Treasury’s Semi-annual Foreign Exchange Report

Released today, and is here.

Reuters report here.

My take on currency misalignment (as opposed to currency manipulation and undervaluation) in this post.

38 thoughts on “Treasury’s Semi-annual Foreign Exchange Report

  1. pgl

    ‘The Swiss National Bank said it does not manipulate its currency and “remains willing to intervene more strongly in the foreign exchange market”. Vietnam’s central bank said it would work with U.S. authorities to ensure a “harmonious and fair” trade relationship. “Vietnam’s foreign exchange rate policy has for years been managed in a way to contain inflation, ensure macro stability and not to create unfair trade advantage,” the State Bank of Vietnam said in a statement.’

    Switzerland may be the land of transfer pricing manipulation but currency manipulation??? I guess Vietnam was included as Pompeo wants to start some sort of war with Commies on the way out the door.

  2. pgl

    “A top Trump appointee repeatedly urged top health officials to adopt a “herd immunity” approach to Covid-19 and allow millions of Americans to be infected by the virus, according to internal emails obtained by a House watchdog and shared with POLITICO. “There is no other way, we need to establish herd, and it only comes about allowing the non-high risk groups expose themselves to the virus. PERIOD,” then-science adviser Paul Alexander wrote on July 4 to his boss, Health and Human Services assistant secretary for public affairs Michael Caputo, and six other senior officials.”

    This Paul Alexander reminds me of the Usual Suspects. Yes we are looking at you Bruce Hall, Sammy, CoRev, etc. Really stupid advice that has killed over 300 thousand Americans to date with the daily death count now above 3000 new deaths per day. But of course Sammy is too busy trying to find evidence voter fraud to give a damn.

    1. pgl

      MSNBC keeps playing a clip of George Stephanopoulos interviewing Trump when Trump was advocating herd immunity. Of course Trump called it “herd mentality” and “herd developed”. Yes we have had over 300 thousand deaths from this virus because we allowed an utter moron to be our President.

      1. Ivan

        And this herd immunity enthusiasm was all based on the idea that Sweden was doing so well. Unfortunately, Sweden is a tragic story.

        COVID-19 economic damage in Sweden and comparable countries.
        GDP quarter-to-quarter change in second quarter (and death per million):
        Sweden: -8.0% (742)
        Denmark: -7.4% (164)
        Norway: -6.0% (72)
        Finland: -3.2% (83)
        Although Sweden had 4 to10-fold as many COVID death per million, their economy took just as big (or much worse) a hit. It’s not the lockdown it’s the virus..

          1. pgl

            Mike Pence wore a mask when he took the Pfizer vaccine. This was on the 1-year anniversary of Trump getting impeached. Now had the Senate done its job – Pence would have been our President during the pandemic, which may have avoided the complete and utter failure of the White House efforts led by Donald Trump.

  3. pgl

    Trump kept saying his (partial) travel ban was the only thing needed to control COVID19. This research calls that claim into question:

    Global Mobility and the Threat of Pandemics: Evidence from Three Centuries


    Countries restrict the overall extent of international travel and migration to balance the expected costs and benefits of mobility. Given the ever-present threat of new, future pandemics, how should permanent restrictions on mobility respond? A simple theoretical framework predicts that reduced exposure to pre-pandemic international mobility causes slightly slower arrival of the pathogen. A standard epidemiological model predicts no decrease in the harm of the pathogen if travel ceases thereafter and only a slight decrease in the harm (for plausible parameters) if travel does not cease. We test these predictions across four
    global pandemics in three different centuries: the influenza pandemics that began in 1889, 1918, 1957, and 2009. We find that in all cases, even a draconian 50 percent reduction in pre-pandemic international mobility is associated with 1–2 weeks later arrival and no detectable reduction in final mortality. The case for permanent limits on international mobility to reduce the harm of future pandemics is weak.

