A worryingly quiet day

Posted by: Paul Donovan

18 Aug 2020

Daily update

  • The data calendar is a desolate wasteland of nothingness. US housing starts data will be released. It is hard to get excited about housing starts data (I have tried). This leaves investors repeatedly checking social media for news, or alternatively listening to politicians. Neither is a desirable course of action.
  • There is still no movement on the next US fiscal stimulus plan. The loss of unemployment benefit hurts those who are unemployed, and risks increasing the fear of unemployment for those with jobs. This may slow the pace at which accumulated savings are spent. Reports suggest more US citizens worry about not meeting next month's rent or mortgage payments.
  • The fiscally conservative EU states are worried about the future value of their fiscal rebates, in the event of higher inflation (the rebates were increased to get their support for the pandemic bailout). Inflation seems a peculiar concern – it will probably go higher, but is unlikely to be high.
  • The US imposed more restrictions on selling semi-conductors to the Chinese company Huawei. There is a report that China lost share of the global export market in 2019. We already knew that the US shifted to purchasing some goods from South Korea, Taiwan and Mexico as taxes were imposed.

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