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Global inter-dependence

| Posted by: Paul Donovan | Tags: Paul Donovan

  • US President Trump repeatedly asserted that trade with China is not fair. The Chinese willingness to accept low-yielding Treasuries in exchange for goods that people want is clearly unfair. US problems creating low-skilled jobs in competition with low- and middle-income economies is also not fair.
  • China's inflation data showed slight upside to consumer and producer prices. Neither really matter that much outside China. Consumer price inflation is an entirely local affair. Producer prices have limited correlation with export prices. Export prices have limited correlation with foreign consumer prices.
  • German trade data is due – a source of contention in the Euro area, but probably not something that will attract attention on the Trump Twitter Feed (the focus is Asia). SNB President Jordan is to talk on central bank independence – presumably in favor. It is worth reiterating the benefits of independent central banks, run by economists.
  • Media reports suggest more assets are being frozen in Saudi Arabia, and that these assets will be used to finance domestic spending. If that takes place it will represent a reduction in the global savings rate (good for growth) and probably a capital flow out of the US and towards Europe and Asia.