Longer-term issues, shorter-term market reactions
- Financial market reactions to the threat of more taxes on trade remain relatively muted. Listed company profits would be hurt far more than the economy by a trade war. Taxing hundreds of billions of goods partially made in China would be disruptive – but markets appear not to trust the Trump Twitter feed.
- The ECB's conference brings out the big names today – the ECB's Draghi, the Fed's Powell and the Bank of Japan's Kuroda are scheduled to speak. Near-term policy paths are relatively set. Comments on structural change and wage and price relationships will be more interesting.
- The UK government faces a "major" vote in the interminably tedious process of leaving the EU. If the government wins, markets are unlikely to care. If the government loses, the media will care a lot more than markets, but there may be a market reaction too.
- Migration policy matters. In the long term, trend growth is driven by population growth and productivity. Migration and prejudice affect these issues. In the near term, there are political divisions in the US and German governments over migration policies. The EU proposes to discuss the topic next week, which may reduce the challenge against German Chancellor Merkel.