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.
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 +5.6%, accelerating by 3 bps/year over the last 25Y. Latest: +10.7%, 5.1 pp above trend, a 0.52σ deviation. The latest YoY reading is boosted by 1.4 pp due to an easy comparison base from Jul '25. At current levels, YoY would fall to +5.8% by Dec '26 as comparisons tighten.
Level
YoY %
y = 4.9% + 3 bps/yr · t
Deviation from trend
Proxy for China's tech sector accessibility — decoupling shows up as valuation divergence from U.S. tech.
$23.4
Trend YoY growth is -4.0%, slowing by 1.8 pp/year over the last 9Y. Deviations have remained below trend for 135 consecutive periods. Latest: -38.0%, 33.9 pp below trend, a 3.6σ deviation. The latest YoY reading is depressed by 29.2 pp due to an tough comparison base from Nov '25.
Level
YoY %
y = 12.5% − 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.
$214.7
Trend YoY growth is +25.9%, accelerating by 2.3 pp/year over the last 9Y. Deviations have remained below trend for 58 consecutive periods. Latest: +0.1%, 25.8 pp below trend, a 1.9σ deviation. The latest YoY reading is depressed by 26.3 pp due to an tough comparison base from Nov '25.
Level
YoY %
y = 5.0% + 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.
$61.1
Trend YoY growth is +17.8%, accelerating by 1.9 pp/year over the last 9Y. Latest: +12.0%, 5.8 pp below trend, a 0.57σ deviation. The latest YoY reading is depressed by 11.9 pp due to an tough comparison base from Nov '25.
Level
YoY %
y = 0.4% + 1.9 pp/yr · t
Deviation from trend
Industrial Competition
Domestic industrial companies — outperformance signals reshoring and industrial policy tailwinds.
$169.8
Trend YoY growth is +20.3%, accelerating by 1.4 pp/year over the last 9Y. Deviations have remained below trend for 51 consecutive periods. Latest: +11.2%, 9.1 pp below trend, a 1.5σ deviation. The latest YoY reading is boosted by 1.8 pp due to an easy comparison base from Nov '25.
Level
YoY %
y = 7.7% + 1.4 pp/yr · t
Deviation from trend
New orders for long-lived manufactured goods — leading indicator of industrial investment and reshoring activity.
$345.4B
Trend YoY growth is +5.7%, accelerating by 22 bps/year over the last 26Y. Latest: +9.9%, 4.3 pp above trend, a 0.60σ deviation. The latest YoY reading is depressed by 2.0 pp due to an tough comparison base from Sep '25. At current levels, YoY would fall to +7.5% by Dec '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.
101.6Index
Trend YoY growth is +0.4%, slowing by 0 bps/year over the last 9Y. Deviations have remained above trend for 51 consecutive periods. Latest: +1.8%, 1.4 pp above trend, a 0.88σ deviation. The latest YoY reading is boosted by 4.3 pp due to an easy comparison base from Nov '25.
Level
YoY %
y = 0.4% − 0 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.
$103.7
Trend YoY growth is +16.9%, accelerating by 1.6 pp/year over the last 9Y. Deviations have remained below trend for 25 consecutive periods. Latest: +13.5%, 3.4 pp below trend, a 0.74σ deviation. The latest YoY reading is depressed by 7.5 pp due to an tough comparison base from Nov '25.
Level
YoY %
y = 2.4% + 1.6 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.
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 +5.6%, accelerating by 3 bps/year over the last 25Y. Latest: +10.7%, 5.1 pp above trend, a 0.52σ deviation. The latest YoY reading is boosted by 1.4 pp due to an easy comparison base from Jul '25. At current levels, YoY would fall to +5.8% by Dec '26 as comparisons tighten.
Level
YoY %
y = 4.9% + 3 bps/yr · t
Deviation from trend
Proxy for China's tech sector accessibility — decoupling shows up as valuation divergence from U.S. tech.
$23.4
Trend YoY growth is -4.0%, slowing by 1.8 pp/year over the last 9Y. Deviations have remained below trend for 135 consecutive periods. Latest: -38.0%, 33.9 pp below trend, a 3.6σ deviation. The latest YoY reading is depressed by 29.2 pp due to an tough comparison base from Nov '25.
Level
YoY %
y = 12.5% − 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.
$214.7
Trend YoY growth is +25.9%, accelerating by 2.3 pp/year over the last 9Y. Deviations have remained below trend for 58 consecutive periods. Latest: +0.1%, 25.8 pp below trend, a 1.9σ deviation. The latest YoY reading is depressed by 26.3 pp due to an tough comparison base from Nov '25.
Level
YoY %
y = 5.0% + 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.
$61.1
Trend YoY growth is +17.8%, accelerating by 1.9 pp/year over the last 9Y. Latest: +12.0%, 5.8 pp below trend, a 0.57σ deviation. The latest YoY reading is depressed by 11.9 pp due to an tough comparison base from Nov '25.
Level
YoY %
y = 0.4% + 1.9 pp/yr · t
Deviation from trend
Industrial Competition
Domestic industrial companies — outperformance signals reshoring and industrial policy tailwinds.
$169.8
Trend YoY growth is +20.3%, accelerating by 1.4 pp/year over the last 9Y. Deviations have remained below trend for 51 consecutive periods. Latest: +11.2%, 9.1 pp below trend, a 1.5σ deviation. The latest YoY reading is boosted by 1.8 pp due to an easy comparison base from Nov '25.
Level
YoY %
y = 7.7% + 1.4 pp/yr · t
Deviation from trend
New orders for long-lived manufactured goods — leading indicator of industrial investment and reshoring activity.
$345.4B
Trend YoY growth is +5.7%, accelerating by 22 bps/year over the last 26Y. Latest: +9.9%, 4.3 pp above trend, a 0.60σ deviation. The latest YoY reading is depressed by 2.0 pp due to an tough comparison base from Sep '25. At current levels, YoY would fall to +7.5% by Dec '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.
101.6Index
Trend YoY growth is +0.4%, slowing by 0 bps/year over the last 9Y. Deviations have remained above trend for 51 consecutive periods. Latest: +1.8%, 1.4 pp above trend, a 0.88σ deviation. The latest YoY reading is boosted by 4.3 pp due to an easy comparison base from Nov '25.
Level
YoY %
y = 0.4% − 0 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.
$103.7
Trend YoY growth is +16.9%, accelerating by 1.6 pp/year over the last 9Y. Deviations have remained below trend for 25 consecutive periods. Latest: +13.5%, 3.4 pp below trend, a 0.74σ deviation. The latest YoY reading is depressed by 7.5 pp due to an tough comparison base from Nov '25.
Level
YoY %
y = 2.4% + 1.6 pp/yr · t
Deviation from trend