Dragging on (Brexit edition)

Posted by: Paul Donovan

15 May 2019
  • In the interminably tedious EU-UK divorce, something is happening. Nothing interesting, obviously, but something. The UK Parliament is to vote again on extricating the UK from the EU in early June. Investors may want to see what signals the late May European parliamentary elections offer before pricing in scenarios for this latest parliamentary vote.
  • The China-US trade dispute rumbles on. US import price data showed Chinese companies do not appear to be reducing their prices to accommodate US tax hikes – the burden of the tax falls on US customers. Meanwhile, US President Trump is urging a little more quantitative policy to help US growth achieve 5%. Lack of labor supply may prevent real growth hitting 5%. Nominal growth could achieve 5% with quantitative policy, but with associated costs. There were associated costs in Weimar Germany in 1923.
  • Trade taxes have delayed investment and weakened manufacturing of investment products. Industrial production in China was a little weaker than expected in April. US industrial production is due, but is less investment biased than production in some other countries.
  • Chinese retail sales data also slowed. US retail sales numbers are due. French inflation data, and German and Eurozone GDP growth are other highlights on the calendar.