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Welcome gridlock

| Posted by: Paul Donovan | Tags: Paul Donovan

  • On current projections, the Democrats have taken control of the House of Representatives in the US, winning the popular vote by over 7%. The Republicans are set to increase their Senate majority. Welcome to gridlock. US President Trump may now fall back on policy areas that do not require Congress, like trade.
  • A Democrat House is likely to increase investigations into the administration. This will take up the time of administration officials, and potentially reduce intra-administration collaboration. This is another form of gridlock. It is worth noting that this Congress is, on several measures, more diverse than before. In the private sector, diverse organizations tend to make better decisions.
  • The interminably tedious process of separating the EU and the UK is defying the idea of rational markets. Sterling is now reacting to "thumbs up" or "thumbs down" signals from members of the government, in the manner of gladiators in the Coliseum responding to signs from the Roman Emperor Nero.
  • German industrial production data is due. This is normally interesting but not a show-stopping number. However, the failure of the fabled Teutonic efficiency of the German auto sector this summer has caused disruption in economic data, and today's figures may show the start of normalization.