Trade dominates everything

Posted by: Paul Donovan

18 Feb 2019
  • In the absence of data, politics (trade) is likely to dominate markets. The US and China resume trade talks in Washington this week. Asian markets have strengthened on hopes and dreams of a trade deal. US President Trump reiterated that the 1 March tax-hike deadline could be extended. Chinese officials sounded positive (more positive than US officials) about a deal.
  • The US Department of Commerce gave President Trump a report on the national security threat of Americans buying the cars they want to buy, not the cars the government wants them to buy. The president has ninety days to respond. There have been no tweets on the topic so far. German Chancellor Merkel called the threat of tariffs "frightening". Markets would likely be very frightened if more trade/equity taxes were a real threat.
  • Thailand's GDP was stronger than expected, on domestic demand (fitting a global pattern). Singapore's total exports were up, but Singaporean-made exports were down on weakness in the computer sector. This fits with a story of good global consumer demand but weaker investment.
  • The interminably tedious EU-UK divorce continues. UK-Japan trade talks are apparently not going well. Please do not force economists to keep talking about this.