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 today.
Trade
Monthly goods trade deficit — widening deficits signal import dependence; narrowing may reflect reshoring or trade barriers.
$-55.9B
Trend YoY growth is -4.3%, accelerating by 11 bps/year over the last 25Y. Deviations have remained above trend for 14 consecutive periods. Latest: +7.4%, 11.7 pp above trend, a 0.33σ deviation. The latest YoY reading is depressed by 19.3 pp due to an tough comparison base from Apr '25.
Level
YoY %
y = −7.2% + 11 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.
$3.5T
Trend YoY growth is +4.9%, slowing by 1 bps/year over the last 25Y. Latest: +6.5%, 1.6 pp above trend, a 0.17σ deviation. The latest YoY reading is boosted by 81 bps due to an easy comparison base from Jan '25.
Level
YoY %
y = 5.2% − 1 bps/yr · t
Deviation from trend
Proxy for China's tech sector accessibility — decoupling shows up as valuation divergence from U.S. tech.
$25.0
Trend YoY growth is -1.8%, slowing by 2.0 pp/year over the last 9Y. Deviations have remained below trend for 50 consecutive periods. Latest: -21.2%, 19.4 pp below trend, a 1.6σ deviation. The latest YoY reading is depressed by 24.2 pp due to an tough comparison base from Jul '25.
Level
YoY %
y = 15.8% − 2.0 pp/yr · t
Deviation from trend
Strategic Buildup
Market pricing of defense spending — rising valuations reflect expectations of sustained military buildup across blocs.
$248.2
Trend YoY growth is +25.0%, accelerating by 1.9 pp/year over the last 9Y. Deviations have remained above trend for 287 consecutive periods. Latest: +33.5%, 8.5 pp above trend, a 0.80σ deviation. The latest YoY reading is depressed by 16.6 pp due to an tough comparison base from Jul '25.
Level
YoY %
y = 7.5% + 1.9 pp/yr · t
Deviation from trend
No data
Broad EM equity basket — underperformance vs. U.S. signals capital retreating from fragmentation-exposed economies.
$65.7
Trend YoY growth is +13.5%, accelerating by 1.0 pp/year over the last 9Y. Deviations have remained above trend for 245 consecutive periods. Latest: +37.4%, 23.9 pp above trend, a 3.3σ deviation. The latest YoY reading is depressed by 2.2 pp due to an tough comparison base from Jul '25.
Level
YoY %
y = 4.1% + 1.0 pp/yr · t
Deviation from trend
Industrial Competition
Domestic industrial companies — outperformance signals reshoring and industrial policy tailwinds.
$183.9
Trend YoY growth is +19.3%, accelerating by 1.1 pp/year over the last 9Y. Latest: +24.7%, 5.3 pp above trend, a 0.97σ deviation. The latest YoY reading is depressed by 5.3 pp due to an tough comparison base from Jul '25.
Level
YoY %
y = 9.2% + 1.1 pp/yr · t
Deviation from trend
New orders for long-lived manufactured goods — leading indicator of industrial investment and reshoring activity.
$332.2B
Trend YoY growth is +5.4%, accelerating by 21 bps/year over the last 25Y. Latest: -3.4%, 8.8 pp below trend, a 1.2σ deviation. The latest YoY reading is depressed by 14.8 pp due to an tough comparison base from May '25. At current levels, YoY would rise to +6.4% by Jul '26 as comparisons ease.
Level
YoY %
y = 0.0% + 21 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.
101.1Index
Trend YoY growth is +0.3%, accelerating by 2 bps/year over the last 9Y. Deviations have remained above trend for 22 consecutive periods. Latest: +3.7%, 3.4 pp above trend, a 0.99σ deviation. The latest YoY reading is boosted by 7.5 pp due to an easy comparison base from Jul '25.
Level
YoY %
y = 0.1% + 2 bps/yr · t
Deviation from trend
Foreign central bank appetite for Treasuries — declining share suggests dedollarization or reserve diversification.
$9.3T
Trend YoY growth is +3.1%, slowing by 51 bps/year over the last 25Y. Deviations have remained above trend for 9 consecutive periods. Latest: +7.6%, 4.5 pp above trend, a 0.68σ deviation. The latest YoY reading is depressed by 5.0 pp due to an tough comparison base from Oct '24.
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.
$104.4
Trend YoY growth is +14.8%, accelerating by 1.1 pp/year over the last 9Y. Deviations have remained above trend for 191 consecutive periods. Latest: +20.6%, 5.8 pp above trend, a 1.2σ deviation. The latest YoY reading is depressed by 2.3 pp due to an tough comparison base from Jul '25.
Level
YoY %
y = 4.5% + 1.1 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 today.
