Posted by: Paul Donovan

24 Apr 2019
  • Europe is offering local sentiment data. The gap between sentiment and reality is quite wide in Europe –the two should not be confused. People do not go around talking with the gushing sentimentality of a greeting card. Companies do not necessarily do what they say they are doing.
  • French sentiment is subject to political risk in the wake of the recent protests. People may express sentiment that aligns with their political rather than their economic perception. German ifo business sentiment is also due. German companies have been negatively affected by the global capital spending slowdown.
  • The UK public sector borrowing data is not especially interesting of itself. However, the trend of government finances performing better than expected is suggestive. People rarely pay more taxes than they have to. Perhaps the data signals a stronger economy than reported.
  • The US and China resume talks next week to try and cut trade taxes. Equity markets have strengthened, trade taxes being a tax on equities. The rise in equity markets has less of an economic impact than it once did. Most Americans own little to no equity. Established companies do not raise money in equity markets to fund investment.

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