Tim C

🇨🇳🇺🇸 CHINA’s declining direct role but rising value-added influence in U.S. imports and final demand 1. Direct vs. value-added share of U.S. imports from China Direct imports (gross trade value) from China peaked at 22% of total U.S. imports in 2017, then steadily declined to 14% by 2024. Value-added imports (actual Chinese contribution after accounting for global supply chains) started lower at 17% in 2017 but showed more resilience, ending at 16% in 2024. Important trend: By 2024, China’s value-added share (16%) actually exceeded its direct import share (14%). This indicates that even as the U.S. reduced direct purchases from China (due to tariffs, diversification, and “China+1” strategies), Chinese value-added content embedded in products from other countries continued to play a significant role. 2. Chinese value-added content in U.S. final demand total Chinese value-added in U.S. final demand (in constant 2010 USD billions) grew substantially over the period. 2024 breakdown: Direct imports $333 billion Indirect imports (through third countries): $227 billion Total: $560 billion The indirect component has grown notably since 2020, showing that Chinese intermediate goods are increasingly routed through Vietnam, Mexico, and other countries before reaching the U.S. market. Despite geopolitical tensions and trade barriers, the overall Chinese contribution to U.S. final demand has continued to rise, reaching its highest level in the period by 2024. So ... While the headline direct trade numbers show a clear decline in reliance on China (from 22% to 14%), the value-added perspective reveals a more persistent and even slightly increasing Chinese footprint in the U.S. economy. This highlights the complexity of modern supply chains, decoupling in gross trade terms has been only partially successful when measured by actual economic value. Source: @rhodium_group

"The chart below from Citigroup tracks the number of S&P 500 companies each quarter that moved more than 10% in either direction on earnings day. For much of the past decade, that number was relatively low, often around 10 to 20 companies per quarter. Since 2024, however, the count has climbed sharply, with several recent quarters showing more than 30 or 40 companies making such large moves. The tally peaked above 60 during the first-quarter earnings season." This data doesn't go back far enough. It's not a trend that began in 2024. In my February report on "Price Discovery" (sageroadresearch.com/collections/re…), I referenced a Stanford study that found that:“[There’s been a] striking increase in investor response to earnings announcements from 2001 to 2016, as measured by return variability and volume following [announcements].” Increased earnings reactiveness is also part of a broader trend of generally greater news-cycle reflexiveness. For one, upside or downside moves of five standard deviations or more amongst the 100 largest stocks in the S&P 500 have been increasing in frequency for more than a decade. Last year alone, there were 47 instances of such severe single-stock selloffs, the most in Barclays records going back to 1998. I founded Sage Road Research roughly a year ago to focus on deep research into structural trends because I believe thinking longer term, more holistically, and with less bias is essential to exploiting the ever-increasing news-cycle reflexiveness of equity markets. Learn more here: sageroadresearch.com. Interested in subscribing? Message me. MarketWatch link: marketwatch.com/story/stocks-a…