No new taxes (terms and conditions apply)

Posted by: Paul Donovan

13 Dec 2019
  • US President Trump has agreed a Phase 1 trade deal with China. Do not expect Phase 2. No new December US taxes. Previous US taxes will be cut. China will buy US agricultural product. The tax cuts are an economic positive. The US is better off than it was three months ago, but worse off than it was three years ago. Trade uncertainty has done lasting economic damage.
  • The UK election has produced a larger-than-expected Conservative majority.  The UK will almost certainly leave the EU by 31 January. Brexit will then continue to be interminably tedious. The Scottish National Party is calling for independence (unionist parties won a larger share of the vote). The next key date is in February – a government reshuffle may lead to a shift to the center for economic policy.
  • The Chinese Central Economic Work Conference has concluded. 2020 growth targets are expected to be set "around 6%" (official growth number). China's trend growth rate is naturally slowing. Monetary policy is set to stay accommodative.
  • ECB President Lagarde declared yesterday "when I don't know, I will tell you I don't know". Nothing could make it more painfully evident that the ECB is now headed by a lawyer not an economist.

Explore more CIO Daily Updates