Daily update
Daily update
- US equity markets were a little disturbed by a sharp decline in a consumer confidence survey—but these surveys are distorted by partisan politics. Depending on the cable news network one watches, the US is either an unpleasant version of Panem from “The Hunger Games” or a Panglossian paradise where all is for the best in this best of all possible worlds. Clear economic signals are hardly likely to come from economic surveys in such a situation.
- There are risks to the US economic growth outlook. Inflation perceptions remain a concern—US President Trump has presided over soaring egg prices which they cannot control, but which might impact consumers’ fears for the future. Uncertainty over policy, and in particular trade taxes, might impact investment or consumer spending (yesterday, there were threats to tax US copper users).
- The US House of Representatives passed, with some difficulty, a budget resolution. The process goes to the Senate, and then reconciliation, with investors likely to focus on resistance to larger deficits. Markets would not react well to suggestions that fictional fiscal savings are included in the accounting.
- The data calendar is dangerously quiet, allowing politics to intrude into the markets’ consciousness. French and German consumer confidence data is also subject to partisan bias, though less transparently.