When what didn't happen is the focus

Posted by: Paul Donovan

29 Apr 2019
  • Spain held the third general election in four years. Prime Minister Sanchez increased the Socialist Party's number of seats. The result was perhaps more notable for what did not happen. The anti-establishment Vox Party did not perform as well as some polls had indicated. This may help quiet fears of a wave of anti-establishment politics in Europe.
  • European data is unlikely to excite too much market attention. Money supply data is reliable, but receives little attention. Sentiment data is unreliable, and receives more attention than it should. The May day holidays later this week will keep markets relatively subdued.
  • US-China trade talks continue – there is almost a Brexit-like quality to the way they are dragging on. However (unlike Brexit) a conclusion is likely. US President Trump has been stressing the economy in election-style rallies. As trade taxes hurt manufacturing, investment and equities, it seems in President Trump's interests to concede a deal.
  • US personal income, spending and inflation data are due. The inflation (PCE deflator) is unlikely to show much of an increase. Higher labor costs have been chipping away at national profits rather than pushing prices up. Income and spending data should show that the consumer remains a solid foundation for growth (in the US as elsewhere).

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