    1. Macroduck

      So only if those 2 weeks are used to make herulean efforts toward domestic preparedness does an immigration limit offer any hope of benefit.

      Oh, well.

  4. ltr

    December 16, 2020

    Treasury Designates Vietnam, Switzerland as Currency Manipulators
    Report says the two countries had intervened in foreign exchange markets in a persistent, one-sided manner to limit appreciations of their currencies
    By Kate Davidson – Wall Street Journal

    WASHINGTON—The U.S. Treasury Department labeled Switzerland and Vietnam as currency manipulators on Wednesday, saying the two countries had intervened in foreign-exchange markets in a persistent, one-sided manner to limit appreciations of their currencies.

    1. Macroduck

      The Treasury finding is driven by rule, so economic logic need not apply. The whole notion of a currency manipulation report is the result of Congress demanding action that various administrations would take. Trump is another matter.

  5. ltr

    December 16, 2020



    Cases   ( 17,392,618)
    Deaths   ( 314,577)


    Cases   ( 9,951,072)
    Deaths   ( 144,487)


    Cases   ( 2,409,062)
    Deaths   ( 59,361)


    Cases   ( 1,913,277)
    Deaths   ( 65,520)


    Cases   ( 1,407,487)
    Deaths   ( 24,441)


    Cases   ( 1,267,202)
    Deaths   ( 115,099)


    Cases   ( 481,630)
    Deaths   ( 13,799)


    Cases   ( 86,770)
    Deaths   ( 4,634)

  6. ltr

    December 16, 2020

    Coronavirus   (Deaths per million)

    UK   ( 963)
    US   ( 948)
    France   ( 908)
    Mexico   ( 888)

    Canada   ( 363)
    Germany   ( 291)
    India   ( 104)
    China   ( 3)

    Notice the ratios of deaths to coronavirus cases are 9.1%, 3.4% and 2.5% for Mexico, the United Kingdom and France respectively.

  7. ltr

    December 17, 2020

    Chinese mainland reports 7 new COVID-19 cases

    The Chinese mainland recorded 7 new COVID-19 cases on Wednesday, all from overseas, the National Health Commission announced on Thursday.

    Six new asymptomatic COVID-19 cases were also recorded, and 198 asymptomatic patients remain under medical observation.

    No COVID-19 deaths were reported on Wednesday, and 21 patients were discharged from hospitals. The total number of confirmed COVID-19 cases reached 86,777, with 4,634 deaths.

    Chinese mainland new imported cases

    Chinese mainland new asymptomatic cases

    [ There has been no coronavirus death on the Chinese mainland since the beginning of May.  Since the beginning of June there have been 7 limited community clusters of infections, each of which was an immediate focus of mass testing, contact tracing and quarantine, with each outbreak having been contained.  Symptomatic and asymptomatic cases are all contact traced and quarantined.

    Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Cold-chain imported food products are all checked and tracked through distribution.  The flow of imported cases to China is low, but has been persistent.

    There are now 301 active coronavirus cases in all on the Chinese mainland, 7 of which cases are classed as serious or critical. ]

    1. pgl

      Wait – a lot of things could lead to this modest increase in import prices. Now I seriously doubt the burden of the tariffs are falling on Chinese producers as Trump wants us to believe but this BLS data is not where I would turn for convincing evidence.

    2. JohnH

      As always, you have to ask the question: who is assuming the cost of higher tariffs?

      “The impact of these rising import costs on consumer prices has thus far been mild, the researchers find. They used data from two major multichannel retailers to estimate that a 20 percent tariff resulted in only a 0.7 percent increase in the prices of affected products, meaning the merchants were absorbing much of the higher tariff by realizing thinner profit margins.“

      IOW it’s the same people who made out like bandits as a result of China PNTR, something never really talked about by “free trade” promoters.

