Trade, price, and politics

Daily update

Initial trade data for January from South Korea suggests that there was a slowdown in export growth. The data should not be affected by rerouting ships away from the Red Sea (it is counting when goods leave Korea, not when they arrive at their destination). Global trade has to contend with consumers shifting demand from goods to services, the hype about artificial intelligence (and its associated technology), and simplifying supply chains.
Profit-led inflation remains in focus, with consumer rebellion against price increases featuring in the recent Federal Reserve Beige Book, and Fed President Barkin discussing margins and inflation in the Financial Times. Story telling still continues—freight and labor costs are cited as reasons for price increases. Freight costs are almost irrelevant, and wage growth is not the same as labor cost growth.
A Republican candidate has withdrawn from the US presidential race. Investors are not yet considering how to price this election (if indeed markets can properly price the risks), so this is not really market moving.
There were protests in Germany against the far-right over the weekend. Structural economic change tends to encourage prejudice politics. Prejudice is very economically damaging, and those countries that resist it are more likely to do well in the fourth industrial revolution.