Globalization fragmenting into rival operating systems
The post-Cold War assumption was that trade integration and technological diffusion would produce convergence under a stable ruleset. The actual path looks roug
Updated yesterday.
Trade
Monthly goods trade deficit — widening deficits signal import dependence; narrowing may reflect reshoring or trade barriers.
$-105.6B
Trend YoY growth is -5.7%, accelerating by 3 bps/year over the last 26Y. Latest: -77.0%, 71.3 pp below trend, a 2.0σ deviation. The latest YoY reading is depressed by 21.9 pp due to an tough comparison base from Aug '25. At current levels, YoY would rise to -65.3% by Oct '26 as comparisons ease.
Level
YoY %
y = −6.5% + 3 bps/yr · t
Deviation from trend
Total quarterly export volume — tracks whether the U.S. is gaining or losing share in a fragmenting trade system.
$3.8T
Trend YoY growth is +5.4%, accelerating by 2 bps/year over the last 25Y. Latest: +15.3%, 9.9 pp above trend, a 1.0σ deviation. The latest YoY reading is boosted by 2.8 pp due to an easy comparison base from Apr '25.
Level
YoY %
y = 5.0% + 2 bps/yr · t
Deviation from trend
Proxy for China's tech sector accessibility — decoupling shows up as valuation divergence from U.S. tech.
$24.5
Trend YoY growth is -3.5%, slowing by 1.8 pp/year over the last 9Y. Deviations have remained below trend for 122 consecutive periods. Latest: -34.4%, 31.0 pp below trend, a 3.0σ deviation. The latest YoY reading is depressed by 28.7 pp due to an tough comparison base from Oct '25.
Level
YoY %
y = 12.9% − 1.8 pp/yr · t
Deviation from trend
Strategic Buildup
Market pricing of defense spending — rising valuations reflect expectations of sustained military buildup across blocs.
$204.2
Trend YoY growth is +26.0%, accelerating by 2.3 pp/year over the last 9Y. Deviations have remained below trend for 42 consecutive periods. Latest: -1.4%, 27.4 pp below trend, a 1.9σ deviation. The latest YoY reading is depressed by 15.3 pp due to an tough comparison base from Oct '25.
Level
YoY %
y = 5.5% + 2.3 pp/yr · t
Deviation from trend
No data
Broad EM equity basket — underperformance vs. U.S. signals capital retreating from fragmentation-exposed economies.
$64.4
Trend YoY growth is +17.4%, accelerating by 1.8 pp/year over the last 9Y. Deviations have remained above trend for 253 consecutive periods. Latest: +21.9%, 4.5 pp above trend, a 0.64σ deviation. The latest YoY reading is depressed by 4.8 pp due to an tough comparison base from Oct '25.
Level
YoY %
y = 0.8% + 1.8 pp/yr · t
Deviation from trend
Industrial Competition
Domestic industrial companies — outperformance signals reshoring and industrial policy tailwinds.
$167.0
Trend YoY growth is +20.2%, accelerating by 1.3 pp/year over the last 9Y. Deviations have remained below trend for 38 consecutive periods. Latest: +10.7%, 9.6 pp below trend, a 1.5σ deviation. The latest YoY reading is boosted by 6.3 pp due to an easy comparison base from Oct '25.
Level
YoY %
y = 8.1% + 1.3 pp/yr · t
Deviation from trend
New orders for long-lived manufactured goods — leading indicator of industrial investment and reshoring activity.
$338.5B
Trend YoY growth is +5.6%, accelerating by 22 bps/year over the last 26Y. Latest: +8.4%, 2.9 pp above trend, a 0.39σ deviation. The latest YoY reading is depressed by 2.3 pp due to an tough comparison base from Aug '25. At current levels, YoY would fall to +4.4% by Oct '26 as comparisons tighten.
Level
YoY %
y = −0.1% + 22 bps/yr · t
Deviation from trend
Dollar System
The world's reserve currency — sustained weakness may signal erosion of dollar hegemony in a multipolar order.
102.9Index
Trend YoY growth is +0.4%, accelerating by 1 bps/year over the last 9Y. Deviations have remained above trend for 38 consecutive periods. Latest: +4.2%, 3.8 pp above trend, a 2.1σ deviation. The latest YoY reading is boosted by 4.5 pp due to an easy comparison base from Oct '25.
Level
YoY %
y = 0.3% + 1 bps/yr · t
Deviation from trend
Foreign central bank appetite for Treasuries — declining share suggests dedollarization or reserve diversification.
$9.4T
Trend YoY growth is +3.0%, slowing by 51 bps/year over the last 25Y. Deviations have remained above trend for 10 consecutive periods. Latest: +3.4%, 39 bps above trend, a 0.06σ deviation. The latest YoY reading is depressed by 8.2 pp due to an tough comparison base from Jan '25.
Level
YoY %
y = 15.8% − 51 bps/yr · t
Deviation from trend
EAFE equity performance — tracks whether capital is concentrating in the U.S. or redistributing across blocs.
$102.8
Trend YoY growth is +16.6%, accelerating by 1.5 pp/year over the last 9Y. Latest: +13.3%, 3.3 pp below trend, a 0.78σ deviation. The latest YoY reading is depressed by 3.6 pp due to an tough comparison base from Oct '25.
Level
YoY %
y = 2.8% + 1.5 pp/yr · t
Deviation from trend
Key Insight
Fragmentation is now more visible in strategic-asset prices than in the underlying trade flows, and that inversion is the signal — capital markets are pricing the new bloc architecture faster than goods markets are re-routing through it.
