That’s from GS yesterday. Question: Should one stock up on ibuprofen, because I anticipate a lot of headaches coming. Asking for a friend.
Of the $17.8 bn increase in imports, $20.9 bn were accounted for by imports of pharmaceutical preparations, according to the March release.
or they are anticipating a lot of headaches during Trump’s second administration
test
Off topic – a finance story with a handful of moving parts.
As we all know, the dollar has lost a bit of its luster this year:
https://www.tradingview.com/symbols/TVC-DXY/?timeframe=12M
A popular explanation is that the dollar has lost some safe-haven value due to policy risk in, and emanating from, the U.S.:
https://econbrowser.com/archives/2025/04/dollar-dominance-no-more
The loss of safe-haven value may be seen in rising U.S. soverign default risk:
https://econbrowser.com/archives/2025/04/two-pictures-on-the-usd-as-safe-haven-asset
There is another sudden change in U.S. financial markets resulting from policy uncertainty; M&A activity has fallen off a cliff:
https://www.rte.ie/news/business/2025/0506/1511296-global-m-s-activity/
What might that have to do with the dollar? One thing that drives FX flows is asset issuance. In order to buy new assets, one turns bank accounts in one’s home currency into bank accounts in the target investment currency. Fewer U.S. deals means fewer new dollar-denominated assets to invest in.
Wanna know where there are new corporate bond issues to buy? In the EU. Here’s Marketplace on the shift in U.S firms’ issuance to Europe due to lower borrowing costs (thank you, ECB):
https://www.marketplace.org/story/2025/05/07/why-more-american-companies-are-issuing-eurobonds
So what we have right now is a special circumstance in which LOWER rates, by driving increased issuance, attract foreign exchange flows. And what do you know, here’s Thorsten Slok on the recent flip in the dollar’s foreign exchange value relative to interest rate differentials:
https://www.apolloacademy.com/after-liberation-day/
The divergence Slok demonstrates can reflect a loss of safe-haven value, greater investment opportunity outside the U.S., or both. Right now, it looks like both, plus quite possibly one more factor. Forgive me, oh gods of efficient markets, but if one suspects further decline for the dollar in FX market, then shifting away from dollar-denominated assets offers the hope of surplus returns.
The broad dollar was down 8% in Q1, which annualizes to over 24%. It’s hard to make that kind of return on a diversified portfolio, but switching from U.S. assets to global assets on January 1 would have done it. It’s just really tempting to think more surplus gains are possible.
Why this wordy, twisty story, much of which is not new? Take a look at the dollar index, day by day. Stocks down, bonds down, dollar index down. Stocks up, bonds down, dollar index down. Stocks down, bonds up, dollar index down. The dollar isn’t down every day, but most days it is, and performance in other markets seems to matter less than usual. Seems like lots of things are changing to make this happen. Seems like the people causing dollar weakness aren’t keeping up.
32%…how could I be that wrong?
We need pgl to chip in here. Ireland “manufactures” pharmaceuticals, but do they actually make them? I assume these are real physical imports, but why pharmaceuticals massively above everything else, when most imported goods face rising tariffs?
Is it because profit margins in the U.S. drug market are vastly higher than for most other goods, and that tariffs make a bunch of that margin evaporate? Remember, the profit has to be booked in Ireland for tax reasons, so the mark-up comes before importation. Does the margin on drugs make a big rise in transportation and warehousing costs affordable in a way they are not for other goods?
Bernie, Elizabeth and Alexandria would like to know.
Ah Men on the “pgl” sentiment.
I have seen complaints that the low corporate tax rates in Ireland has pulled in corporate “profits” that give them a “fake” increase in GDP. So the GDP numbers are going up but without it representing real economic activity, in Ireland., Politically it makes the Irish people ask “where is my piece of all that GDP increase”? But its just an accounting entity not real activity.
Is something similar happening in the US where the world’s multimillionaires want to place their wealth in the ultimate safe heaven. That would drive up the average wealth and asset prices and GDP numbers – even though it is all foreigners wealth and asset appreciation, nothing to do with US citizens.
BTW – that 403 screen is still blocking me most of the time.
https://www.cfr.org/blog/american-pharmaceutical-companies-still-arent-paying-tax-us
American Pharmaceutical Companies Still Aren’t Paying Tax in the U.S.
Brad Setser speaks, we all listen!
“Should one stock up on ibuprofen, because I anticipate a lot of headaches coming. Asking for a friend.”
This is the humor I enojyed so much when I was still allowed to comment here.
a lot of old maga voters rely on a large daily dose of medications. they will be howling by the end of the year. question is, are they smart enough to lay blame on the appropriate individuals for the pharma price increases? our resident maga geriatric bruce hall will invariably find other ways to lay blame for the price increases, rather than the trump tariffs.
Congress continues to squabble over how ridiculously bad the budget can be. The proposal had been to cut taxes by $4.5 trillion over ten years, spending by $2 trillion, so adding $2.5 trillion in debt on top of the increase in debt built into existing law. Now it’s looking like a $4 trillion tax cuts and a $1.5 trillion spending cut, for the same $2.5 additional increase in debt.
https://www.politico.com/live-updates/2025/05/08/congress/johnson-targets-small-tax-package-with-1-5t-in-spending-cuts-00336222
Small tax package? Politico needs less cowardly editors.
