Macro Hive Conversations With Bilal Hafeez

Ep. 229: Brad Setser on Yen Carry Trade, US-China Trade, and US Profit Offshoring

Aug 16, 2024

Brad Setser, a senior fellow at the Council on Foreign Relations, shares his deep insights into global trade and capital flows. He discusses the intricacies of Japan's yen carry trade and fiscal dynamics, highlighting the effectiveness of currency interventions. The conversation shifts to China's economic data and evolving trade patterns, dissecting the impact of U.S. policy on Chinese investments. Setser also examines U.S.-Mexico trade relations amid political changes and reveals how multinational corporations exploit low-tax jurisdictions for profit offshoring.

57:49

Creator website

Episode guests

Brad Setser

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

The yen carry trade significantly impacts market volatility, with its recent unwinding linked to shifts in Japanese policy and yield differentials.

Japan's financial stability is bolstered by substantial foreign assets, countering high domestic debt-to-GDP ratios and mitigating fiscal risks.

U.S.-China trade dynamics are complex, with structural shifts favoring Southeast Asia and highlighting the limited effectiveness of tariffs alone.

Deep dives

Influence of the Yen Carry Trade

The yen carry trade has significantly influenced recent market volatility, particularly as the yen reached unprecedented levels of weakness. Prior to the corrections, the yen's valuation was at its lowest since the late 1960s, driven by market positioning where investors expected further yen weakness. However, shifts in Japanese policy intervention and narrowing 10-year yield differentials hinted at an impending correction, which ultimately led to a substantial unwind of the carry trade. The connection between this unwinding and broader equity market fluctuations remains somewhat ambiguous, indicating complex interdependencies in market movements.

Intro

2min

Navigating Japan's Financial Landscape

13min

Navigating China's Economic Data and Trade Dynamics

22min

US-Mexico Trade Relations and Election Implications

4min

Tax Strategies of Multinational Corporations

9min

The Enduring Dominance of the Dollar: Analysis of Currency Resilience

4min

Advice for Young Professionals: Developing Expertise and Influential Readings

5min

Brad Setser is the Whitney Shepardson senior fellow at the Council on Foreign Relations. His expertise includes global trade and capital flows, financial vulnerability analysis, and sovereign debt restructuring. He regularly blogs at Follow the Money. Brad served as a senior advisor to the United States Trade Representative from 2021 to 2022, where he worked on the resolution of a number of trade disputes. He had previously served as the deputy assistant secretary for international economic analysis in the US Treasury from 2011 to 2015 and as a director for international economics on the staff of the National Economic Council and the National Security Council. This podcast covers yen carry trade dynamics, FX intervention, Japan fiscal dynamics, and much more.

https://macrohive.com/home-prime/

https://twitter.com/Macro_Hive

https://www.linkedin.com/company/macro-hive

Get the Snipd
podcast app

Unlock the knowledge in podcasts with the podcast player of the future.

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode

Save any
moment

Hear something you like? Tap your headphones to save it with AI-generated key takeaways

Share
& Export

Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more