Slower growth is no surprise

Posted by: Paul Donovan

16 Oct 2019
  • The IMF has simply slashed its global economic growth forecast from something to something else this year. Does anyone really care? Global growth is an artificial number. Markets know the world economy is slowing (the IMF are always late to the party). And since 1988, the IMF has predicted 47 recessions that did not happen.
  • The US House of Representatives unanimously passed measures on Hong Kong on Tuesday. These now go to the US Senate. China's Ministry of Foreign Affairs has responded by threatening "strong measures" without giving details. Markets are worried that this political disagreement will further complicate the trade tensions between the US and China.
  • The interminably tedious EU-UK divorce continues to drag on. No one should expect anything else. There are media reports that even with an agreement, an extension to the deadline will be needed. Apparently, the world needs more Brexit. The key uncertainty remains whether any deal could pass the UK Parliament.
  • UK and Eurozone inflation figures can probably be ignored. Eurozone trade data for August is due, and given trade tensions, is worth looking at. US retail sales are the highlight for the day. US consumers have been shielded from trade tax increases so far.

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