By Joe Mayes, Bloomberg, 6/2/2025
MarketMinderâs View: Plenty of politics here, so we remind you that MarketMinder prefers no party nor any politician and assesses developments for their potential economic and market impact only. According to this article, Britainâs wealthiest non-domiciles (non-doms, UK residents domiciled outside the country) are leaving in droves, raising concerns around UK tax revenues. This is based on one research outfitâs analysis, which estimates that 26,000 non-doms left the UK last year, including some prominent names (e.g., Egyptâs richest person and an heir to one of Indiaâs richest families). Per another estimate, âThe Centre for Economics and Business Research think tank has said that the non-dom tax overhaul will be a net cost to the Treasury if more than 25% of those affected leave the country. The Office for Budget Responsibility, the governmentâs fiscal watchdog, currently assumes the reforms will raise billions of pounds in taxes annually, but it cautions its forecasts are âvery uncertainâ and assumes only 12% of the UKâs non-doms leave.â As worrisome as these percentages sound, what would the actual losses be? The aforementioned Centre for Economics and Business Research estimates a ÂŁ2.4 billion in net losses in the first year of changes if half of non-doms left. That is a big number, but it amounts to 0.3% of the ÂŁ858 billion the UKâs HMRC collected in tax year 2024 â 2025. We arenât saying non-domsâ exiting the UK doesnât matter. But when a news story is heavy on speculation and projection, we think it is worth digging into the claims and scaling what an âextremeâ scenario actually looks likeâdoing so can provide critical perspective.
Asian Manufacturing Activity Stumbles Again Under Weight of Trump Tariffs
By Kimberley Kao, The Wall Street Journal, 6/2/2025
MarketMinderâs View: Here is a recap of Mayâs manufacturing purchasing managersâ indexes (PMIs) that, as the title suggests, show weaker demand for factory-made goods from Asia. This includes South Korea, Taiwan and Vietnamâmajor links in the global supply chain. Mind you, Mayâs weakness isnât a shock. American businesses broadly cranked up their manufacturing orders ahead of Aprilâs âLiberation Dayâ tariff announcement, so a pothole in the data wouldnât be surprisingâand perhaps the latest PMIs indicate as much. âMajor exporting economies such as Taiwan, South Korea and Vietnam saw sharp declines in new orders during the month, continuing the downward momentum since the Trump administration announced tariffs on dozens of countries in April. A series of policy U-turns since thenâincluding a trade truce between China and the U.S.âhave offered some relief, but also muddied the outlook, leaving businesses hesitant to spend as they question what lies ahead.â As this tariff saga has shown, policy uncertainty can discourage and delay businessesâ plans and investmentsâexecutives are loath to take risk if the rules can change again. The weakness highlighted in these PMIsâwhich show contractionâs breadth, not its magnitudeâcould be reflecting corporationsâ opting to wait for more clarity. We donât know when that will arrive, but tariff unknowns hurt American companies more than non-US businessesâreason we are more bullish on the latter for the foreseeable future.
The European Plot to Topple the Dollar
By Tim Wallace, The Telegraph, 6/2/2025
MarketMinderâs View: We found this long-ish piece mixed. The thesis: Weakening confidence toward the US opens up an opportunity for the euro to become a (if not the) global reserve currency of choice. We have several issues with this thinking, and to its credit, this article lays out some of those challenges facing euroland. Namely, the eurozoneâs capital markets arenât nearly as deep, open and liquid as Americaâsâthe primary reason underpinning the dollarâs dominance globally. That isnât likely to change any time soon regardless of the ECBâs rhetoric. âWhile the US has a vast, deep market for its $36 trillion (ÂŁ27 trillion) national debt, the eurozone is split into member states with different levels of borrowing and risks. Few jointly issued bonds exist in Europe, so it is not a direct alternative to the big, liquid American market.â At the same time, we disagree with the broader notion the world reserve currency status grants an âexorbitant privilegeâ to the US. The US Treasury doesnât receive fees when other nations use the USD in global commerce. If there truly was an exorbitant privilege, Americaâs long-term interest rates should always be among the worldâs lowest among major economiesâwhich isnât true (they are a tad lower than British gilts and higher than German bunds and Japanese government bonds, according to FactSet).
