New governments, new taxes. Same old story
- Italy has a new government. The two anti-parties have come together with an agreed list of ministers. The government is "technocrat-lite" – the finance minister is a technocrat as are several other ministers. The technocrat influence and a small majority suggest a less radical fiscal program.
- Spain is likely to have a new government, as the opposition appears to have enough votes to remove Prime Minister Rajoy. Rajoy could resign before the vote of confidence, or call elections. Political drift in Madrid is not likely to change the near-term economic outlook that much.
- The US consumer has new taxes. US President Trump (as expected) imposed taxes on consumers of steel and aluminum. If fully passed through, a USD 9.50 six pack of beer would now cost about USD 9.56. The taxes are something of a stealth tax, therefore. Trump also sounded hostile over NAFTA again, which is more serious. The US equity market's value assumes US companies can participate in a modern, complex global trading order.
- US employment data is due. The story has not changed. The labor market is relatively tight. Unemployment should stay low. There may be problems finding workers to hire. It is generally economically supportive.