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.
$-73.3B
Trend YoY growth is -4.7%, accelerating by 9 bps/year over the last 25Y. Latest: -24.8%, 20.1 pp below trend, a 0.59σ deviation. The latest YoY reading is depressed by 22.5 pp due to an tough comparison base from Jun '25. At current levels, YoY would rise to -23.4% by Aug '26 as comparisons ease.
Level
YoY %
y = −7.0% + 9 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 +5.3%, accelerating by 1 bps/year over the last 25Y. Latest: +14.8%, 9.5 pp above trend, a 0.98σ deviation. The latest YoY reading is boosted by 2.9 pp due to an easy comparison base from Apr '25. At current levels, YoY would fall to +12.0% by Sep '26 as comparisons tighten.
Level
YoY %
y = 5.0% + 1 bps/yr · t
Deviation from trend
Proxy for China's tech sector accessibility — decoupling shows up as valuation divergence from U.S. tech.
$27.0
Trend YoY growth is -2.0%, slowing by 1.8 pp/year over the last 9Y. Deviations have remained below trend for 80 consecutive periods. Latest: -22.9%, 20.9 pp below trend, a 2.4σ deviation. The latest YoY reading is depressed by 43.5 pp due to an tough comparison base from Aug '25.
Level
YoY %
y = 14.3% − 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.
$253.2
Trend YoY growth is +25.8%, accelerating by 2.1 pp/year over the last 9Y. Latest: +30.5%, 4.7 pp above trend, a 0.49σ deviation. The latest YoY reading is depressed by 14.0 pp due to an tough comparison base from Aug '25.
Level
YoY %
y = 6.7% + 2.1 pp/yr · t
Deviation from trend
No data
Broad EM equity basket — underperformance vs. U.S. signals capital retreating from fragmentation-exposed economies.
$66.6
Trend YoY growth is +15.2%, accelerating by 1.4 pp/year over the last 9Y. Deviations have remained above trend for 273 consecutive periods. Latest: +36.0%, 20.7 pp above trend, a 2.8σ deviation. The latest YoY reading is depressed by 5.5 pp due to an tough comparison base from Aug '25.
Level
YoY %
y = 2.7% + 1.4 pp/yr · t
Deviation from trend
Industrial Competition
Domestic industrial companies — outperformance signals reshoring and industrial policy tailwinds.
$186.5
Trend YoY growth is +19.9%, accelerating by 1.3 pp/year over the last 9Y. Latest: +25.6%, 5.6 pp above trend, a 1.2σ deviation. The latest YoY reading is depressed by 1.9 pp due to an tough comparison base from Aug '25.
Level
YoY %
y = 8.6% + 1.3 pp/yr · t
Deviation from trend
New orders for long-lived manufactured goods — leading indicator of industrial investment and reshoring activity.
$335.4B
Trend YoY growth is +5.4%, accelerating by 21 bps/year over the last 25Y. Latest: +7.6%, 2.2 pp above trend, a 0.30σ deviation. The latest YoY reading is depressed by 5.7 pp due to an tough comparison base from Jun '25. At current levels, YoY would fall to +6.8% by Aug '26 as comparisons tighten.
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.
99.64Index
Trend YoY growth is +0.4%, accelerating by 2 bps/year over the last 9Y. Latest: +1.8%, 1.5 pp above trend, a 0.57σ deviation. The latest YoY reading is boosted by 4.9 pp due to an easy comparison base from Aug '25.
Level
YoY %
y = 0.2% + 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.
$108.6
Trend YoY growth is +15.7%, accelerating by 1.3 pp/year over the last 9Y. Deviations have remained above trend for 221 consecutive periods. Latest: +21.9%, 6.2 pp above trend, a 1.7σ deviation. The latest YoY reading is depressed by 3.9 pp due to an tough comparison base from Aug '25.
Level
YoY %
y = 3.7% + 1.3 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.
