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Big government is back, bigly

| Posted by: Paul Donovan | Tags: Paul Donovan

  • "Bigly" means doing something with great force or violence, and it seems an appropriate description for President Trump's seeming intention to bring back big government. Trump's proposed increase in military spending yesterday was not accompanied by any details on how this was to be paid for.
  • Congress does have to approve spending plans. Trump's speech to Congress may offer some insight into fundraising via a tax on consumers through trade protection. The reaction of Congressional Republicans to today's speech may also give insight into how much of Trump's program is likely to make it through the legislature. 
  • Euro area inflation begins to be released for February, with French consumer price inflation likely to come in around the ECB's target (not that the ECB has a terribly precise target). Italian consumer price inflation is likely to be noticeably lower – Euro area divergence is very visible in inflation data.
  • French GDP is revised for the fourth quarter, and may generate some political noise in the presidential campaign. US GDP is also revised for the fourth quarter – the data (as with most data in 2017) reflects the legacy of Obama-era policies - and the inflation component will be watched by investors.