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.
$-60.3B
Trend YoY growth is -3.4%, accelerating by 15 bps/year over the last 25Y. Deviations have remained above trend for 13 consecutive periods. Latest: +55.6%, 59.0 pp above trend, a 1.7σ deviation. The latest YoY reading is boosted by 101.4 pp due to an easy comparison base from Mar '25. At current levels, YoY would fall to -4.6% by May '26 as comparisons tighten.
Level
YoY %
y = −7.3% + 15 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: +7.0%, 2.1 pp above trend, a 0.21σ deviation. The latest YoY reading is boosted by 83 bps due to an easy comparison base from Jan '25. At current levels, YoY would fall to +4.7% by Jul '26 as comparisons tighten.
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.
$27.3
Trend YoY growth is -1.5%, slowing by 2.1 pp/year over the last 9Y. Deviations have remained below trend for 24 consecutive periods. Latest: -13.8%, 12.3 pp below trend, a 1.0σ deviation. The latest YoY reading is depressed by 15.6 pp due to an tough comparison base from May '25.
Level
YoY %
y = 17.0% − 2.1 pp/yr · t
Deviation from trend
Strategic Buildup
Market pricing of defense spending — rising valuations reflect expectations of sustained military buildup across blocs.
$229.5
Trend YoY growth is +24.1%, accelerating by 1.7 pp/year over the last 9Y. Deviations have remained above trend for 261 consecutive periods. Latest: +31.6%, 7.5 pp above trend, a 0.67σ deviation. The latest YoY reading is depressed by 9.2 pp due to an tough comparison base from May '25.
Level
YoY %
y = 8.4% + 1.7 pp/yr · t
Deviation from trend
No data
Broad EM equity basket — underperformance vs. U.S. signals capital retreating from fragmentation-exposed economies.
$68.4
Trend YoY growth is +11.3%, accelerating by 61 bps/year over the last 9Y. Deviations have remained above trend for 250 consecutive periods. Latest: +51.9%, 40.6 pp above trend, a 4.9σ deviation. The latest YoY reading is boosted by 79 bps due to an easy comparison base from May '25.
Level
YoY %
y = 5.8% + 61 bps/yr · t
Deviation from trend
Industrial Competition
Domestic industrial companies — outperformance signals reshoring and industrial policy tailwinds.
$174.3
Trend YoY growth is +18.6%, accelerating by 97 bps/year over the last 9Y. Deviations have remained above trend for 84 consecutive periods. Latest: +23.3%, 4.6 pp above trend, a 0.64σ deviation. The latest YoY reading is depressed by 64 bps due to an tough comparison base from May '25.
Level
YoY %
y = 9.9% + 97 bps/yr · t
Deviation from trend
New orders for long-lived manufactured goods — leading indicator of industrial investment and reshoring activity.
$318.9B
Trend YoY growth is +5.3%, accelerating by 21 bps/year over the last 25Y. Latest: +0.8%, 4.4 pp below trend, a 0.60σ deviation. The latest YoY reading is depressed by 5.0 pp due to an tough comparison base from Mar '25. At current levels, YoY would rise to +2.3% by May '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.
99.15Index
Trend YoY growth is +0.2%, slowing by 1 bps/year over the last 9Y. Latest: -0.4%, 53 bps below trend, a 0.18σ deviation. The latest YoY reading is boosted by 5.6 pp due to an easy comparison base from May '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.
$9.2T
Trend YoY growth is +3.0%, slowing by 53 bps/year over the last 24Y. Deviations have remained above trend for 8 consecutive periods. Latest: +5.5%, 2.5 pp above trend, a 0.38σ deviation. The latest YoY reading is depressed by 13.2 pp due to an tough comparison base from Jul '24.
Level
YoY %
y = 15.9% − 53 bps/yr · t
Deviation from trend
EAFE equity performance — tracks whether capital is concentrating in the U.S. or redistributing across blocs.
$105.1
Trend YoY growth is +14.1%, accelerating by 98 bps/year over the last 9Y. Deviations have remained above trend for 166 consecutive periods. Latest: +21.9%, 7.8 pp above trend, a 1.4σ deviation. The latest YoY reading is depressed by 61 bps due to an tough comparison base from May '25.
Level
YoY %
y = 5.2% + 98 bps/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.
