Daily Commentary

MarketMinder’s View: Often in trade, when one door closes, another opens. In this case: “Deliveries of Russian crude into Indian ports continued to fall last month, dropping to about 1.12 million barrels a day from 1.2 million in December, to leave the January import figure at the lowest since November 2022. ...The hurdles facing exporters could soon get even higher, if India follows through on an apparent deal with the US, potentially imperiling the Kremlin’s war chest. That accord would see Washington slash import tariffs on Indian goods, while New Delhi would, among other things, halt purchases of Moscow’s crude, according to President Donald Trump’s interpretation.” Yet as the chart here shows, Russia’s seaborne crude shipments have been remarkably stable since 2022’s Ukraine invasion despite years of seemingly escalating sanctions. One reason: Unlike India’s, the US’s trade deal with China didn’t come with conditions for the Middle Kingdom to halt its Russian oil imports. Hence, “The drop in flows to India has been offset by an increase in the amount being delivered to China,” further evidence that tariffs, sanctions and other trade barriers often end up just redirecting trade. This doesn’t mean they are beneficial or harmless—these barriers make doing business more difficult and expensive—but they don’t cease commerce altogether. For another salient example, consider: As Venezuelan oil shipments stop heading to China, the Trump administration is now talking them up for India. We won’t speak to the geopolitical implications, but from an investment perspective, markets focus most on the economic ramifications and the reality here is that ostensibly big trade disruptions have turned out far less destabilizing than expected. The lesson for investors: Markets are more adaptable than many imagine.

MarketMinder’s View: Two standard disclosures upfront: First, MarketMinder is politically agnostic and doesn’t favor one party or politician over another. Second, since this piece refers to several specific companies, we also don’t make any individual security recommendations and are sharing this to highlight some broader themes. For example, presidents aren’t all-powerful. One of the stated aims of the Trump administration’s tariffs is to reshore and restore manufacturing (and, by extension, jobs) in America. While the jury is still out over the long term, the short-term effects have been limited. “Manufacturers shed workers in each of the eight months after Trump unveiled ‘Liberation Day’ tariffs, according to federal figures, extending a contraction that has seen more than 200,000 roles disappear since 2023.” Now, that doesn’t mean manufacturing activity has dried up. The article cites some signs of stabilization, including an uptick in January PMI’s new orders, though it is worth putting this in perspective: “The gradual slowdown is in some ways a continuation of decadeslong trends that pulled factory jobs overseas and helped empty out Midwestern cities. In an industry where capital plans and construction timelines extend years into the future, turnarounds also don’t happen overnight.” No government policy, including tariffs, was likely to reverse this development, and in the short run, these levies raised many companies’ costs and stoked some uncertainty—hurting businesses more than helping. That said, firms have also adapted, helping blunt tariffs’ worst-case effects, which shows they aren’t necessarily make-or-break for the economy, either. The business cycle matters much more—and presidents’ influence on that, as we are seeing, is vastly overrated.

MarketMinder’s View: While switching to a supranational currency may seem momentous, as this article makes plain, adopting a new monetary unit is more ho-hum in practice. Aside from replacing price tags to adjust to using euros, not much else has changed. This is because “One euro amounts to slightly less than two leva, an exchange rate that had been locked in for nearly three decades. Economists say that means the transition should not result in dramatic price swings or spikes in inflation, and it could even lower costs for trade and tourism because there will no longer be currency conversion fees.” One of the most interesting things we find about Bulgaria’s joining the eurozone: the lack of fanfare. When, for example, Greece verged on exiting the single currency a decade-and-a-half ago, that was pretty much all anyone could talk about. And even when that didn’t happen, the financial press still talked about it—for years. That rendered Latvia’s euro accession in 2014 a very big deal. Yet these days, a country joining the currency union is borderline non-news—evidence the euro is faring fine. Now, perhaps the lack of big cheer is another indication sentiment toward the eurozone is running colder than US sentiment, but that just leaves more room for upside surprise.