Trade talks don't take place

Posted by: Paul Donovan

17 Aug 2020

Daily update

  • Japanese GDP was reported as having fallen 7.8% during the second quarter. (The numbers are also available in an annualized format, but annualization is an extremely silly thing to do in a pandemic). The data is almost certainly wrong and will be revised, just because of the circumstances we are in.
  • When making international comparisons in the downturn and in the third quarter bounce-back, it is important to remember that economies all calculate GDP differently. Normally, these differences are too small to matter, but the pandemic exaggerates them. Thus, reopening schools will directly boost UK GDP, but have little direct effect on French GDP.
  • The US and China were supposed to talk trade over the weekend. They did not talk trade over the weekend. There was a scheduling conflict, apparently. US President Trump's apparent fear that national security will be harmed if the Chinese learn how to do the renegade dance on TikTok resulted in an order that the US operations of the video app be sold.
  • The People's Bank of China injected liquidity into the financial system overnight, which equity markets in Asia appear to have liked. However, the deputy governor of the PBoC warned of the risks of excessive debt.

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