Debating policy

Posted by: Paul Donovan

09 Oct 2020

Daily update

  • Another day of sitting behind a computer and doing a comment, knowing that the audience can cut me off whenever they want. The debate over the next US presidential debate is of almost zero interest to financial markets. 
  • The fiscal policy debate is of interest to markets. Fed President Kaplan made it very clear that central banks cannot solve income problems. Governments took income away. It is down to governments to replace that income via fiscal policy. The Trump administration is now signalling that they might be willing to negotiate a comprehensive fiscal deal. Bear in mind the longer the delay, the less effective the deal will be at stimulating the economy.
  • UK August GDP was at the bottom end of the forecast range, but as is so often the case there were positive revisions to previous data. The numbers cannot be compared internationally because of differences in calculation (making life awkward for global economists, whose raison d'etre is international comparison).
  • French August production data is due—it is moderately interesting to see if the French took their grandes vacances as normal, or whether more factories remained open after the lockdown experience. US wholesale inventories will be worth a glance.

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