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Bubble management

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The UK's long goodbye from Europe will be somewhat longer, as the UK agrees to allow the EU access to the UK single market for 21 months after exit. Coincidentally, the UK will have access to the EU single market. Financial markets are not worried about the details, focusing on the headlines that suggest the UK's exit will be relatively gentle.
  • The G20 finance ministers and central bankers meet. Regulating cryptocurrencies is a topic of discussion. The cryptocurrency bubble transfers wealth from a large number of bubble buyers to a small number of bubble sellers. Absent regulation, bubble buyers may be misled into buying. Cryptocurrency supply cannot fall. If talk of regulation reduces cryptocurrency demand, value will suffer.
  • The Germans offer producer price inflation data. This is not interesting just yet. In the future, the data will show how companies are adjusting pricing strategies to accommodate US President Trump's taxes on trade.
  • Assorted UK price inflation data is due. Consumer price inflation should decline a little. The Bank of England is still expected to raise interest rates in the second quarter, given the overall state of the economy and the deal with the EU.