Fact checking

Posted by: Paul Donovan

27 May 2020

Daily update

  • Today is following the standard pattern—rhetoric between the US and China is ignored, and optimism over economic stimulus is the focus. US President Trump promised unspecified action against China by the end of the week—but markets cannot be expected to pay attention to every comment or Tweet on the Trump Twitter Feed. That would be exhausting.
  • Japan is preparing a USD 1 trillion stimulus package, of which at least a quarter is actual spending. (Loan guarantees and other measures make up the rest.) This will add to the level of debt—already over 200% of GDP. How will Japan's government pay this back? The better question, perhaps, is why anyone thinks governments will ever pay back debt? They never have before.
  • ECB President Lagarde is scheduled to speak—markets are more interested in the political than the economic comments, as the EU squabbles over collective fiscal stimulus.
  • The Fed's Beige Book—a survey of economic opinion—is scheduled. From time to time this comment may have expressed scepticism about survey-based opinion polls, but central bank surveys are normally higher quality. The question this time is how the Fed managed to run a Beige Book survey in a lockdown.

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