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A fun week ahead

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The fun is mainly later this week. Wednesday is the conclusion of the US Federal Reserve meeting. A rate hike is very widely expected (the US president perhaps the lone person not expecting one). What matters therefore is the subsequent press conference and any guidance for how tightening continues in 2019.
  • Tuesday is a key speech from Chinese President Xi marking the 40th anniversary of the opening up of China's economy. What matters is the "vision thing". The model of growth that worked over the past several decades will not work over the coming years. What markets will focus on are the less significant short-term comments about trade.
  • The interminably tedious process of separating the UK and the EU offers no fun whatsoever under any scenario. UK Prime Minister May is opposing a second referendum (opinion polls have not shifted very much, raising the question of what another referendum would solve).
  • Nearly 200 countries agreed how to tackle climate change. Climate change directly hurts economic activity. Water shortages hit patterns of trade (China must import soybeans, for instance). Economic activity is disrupted by extreme climate events. The Bank of England is to include climate change in its bank stress tests.