I was part of an interesting debate yesterday with @M_C_Klein and @jakluge on whether to trust Russian data. Current account and tax collection data diverged recently, which is at least odd. If China manipulates its current account, as @Brad_Setser flags, what's stopping Russia?
US exceptionalism isn't over. It's the opposite. Foreign flows into Treasuries and US stocks roared back in May after small outflows in April. This suggests the fall in the Dollar happened on narrow liquidity. Markets still believe in US outperformance...
A deep dive -- a really deep dive some might say -- into the IMF's new External Sector Report.
It is a step in the right direction, but the IMF is still understating the scale of global trade imbalances and the scale of China's surplus.
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There's been a lot of Schadenfreude out of Europe about a supposed capital flows exodus from the US. Here's the thing. There is no exodus. May saw the biggest inflow in foreign portfolio flows into the US ever. Markets really don't think the US "exceptionalism" story is over...
When times are good and global risk appetite is healthy, foreign investors pile into the US (blue) and US residents send money abroad (red). That's exactly what happened in May after "Liberation Day" turbulence in April. Markets have a short memory. They forgive and forget...
