmentation tool. They did that so they could hike along with the Fed and protect the high-debt periphery from the resulting fiscal stress. That's not hawkish. That's fiscal capture... robinjbrooks.substack.com/p/the-princi...

The end of the Euro will see the periphery devalue. The sovereign debt crisis a decade ago was a "sudden stop" in capital flows. In EM, those cause currencies to fall 30% (lhs), which brings recovery (rhs). Devaluation sounds scary, but it'll bring growth... robinjbrooks.substack.com/p/what-the-e...

The Euro is just a system of exchange rate pegs. It doesn't define Europe and isn't necessary for things like joint foreign policy or defense. Exchange rate pegs don't work unless countries run responsible fiscal policy. In the Euro zone, they don't... robinjbrooks.substack.com/p/why-german...

The Dollar (blue) has been almost absurdly stable recently, even as all kinds of other asset prices have gone every which way. That's ending now. A huge amount of negativity has been priced for the Dollar - including Fed cuts - so the path of least resistance is higher...

What we now know for sure is that the gold rally was a bubble. Gold is now back into the same kind of holding pattern it was in after its April rally. At the same time, the longer-term rise in gold isn't over. It's just waiting for the next catalyst... robinjbrooks.substack.com/p/is-this-th...

The Dollar today is at its strongest level since May and its rise is linked to the bursting of the gold bubble. Both things are driven by markets upgrading their assessment of the US economy. I forecast Dollar strength as a result of the gold unwind here: robinjbrooks.substack.com/p/where-next...

The Euro is a means for countries to pretend they have fiscal space when they don't. You just have to look at how little aid high-debt countries give Ukraine to see that. Europe can still be Europe without the Euro. It'll be stronger and more resilient... robinjbrooks.substack.com/p/why-german...

The problem in the Euro zone is some countries are broke, but insist they aren't. Look at Ukraine aid. The 3 Baltics (Estonia, Latvia, Lithuania) combined give more aid to Ukraine than Italy, even though its GDP is 15 times as big. The Euro zone debt discussion must change. It's enough with this...

Immigration is a difficult issue on both sides of the Atlantic. In the US, it caused the Democrats to lose the 2024 election (in my view) and immigration policy has radically changed. In Europe, the political center prevents that with its "Brandmauer" or "cordon sanitaire." Which is more democratic?

In the US, Trump has taken undocumented immigration down to zero and is deporting people. In Germany, the new government has also taken immigration down to zero, but is struggling to deport people in any meaningful size. It's the latter that decides if AfD becomes Germany's biggest party in 2029...

Many Germans are unhappy about immigration, but it's almost impossible to say this out loud, because you very quickly get called very bad things. So people stay silent and vote for the AfD. The CDU is the last best hope to bring this issue into the political center and take it away from the AfD...

US tariffs are forcing China's exporters to divert goods to all kinds of other places. That's hitting small, out-of-the-way places especially hard. Here's tiny Liberia in Africa. Like in many other places, Liberia is getting flooded with discounted Chinese goods...

Germany has a principal-agent problem at the ECB. People who held the line on debt, like Jens Weidmann, Axel Weber and Jürgen Stark, resigned. The Germans that remain appease the high-debt South. That's good for their careers, but isn't good for Germany... robinjbrooks.substack.com/p/the-princi...

This cowardice and complicity with evil is appalling.

A huge deflationary shock is coming to the EU. China now runs a trade surplus in cars with the EU after many years in which it ran a deficit. The most important thing is for the ECB to recognize this and cut interest rates as aggressively as possible. A weaker Euro will help...

South Korea's exports to tiny Kyrgyzstan just reached half a billion Dollars in one month. This stuff is obviously not headed to Kyrgyzstan but is going to Russia. The West is guilty of a collective failure on Ukraine: chasing short term profits instead of shutting down autocrats. We must do better.

Pro-China bots are very active recently and spread misinformation. So it's important to be clear what role China plays in the world. It's the single biggest pillar of support for Russia's war machine and invasion of Ukraine. China is Putin's biggest enabler in his war on Western Europe. The truth...

Argentina successfully defended its peg and that helped Milei do well at the polls. But the cost of that is huge capital flight, because the peg enabled households to take money out of Argentina. That capital flight is then lost to the cash-starved country for ever. Better to just float the Peso...

Argentina's central bank on Friday published data for September showing huge capital flight. Outflows eclipsed Aug. '19. Historically, these outflows never return and are lost to Argentina. This could have been prevented if the Peso were allowed to float... robinjbrooks.substack.com/p/the-enormo...

The IMF/WB annual meetings two weeks ago burst the crazy precious metals bubble. But that's not the same as ending the "debasement trade." That will keep going and is just shape-shifting into other assets. At the moment, it's morphed into the S&P 500... robinjbrooks.substack.com/p/where-next...

One problem with speculative bubbles is that people get suckered into them with bogus stories. So it is with the myth of central bank gold buying. I see this chart all the time. It suggests central banks are behind the gold rally, but this chart is bogus... robinjbrooks.substack.com/p/debunking-...

Pro-China propaganda posts are especially prevalent recently, so here's a quick reminder that Russia's war machine would have collapsed long ago were it not for all the help Russia gets from China. Putin is just Beijing's stooge. It's really China that's waging war on Western Europe via Ukraine...

