The so-called impact of so-called politics
- This weekend's fevered tweeting in the United States does have economic and market implications. The signaling effect of the travel ban cannot be reversed. Tension between the US president and Congress (equal parts of the constitution) may delay or halt the constructive parts of the administration's agenda.
- Japanese wages rose, with cash earnings up 0.1% over the past year. While this might seem grounds for celebration, the average inflation expectation of Japanese consumers is 3.7% in the year ahead. A 0.1% cash earnings increase fades away in the face of such inflation fears.
- The British Chamber of Commerce is reporting that companies face rising costs and squeezed profit margins as a consequence of the weakness of sterling; the BCC is a lobbying group. This has been evident in producer prices. The question is to what extent such cost increases are passed on to UK consumers.
- ECB President Draghi is to address the EU parliament, and no doubt will use the occasion to justify the ECB's continued policy accommodation. With inflation pressures rising, the justification may be wearing a little thin with some in the euro area.