Political spin in the snow

Daily update

The World Economic Forum gets underway in Davos, filling the media with policymakers’ comments. Policymaker comments are normally recycled statements that have already been made, but making such statements in close proximity to a) other policy makers and b) snow-covered mountains creates more dramatic television coverage and amplifies the noise.
Taiwan’s election has been a source of periodic anxiety for investors. The DPP candidate Lai won, but the DPP did not win a majority in the legislature. Despite being the candidate opposed by mainland China, the rhetoric since the election is regarded as being likely to reduce tensions.
In the US, the Republican Iowa caucuses are taking place. There is interest in whether former US President Trump receives a share of votes comparable to his polling lead, and which candidate comes in second. However, investors are not yet prepared to properly price in scenarios for the election in November.
Euro area November industrial production is expected to decline again. This reflects slower demand, but also potentially a loss of competitiveness. It matters in assessing global production, as movements in production could reflect weaker end-user demand, or changing market share as competitiveness, deglobalization, and localization interact.