The only thing we have to fear…

Posted by: Paul Donovan

06 May 2020

Daily update

  • US President Trump asserted that the US lockdown must end soon, even if more people will die as a result. The economics of ending a lockdown depend on fear and confidence. Consumers need to be confident in their employment and in their health safety to go out and spend in the economic bounce back. If lockdowns end too early and deaths keep rising, that confidence is missing and the economic downturn continues independent of the lockdown policy.
  • European consumers may be showing some confidence, when lockdowns have ended appropriately. The accommodation-sharing site AirBnB reported increased bookings in Denmark and the Netherlands. This shows confidence on the part of both bookers and people renting rooms. It may not signal international travel, which is a problem for countries with large tourism surpluses.
  • In Germany, the lawyers of the constitutional court tried to decide what economic policy was. The ECB has been set conditions for its old bond buying program. Those conditions should be satisfied, but it adds an additional obstacle to policy operating smoothly.
  • Germany's March factory orders were weak (of course). The US ADP payrolls may get some attention ahead of what is likely to be a very weak employment report on Friday.

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