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Leaks and tweets

| Posted by: Paul Donovan | Tags: Paul Donovan

  • A series of leaks suggest that US President Trump will fail to certify Iran's compliance with the nuclear accord today, but will also ask Congress not to impose sanctions yet. Congress may have refused to impose sanctions anyway, as everyone else thinks Iran is compliant. This creates uncertainty for business.
  • Leaks also suggested that the US proposed a "sunset clause" for NAFTA. NAFTA would expire in five years without an agreement to extend. The advantage is that most of the costs of ending NAFTA (falling mainly on low income Americans) would occur after the president's current term. The disadvantage would be massive business uncertainty.
  • US retail sales and consumer price inflation numbers both show the effects of hurricane damage. Retail sales should bounce back after August's distorted numbers, and as replace-and-rebuild spending starts to occur. Consumer price inflation should rise on energy costs and supply chain disruption.
  • As Bitcoin moves higher, UBS has published a white paper on crypto-currencies "Beneath the bubble". We believe the recent rise in prices to be a speculative bubble, and doubt crypto-currencies will ever be currencies. The underlying technology of blockchain offers long-term opportunities.