Trader Talk

Global Trade: BofA's Quinlan Lists Benefits For U.S.


While the markets are concerned today about the poor quality of financial earnings, Bank of America’s Joe Quinlan tackles a different—but equally important—subject: the rising tide of protectionism in the U.S., which is threatening the profits of now-global U.S. corporations. Quinlan notes that U.S. firms are enjoying a global boom in trade, earnings, capital inflows.

Consider the benefits of global trade, Quinlan notes:

1. U.S. exports have been a key offset to the drag from U.S. housing. Put another way, absent U.S. trade, the American economy would be a great deal weaker today. Protectionism, in short, threatens to undermine one of the few pillars of U.S. economic growth.

2. It has been a stellar year for U.S. exports, rising by nearly 13% in the first eight months of this year versus a

3.4% rise in imports.

3. Exports totaled nearly $140 billion in August, a monthly total greater than what most nations’ (Australia, Argentina, Belgium, Thailand) export in a year.

4. U.S. service exports are running at a record pace, totaling a monthly record of $39.4 billion in August. That represents a 12% increase from the same period a year ago.

5. Exports of “other private services, which includes a host of activities like computer processing, engineering, consulting, education, etc., rose by nearly 14% in the first eight months of this year, and remain one of the largest and fastest growing components of U.S. exports.

6. China remains one of the fastest growing export markets in the world for U.S. goods and services, with U.S. goods exports rising 23% in August from the same period a year ago.

7. U.S. global earnings—as measured by foreign affiliate income—climbed to a quarterly record $83 billion in the second quarter of this year, a 10% jump from the prior year.

8. The boom in this year’s global earnings has been unprecedented in scope, with U.S. affiliates posting record earnings in Europe, the Middle East, Africa, South America and Asia.

9. U.S. affiliate earnings in China topped $2.5 billion in the first six months of this year, a rise of 17% from the same period a year ago. Affiliate income is expected to exceed $5 billion this year, a record total.

10. U.S. net capital inflows from China totaled $90 billion in the first eight months of this year, a 4% rise from a year ago; the mainland remains one of the largest providers of capital to the United States, an inconvenient truth for those in favor of slapping U.S. trade/investment sanctions on China.

Questions?  Comments?