Globalization fragmenting into rival operating systems
The post-Cold War assumption was that trade integration and technological diffusion would produce convergence under a stable ruleset. The actual path looks roug
Updated yesterday.
Trade
Monthly goods trade deficit — widening deficits signal import dependence; narrowing may reflect reshoring or trade barriers.
$-105.6B
Trend YoY growth is -5.7%, accelerating by 3 bps/year over the last 26Y. Latest: -77.0%, 71.3 pp below trend, a 2.0σ deviation. The latest YoY reading is depressed by 21.9 pp due to an tough comparison base from Aug '25. At current levels, YoY would rise to -65.3% by Oct '26 as comparisons ease.
Level
YoY %
y = −6.5% + 3 bps/yr · t
Deviation from trend
Total quarterly export volume — tracks whether the U.S. is gaining or losing share in a fragmenting trade system.
$3.8T
Trend YoY growth is +5.4%, accelerating by 2 bps/year over the last 25Y. Latest: +15.3%, 9.9 pp above trend, a 1.0σ deviation. The latest YoY reading is boosted by 2.8 pp due to an easy comparison base from Apr '25.
Level
YoY %
y = 5.0% + 2 bps/yr · t
Deviation from trend
Proxy for China's tech sector accessibility — decoupling shows up as valuation divergence from U.S. tech.
$24.5
Trend YoY growth is -3.5%, slowing by 1.8 pp/year over the last 9Y. Deviations have remained below trend for 122 consecutive periods. Latest: -34.4%, 31.0 pp below trend, a 3.0σ deviation. The latest YoY reading is depressed by 28.7 pp due to an tough comparison base from Oct '25.
Level
YoY %
y = 12.9% − 1.8 pp/yr · t
Deviation from trend
Strategic Buildup
Market pricing of defense spending — rising valuations reflect expectations of sustained military buildup across blocs.
$204.2
Trend YoY growth is +26.0%, accelerating by 2.3 pp/year over the last 9Y. Deviations have remained below trend for 42 consecutive periods. Latest: -1.4%, 27.4 pp below trend, a 1.9σ deviation. The latest YoY reading is depressed by 15.3 pp due to an tough comparison base from Oct '25.
Level
YoY %
y = 5.5% + 2.3 pp/yr · t
Deviation from trend
No data
Broad EM equity basket — underperformance vs. U.S. signals capital retreating from fragmentation-exposed economies.
$64.4
Trend YoY growth is +17.4%, accelerating by 1.8 pp/year over the last 9Y. Deviations have remained above trend for 253 consecutive periods. Latest: +21.9%, 4.5 pp above trend, a 0.64σ deviation. The latest YoY reading is depressed by 4.8 pp due to an tough comparison base from Oct '25.
Level
YoY %
y = 0.8% + 1.8 pp/yr · t
Deviation from trend
Industrial Competition
Domestic industrial companies — outperformance signals reshoring and industrial policy tailwinds.
$167.0
Trend YoY growth is +20.2%, accelerating by 1.3 pp/year over the last 9Y. Deviations have remained below trend for 38 consecutive periods. Latest: +10.7%, 9.6 pp below trend, a 1.5σ deviation. The latest YoY reading is boosted by 6.3 pp due to an easy comparison base from Oct '25.
Level
YoY %
y = 8.1% + 1.3 pp/yr · t
Deviation from trend
New orders for long-lived manufactured goods — leading indicator of industrial investment and reshoring activity.
$338.5B
Trend YoY growth is +5.6%, accelerating by 22 bps/year over the last 26Y. Latest: +8.4%, 2.9 pp above trend, a 0.39σ deviation. The latest YoY reading is depressed by 2.3 pp due to an tough comparison base from Aug '25. At current levels, YoY would fall to +4.4% by Oct '26 as comparisons tighten.
Level
YoY %
y = −0.1% + 22 bps/yr · t
Deviation from trend
Dollar System
The world's reserve currency — sustained weakness may signal erosion of dollar hegemony in a multipolar order.
102.9Index
Trend YoY growth is +0.4%, accelerating by 1 bps/year over the last 9Y. Deviations have remained above trend for 38 consecutive periods. Latest: +4.2%, 3.8 pp above trend, a 2.1σ deviation. The latest YoY reading is boosted by 4.5 pp due to an easy comparison base from Oct '25.
Level
YoY %
y = 0.3% + 1 bps/yr · t
Deviation from trend
Foreign central bank appetite for Treasuries — declining share suggests dedollarization or reserve diversification.
$9.4T
Trend YoY growth is +3.0%, slowing by 51 bps/year over the last 25Y. Deviations have remained above trend for 10 consecutive periods. Latest: +3.4%, 39 bps above trend, a 0.06σ deviation. The latest YoY reading is depressed by 8.2 pp due to an tough comparison base from Jan '25.
Level
YoY %
y = 15.8% − 51 bps/yr · t
Deviation from trend
EAFE equity performance — tracks whether capital is concentrating in the U.S. or redistributing across blocs.
$102.8
Trend YoY growth is +16.6%, accelerating by 1.5 pp/year over the last 9Y. Latest: +13.3%, 3.3 pp below trend, a 0.78σ deviation. The latest YoY reading is depressed by 3.6 pp due to an tough comparison base from Oct '25.
Level
YoY %
y = 2.8% + 1.5 pp/yr · t
Deviation from trend