      Crocodile tears for those poor multinationals who have fewer profits to squirrel away in off-shore tax havens…

      1. pgl

        You always ask the WRONG questions. You also failed to read the next 2 paragraphs:

        “Importers can avoid charging higher prices or dampening their profit margins by sourcing goods from nontariffed countries, and that seems to be happening, the researchers write. China’s share of tonnage shipped to those retailers before the tariffs was 80–90 percent, according to the study, but the share dropped to 60–70 percent after the tariffs.
        There’s also evidence that between the time Trump announced the tariffs and the time they went into effect, US importers front-loaded their purchases to beat the new duties. As retailers work through inventory and restock goods that are subject to the tariffs, they may have to increase prices to shore up profit margins, the researchers speculate. The trade war may yet hit the US consumer even harder.”

        And I complain when Bruce no relationship to Robert Hall forgets to read the entire story he linked to.

        1. JohnH

          Nothing in what pgl wrote supports Dean Baker’s tweet that “we” have been paying for most of Trump’s tariffs on China. “We” the American consumer have NOT borne the brunt of the tariffs, which is what the fear mongering about the tariffs, hyped regularly in the mainstream media, has tried to persuade us. In fact, the multinationals bore the brunt, and were most likely the real source of the fears expressed in the corporate media. In fact, the corporate media could care less if consumers are hurt at the expense of corporate profiteering. But if corporate profits are threatened, then they create propaganda to claim that it is “we” Americans—everybody—who will get hurt, not primarily investors.

          This is exactly the same nonsense the conflates the health of Wall Street with the health of the economy. The woes of importers from China (and their investors) should not automatically be assumed to hurt ordinary Americans, as Baker (and many other economists including pgl) have been implicitly asserting for the past couple years.

          When policies are proposed that supposedly help or hurt “America” or “Americans” it pays to look at the distribution of benefits or costs. In most cases these days, policies that are prompted as helping “America” mostly help only a narrow segment of Americans known as investors.

          But pgl and many other economists are too embedded into corporate America to realize this. If they were not so embedded, they would make a more of an effort to inform people of which Americans gain and which ones lose, instead of lumping them all together.

          1. pgl

            Come on idiot. Try reading the actual research paper. None of their evidence addressed that read you inserted into what they wrote. Yea – they cite other theoretical work. But do the hard work and tell us how WalMart or Best Buy profits have declined. I checked their 10-K filings and sales as well as profit margins ROSE. Oh wait – you are too stupid to know what a 10-K even is. You are too lazy to read the literature. But you troll on anyway!

          2. pgl

            “Nothing in what pgl wrote supports Dean Baker’s tweet that “we” have been paying for most of Trump’s tariffs on China. “We” the American consumer have NOT borne the brunt of the tariffs, which is what the fear mongering about the tariffs, hyped regularly in the mainstream media, has tried to persuade us. In fact, the multinationals bore the brunt”

            Of course I originally questioned what Dean wrote but after reading the detailed research – it does support what Dean claimed. Of course this reading impaired troll JohnH (the new Bruce Hall) did not get that but he did invent a new claim that is not shown at all by the detailed research which of course this troll skipped reading.

            I used to claim Bruce Hall had some sort of disease that caused him not to read his own links before cherry picking some claim out of whole clothe. It seems JohnH has caught Bruce Hall disease.

          3. Barkley Rosser

            Another set of Americans damaged by the tariffs not mentioned by anybody in the comments here, but really damaging your case that they reflect Trump somehow helping all those industrial workers in the Rust Belt so viciously ignored by all those awful Dems is that some of the most important tariffs were on steel and aluminum that are overwhelming bought by other industrial producers, such auto manufacturers, construction firms, and consumer appliance manufacturers. It has been documented that the higher prices of those “protected” goods has led to substantial layoffs of workers in those industries using those inputs. Indeed, the net change in manufacturing as a whole has been negative under Trump, so whatever gains there were in aluminum and steel employment, fairly modest by most counts, was more than offset by losses in those others, with this the case prior to when the pandemic hit.