By Joe Mayes, Bloomberg, 6/2/2025
MarketMinderâs View: Plenty of politics here, so we remind you that MarketMinder prefers no party nor any politician and assesses developments for their potential economic and market impact only. According to this article, Britainâs wealthiest non-domiciles (non-doms, UK residents domiciled outside the country) are leaving in droves, raising concerns around UK tax revenues. This is based on one research outfitâs analysis, which estimates that 26,000 non-doms left the UK last year, including some prominent names (e.g., Egyptâs richest person and an heir to one of Indiaâs richest families). Per another estimate, âThe Centre for Economics and Business Research think tank has said that the non-dom tax overhaul will be a net cost to the Treasury if more than 25% of those affected leave the country. The Office for Budget Responsibility, the governmentâs fiscal watchdog, currently assumes the reforms will raise billions of pounds in taxes annually, but it cautions its forecasts are âvery uncertainâ and assumes only 12% of the UKâs non-doms leave.â As worrisome as these percentages sound, what would the actual losses be? The aforementioned Centre for Economics and Business Research estimates a ÂŁ2.4 billion in net losses in the first year of changes if half of non-doms left. That is a big number, but it amounts to 0.3% of the ÂŁ858 billion the UKâs HMRC collected in tax year 2024 â 2025. We arenât saying non-domsâ exiting the UK doesnât matter. But when a news story is heavy on speculation and projection, we think it is worth digging into the claims and scaling what an âextremeâ scenario actually looks likeâdoing so can provide critical perspective.
Asian Manufacturing Activity Stumbles Again Under Weight of Trump Tariffs
By Kimberley Kao, The Wall Street Journal, 6/2/2025
MarketMinderâs View: Here is a recap of Mayâs manufacturing purchasing managersâ indexes (PMIs) that, as the title suggests, show weaker demand for factory-made goods from Asia. This includes South Korea, Taiwan and Vietnamâmajor links in the global supply chain. Mind you, Mayâs weakness isnât a shock. American businesses broadly cranked up their manufacturing orders ahead of Aprilâs âLiberation Dayâ tariff announcement, so a pothole in the data wouldnât be surprisingâand perhaps the latest PMIs indicate as much. âMajor exporting economies such as Taiwan, South Korea and Vietnam saw sharp declines in new orders during the month, continuing the downward momentum since the Trump administration announced tariffs on dozens of countries in April. A series of policy U-turns since thenâincluding a trade truce between China and the U.S.âhave offered some relief, but also muddied the outlook, leaving businesses hesitant to spend as they question what lies ahead.â As this tariff saga has shown, policy uncertainty can discourage and delay businessesâ plans and investmentsâexecutives are loath to take risk if the rules can change again. The weakness highlighted in these PMIsâwhich show contractionâs breadth, not its magnitudeâcould be reflecting corporationsâ opting to wait for more clarity. We donât know when that will arrive, but tariff unknowns hurt American companies more than non-US businessesâreason we are more bullish on the latter for the foreseeable future.
The European Plot to Topple the Dollar
By Tim Wallace, The Telegraph, 6/2/2025
MarketMinderâs View: We found this long-ish piece mixed. The thesis: Weakening confidence toward the US opens up an opportunity for the euro to become a (if not the) global reserve currency of choice. We have several issues with this thinking, and to its credit, this article lays out some of those challenges facing euroland. Namely, the eurozoneâs capital markets arenât nearly as deep, open and liquid as Americaâsâthe primary reason underpinning the dollarâs dominance globally. That isnât likely to change any time soon regardless of the ECBâs rhetoric. âWhile the US has a vast, deep market for its $36 trillion (ÂŁ27 trillion) national debt, the eurozone is split into member states with different levels of borrowing and risks. Few jointly issued bonds exist in Europe, so it is not a direct alternative to the big, liquid American market.â At the same time, we disagree with the broader notion the world reserve currency status grants an âexorbitant privilegeâ to the US. The US Treasury doesnât receive fees when other nations use the USD in global commerce. If there truly was an exorbitant privilege, Americaâs long-term interest rates should always be among the worldâs lowest among major economiesâwhich isnât true (they are a tad lower than British gilts and higher than German bunds and Japanese government bonds, according to FactSet).