B-Day

Posted by: Paul Donovan

12 Mar 2019
  • Another convulsion in the interminably tedious UK-EU divorce. The UK Parliament votes on a new and improved government deal to separate from the EU. The view of the attorney-general as to whether this is actually new and improved is important. Without the attorney-general's support, the government has almost no chance of success. With the attorney-general's support, the government has slightly higher than no chance of success.
  • US President Trump presented a budget proposal to Congress, delayed by the last government shutdown. This controversial ideas risk another government shutdown (1 October is the deadline). However, presidential budget proposals tend to be fantasy wish-lists, not necessarily serious attempts to pass Congress.
  • US consumer price inflation is due. Labor costs have been rising. Labor is the most important part of inflation. However, there are restraints on CPI. Most of the index is not driven purely by market forces (the largest component is a made-up price). Profit margins may absorb the higher labor costs.
  • Dutch manufacturing production was strong, with positive revisions to past data. This follows weak German production data (due to the auto sector), with strong revisions to past data. Revisions are a lesson to have limited faith in the power of nowcasting.