            So, sorry, JohnH, you are simply way wrong on this, which fits with you looking simply foolish in some of your whining about various Dem policies and support for Trump’s policies, which have economically damaged far more Americans and by larger amounts than those they have helped.

      2. pgl

        JohnH cites a 2nd hand source as he is too lazy to find the actual report so I did:

        ‘We use micro data collected at the border and at retailers to characterize the effects brought by recent changes in US trade policy – particularly the tariffs placed on imports from China – on importers, consumers, and exporters. We start by documenting that the tariffs were almost fully passed through to total prices paid by importers, suggesting the tariffs’ incidence has fallen largely on the United States. Since we estimate the response of prices to exchange rates to be far more muted, the recent depreciation of the Chinese renminbi is unlikely to alter this conclusion. Next, using product-level data from several large multi-national retailers, we demonstrate that the impact of the tariffs on retail prices is more mixed. Some affected product categories have seen sharp price increases, but the difference between affected and unaffected products is generally quite modest, suggesting that retail margins have fallen. These retailers’ imports increased after the initial announcement of possible tariffs, but before their full implementation, so the intermediate passthrough of tariffs to their prices may not persist. Finally, in contrast to the case of foreign exporters facing US tariffs, we show that US exporters lowered their prices on goods subjected to foreign retaliatory tariffs compared to exports of non-targeted goods.’

        I’m sure WalMart is whining that their profit margin was temporarily decreased but if JohnH is telling us that WalMart will forever receive depressed margins, this paper is NOT saying that at all. For all his pretend progressivism, he appears to be WalMart’s new favorite excuse boy.

        1. pgl

          I just checked WalMart’s 10Q filings as well as those of Best Buy. These are two of the big players which drew this from know nothing JohnH:

          ‘Crocodile tears for those poor multinationals who have fewer profits to squirrel away in off-shore tax havens…’

          But wait – both multinationals are reporting both higher sales and higher profit margins than what they got last year. You know the SEC website makes checking the data really easy. But JohnH is just another know nothing troll you cannot bother doing a little research before going off on uninformed rants.

        2. pgl

          Clearly JohnH has not read the actual paper or done anything but rant about how we need tariffs to screw companies like WalMart. Never mind the fact the WalMart’s profit margin actually rose in the last few years. But let’s consider what the authors actually wrote (as opposed to the babbling from JohnH):

          ‘Some affected product categories have seen sharp price increases, but the difference between affected and unaffected products is generally quite modest, suggesting that retail margins have fallen. These retailers’ imports increased after the initial announcement of possible tariffs, but before their full implementation, so the intermediate pass through of tariffs to their prices may not persist .. having demonstrated that incidence of the US import tariffs fall largely on the United States, we study the extent to which the price increases faced by importers passed through into higher retail prices or were instead absorbed by lower retailer profit margins. We consider aggregated categories such as washing machines, handbags, tires, refrigerators, and bicycles, and find mixed results, with some sectors exhibiting clear price increases due to the tariffs and others exhibiting stable price dynamics despite the tariffs. It is difficult to study the impact of tariffs using such retail price indices because they are at a level of aggregation that combines meaningful shares of goods that are both affected and not affected by the tariffs. To get around this problem, we collect millions of online prices from two multi-channel retailers – both in the top 10 of US retailers in terms of revenues – where we can identify whether or not individual goods are affected by the import tariffs.’

          First of all – everything Dean Baker said is confirmed but OK – what is the division between higher prices to consumer v. lower profit margins for WalMart? Note retail prices often cannot tell if it were higher prices of washing machines from Korea v. higher prices of washing machines made here. And if you have recently bought a washing machine or a new frig, you know you paid a lot more for these products.

