May may go away (sooner)

Posted by: Paul Donovan

17 May 2019
  • In UK politics, Prime Minister May is to resign. This has been known for some time, but now the plan is an imminent resignation regardless of whether or not the interminably tedious EU-UK divorce is brought to a conclusion. The prospects of getting a deal passed by Parliament are not materially changed by changing the government's leadership.
  • Eurozone final April inflation is due. The number will be near, but not at, but below 2%. This, investors might like to recall, is the slightly absurd ECB target. The fact that Eurozone inflation is on target is unlikely to change policy because the ECB is headed by President Draghi.
  • Italian Deputy Prime Minister Di Maio does not want debt to rise over 140% of GDP. Wanting something not to happen and preventing something from happening is not, it should be noted, exactly the same thing. Markets (and the EU Commission) are unlikely to pay much attention.
  • Williams and Clarida of the US Federal Reserve are due to speak. They can be considered the competing voices of economic reason at the Fed. Kashkari, who is not competing as a voice of economic reason at the Fed, was sounding characteristically dovish in remarks yesterday.

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