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Don't worry, be happy?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The US Beige Book of economic gossip and anecdote reported an extremely strong labor market (explaining the breadth of pay increases in the US). However, there were also concerns expressed about the uncertainties of trade taxes, politics and financial volatility. Economic reality seems firm, sentiment less so.
  • In a politically polarized world, we have to be careful in judging sentiment shifts. Since 2016, US consumer sentiment has been very strong for Republicans. Democrats' sentiment was more stable. Republicans' sentiment weakened recently – this might reflect shifting political perceptions rather than shifting economic reality.
  • The UK government survived a vote of confidence 52% to 48%. Everyone is saying things that they probably do not mean. The main opposition party leadership has not decided whether or not to back a second referendum. If anyone is still paying attention, it is probably best to stay cynical and avoid attempting to trade unforecastable events.
  • In the glittering wonder that is the Euro, the Greek government also survived its vote of confidence (though there will be a general election this year). Eurozone CPI is due, and is not likely to inflame the passions of financial market investors. It is better than talking about UK politics however.