The Grand Old Duke of Mar-a-Lago

Posted by: Paul Donovan

28 Nov 2019
  • US President Trump signed the Hong Kong Human Rights and Democracy Act into law. This was expected. Markets' focus is whether this damages trade talks. China has threatened "resolute countermeasures" without defining what "resolute countermeasures" might be.
  • With the legislation now law, the US administration has flexibility as in implementation. Nonetheless, this is a flaw in US President Trump's negotiating style. Like the Grand Old Duke of York, a crisis is marched to the top of the hill in order that the president can march it back down again and claim a victory. This legislation is an unexpected obstacle on the way back down.
  • A much anticipated UK constituency-based opinion poll signalled a Conservative majority in the forthcoming election. Sterling is at the top of recent ranges. The same poll accurately predicted the last election, but not the constituency results. It may also be subject to a variation on the Lucas critique – if people believe the poll, they may change their voting behaviour, making the poll inaccurate.
  • The US has today off to prepare for the Black Friday retail extravaganza. Consumer price data from Spain and Germany is unlikely to excite. Euro area sentiment data is also due.

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