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To tweet, or not to tweet, that is the question

| Posted by: Paul Donovan | Tags: Paul Donovan

Chinese President Xi's speech on Tuesday did not seem a tweetable moment; there was little new content. However, US President Trump disagreed. If the US president is prepared to spin so little change into "Mission Accomplished", a trade deal may easily be done. Whether this tone continues is less certain.

The US media are focusing on the Mueller "witch hunt" or "investigation" (language depends on your choice of television channel). Short term, this does not matter economically – employment and inflation matter short term. However, political time is limited. Time spent investigating, or tweeting about investigating, is time not spent governing.

Chinese consumer and producer price inflation were lower than anticipated. CPI is an entirely local matter. PPI is also mainly a local concern. Chinese producer prices have limited relevance for export prices, and Chinese export prices have limited relevance for consumer prices elsewhere in the world.

US consumer price inflation is set to rise as the distortions of the "Verizon effect" fade from the numbers. This was a statistical adjustment which lowered CPI without any prices actually falling. It is one reason the Fed does not focus on CPI. However, CPI is still the favored inflation measure of financial markets.