The device which will probably be used to reduce the size of the tax cuts (sic) is to keep the same cuts already proposed, but to sunset a few on them in the out years to make the cut look smaller on paper. That’s what was done with the felon-in-chief’s first round of tax cuts, and here Repulicans are, working to extend them. The shrinking of the tax cuts being negotiated now is probably also fictional.
The only way to prevent this trick from working is to elect Democrats. Obama’s tax increase was really just allowing some Bush tax cuts to sunset. Republicans are the party of deficits through tax cuts for the rich.
This link leads to a chart showing spending shifts by cabinet department under the current White House budget proposal:
https://www.stephensemler.com/p/a-closer-look-at-trumps-2026-budget
The changes sum to a slight increase in spending, because of very large increases to the military and DHS. As far as I can discern, these are changes to discretionary budgets, and so miss the effort to reduce overall outlays by cutting Medicaid and SNAP spending.
More on drug imports from Ireland:
https://www.reuters.com/business/healthcare-pharmaceuticals/pharma-imports-us-surged-march-drugmakers-look-avoid-tariffs-2025-05-06/
Speaking of bad faith and Elon:
https://insideevs.com/news/758916/tesla-range-extender-cancelled-officially/
The add-on battery pack that Tesla truck buyers were promised has been cancelled. So if you bought an Incel Camino on the strength of the promise of extended range, your bait just got switched.
Robert Prevost, aka Leo XIV, opposes abortion, euthanasia, the death penalty, homosexuality, the ordination of women and the felon-in-chief’s treatment of immigrants. Has called for action against climate change.
Prevost knew he was in the running to become Pope, most likely because Francis has identified him as a possible successor. (Prevost called one of his brothers before the conclave to ask what Papal name he should adopt.) The fact that Francis picked him out suggests we get another liberal Pope – two in a row. The stench of Ratzinger hasn’t yet dissipated?
I find it interesting that this inane Trump scheme to devalue the dollar and make the U.S. into a low-cost manufacturer of cheap goods will drive upward pressure on inflation in the U.S. and drive downward pressure in Europe, Canada, Australia, and Japan – basically Trump is making the rest of the world great again and exposing the lie of American exceptionalism. https://www.apolloacademy.com/chinese-exports-redirected-from-the-us-to-the-rest-of-the-world/
Also note to Scott Bessent – In the U.S., 9.7% of jobs are in manufacturing (and have been declining for decades), while 79.09% are in services. The remaining portion, about 1.57%, is in agriculture. Hey folks! we are primarily a services economy not a goods manufacturer economy.
I often think of this scheme in terms of what it means for Wisconsin – the population of the state has been flat for two decades and may start declining in the next decade unless we get more foreign immigration – some northern counties are heading to 30-40% of their county population being 65+. We desperately need care providers and health care workers to move to these areas. No sensible manufacturing business owner is going to put in a plant in Wisconsin – there are no workers.
One way of seeing what the felon-in-chief is up to is that he (along with his sycophants) is reducing the range of human cooperation in service of common goals. No matter whether that cooperation is civic, cultural, institutional or multinational, he’s against it.
In the felon’s world, we no longer call upon our whole society to take on great projects. Combatting disease? No thank you. Disaster relief? Leave it to the states. Have NASA marshal all the scientific and engineering resources our society has to offer to explore our universe? Nah, let’s have Elon be the single-bid contractor and launch only commercial satellites. Rather than have coherent systems of trade, finance, scientific research and mutual defense, we shorten up our cooperative linkages to just inside our national border, or make those linkages one-by-one with individual countries, all on competitive, rather than cooperative terms.
Why he wants to narrow the range of human cooperation is open to speculation. Obviously, one reason is non-productive rent seeking, but there maybe others. Reducing human cooperation selectively is one goal of the entire Republican Party, but wholesale uprooting of cooperation is a special hobby of the felon and his followers.
As a hint of the cost of the felon’s anti-cooperative agenda, here’s a bit of writing by two of the better scholars of social cooperation, its sources and consequences:
https://press.princeton.edu/books/paperback/9780691158167/a-cooperative-species
Their central message is that extensive human cooperation, cooperation beyond the point that can be explained by personal benefit or the benefit of our close genetic relatives, has produced enormous welfare gains; broad-reaching cooperation accounts for a great deal of human progress. (As President Obama put it, “You didn’t build that”.) By the way, in the game of figuring out what sets us apart from the animals*, widespread cooperation is an obvious choice.
So aside from personal freedom, economic growth, consumer choice and liberty from oppression, the felon-in-chief is also taking away an important source of human progress and some part of what makes us human.
*Isn’t it odd that we pretend to set ourselves apart from “the animals”?
Just so the trump supporters get clarification on trump’s plan. There is no plan. So plan accordingly.
Let’s test the comment function. Test 1
It comes and goes for me too.
https://www.occrp.org/en/news/bahrain-former-aluminum-exec-sentenced-in-5-million-bribe-case
Bahrain: Former Aluminum Exec Sentenced in $5 Million Bribe Case
News
Bruce Hall, the former chief executive of one of the world’s largest aluminum smelters, was sentenced to 16 months in prison after admitting he took nearly US$ 5 million in bribes from a Bahraini sheikh.
So that is how Bruce pays his bills.
This is now legal in the usa.
Alcoa got dragged into a transfer pricing litigation with the Australian Tax Office even though the real losers were Arab shareholders of the Bahrain entity. Trump is visiting the Middle East where corruption is just standard business.