Searching for insight in the new abnormal
- Market attention is likely to focus on the prospect of Wednesday's Trump press conference. The Trump Twitter feed has influenced markets. And if 140 characters can move markets, a press conference can do even more. Investors crave clarity as the new abnormal makes the past an unreliable guide to the future.
- Clarity matters because the US still needs USD 2.7bn a day of capital inflows. If international investors decide to wait and see what Trump's policies involve, that inflow is not forthcoming and the dollar suffers. Central banks cannot be relied upon as Chinese foreign exchange reserve data again demonstrates.
- US employment data showed an economy at full employment, with rising wage pressures and thus rising inflation pressures. Euro area employment data today is less insightful. The Eurozone has Germany at full employment with wage pressures, but Italy has high unemployment and few wage pressures.
- UK PM May indicated that there was a plan for the UK's EU exit, but it was not ready just yet. She hinted that the UK would leave the single market. This is just political noise, but political noise is normal in the new abnormal of the modern world.