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Axios' Neal Rothschild writes: President Trump's trade war has led to an even bigger trade deficit with China, even though it was intended to improve the trade balance. But it's not just China — deficits have increased with most of our other major trade partners, too.
Why it matters: While economists agree that trade deficits aren't a good way to measure a trade relationship, they are the metric Trump fixates on, makes campaign promises about, and uses to evaluate relationships with other countries.
Reality check: Among the U.S.' 15 biggest trading partners, the trade balance has moved in the wrong direction for Trump in 10 of those countries between 2016 and 2018, while the aggregate trade deficit has jumped from $503 billion to $628 billion.
The latest: The U.S. trade deficit in the first 6 months of 2019 is even bigger than in the last two years.
What's going on: Trump's tax cuts are as much to blame for the increase in the trade deficit as anything else.
The big picture: Trade deficits mean we buy more from a country than they buy from us, but that doesn’t necessarily mean the relationship is unfair, writes Axios business editor Dan Primack.
Between the lines: Despite the dubious merit of the trade deficit as a useful barometer of the health of a trade relationship, Trump's obsession with the number has led to strained relations with key allies.
The share prices of Philip Morris and Altria have continued to fall since news of their possible merger, but that's not because traders are bearish on cigarettes.
What's happening: The cigarette business is booming, just not in markets where Philip Morris — the international leader outside China that spun off in 2008 — has a major footprint.
The intrigue: China is the world’s largest tobacco market by far, outselling just about every other market on the planet combined, according to data from Euromonitor International.
Go deeper: China’s red-hot tobacco stock is cooling (WSJ)
Consumer sentiment fell to its lowest level since October 2016 and dropped by the most since December 2012, according to a survey by the University of Michigan released Friday.
Why it matters: The decline in sentiment was attributed largely to negative references to tariffs and the U.S.-China trade war, said Richard Curtin, the survey’s chief economist. Tariffs were mentioned "spontaneously" as a negative force by 1 in 3 respondents.
What they're saying: “The August data indicate that the erosion of consumer confidence due to tariff policies is now well under way,” Curtin said.
Of note: Michigan's data remains at historically high levels but has been falling consistently since May, while a measure of consumer confidence conducted by the Conference Board has been much more resilient.
With the re-imposition of currency controls, Argentine President Mauricio Macri has essentially returned the country to what it was under former Peronist President Cristina Fernández de Kirchner, just in much worse shape.
The backdrop: Macri came to office as a center-right market pragmatist in 2015 riding a wave of investor enthusiasm and pledging to unleash the economy after years of government intervention, like capital controls, that it had seen under Kirchner.
He issued billions of dollars in new sovereign debt, including a 100-year bond investors at the time said was largely the result of hubris, and is now looking to write off some of that debt in a process his administration has termed “voluntary reprofiling” that's eerily similar to Kirchner's proposals.
What they're saying: “Argentina is in a virtual, hidden default," leading presidential candidate Alberto Fernández said in response to the government's measures and market's reaction.
Why it matters: It's the latest in the litany of Brexit back-and-forth that has left the market reeling and most of Britain uncertain about the future.
What happened: The pound fell nearly 1%, near its lowest level in a year, and is again testing its early August lows when it reached the weakest against the dollar since 1985.
The big picture: The British pound also has been hit by a wave of negative data about the U.K. economy.
What's next: The combination of Brexit uncertainty and the economic weakness has a growing number of fund managers betting sterling will continue falling until it hits parity with the dollar.