$-73.3B
Trend YoY growth is -4.7%, accelerating by 9 bps/year over the last 25Y. Latest: -24.8%, 20.1 pp below trend, a 0.59σ deviation. The latest YoY reading is depressed by 22.5 pp due to an tough comparison base from Jun '25. At current levels, YoY would rise to -23.4% by Aug '26 as comparisons ease.
Level
YoY %
y = −7.0% + 9 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 +5.3%, accelerating by 1 bps/year over the last 25Y. Latest: +14.8%, 9.5 pp above trend, a 0.98σ deviation. The latest YoY reading is boosted by 2.9 pp due to an easy comparison base from Apr '25. At current levels, YoY would fall to +12.0% by Sep '26 as comparisons tighten.
Level
YoY %
y = 5.0% + 1 bps/yr · t
Deviation from trend
Proxy for China's tech sector accessibility — decoupling shows up as valuation divergence from U.S. tech.
$27.0
Trend YoY growth is -2.0%, slowing by 1.8 pp/year over the last 9Y. Deviations have remained below trend for 80 consecutive periods. Latest: -22.9%, 20.9 pp below trend, a 2.4σ deviation. The latest YoY reading is depressed by 43.5 pp due to an tough comparison base from Aug '25.
Level
YoY %
y = 14.3% − 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.
$253.2
Trend YoY growth is +25.8%, accelerating by 2.1 pp/year over the last 9Y. Latest: +30.5%, 4.7 pp above trend, a 0.49σ deviation. The latest YoY reading is depressed by 14.0 pp due to an tough comparison base from Aug '25.
Level
YoY %
y = 6.7% + 2.1 pp/yr · t
Deviation from trend
No data
Broad EM equity basket — underperformance vs. U.S. signals capital retreating from fragmentation-exposed economies.
$66.6
Trend YoY growth is +15.2%, accelerating by 1.4 pp/year over the last 9Y. Deviations have remained above trend for 273 consecutive periods. Latest: +36.0%, 20.7 pp above trend, a 2.8σ deviation. The latest YoY reading is depressed by 5.5 pp due to an tough comparison base from Aug '25.
Level
YoY %
y = 2.7% + 1.4 pp/yr · t
Deviation from trend
Industrial Competition
Domestic industrial companies — outperformance signals reshoring and industrial policy tailwinds.
$186.5
Trend YoY growth is +19.9%, accelerating by 1.3 pp/year over the last 9Y. Latest: +25.6%, 5.6 pp above trend, a 1.2σ deviation. The latest YoY reading is depressed by 1.9 pp due to an tough comparison base from Aug '25.
Level
YoY %
y = 8.6% + 1.3 pp/yr · t
Deviation from trend
New orders for long-lived manufactured goods — leading indicator of industrial investment and reshoring activity.
$335.4B
Trend YoY growth is +5.4%, accelerating by 21 bps/year over the last 25Y. Latest: +7.6%, 2.2 pp above trend, a 0.30σ deviation. The latest YoY reading is depressed by 5.7 pp due to an tough comparison base from Jun '25. At current levels, YoY would fall to +6.8% by Aug '26 as comparisons tighten.
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.
99.64Index
Trend YoY growth is +0.4%, accelerating by 2 bps/year over the last 9Y. Latest: +1.8%, 1.5 pp above trend, a 0.57σ deviation. The latest YoY reading is boosted by 4.9 pp due to an easy comparison base from Aug '25.
Level
YoY %
y = 0.2% + 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.
$108.6
Trend YoY growth is +15.7%, accelerating by 1.3 pp/year over the last 9Y. Deviations have remained above trend for 221 consecutive periods. Latest: +21.9%, 6.2 pp above trend, a 1.7σ deviation. The latest YoY reading is depressed by 3.9 pp due to an tough comparison base from Aug '25.
Level
YoY %
y = 3.7% + 1.3 pp/yr · t
Deviation from trend