Dutch Election Results: What Do They Mean for France?

Posted by Laura Sarlo, Senior Sovereign Analyst on Mar 21, 2017 1:11:32 PM

Global markets breathed a collective sigh of relief last week when it became clear that Geert Wilders’ anti-European Party for Freedom (PVV) did not win the most votes in the March 15 Dutch election.

But did populism lose? Is the populist wave over? Not so fast. Prime Minister Mark Rutte adopted some populist and nationalist rhetoric during the campaign –remember that he ran ads this past January in all major Dutch papers telling immigrants to “act normal or leave.”


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Topics: Macro Strategies, Sovereign Research

Border Tax:  Should We Anticipate a Backdoor Gasoline Tax?

Posted by Ryan McGrail, Senior Credit Research Analyst on Mar 16, 2017 10:15:00 AM

How might the new administration make good on its promise of a lower corporate tax rate? The House has proposed funding the cut with a new border tax on imports (BAT). While taxing imports may sound straight forward, there are many less obvious details that need to be hashed out including, specifically, whether or not imported crude oil would be exempt from this BAT.

Crude oil imports

Growing US oil production from the booming shale industry over the past few years has allowed the US to reduce its reliance on imported crude oil from the Middle East, Canada and Mexico. However, the US still imports over 7 million barrels per day. While OPEC accounts for a significant amount of the imports (34%), Canada and Mexico combine to account for a larger share at 44% of imports.

While things between the US and Mexico have appeared frosty since President Trump assumed office, relations with Canada have been more favorable with Trump signing an executive order to advance the Keystone pipeline. Additionally, White House press secretary Sean Spicer has indicated that the administration would favor a border tax that would likely apply only to countries where the US has a trade deficit, which would include Mexico, but not Canada.

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Topics: Commodities

The Donald and the Dollar

Posted by Laura Sarlo, Senior Sovereign Analyst on Mar 8, 2017 9:45:00 AM

Posted byLaura Sarlo, Senior Sovereign Analyst and Tom Fahey, Senior Global Macro Strategist

From Election Day in November through the end of 2016, financial markets embraced the “Trump Trade,” pricing higher equities, higher interest rates and a stronger US dollar.

 So far this year, two legs of the Trump Trade remain intact:

  • US equities have continued to march higher as optimism grows for improving corporate profitability.
  • Bond yields have retraced some of the post-November gains, but at 2.49% the current US 10-year Treasury yield is still more than 60 basis points higher than the 1.8% seen just before the election.

However, the trade weighted dollar has dropped 4%, losing 5-7% against many emerging market and commodity-related currencies. We view the recent depreciation as a correction in the dollar’s primary trend toward appreciation. The dollar is likely to remain supported by easier fiscal policy, tighter monetary policy and the ongoing economic expansion. Most notably, we expect tax policy decisions published over the next month will be the major catalyst for the dollar for 2017.

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Topics: Macro Strategies

Chart of the Week: US GDP and the Soybean Factor

Posted by Brian Horrigan, Chief Economist on Feb 22, 2017 7:34:32 AM

Seasonally adjusted, US real GDP rose a strong 3.5% in the third quarter of 2016, but then slowed to a lousy 1.9% in the fourth quarter. (All growth rates are at an annual rate). Are these figures representative of an underlying economic trend? Believe it or not, soybeans were actually an important factor in the swings in growth.

The US had a bumper crop of soybeans last year and exported a huge amount to China, recorded in third quarter exports.  Seasonally adjusted, total real exports of food surged 216% in that period, the largest quarterly gain since 1969.   The rise in good exports accounted for most of the rise in merchandise exports that quarter and the surge boosted third quarter real GDP.

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Topics: Macro Strategies

Loomis Sayles analysts are career professionals who offer deep knowledge and experience in a diversity of global asset classes and market sectors. These dedicated experts provide the insight essential to supporting our portfolio management teams across a wide range of investment strategies.


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