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G6 plus 1

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The G7 finance ministers' meeting was described as the G6 plus 1 – US Treasury Secretary Mnuchin being the plus one. Trade was the source of Mnuchin's isolation, ahead of the G7 (or G6 plus 1) heads of government meeting this week.
  • We do not have  a trade war, even with the US taxes on steel and aluminum. It is unlikely that these policies will cause real trade to fall as a share of real GDP.  There is an interesting question as to what would happen to trade if everyone bar the US carries on trading as normal. Trade risks are greater for markets than for the economy, because listed companies are disproportionately engaged in trade.
  • US durable goods and capital spending data is due today. US President Trump has not tweeted anything about these numbers – that might be a signal that the data is bad, or it might be that the president was distracted and tweeting about other things.
  • Eurozone producer price inflation is due. This, not CPI, is the best indicator of corporate pricing power. There has been evidence of rising pricing power. With consumer price inflation surprising to the upside in the Eurozone, this is relevant.