The cost of taxing training shoes

Posted by: Paul Donovan

21 May 2019
  • Uncertainties around trade could become a recession-inducing policy error. They could fade and allow growth to stabilize at trend. Thus, financial markets react to every hint. The risk assessment is not helped by the fact that trade policy decisions are taken by individuals, not in a transparent framework.
  • US President Trump delayed the ban on US companies doing business with Huawei. China warned of "unwavering resolve" in any fight. Markets put more emphasis on the Trump Twitter Feed than China's position. This may be more bias than good analysis. Meanwhile, 173 US footwear manufacturers warned of the catastrophe that will befall the US economy if US sport shoe consumers are taxed.
  • Fed Chair Powell opined on corporate debt – noting that a slowdown would make debt a bigger problem (that is a statement of the obvious. Chair Powell excels at statements of the obvious). However, Powell emphasised this was not like 2008. Markets are too inclined to view everything through the experience of 2008.
  • The Reserve Bank of Australia hinted at a possible rate cut in June. The OECD will publish its economic outlook. Media will report this, generally without any context as to the accuracy or timeliness of OECD economic forecasts.