Daily Commentary

MarketMinder’s View: Taiwan’s “Export orders rose 20.8% year-on-year in December to $52.92 billion, Taiwan’s economy ministry said on Tuesday. That beat the 16.05% increase forecast in a Reuters poll and November’s expansion of 3.3%, and was the strongest growth since February 2022. It was also the 10th monthly gain in a row. Orders for goods from Taiwan ... are a bellwether of global technology demand.” As the article mentions the world’s largest contract chip manufacturer here, we remind readers that MarketMinder doesn’t make individual security recommendations—specific firms serve only as examples to highlight the broader theme. As some suspect, though, the order surge looks at least partly driven by frontloading shipments ahead of potential tariffs or other trade barriers many fear from the Trump administration—alongside seasonal patterns. As such, “The ministry said it expects export orders in January to fall between 8.1% and 4.0% year-on-year.” From an investment perspective, tempered outlooks suggest a lowered bar for reality to exceed expectations, important to monitor for investors.

MarketMinder’s View: Please note that MarketMinder is nonpartisan. Nothing we say is for or against any party or politician—we seek only to discern political developments’ likely market ramifications, if any. Key to this, in our view, is separating fact from fiction. In this case, President Donald Trump has proposed an “External Revenue Service,” which sounds like it would raise money from foreign exporters selling into the US. But as this article points out, that isn’t how it works. Rather, “The exact contours of that new agency are still unclear, but it is probably best thought of as a public relations maneuver rather than a meaningful policy change. After all, there’s already a governmental entity that handles tariff collection—that’s the ‘customs’ in U.S. Customs and Border Protection. Changing the name won’t change anything about the transactions that occur.” As for tariffs themselves, many fear (or cheer) what may be coming down the pike, but it remains speculative. Many also thought they would be coming on “day one,” which didn’t happen. Doesn’t mean they won’t, but history—and recent rhetoric—suggest Trump uses tariffs as leverage to achieve other aims (e.g., renegotiating trade deals, stricter migration and drug enforcement). They are political, not economic, tools. Global trade, economic growth and the bull market survived the last go ’round, worth keeping in mind for this round of possible tariffs.

MarketMinder’s View: Who says America is turning away from the world? According to this article tallying “announced greenfield projects—where companies build or expand new facilities and operations in a foreign country,” these new American investments “in the 12 months to November 2024 rose by more than $100bn to $227bn, according to fDi. The data is based on corporate announcements, press reports and fDI estimates for the lifetime of the project, rather than annual capital spending.” Actual amounts may vary but this would boost America’s share of global foreign direct investment (FDI) to 14.3% from 11.6% in 2023. Driving this shift, the piece credits America’s “AI innovation, lower energy costs and investment incentives as part of the Biden administration’s Inflation Reduction Act and the Chips Act” for the FDI surge—a stark contrast with China and Europe, where weak growth presumably makes those locales less attractive. We see a couple takeaways for investors. First, this further confirms our view US capital expenditures are trending higher as businesses that retrenched in 2022 for a recession have been going on offense—evidence countering recession concerns. Second, it reflects widespread attitudes that America is doing great while the rest of the world isn’t as much—lopsided sentiment that can present opportunities depending on how reality shakes out. These data won’t tell you about future investment, but the reaction here can inform investors about areas where reality may meet, miss or exceed expectations.