Politicians don't matter that much (economists always matter)
- Political noise continues relentlessly. The incredibly tedious EU-UK divorce process is stuck in details of how to leave a customs union without leaving a customs union. US President Trump has disagreed with presidential aide Bolton over North Korea, as North Korea has used increasingly colorful language to describe South Korea.
- Meanwhile, in Italy, there is still no new government, and negotiations between the two anti-parties to establish a government against things continue. The latest plan has dropped proposals to have the ECB forgive bonds bought under quantitative policy (the Italian central bank bought the bonds).
- The common thread to the political noise is a reminder that politicians do not matter as much as they think they do. (Economists always matter, of course). Markets stopped paying attention to the UK-EU divorce some time ago. Geopolitical tail risks are rarely priced into markets. Domestic holders of Italian debt are used to political noise.
- Trade is an area where politics matters to economics. The EU publishes the politically sensitive current account data today, and is also preparing a blocking statute over US Iranian-related sanctions. Elsewhere, German producer price inflation is due, and Japanese consumer price inflation slowed a little more than expected.