February 19, 2024
Mexico surpassed China as the top source of official U.S. imports for the first time in two decades. The change reflected nearshoring, pandemic supply-chain lessons, and U.S.-China trade tension. Mexico benefits from proximity to the U.S. and a more stable North American trade relationship, while companies gain shorter transport routes and lower geopolitical exposure.
The banking angle is broader than trade share. Nearshoring can affect industrials, logistics, warehousing, infrastructure, transportation, working capital financing, and cross-border M&A. Schneider Electric's Mexico expansion fit that pattern, and cited foreign direct investment in Mexico rose 21%. For recruiting, this is a practical way to connect supply-chain strategy to capex and deal activity.
South Korea showed a different trade rebound. January exports rose 18% year over year to $54.69 billion, with semiconductor shipments up 56%. Exports to the U.S. rose 27%, while shipments to China increased 16%, ending a 19-month decline. After a 7.4% export contraction in 2023, officials expected recovery in 2024.
Inflation kept the Fed story uneven. January CPI rose 3.1% year over year, down from 3.4% in December but above the 2.9% expected. Core CPI stayed at 3.9%. Stocks fell, bond yields rose, and futures shifted toward June rather than May as the more likely start for rate cuts. Mortgage pressure remained visible, with the average 30-year fixed rate at 7.13%, applications down 2.3%, new listings down 1.2%, and refinancings down 2%.
Deal activity was strongest in healthcare. Gilead agreed to buy CymaBay for $4.3 billion in cash at $32.50 per share, a 27% premium, adding a liver-treatment asset under FDA priority review. KKR and Veritas Capital agreed to take equal stakes in Cotiviti at around an $11 billion valuation. Cotiviti serves more than 180 healthcare payers with regulatory and cost-control technology, and the deal used bank debt rather than private lenders.
EVs and Chinese semiconductors showed the gap between long-term themes and near-term execution. Higher auto financing rates, battery concerns, charging times, and repair costs hurt EV demand in 2023. China's SMIC-built 7nm chip in Huawei's Mate 60 showed progress after U.S. export limits, but China still trails Samsung and TSMC.