The times they are a-changing
- In the US, Trumpcare tax reform was cancelled. It was going to be all fiscal policy all the time, and Congress was told to move on. Now, healthcare reform may trump fiscal policy once again. Who knew tax reform could be so complicated?
- China was to be declared a currency manipulator on day one of US President Trump's administration. China is not now and never has been a currency manipulator. Who knew trade could be so complicated? The strong dollar was a sign of confidence in the US, now the dollar is too strong. Who knew currency markets could be so complicated?
- Politically, uncertainty may or may not be a good thing. However, investors tend to prefer trends operating within a known and predictable policy framework. The fundamentals of the global economy remain positive, and that should drive market direction – but political uncertainty may cause much noise.
- An opinion poll on US consumer sentiment is due out. US producer prices are also due today, reflecting corporate pricing power in the economy (and whether labor cost pressures are squeezing profits or being passed on). Final German, Italian and French consumer price inflation data is less of a focus.