Digging holes

Posted by: Paul Donovan

21 Oct 2019
  • The IMF meetings last weekend concluded with profound statements of the obvious on trade and the economic outlook. In the debate about fiscal stimulus, it is worth remembering that IMF meetings are taxpayer financed, and thus fiscal stimulus. It is similar to the economist Keynes' suggestion that people be paid to dig holes in the ground and fill them in again.
  • A Chinese trade negotiator suggested that US-China trade talks were making progress. The problem is that we have heard such comments from both sides in the past, and where we are today in trade is not the outcome of progress. This will limit market reactions. Trade data from Japan and Korea showed exports falling at a slower pace.
  • The interminably tedious EU-UK divorce continues. This is not news. UK Prime Minister Johnson lost another vote in Parliament over the weekend. This is not news. There will be an attempt to pass ex-PM May's withdrawal agreement (cunningly disguised) either today or tomorrow.
  • The calendar is rather quiet. German producer prices are unlikely to interest markets much. There are a couple of ECB speakers. The Bank of England's Haldane speaks on diversity – a critical economic issue, which markets will probably ignore.