Three cheers for global growth

Posted by: Paul Donovan

26 Apr 2019
  • Japanese industrial production was weaker than expected, but it was weaker than expected in predictable ways. Production of investment goods was worse than hoped for. However, the data shows expectations of a strong rebound in production . Meanwhile, the Japanese consumer was stronger than expected.
  • Japan's pattern repeats the global pattern. Consumers are doing well, backed by the best labor market in over a generation. Companies are slow to invest because of politics. Consumers drive the economy. Global growth ended last year in line with its 40-year average.
  • US first quarter GDP data will be released today. The data will be wrong. This number will be revised often, and substantially over the coming years. However, market traders get very excited about new data toys, and tend not to notice when those toys break six weeks later. The expectation is for an above-trend growth number.
  • One of the credit rating agencies (it does not matter which) might change Italy's credit rating from something to something else. They probably will not, but there are some people who are focused on the news. Italian grandmothers, who can finance the entire debt of Italy three times over without thinking about it, are unlikely to care.

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