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Pretend today is not happening

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Today is a mix of messy politics around the world, and economic data that is too poorly correlated to economic reality to bother with. It is the sort of day that makes economists want to crawl back into bed and pull the duvet over their heads.
  • US politics has the Trump Twitter Feed undermining North Korean diplomacy, the Trump Twitter Feed calling US citizens "ingrates", and a series of interviews for Fed Chair. Markets will probably not price in extreme Korean scenarios. Inflaming racial tensions may increase uncertainty about the mid-term elections while the range of abilities of the Fed candidates raises uncertainty about US monetary policy.
  • The Catalonian attempt to hold a vote on independence and ensuing images of violence raise concerns about anti-establishment European politics. This comes ahead of a likely Italian general election. UK Prime Minister May has evaded questions as to whether Foreign Secretary Johnson is unsackable, following his comments on the EU. Foreign investors may overreact to the uncertainty. 
  • Purchasing manager business sentiment opinion polls are due (in the US, it is the ISM survey). This data is increasingly uncorrelated to reality. Please do not make economists talk about it.