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| Posted by: Paul Donovan | Tags: Paul Donovan

  • The US government is still shut down. This limits the data flow investors have to work with. The Trump Twitter Feed was active over the weekend, but as this was mainly a mix of the Russian affair and personal attacks it is not something that is likely to impact investors. Investors would only care about the Russian affair if it was seen as changing the President's ability to pass legislation through Congress (which is hardly likely, as it is currently very limited), if it threatened the conviction or resignation of President Trump (unlikely), or if it changed probabilities around the 2020 elections (far too soon for markets to be focused on).
  • In the UK the interminably tedious process of exiting the EU gets more attention this week, with the prospect of a vote in parliament on the government's withdrawal agreement. Markets are not expecting the Withdrawal Agreement to pass parliament. What matters to markets is the scale of the government defeat, and what the government then announces will happen next. The lost art of letter writing is expected to be revived today with an exchange of letters between the UK government and one of the assorted presidents the EU has kicking around, to try and clarify the controversial issue of the Northern Ireland backstop. It is unlikely to change many people's opinions. Prime Minister May has warned that the UK may never leave the EU if the withdrawal agreement is not passed. This is unlikely to change many people's opinions.
  • Greece is providing some political diversion, with a breakdown of the governing coalition prompting a vote of confidence later this week. An election was due in September this year, but may now come early. Of itself, a Greek election is of limited interest to international investors. Greece is more firmly established as a member of the euro, and is running a primary fiscal surplus. However, investors may choose to look at the extent of support for unconventional or extreme political groups and extrapolate that into European trends. It is probably unwise to extrapolate in this manner, but that will not stop it from happening. Sweden is likely to present a government for a vote of confidence on Wednesday, and the same concerns apply there.
  • The data calendar suffers from a lack of US information. The auto distorted industrial production numbers for November are due from the EU, which offers a slight diversion. German wholesale price data is also due, which is unlikely to excite markets.