Daily update
Daily update
- In Europe, 22 people will meet for two hours to try and decide central bank policy for a continent. What could possibly go wrong? An ECB that is more focused on the present than the direction the economy is taking seems likely to raise rates again.
- US retail sales headline numbers will be supported by higher energy prices (this is a value measure), and that may divert money away from other areas of consumption. Middle-income consumers do have better spending power than may first appear—yesterday’s consumer price data suggests that home owners face an inflation rate that is probably below 2% y/y because the fiction of owners’ equivalent rent does not actually affect reality.
- Producer price inflation in the US is mercifully unaffected by owners’ equivalent rent, and so comes closer to price reality further up the supply chain. As with the consumer data, oil prices will likely push up the headline, while the core inflation rate continues to slow.
- China complained about an anti-subsidy investigation by the EU into electric vehicles. This sort of politics will be more common as economic nationalism increases. Investors will be challenged by economic nationalism, as it is hard to know where the next focal point is likely to be.
