Time to tweet about something else?

Posted by: Paul Donovan

01 Mar 2019
  • Geopolitical events rarely matter much to markets. If commodity prices move, if there is disruption to trade flows, or if domestic politics change then markets tend to care. Otherwise there is limited impact on the economic expectations that shape markets. The collapse of the Korean summit is not market significant – unless it changes expectations about US President Trump's focus.
  • The US president (like the rest of us) is subject to the economic problem – limited time, and lots of demand on that time. Time focused on Korea is time that cannot be spent tweeting about trade. The president may want a quick win on trade to offset the Korean situation. There are media reports of a mid-March summit with China and a "quick" trade deal.
  • US personal income and spending data are published today. With the surprise weakness in retail sales, these numbers have some additional interest. The PCE deflator, the Fed's favored inflation measure, is also due. Wage costs have been rising, but this may be more of an issue for profit margins than inflation.
  • German unemployment and retail sales data will hint at the health of the German consumer. Euro area consumer price inflation will be overlooked. UK credit data is due.

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