Ailing Despots, Flailing Authoritarians And Excruciating Exports

Risk appetite wavered again on Tuesday amid signs the unprecedented tumult in crude markets isn’t set to abate anytime soon and as questions swirl around the health of North Korea’s Kim Jong-Un, who may or may not have fully recovered from a cardiovascular procedure.

Speculation around Kim’s health began with a CNN report which cited a US government source in assessing Kim’s condition as “grave”. For their part, South Korea said the young despot is conducing “normal activities” in a remote region, where he’s apparently resting with aides and advisors. “No special movements” were detected, Seoul said. Reuters, meanwhile, cited a Chinese official in suggesting there’s no immediate threat to Kim’s health. Kremlin spokesman Dmitry Peskov would only say that Vladimir Putin is aware of media reports about Kim but doesn’t know whether or to what extent they’re accurate.

If there is, in fact, a “problem”, my money is on his sister, Kim Yo Jong, as a successor for a variety of reasons. But for now, I’ll leave that discussion to the experts, as much fun as it is to debate.

Donald Trump, meanwhile, is apparently poised to use the coronavirus epidemic as an excuse to choke off all immigration to the US. “In light of the attack from the Invisible Enemy, as well as the need to protect the jobs of our GREAT American Citizens, I will be signing an Executive Order to temporarily suspend immigration into the United States!”, he declared, in a late Monday tweet.

He provided no details, but this will be Tuesday’s big political story stateside.

Joaquin Castro called Trump’s forthcoming decree “an authoritarian-like move to take advantage of a crisis and advance his anti-immigrant agenda”.

South Korea’s Kospi slipped on the news around Kim, but ultimately recovered to trade just 1% lower. It had fallen more than 2%. On the year, it’s suffered along with every other global benchmark.

The won hit a decade low against the dollar earlier in 2020.

“Newsflow has turned unsupportive”, Credit Agricole’s Guillaume Tresca said, in a note. “In Korea, the collapse in the trade figures as well as the rise in geopolitical uncertainty due to the state of Kim Jung Un’s health led to a risk-off mood in Korean assets”.

First-20 days export figures for South Korea were disconcerting. Shipments abroad fell nearly 27% during the period April 1 through 20. Exports rose in February for the first time in more than a year, before contracting slightly in March. Obviously, the hit from the coronavirus will manifest itself in these figures for the foreseeable future.

Daily average exports were down 16.8%, chip exports fell nearly 15% and exports to China, the US, and the EU fell 17%, 17.5% and 32.6%, respectively.

Oil imports were down more than 50%. Imports more broadly contracted 18.6%.

You get the idea. The macro backdrop isn’t great. And this is just another coal mine canary when it comes to what the future holds for COVID-impacted data.

“The report, which is closely watched as a bellwether for global commerce, is another wake-up call for how bad things could get on the trade front, even as new infection counts start to ebb in many parts of the world”, Bloomberg wrote, in their “Supply Lines” newsletter. “The big problem now is the dearth of demand”.