Daily update
Daily update
- Economic theory often assumes perfect information. This is obviously only true in economic fantasies. Social media and fake news risk distorting real-world market prices. The Gulf war is contributing to this, with governments seeking to influence social media influencers and television reports, or not giving out information at all. This encourages fake news and risks discrediting accurate information, undermining market pricing.
- On Friday the US Bureau of Economic Analysis silently changed the data source of part of the personal consumer expenditure deflator. The change (modestly) lowered reported inflation. Low response rates to a legal costs survey led to a different source being used. The reason may be legitimate, but with heightened concerns about political interference in data the presentation is unfortunate.
- Events in the Gulf (so far) are unlikely to give much market direction. India is using diplomacy to try and get oil through the Strait of Hormuz. US President Trump’s pleas for help from other countries were met with a cool response. Dubai resumed flights after a drone strike.
- China’s economic data showed stronger industrial production driven by better exports. Domestic retail sales were helped by incentives to buy appliances – the risk is that consumers shuffle the composition of their spending rather than use savings to spend more.