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Days of our lives

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The US political scene is starting to resemble a daytime soap opera. The appointment of a special counsel to investigate the Russian question escalates the drama for markets. There are four points to consider.
  • 1) Politicians do not matter much in the near term. 2) Politicians can influence long-term growth. 3) The issue for investors is not impeachment (that is mainly about selling newspapers), but whether the president has the authority and Congress has the time to implement the administration's legislative agenda. 4) There is a risk that President Trump doubles down on areas covered by executive orders if thwarted by Congress. 
  • Japanese GDP was better than expected – domestic consumption was weaker than expected, domestic prices fell more than expected, but exports held up. This again raises questions about US first-quarter GDP. Global evidence and inconsistencies in the US data suggests that the US grew faster than has been reported. 
  • UK retail sales will be watched in the wake of the supposed move to negative real income growth. In fact, inflation inequality means negative real income growth is nothing new for many