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Slip sliding around

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The oil price slid as the latest scene in the OPEC soap opera saw Iran reject the possibility of a coordinated cut in production. The recent ups and downs of the oil price do not really change the economic consequences – oil base effects will drop out of most economies' consumer price baskets over the remainder of this year.
  • An aide to Japanese Prime Minister Shinzo Abe is urging the Bank of Japan to take action on the yen, suggesting it is damaging the economy. A stronger yen certainly damages reported profits of exporters, but there is limited evidence it hurts economic production nowadays. It may actually help boost consumer demand.
  • Fed Chair Janet Yellen speaks before Congress on bank regulation – it may give some opportunity for criticism of Fed independence. More scope for central bank criticism comes with ECB President Mario Draghi, who will be speaking before the German Bundestag.
  • German consumer confidence is due – there is no read through from the surge in US confidence yesterday, since confidence is a local affair. US durable goods include an investment goods subcomponent, but this may be misleading. Structural change is blurring the distinction between investment and consumer goods.