Uncertainty in the spotlight

Posted by: Paul Donovan

24 Apr 2020

Daily update

  • Economists are dealing with three levels of uncertainty. Uncertainty about the virus. Uncertainty about the policy response. Uncertainty about the economic response to the virus and to policy. Changes in any one of those change economic outcomes. Reports of poor test results for a possible treatment weakened risk markets somewhat. US President Trump's suggestion that injecting disinfectant or bright lights be investigated did not reverse that weakness.
  • The US stimulus 3.5 passed the House, and allows aid to small businesses to resume. On to stimulus 4.0 (oil companies are suggesting that they would like some cash). The European leaders decided to delay deciding anything until they could decide on what they wanted to decide. There is agreement for a large mutual recovery fund. How much, when, and whether loans or grants is not agreed.
  • A credit rating agency (it does not matter which) is to opine on UK and Italian credit ratings. The UK credit rating could change, and no one would care. The Italian rating may be more in focus because of the arbitrary "investment grade" status.
  • German ifo business sentiment and US Michigan consumer sentiment surveys are due. They should be thrown away unread. UK retail sales (also a survey) obviously fell in March.

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