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Taking a stand

| Posted by: Paul Donovan | Tags: Paul Donovan

  • US President Trump was again talking trade – not with the status of an official tweet, but on Fox News. The president stated that it was time to take a stand on China, and that the Chinese were hurting America (presumably by selling Americans things that they wanted to buy at prices they could afford). This does raise the risk of yet more taxes on US imports of things partially made in China.
  • UK government borrowing data is due – this data has been better than expected (i.e. lower borrowing) in the past, and may hint at the resilience of the UK economy as divorce talks with the EU turn acrimonious.
  • Turkey's medium-term fiscal plan offered government spending cuts. Financial markets seem unsure how to interpret this, with the lira bouncing around yesterday. The end result was a slightly stronger currency.
  • Europe offers assorted PMI surveys of sentiment. Normal people, of course, do not fill in surveys as a rule nowadays. Since 2010, the French manufacturing production PMI has had a 37% correlation with reality. The Italian correlation is 17%. The German is 1%. Some people might get excited about a 1% correlation with reality. Economists are not those people.