It's a kind of magic

Posted by: Paul Donovan

22 Feb 2019
  • US President Trump is to meet Chinese Vice Premier Liu He today, to discuss the magic date of 1 March (when President Trump increases taxes on Americans who buy goods partially made in China). Investors increasingly expect that date to be magically moved, or even to disappear.
  • Expectations skew the risks around the trade discussions. Good news on trade is modestly good news for markets. Bad news on trade is very, very bad news for markets; a tax on trade amounts to a tax on equities. Although the Trump Twitter Feed has talked about competition, there is unlikely to be very, very good news.
  • Economists cannot turn around today without bumping into a member of the US Federal Reserve rushing to grab a microphone and say something. New York Fed President Williams – the leading economic voice in a Fed run by a lawyer – is probably the one to watch. Williams speaks on inflation, which is a topic fascinating enough to write a book about.
  • German fourth quarter GDP is due to be revised. We know the numbers are wrong (something weird has been going on with measuring parts of the economy), but the errors will not be corrected today.