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Peace in our time? (Probably not)

| Posted by: Paul Donovan | Tags: Paul Donovan

US President Trump may, metaphorically, be claiming to have a tweet on Twitter that promises trade peace in our time. The reality of the US-China handshake deal at the G20 is not that secure. The deal looks to be a variation on the Juncker-Trump EU handshake deal.

President Xi can follow through on a pledge to buy soybeans (Juncker could not). The 90-day delay to increasing US consumer taxes to 25% may reflect US frustration at the slow process of EU negotiations (not subject to a time limit). Equities have reacted positively. Much of the recent weakness was trade tax related.

US consumers may still feel negative effects from trade taxes. Many companies imported goods for the holiday spending season in advance of the 10% tax. That tax will gradually take effect as fresh imports arrive in 2019. Giving vouchers or gift cards may not be a wise strategy this year.

Assorted business sentiment opinion polls are due. Employment and pricing subcomponents cling to some correlation with reality. Pricing decisions by US firms are important in the fourth quarter. Several US Fed speakers crowd the agenda. December's rate hike is seen as a done deal. 2019 is a subject for speculation.