Follow Paul Donovan

Climate change consequences

| Posted by: Paul Donovan | Tags: Paul Donovan

  • US President Trump will announce if the US is to abandon the Paris climate accord. This may not matter. Global companies will be under pressure from foreign regulators, customers and shareholders to comply. Companies and the profit motive may trump politicians when it comes to environment, diversity and other social issues. 
  • There are two ways a US retreat from Paris matters. First, most of the US corporate sector is made up of small companies with no global reach, and less subject to pressure to comply. Second, there are signs of a growing EU-China alliance - both know the direct negative economic consequences of an environmental credit crunch.
  • Weidmann of the ECB has suggested the central bank is starting to think about changing guidance. Not the end, but perhaps the beginning of the end for quantitative policy accommodation? Williams of the US Fed has suggested four rate hikes might be possible this year – aggressive if quantitative policy is also tightened. 
  • Various opinion polls on manufacturing sentiment are due. Most are unrealistically over-inflated. Like any over-inflated bubble, they will need to deflate. The decline in sentiment in the coming months will not necessarily signal economic weakness – just as the inflation did not signal a massive economic boom.