Minute by minute

Posted by: Paul Donovan

22 May 2019
  • Finally, something that does not require economists to read the Trump Twitter Feed. The minutes of the last US Federal Reserve meeting are due. The economy is growing at or above trend. Unemployment is at a multi-year low. Wages are rising. Inflation is normal. Yet, markets expect a rate cut.
  • Markets may fear the effects of US President Trump's trade taxes, which like any tax increase slow growth. These taxes also add uncertainty, which could do more damage to the economy. Markets may underestimate the strength of the economy anyway. Hopefully, the minutes will give clear signals on what neutral policy looks like.
  • The UK's interminably tedious EU-UK divorce lurches on (direction unclear). The prime minister proposed a second referendum (terms and conditions apply, no one understands the terms and conditions) to pass the government's divorce deal. Everyone condemned the terms of the deal. Inflation and government revenue numbers are due.
  • Japan's April trade data showed weaker exports (mixed as to geography) and stronger imports. Machinery orders were stronger. As capital spending has been hit by trade uncertainty, this could be taken as a sign of stabilization. The data is before the latest round of uncertainty, so represents what might have been.