Daily update
Daily update
- Equity markets theoretically price expectations for the economic future. Yesterday’s market volatility raises the question “what new economic information did we get?”. The answer is “nothing really”. The economic outlook has not significantly changed from last week or last month. Markets seem caught in a narrative, not objectively reacting to economic news.
- Equity moves create a negative wealth effect as consumers’ asset values decline. However, the US consumers most at risk recently have been low income households, who are unlikely to care about the gyrations of the Nasdaq.
- UK BRC retail sales data and Barclaycard credit card data showed higher energy prices producing faster falls in pandemic purchases like furniture and discretionary spending like takeaway meals. Spending on travel is resilient—people still want to have fun. The German ZEW business sentiment survey is due, and is likely to still be affected by war doomscrolling on social media.
- The US NFIB small business survey is due—this correlates strongly to Republican partisan views of the economy, and political partisanship means Republicans tend to be very negative in their economic views. There are several Fed speakers, including Williams, but as the Fed is being the most transparent in living memory, it is unlikely that Fed speakers will change economists’ minds.
