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Tax cuts tied up

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Tax cut plans were thrown into confusion by the realisation that the US Treasury Secretary repeating "tax cuts pay for themselves" does not, in fact, make it true. A tax increase trigger mechanism was also ruled out. Votes will take place today to attempt to strike a new compromise.
  • Faced with this crisis, US President Trump has responded with swift and decisive leadership by publically saying "Merry Christmas". Like every other president has done. We believe that Congress will work out a tax cut plan, but it may take a bit more time.
  • Japanese headline consumer price inflation was 0.2% year on year. The problem is that Japanese consumers do not believe the numbers. Japanese consumers think price inflation is far higher; and in fact, Japanese consumers have the highest inflation perception and the highest inflation expectations amongst the major economies.
  • Assorted manufacturing sentiment opinion polls are due out. 1) This is not the real world, and calling a rising PMI or ISM "stronger output" is fake news. 2) People lie on surveys, answer questions inaccurately, or answer a different question to the one asked. 3) This is why the correlation of sentiment surveys with economic reality is so low.