          “despite observing a stark increase in the overall cost (inclusive of tariffs) paid by US importers for certain Chinese goods, we detect only a minor increase in the prices set by the two retailers for these goods relative to those unaffected by tariffs. Our estimates suggest that a 20 percent tariff is associated with a 0.9 percent increase in the retail prices of affected household goods (such as dishes, furniture, linens, toaster ovens, towels, and umbrellas) and a 1.4 percent increase in the retail prices of affected electronics products after one year. While these estimated price increases are economically and statistically greater than zero, they are not easily visible in the aggregated retail price indices that we construct to compare affected and unaffected imports. Our results suggest that retailers are absorbing a significant share of the increase in the cost of affected imports by earning lower profit margins on those goods.4 This empirical evidence supports the idea that a more complete understanding of the full supply chain, from “at-the-dock” importers through to final retailers, is important to capture the full implications of any trade policy, a point made theoretically in Cole and Eckel (2018).”

          Taken at face value, this would say WalMart’s profit margins have fallen by 18% on these products. Of course, that is 3 times its operating margin. OK – its gross margin is over 20% but that mainly is the cost of WalMart labor. So is JohnH really saying WalMart should pay lower wages? OK – he is not but my point is that he totally lacks a shred of comprehension with respect to this type of data. But let’s continue with the paper’s discussion:

          “Rather than retailers earning lower profits, another possibility – following the logic and analysis in Flaaen, Horta¸csu, and Tintelnot (2019) and Amiti, Redding, and Weinstein (2019) – is that in response to the tariffs, domestic producers raise their prices to retailers on goods that compete with the imports. Or alternatively, retailers may simply be increasing prices throughout the sectors that are exposed to the import tariffs, thus earning higher margins on those goods not impacted by tariffs. These dynamics would be consistent with our finding that the retail prices of goods affected by import tariffs have evolved similarly to those for goods unaffected by tariffs”

          Oh wait – their data does not say WalMart faced lower profit margins after all. Maybe we are back to the premise that consumers had to pay more for Maytag products as well as Korean made washing machines and refrigerators. Of course not having actually read his own link – JohnH has no clue. No clue at all.

      3. pgl

        “IOW it’s the same people who made out like bandits as a result of China PNTR, something never really talked about by “free trade” promoters. Crocodile tears for those poor multinationals who have fewer profits to squirrel away in off-shore tax havens…”

        No one has ever talked about the incidence of tariffs? No one has ever complained about the profits of multinationals with market power? No one has ever talked about shifting income to tax havens?

        Oh no – we are all too stupid to talk about this so we should all bow down to JohnH.

        This is the garbage you routinely spew like the moron you really are. No idiot – people have discussed these issues a lot. Now if you are too damn lazy to read smart discussions on these issues, this does not give you the right to ridicule people who know a LOT more than you ever will. And BTW – read the original source next time.

      4. pgl

        “Crocodile tears for those poor multinationals who have fewer profits to squirrel away in off-shore tax havens”

        One more thing about this dumbass rant. Companies like WalMart might want to park profits in Bermuda but if you ever bother to check their 10-K filings you will see that they do not. After all over 76% of their profits are sourced in the US. A lot of their other profits accrue to places like Canada, Mexico, Chile, the UK, South Africa, and Japan where they have significant distribution operations.

        We were talking about retail stores dumbass. They are not the same thing as Apple, Facebook, Google, or Big Pharma. You know – you not only have Bruce Hall disease. You are mentally infected with The Rage who also routinely pops off comments that make no sense.

  8. ltr

    December 18, 2020

    Swedish king says ‘we have failed’ over COVID-19, as deaths mount

    Sweden’s king said his country had failed in its handling of COVID-19, in a sharp criticism of a pandemic policy partly blamed for a high death toll among the elderly.

    Carl XVI Gustaf, whose son and daughter-in-law tested positive last month, used an annual royal Christmas TV special to highlight the growing impact of the virus, in a rare intervention from a monarch whose duties are largely ceremonial.

    Sweden has stood out from most countries by shunning lockdowns and face masks, leaving schools, restaurants and businesses largely open and relying mainly on voluntary social distancing and hygiene recommendations to slow the spread.

