What is the point?

Posted by: Paul Donovan

21 Feb 2020
  • The problem with organizations like the G20 is that once they have been set up, it is difficult to shut them down. No one dares to ask the question "what is the point?". The G20 meets this weekend. It is tempting to argue that there is no point (other than the fiscal support to airlines of flying officials around the world).
  • Nothing is happening in EU budget negotiations. Is anyone surprised by this? The northern European states do not want their budget rebates cut. The southern European states point out that the UK's budget contribution must be replaced from somewhere, and the northern European states would be the ideal source. The lack of cooperation does suggest coordinating fiscal boosts may also be tricky.
  • US Federal Reserve Vice Chair Clarida said that financial markets may not be pricing in rate cuts (even though fed funds futures are pricing in rate cuts). Markets are not one homogenous mass. Traders have their ideas. Economists have their ideas. Economists are sometimes ignored. Bad things happen when economists are ignored.
  • Assorted PMI business sentiment polls are due. The problem with sentiment is that when there is a dominant news story, the media cycle rather than reality can drive opinion.

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