Inégalité, inégalité, inégalité
- The recent run of election results (Dutch, British local, German local, French presidential) may tempt investors to think that anti-establishment politics is over. This would be unwise. The fundamental causes of anti-establishment politics – inequality of income, inequality of inflation, inequality of credit – still give rise to inequality of living standards.
- Unequal living standards encourage scapegoat economics – a desire to blame an external group for economic problems. The economics of aspiration is replaced by the economics of envy, and that proves a powerful support for anti-establishment politics. More elections lie ahead (German local elections next Sunday).
- The oil price may attract some more attention, with Saudi Arabia's oil minister suggesting OPEC production cuts could last until next year. Saudi needs oil over USD 80 per barrel to break even in fiscal terms, so those comments are not perhaps surprising.
- China's April imports and exports came in weaker than expected, but imports more so – producing a larger (potentially politically awkward) trade surplus. China's growth has been driven by primarily domestic factors of late, so this is not inconsistent with stronger economic activity. A couple of Fed speakers are the highlight of the calendar today.