The Trump administration’s zero-sum approach to international relations is now spilling over from trade to currency wars.  After spending the best part of his 2016 campaign and the first three years of his presidency railing against foreign countries taking advantage of the United States on trade, Trump and his administration have started complaining in the past few months about currency manipulation.  In doing so, it is bringing us back to the 1990s, or even the 1930s. 

There are two reports I always look forward to reading each June: the BP Statistical Review of World Energy, and analyst Mary Meeker’s annual report on Internet trends. For those interested in the art of investment prognostication, a stroll through the archives of Meeker’s reports since 1996 is fascinating. They chart the growth of the Internet and the disruption of global communications that have impacted nearly everything.

EconVue is about the Gettier Problem which to simplify means that just because one is justified in drawing a conclusion, doesn’t mean that it is true. For example, we certainly could be justified in thinking that racial hatred has increased in the US based on media and news reports.  However, a fascinating University of Pennsylvania study says that this isn’t true, and that actually racial prejudice has been declining.
 

Mike’s commentary on the struggle, or lack thereof, for “partisan” control of the Fed.
 
Also this afternoon, the Minutes of the March FOMC meeting had few newsworthy disclosures that Powell had not already covered in his post-meeting news conference. We were pleasantly surprised, however, to see that “participants also mentioned a number of upside risks.” Powell had focused overwhelmingly on downside risks.
 
No Danger of a Trump ‘Takeover’ of the Fed
 

The latest quarterly report by the Bank for International Settlements (BIS) underlines the change in the relationship between the major central banks and financial markets.  Claude Borrio, the BIS’s Chief Economist, describes the “extraordinarily tight” relationship between central banks and financial markets in the aftermath of the financial crisis and recession of 2008. Thus, the financial markets scrutinize the central banks for cues, while at the same time relying on central bank “puts” for comfort.

The US government shutdown is over, but the question of how a wall between the US and Mexico will be funded is unresolved. The threat, or lack of a threat posed by immigrants at the southern border, is a litmus test for US politicians. AMLO, Mexico’s new leader, could achieve what no one has before in terms of eliminating violence and corruption, or he could make things much, much worse and turn his country into the next Venezuela.

The biggest economic conference of the season, the World Economic Forum, has just wrapped up in Davos. Most of the sessions are now available as they happen, and with the snow piled high here in Chicago, watching them online almost seemed like being there. I’ve included links to some of the best discussions and interviews you might enjoy on this even colder weekend.

This morning, the Wall Street Journal issued a "bombshell" report about changes to the Fed's plans to "normalize" its balance sheet. The story, FMI contends, delivered far less than it promised.
 
The WSJ reported, in an overwrought and very run-on opening sentence, that “Federal Reserve officials are close to deciding they will maintain a larger portfolio of Treasury securities than they’d expected when they began shrinking those holdings two years ago, putting an end to the central bank’s portfolio wind-down closer into sight.”