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Chancellor Merkel and the horrible, terrible, very bad, not good day

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Chancellor Merkel heads to an EU summit as the German CSU keeps muttering about leaving the German government over the refugee policy. Greek Prime Minister Tsipras has offered to help. Italian Prime Minister Conte has not offered to help. Merkel addresses the Bundestag today, and this may well be a market focus.
  • The interminably tedious UK exit from the EU is hardly going to be resolved at this summit – deals in Europe are always done at the last minute possible. Markets would like to see some progress – but most of the problems lie in the details, and markets cannot be bothered with the details.
  • Russian President Putin is to meet US President Trump – as with the case when US President Trump went to see North Korean President Kim, this will be in a third country. Markets may speculate on whether there will be concessions over sanctions.
  • US first quarter GDP will be revised, with investors expecting a 2.2% annualized number. This does not mean the US economy grew at 2.2% (the data is unreliable), but the US economy was probably operating about trend. German consumer price inflation will be above the ECB target, and Italian consumer price inflation will be below the ECB target.