Let them eat steak

Posted by: Paul Donovan

29 Apr 2020

Daily update

  • US President Trump has ordered meat processing plants to stay open on food supply fears. Americans throw away up to half their food uneaten. It may be fear of inconvenience and higher prices more than absolute food shortages. Food supply and food prices are very politically sensitive, even in the US.
  • The US Federal Reserve meets today. The focus for investors is whether there are signals about how long rates stay as low as they are. This is mainly a crisis for fiscal policy rather than central bank policy, but low rate expectations may assist in the second phase (economic bounce back).
  • Korean March data showed strength in manufacturing (aided by China returning to work). Services remained weak. This may be a pattern that will be repeated elsewhere. Consumers are willing to buy goods as lockdowns end (sometimes helped by higher savings than normal). They may not rush to leisure services.
  • German consumer price inflation is due; measuring prices remains problematic. US first quarter GDP is an initial number, and little more than a wild guess (sharp downturns have been revised into above trend growth). It is annualized, which is nonsense at the moment. The range is from -10% to 0%, which makes the "consensus" fairly useless.

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