Trump Getting Ready to Pull US Out of NAFTA

Reports have emerged that the Trump administration is taking concrete steps to pull the United States out of the North American Free Trade Agreement, also known as NAFTA.

According to Politico, two White House officials stated that a draft order to withdraw from NAFTA has already been submitted for the last stages of review, and could be released by the end of this week, or early next week.

The order was written by Trump’s head of the National Trade Council, Peter Navarro, in corroboration with the White House chief strategist Steve Bannon. It is still unclear what the order states, but the effect on trade can be predicted by an examination of the top 20 exports arriving from Mexico to the US.

In January Capital Economics’ chief emerging markets economist Neil Shearing published a chart in a memo to clients graphing the top 20 exports from Mexico according to their 2015 US dollar value.

About 25 percent of Mexico’s total exports to the US, by far the largest slice, came from the auto sector, valued at about $80 billion. The next three items are electrical components, food, and computers, together valued at about $55 billion.

“The upshot, then, is that targeted measures imposed on the vehicle, electronics, and food and beverage sectors would hit Mexico’s economy especially hard,” wrote Shearing. “Similarly, in the event of a blanket tariff across all sectors, producers in these areas would be among the hardest hit.”

In wake of the reports that Trump is on the verge of pulling out of NAFTA the peso is crashing, down over 2.2 percent at 19.2704 as of 12:53pm Wednesday afternoon.

Oil Prices Stay Steady with Pressure from Both Ends

Oil prices are performing a precarious balancing act as US oil production increases simultaneously with reduction in output from OPEC and other oil producers.

The price for Benchmark crude futures hardly budged from $55.86 a barrel at 6:57am. Yesterday’s price of $56.65 was the high for the month, just before it shrunk slightly today.

Only 6 cents separated today’s and yesterday’s price for US West Texas Intermediate crude futures, falling slightly. Yesterday’s price was the highest a barrel had been since March 7, at $53.76.

The weekly Energy Information Administration (EIA) report points to US oil output rising, while also showing that US stockpiles at the crude hub in Cushing, Oklahoma went up by 276,000 barrels during the week which ended on April 7.

Other data, however, showed a surprising fall in overall US crude inventories. Last week inventories fell by 2.2 million barrels while imports went down by 717,000 barrels per day.

“We saw a bit of a reversal in oil prices (on Wednesday) and it came despite some positive news,” chief market strategist at Sydney’s CMC Markets. “It does appear that there is bit of focus on the data that came alongside inventory numbers which showed further increase in U.S. production.”

Fund Managers to Follow

Certainly, it is human nature to feel more comfortable with people who put their money where their mouth is. A fund manager, for instance, who invests in the funds that he supports professionally is showing that he trusts the work he’s doing and that he stands by it. To this end, the M&M Investment Company have identified management teams that do just this; they have the largest personal holdings in the funds they manage. Here are three of them:

Christopher Mills is the chief executive and investment manager of North Atlantic Smaller Companies Investment Trust plc and chief investment officer of Harwood Capital LLP. He founded Harwood Capital Management in 2011 and he is a non-executive director of several companies.

Simon Borrows of the 3i Group is another executive on the list. He was appointed as the chief executive in May of 2012, after joining 3i in October of 2011 as the Chief Investment Officer. He spent 13 years with Greenhill & Co. before joining 3i and he founded the European business of Greenhill and was co-president of the group on its floatation on the NYSE in 2004.

Finally, Reade Griffith is a founding partner of Polygon and a Principal of Tetragon Financial Management LP. He is on the Tetragon board of directors. Prior to being the founder of Polygon, he founded and was the CEO of the European office of Citadel Investment Group.

 

Hollywood’s Biggest Grossing Blockbusters

Publicity photo of Clark Gable and Vivien Leigh in Gone With the Wind.

Movies are big business, there is no doubt. But just how big might come as a surprise to some. Just like any business, in order to calculate profit, we must factor in expenses and subtract that from revenue. Some of Hollywood’s biggest sellers in terms of profits might surprise the movie-going public.

Here is a list of the six biggest grossing movies of all time, adjusted for inflation:

1.    Gone with the Wind– The 1939 four-hour epic about the Civil War based on the best-selling book by Margaret Mitchell, set in the south. It won eight Academy Awards. Adjusted for inflation the move grossed $1.78 billion.

2.    Star Wars- In 1977 Star Wars touched something ephemeral in the movie-going public, helping it to rake in a cool $1.58 billion in gross sales.

3.    The Sound of Music- The beloved 1965 musical is based on a true story of the Von Trapp Family Singers and their escape from Nazi-occupied Austria. This heart-warming musical grossed $1.23 billion.

4.    E.T.: The Extra-Terrestrial- One of Steven Spielsberg’s early smash-hits, the story of a sensitive boy and his companion alien won the hearts and minds of a generation in 1982. It showed at the box office with a lovely $1.22 billion in receipts.

5.    Titanic- A film of titanic proportions, this film of epic proportions won 11 Academy Awards. Based on the true story of the catastrophic sinking of the luxury ocean liner Titanic in 1912, James Cameron made the film so that he could go to the site of the sinking and see it with his own eyes in a modern, mini-submarine. This film’s gross take of $1.22 billion is truly titanic.

6.    The Ten Commandments Based on the biblical story of the exodus of the Hebrews from slavery in Egypt to the receiving of the Ten Commandments at Mount Sinai, who’d a thunk it, that Moses and his rag-tag collection of Jewish ex-slaves could pull in a lovely $1.13 billion? Released in 1956, Cecil B. DeMille’s classic film won the Award for Best Special Effects at the 29th Academy Awards.

G20 Avoiding Commitment to Strong Free Trade Endorsements

Steven Mnuchin’s Official Portrait as the 77th U.S. Secretary of the Treasury.

US finance officials attending the G20 summit in Baden-Baden, Germany, refrained from signing a document committing the US to free trade as a policy. The refusal is a 180-degree departure from a decade-old policy of supporting free trade. The non-move stymied the chance of any deal from being forged. US intervention also led to any cooperative actions from taking place to stem the tide of climate change.

The talks between the world’s 20 most important world powers, known as the G20, ended with no joint position statement that would have definitively renewed the country’s long-standing promise to develop and nurture free trade among the nations.

US Treasury Secretary Steve Mnuchin led the US delegation and its push-back against free trade. As a result, the G20 finance ministers’ statement reneged on past commitments made by the body, including an unequivocal rejection of protectionism and a strident backing of free trade.

The statement the ministers did issue was a mildly worded, non-committal statement that said that the G20 countries “are working to strengthen the contribution of trade to their economies.”
Also conspicuously missing were the usual commitments to multilateral trade systems, like the World Trade Organization (WTO).

The summit and the G20 are both an informal forum and a non-binding body of nations. Statements do not obligate any of the countries to any particular policy or practice. However, the discussions between the G20 nations and the statements they publish do have and impact on economic and financial policy in the year to come.