China is routinely portrayed as winning the tariff war. The US could certainly improve its negotiating tactics, but there's no escaping the fact that China's exporters are hurting badly. Tariffs are a deflationary shock for China and an existential threat... robinjbrooks.substack.com/p/deflationa...

US tariffs unleashed a flood of Chinese goods on the world. Just-in-time manufacturing means there's very little warehousing capacity, so goods that would have gone to the US now have to be sold - at a discount - in other places. This is a sign of just how badly China's exporters are hurting...

Discounted Chinese goods are flooding into countries all over the world as a result of US tariffs. The smaller and more obscure you are, the worse this is. Here's tiny Suriname in South America and there's countless other examples like it. This illustrates how much China's exporters are hurting...

The global debt overhang is driving the debasement trade. Markets fear high debt levels will be inflated away and the usual places where markets hide - like Germany - no longer offer protection, because German yields are rising as much as everywhere else... robinjbrooks.substack.com/p/the-global...

The chatter around the IMF/WB meetings popped the crazy gold rally that began after Jackson Hole on Aug. 22. But the underlying drivers of the debasement trade remain in place. We're just seeing a pause in the precious metals rally, not the end... robinjbrooks.substack.com/p/is-this-th...

The apocalyptic forecasts for the Dollar haven't come to pass. That's above all due to the fact that "there is no alternative" (TINA) and a lesson for the EU. You can't paper over festering debt dysfunction and weak Russia sanctions and hope to be an alternative. Time to stop papering over...

In the EU, Portugal is one of the places that stands out as getting a ton of Chinese goods after the US imposed more tariffs on China this year. This is a deflationary shock for China - its exporters are having to discount goods to sell them - and a deflationary shock for the EU...

Chinese goods are flooding global markets. There's countless examples. Congo is just an extreme one. This trade diversion shows how hard US tariffs have hit China. The way to exploit this vulnerability is to gradually ratchet up tariffs, not the current back and forth that makes the US look weak...

China is portrayed as the winner in this week's agreement with the US, but the reality is China desperately needed a deal. You just have to look at how Chinese goods are flooding countries around the world to see the damage US tariffs are causing... robinjbrooks.substack.com/p/how-not-to...

Following last night's US-China trade deal, there'll be the usual chorus of voices that China has the upper hand vis-à-vis the US. Nonsense. US tariffs are a massive deflationary shock for China. China needed fentanyl tariffs to come down desperately... robinjbrooks.substack.com/p/deflationa...

Tonight's US-China trade deal: (i) trade negotiators will think we conceded far too much for soybeans; (ii) China hawks will say we look weak; (iii) foreign allies will be even more reluctant to do join on things like secondary tariffs on India for fear the US just does an end-run trade deal...

With its aggressive bullying - from rare earths to Taiwan - China is isolating itself globally. Global markets are pulling back, a trend that began after the pandemic and pre-dates this year's tariffs. China is driving itself into financial isolation... robinjbrooks.substack.com/p/financial-...

The premium the US pays on 10-year Treasuries over foreign 10-year yields after those are hedged back into Dollars has fallen below where it was during the Biden administration. This doesn't mean the US is doing well. There's just so many other high-debt basket cases out there...

Bitcoin (orange) has been left completely on the sidelines since Jackson Hole on August 22 kicked off the debasement trade. That's an important verdict from markets who are saying that Bitcoin is just too volatile to be a store of value and a safe haven...

The debasement trade lives. You can see that in how markets trade currencies. Low-debt currencies are rising against USD - led by Swedish Krona (red) - while high-debt ones like Euro (pink) or Yen (blue) are lagging. The desperate scramble for safe havens... robinjbrooks.substack.com/p/the-desper...

Markets are desperately looking for safe haven currencies. Swedish Krona is increasingly in focus: a well-run country that had the good sense to stay out of the increasingly dysfunctional Euro. Swedish Krona is also very undervalued: it's where it was in 2008. Lots of potential for appreciation...

A huge shift in global macro is the erosion of Germany's safe haven status. Once you convert foreign yields into Euro, Germany's yield advantage is rapidly eroding (lhs), while Switzerland is massively taking its place (rhs). Germany's massive fiscal stimulus comes at great cost to itself...

There's many powerful vested interests in the West that oppose Russia sanctions. Their standard talking point is that sanctions will spike oil prices. Last week's Rosneft and Lukoil sanctions by the US are - once again - proving that this is wrong. Oil prices are falling again...

There was a lot of pushback on the idea that the Peso is overvalued yesterday, from people who frankly should know better. And here we are. The Peso is down almost 3 percent from yesterday. The basic story in Argentina is always the same. Pegging => overvaluation => devaluation...

The precious metals bubble is clearly bursting. The catalyst for this was the IMF/WB meetings 2 weeks ago, as I flagged in my post during the meetings. This is Dollar positive, because - underneath all this - people are going back to US exceptionalism... robinjbrooks.substack.com/p/is-this-th...

The Swedish Krona (red) is emerging as a key safe haven currency in the debasement trade. It's been chronically undervalued for a decade and the country is well run with low debt. The Euro (pink) is failing to benefit, as is the Yen (blue). Both have serious debt dysfunction that holds them back...