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Debate, market demographics and dangers

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The first US presidential debate attracted a record audience. Although the economy was much discussed, and differences on approach to trade were in focus, this was not a forum that lent itself to too much substance on the differences of economic policy.
  • The Mexican peso rallied on the day. It would not be wise to suggest that is an indicator of election probabilities. The demographic of a typical foreign exchange dealer may not match the demographic of a typical supporter of one or other of the main candidates.
  • The Federal Reserve was criticized in the debate. The Bank of England was also criticized during the EU referendum campaign this summer. If politicization becomes a global trend, it is a worrying trend. Quantitative policy without independent central banks is dangerous (see Kingdom of Szechuan in 1072 for details).
  • The data calendar is not very exciting. Italian industrial data is likely to confirm the weak nature of the economy. UK CBI retail sales figures offer some consumer insight post referendum. US consumer confidence and Markit PMI business confidence are vulnerable to the climate of spin over substance.