Trade
Monthly goods trade deficit — widening deficits signal import dependence; narrowing may reflect reshoring or trade barriers.
$-55.9B
Trend YoY growth is -4.3%, accelerating by 11 bps/year over the last 25Y. Deviations have remained above trend for 14 consecutive periods. Latest: +7.4%, 11.7 pp above trend, a 0.33σ deviation. The latest YoY reading is depressed by 19.3 pp due to an tough comparison base from Apr '25.
Level
YoY %
y = −7.2% + 11 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.
$3.5T
Trend YoY growth is +4.9%, slowing by 1 bps/year over the last 25Y. Latest: +6.5%, 1.6 pp above trend, a 0.17σ deviation. The latest YoY reading is boosted by 81 bps due to an easy comparison base from Jan '25.
Level
YoY %
y = 5.2% − 1 bps/yr · t
Deviation from trend
Proxy for China's tech sector accessibility — decoupling shows up as valuation divergence from U.S. tech.
$25.0
Trend YoY growth is -1.8%, slowing by 2.0 pp/year over the last 9Y. Deviations have remained below trend for 50 consecutive periods. Latest: -21.2%, 19.4 pp below trend, a 1.6σ deviation. The latest YoY reading is depressed by 24.2 pp due to an tough comparison base from Jul '25.
Level
YoY %
y = 15.8% − 2.0 pp/yr · t
Deviation from trend
Strategic Buildup
Market pricing of defense spending — rising valuations reflect expectations of sustained military buildup across blocs.
$248.2
Trend YoY growth is +25.0%, accelerating by 1.9 pp/year over the last 9Y. Deviations have remained above trend for 287 consecutive periods. Latest: +33.5%, 8.5 pp above trend, a 0.80σ deviation. The latest YoY reading is depressed by 16.6 pp due to an tough comparison base from Jul '25.
Level
YoY %
y = 7.5% + 1.9 pp/yr · t
Deviation from trend
No data
Broad EM equity basket — underperformance vs. U.S. signals capital retreating from fragmentation-exposed economies.
$65.7
Trend YoY growth is +13.5%, accelerating by 1.0 pp/year over the last 9Y. Deviations have remained above trend for 245 consecutive periods. Latest: +37.4%, 23.9 pp above trend, a 3.3σ deviation. The latest YoY reading is depressed by 2.2 pp due to an tough comparison base from Jul '25.
Level
YoY %
y = 4.1% + 1.0 pp/yr · t
Deviation from trend
Industrial Competition
Domestic industrial companies — outperformance signals reshoring and industrial policy tailwinds.
$183.9
Trend YoY growth is +19.3%, accelerating by 1.1 pp/year over the last 9Y. Latest: +24.7%, 5.3 pp above trend, a 0.97σ deviation. The latest YoY reading is depressed by 5.3 pp due to an tough comparison base from Jul '25.
Level
YoY %
y = 9.2% + 1.1 pp/yr · t
Deviation from trend
New orders for long-lived manufactured goods — leading indicator of industrial investment and reshoring activity.
$332.2B
Trend YoY growth is +5.4%, accelerating by 21 bps/year over the last 25Y. Latest: -3.4%, 8.8 pp below trend, a 1.2σ deviation. The latest YoY reading is depressed by 14.8 pp due to an tough comparison base from May '25. At current levels, YoY would rise to +6.4% by Jul '26 as comparisons ease.
Level
YoY %
y = 0.0% + 21 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.
101.1Index
Trend YoY growth is +0.3%, accelerating by 2 bps/year over the last 9Y. Deviations have remained above trend for 22 consecutive periods. Latest: +3.7%, 3.4 pp above trend, a 0.99σ deviation. The latest YoY reading is boosted by 7.5 pp due to an easy comparison base from Jul '25.
Level
YoY %
y = 0.1% + 2 bps/yr · t
Deviation from trend
Foreign central bank appetite for Treasuries — declining share suggests dedollarization or reserve diversification.
$9.3T
Trend YoY growth is +3.1%, slowing by 51 bps/year over the last 25Y. Deviations have remained above trend for 9 consecutive periods. Latest: +7.6%, 4.5 pp above trend, a 0.68σ deviation. The latest YoY reading is depressed by 5.0 pp due to an tough comparison base from Oct '24.
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.
$104.4
Trend YoY growth is +14.8%, accelerating by 1.1 pp/year over the last 9Y. Deviations have remained above trend for 191 consecutive periods. Latest: +20.6%, 5.8 pp above trend, a 1.2σ deviation. The latest YoY reading is depressed by 2.3 pp due to an tough comparison base from Jul '25.
Level
YoY %
y = 4.5% + 1.1 pp/yr · t
Deviation from trend