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The value of spending power

| Posted by: Paul Donovan | Tags: Paul Donovan

  • UK consumer and retail price inflation data is due. The UK is somewhat unusual among the major economies in that the bias of risks is towards lower inflation in the coming year (as the limited effects of sterling weakness fade).
  • The US releases producer price inflation. This is a significantly better measure of corporate pricing power than is consumer price inflation, as it avoids many of the non- market prices that make up consumer price measures. Anecdotal evidence supports the idea of improving pricing power.
  • The German ZEW economic sentiment survey is released. All sentiment surveys are to be treated with caution – they are little more than opinion polls. However, the Germans appear to be better at filling in surveys than are other nationalities. This is also a survey of economists' opinions. Economists' opinions should always be revered.
  • Two US regulators have expressed some reservations about cryptocurrencies. There are also media reports of leveraged retail buying. If true that would increase the economic consequences of the bubble. The regulators' comments may be less impactful. Sophisticated investors will pay attention to them. Retail investors, cryptocurrency fanatics and digital anarchists will either not know, or not care what regulators think.