$-60.3B
Trend YoY growth is -3.4%, accelerating by 15 bps/year over the last 25Y. Deviations have remained above trend for 13 consecutive periods. Latest: +55.6%, 59.0 pp above trend, a 1.7σ deviation. The latest YoY reading is boosted by 101.4 pp due to an easy comparison base from Mar '25. At current levels, YoY would fall to -4.6% by May '26 as comparisons tighten.
Level
YoY %
y = −7.3% + 15 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: +7.0%, 2.1 pp above trend, a 0.21σ deviation. The latest YoY reading is boosted by 83 bps due to an easy comparison base from Jan '25. At current levels, YoY would fall to +4.7% by Jul '26 as comparisons tighten.
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.
$27.3
Trend YoY growth is -1.5%, slowing by 2.1 pp/year over the last 9Y. Deviations have remained below trend for 24 consecutive periods. Latest: -13.8%, 12.3 pp below trend, a 1.0σ deviation. The latest YoY reading is depressed by 15.6 pp due to an tough comparison base from May '25.
Level
YoY %
y = 17.0% − 2.1 pp/yr · t
Deviation from trend
Strategic Buildup
Market pricing of defense spending — rising valuations reflect expectations of sustained military buildup across blocs.
$229.5
Trend YoY growth is +24.1%, accelerating by 1.7 pp/year over the last 9Y. Deviations have remained above trend for 261 consecutive periods. Latest: +31.6%, 7.5 pp above trend, a 0.67σ deviation. The latest YoY reading is depressed by 9.2 pp due to an tough comparison base from May '25.
Level
YoY %
y = 8.4% + 1.7 pp/yr · t
Deviation from trend
No data
Broad EM equity basket — underperformance vs. U.S. signals capital retreating from fragmentation-exposed economies.
$68.4
Trend YoY growth is +11.3%, accelerating by 61 bps/year over the last 9Y. Deviations have remained above trend for 250 consecutive periods. Latest: +51.9%, 40.6 pp above trend, a 4.9σ deviation. The latest YoY reading is boosted by 79 bps due to an easy comparison base from May '25.
Level
YoY %
y = 5.8% + 61 bps/yr · t
Deviation from trend
Industrial Competition
Domestic industrial companies — outperformance signals reshoring and industrial policy tailwinds.
$174.3
Trend YoY growth is +18.6%, accelerating by 97 bps/year over the last 9Y. Deviations have remained above trend for 84 consecutive periods. Latest: +23.3%, 4.6 pp above trend, a 0.64σ deviation. The latest YoY reading is depressed by 64 bps due to an tough comparison base from May '25.
Level
YoY %
y = 9.9% + 97 bps/yr · t
Deviation from trend
New orders for long-lived manufactured goods — leading indicator of industrial investment and reshoring activity.
$318.9B
Trend YoY growth is +5.3%, accelerating by 21 bps/year over the last 25Y. Latest: +0.8%, 4.4 pp below trend, a 0.60σ deviation. The latest YoY reading is depressed by 5.0 pp due to an tough comparison base from Mar '25. At current levels, YoY would rise to +2.3% by May '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.
99.15Index
Trend YoY growth is +0.2%, slowing by 1 bps/year over the last 9Y. Latest: -0.4%, 53 bps below trend, a 0.18σ deviation. The latest YoY reading is boosted by 5.6 pp due to an easy comparison base from May '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.
$9.2T
Trend YoY growth is +3.0%, slowing by 53 bps/year over the last 24Y. Deviations have remained above trend for 8 consecutive periods. Latest: +5.5%, 2.5 pp above trend, a 0.38σ deviation. The latest YoY reading is depressed by 13.2 pp due to an tough comparison base from Jul '24.
Level
YoY %
y = 15.9% − 53 bps/yr · t
Deviation from trend
EAFE equity performance — tracks whether capital is concentrating in the U.S. or redistributing across blocs.
$105.1
Trend YoY growth is +14.1%, accelerating by 98 bps/year over the last 9Y. Deviations have remained above trend for 166 consecutive periods. Latest: +21.9%, 7.8 pp above trend, a 1.4σ deviation. The latest YoY reading is depressed by 61 bps due to an tough comparison base from May '25.
Level
YoY %
y = 5.2% + 98 bps/yr · t
Deviation from trend