    An official commission said on Tuesday systemic shortcomings in elderly care coupled with inadequate measures from the government and agencies contributed to Sweden’s particularly high death toll in nursing homes….

  9. ltr

    December 17, 2020



    Cases   ( 357,466)
    Deaths   ( 7,893)

    Deaths per million   ( 779)


    Cases   ( 123,813)
    Deaths   ( 992)

    Deaths per million   ( 171)

  10. pgl

    Vaccine update with good news and bad news. The good news is that Pfizer is loading up the warehouses with lots of vaccines ready to be distributed.

    The bad news of course is that the totally inept and corrupt Federal government is being really slow and chaotic at distributing the vaccines to the states that needed them now.

    Trump cannot even do basic distribution of proven and produced vaccines? The most pathetic bunch of boobs ever.

  11. ltr

    December 17, 2020

    Nurses Are Anxious and Angry in 2nd Wave: ‘We’re Not Prepared’
    “We’re worse off in some ways than we were in the beginning,” said one nurse about the lack of workers and resources at her New York hospital.
    By Troy Closson

    In Albany, an outbreak of the coronavirus erupted among nurses and patients in the cancer unit of a hospital.

    Across the state, nurses at hospitals in the Buffalo area bought their own masks and face shields out of concern about the quality of supplies in stock.

    And when an emergency room nurse in New Rochelle began her shift, she was asked to care for 15 patients, after her co-workers called out sick.

    The accounts recall the early days of the pandemic, when the virus ravaged New York — but these scenes took place over the past several weeks. Nurses and other health care workers in the state have begun to warn about the conditions in hospitals, as virus patients are checking in at an alarming rate.

    “We’re worse off in some ways than we were in the beginning,” said Shalon Matthews, an emergency room nurse in New Rochelle. “We need staff, we need help, we need resources. I’m fearful for my patients and I’m fearful that the same thing that happened back in March, it’s going to happen again — and once again, we’re not prepared.”

    Hospitalizations in the state have recently reached levels not seen since May, when New York was the epicenter of the crisis in the U.S. On Wednesday, more than 6,000 people were hospitalized and being treated for the virus….

  12. ltr

    December 16, 2020


    New York

    Cases   ( 844,340)
    Deaths   ( 35,945)

    Deaths per million   ( 1,848)

  13. ltr

    Latin American countries have recorded 4 of the 13 highest and 6 of the 24 highest number of coronavirus cases among all countries.  Brazil, Argentina, Colombia, Mexico, Peru and Chile.  Mexico, with more than 1 million cases recorded, has the 4th highest number of cases among Latin American countries and the 13th highest number of cases among all countries.  Mexico is now the 4th among all countries to have recorded more than 100,000 coronavirus deaths.

    December 16, 2020

    Coronavirus   (Deaths per million)

    US   ( 948) *

    Brazil   ( 862)
    Argentina   ( 911)
    Colombia   ( 774)

    Mexico   ( 888)
    Peru   ( 1,111)
    Chile   ( 832)

    Ecuador   ( 783)
    Bolivia   ( 768)

    * Descending number of cases

  14. ltr

    December 16, 2020

    Coronavirus   (Deaths per million)

    Belgium   ( 1,565)
    Italy   ( 1,101)
    Spain   ( 1,039)
    UK   ( 963)

    US   ( 948)
    France   ( 908)
    Mexico   ( 888)
    Sweden   ( 770)

    Switzerland   ( 735)
    Luxembourg   ( 668)
    Netherlands   ( 597)
    Portugal   ( 571)

    Austria   ( 528)
    Ireland   ( 431)
    Greece   ( 372)
    Canada   ( 364)

    Germany   ( 291)
    Denmark   ( 168)
    India   ( 104)
    Finland   ( 85)

    Norway   ( 74)
    Australia   ( 35)
    Japan   ( 21)
    Korea   ( 12)

    New Zealand   ( 5)
    China   ( 3)

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