ZERO EQUILIBRIUM

  By Chinedu Okoye  Summary: • Donald Trump and Xi Jinping met last week and reached mild concessions, de-escalating the ongoing trade war. However, analysts note that this falls short of a comprehensive deal. • President Xi agreed to delay export controls on rare earth metals for a year and resume soybean purchases from the U.S., which had been halted for months amid a shift to Brazilian supply. • In return, Trump agreed to pause tariffs on Chinese goods for one year, effectively restoring partial access to the U.S. market for Chinese manufacturers. • The agreement is positive in tone but thin in substance, revealing Beijing’s enduring leverage over Washington.   Analyst Assertion: Trump’s framing of the agreement as a “great deal” is overstated. The disruptions in global trade caused by his erratic tariff policy have merely been postponed, not resolved, and issues largely unresolved. As Bloomberg analysts observed, instead of creating “...

Review By Chinedu Okoye  Monetary Reconstruction   The Principle of Sound Money The chapter kicks of with the “Classical Idea of Sound Money,” which was the principle that guided 19th century policies, and a product of Classical Political Economy. And also an essential part of the liberal doctrine developed in the 18th century social philosophy. The doctrine sees the market as the best "even possible only, system of economic organizing society". Private ownership of the means of production are controlled by the best hands fitted for the job, and secures "for all members of society the fullest possible satisfaction of their needs." And assigns the consumer the power to choose between suppliers. But this, he would point, requires an institution that secures members protection against "domestic gangsters and external influence". And this can be done only by armed resistance and repression. The main political problem, he says, (or human p...

By Chinedu Okoye  Last week broader-based equity indexes (Bloomberg S&P, Bloomberg World Large & Mid Cap Price Return Index, all saw declines midweek, suggesting a concentration of equity performance in the US,  As stated in ZE X Post: “  The economic uncertainty continues with the US and China deal being unsubstantiated, and industrial weakness in the words Number 2 Economy (China) and Consumer weakness in the US.  ” Bloomberg World, S&P, and European Indexes are all down intraday at the time if this post, whulst European Indexes had a mixed weak, with the DWX and CAC40 sliding, whilst the IBEX ALand FTSEMIB rose week-on-week. From the Paper, a point of nite was the decline in broad European equities as “  Bloomberg European 600 Price Return Index down -0.33% (frame 3); this index tracks 600 large, mid, and small-cap companies from 17 European countries (including the UK, France, Germany, Switzerland, etc.).  ” It represents about 9...

By Chinedu Okoye  Summary:   The new 15% Tarrifs on petroleum imports by the federal government of Nigeria has sparked outrage from skeptical and idelogical experts, on the X (formerly Twitter) and LinkedIn platforms. This is understandable, however there are various other factors, and implications at place which critique is haven't looked at, save for a few. We digest the tarrif and implications in detail for a more concise view, adding factors that have been largely ignored. These include; Complimentary policies; other underlying price determining factors; policy optics and a tilt towards refined products.     Federal Government, Tarrifs and Public Objection: The Dangote Refinery is one of the most consequential and more recently controversial developments in Nigeria’s industrial history. Not only does it promise to transform Nigeria from a net importer of refined petroleum products into a ...

By Chinedu Okoye  Summary: • China's Economy Grows by +4.8% (Year-on-year) in Q3. A slowdown compared to the previous two quarters. • However this hasn't been reflected in the markets and is viewed as a non-issue in the the Zero Equilibrium camp. And perhaps by China a well. • This is as relative to it's peers, China has a more balanced and stable macroeconomic outlook with debt and reserves strategically positioned, and aligned with Beijing's economic ambitions. • China is armed with more fiscal space and monetary ammunition than it's peers, with lower inflationary pressures and a sizeable amount of gold in it's reserves insulating the domestic economy from exchange rate and price fluctuations. Growth Slows Down the Most in Q3: Economic growth slowed to 4.8% between July and September after being adjusted for inflation. Absent those adjustments, growth was under 4% given prices falling for the 10th straight quarter. The Property Market Effect: T...

By Chinedu Okoye  The Dynamics and Current State of Global Sovereign Debt: Public spending come to the forefront of the paper seem as it is the catalyst for deficits.and sovereign debt increases. Government debt is a global problem facing countries to varying degrees, depending on the level of monetary sovereignty. As at 2024, Japan's debt to GDP was 250%, the US, 120%, France 110%, Australia 45% For EM; China leads at near 90%, with Brazil and India coming a close second and third, and South Africa debt/GDP ratios at ~70%.. Developed economies with more monetary sovereignty seems to have saturated the market, and need fiscal consolidation to foster economic stability. For emerging market economies, who's debt is currently sought after by yield hungry investors, a balanced approach is necessary to avoid the dent trap situation currently plaguing DMs. Frontier markets must curb fiscal excesses and improve spending efficiency to support...

By Chinedu Okoye  As the Fed continues to unwind its balance sheet, the corresponding drain on bank reserves is beginning to show up across short-term funding markets. In these markets, liquidity conditions have tightened, pushing repo rates higher and bank reserves lower — a sign that quantitative tightening may be nearing its limit.. The balance sheet unwind was meant to be a correction of the massive balance sheet expansion seen in the last decade and a half, –quantitative tightening. However this measure has seen liquidity depressed, a steady rise in ultra short-term rates, “as the treasury is rebuilding its cash pile” – to quote Bloomberg's Lisa Cook.¹ This could also be a major factor in the inflation stickiness experienced in the struggle to get it within the feds 2% target. On Ultra-High Short-term Rate; Because of this liquidity squeeze; the difference between Secured overnight financing rates (SOFR) and the effective feds funds rate (th benchmark rate of the U...