When does reality bite?

Daily update

Last Friday’s US data showed a notable improvement in late April consumer sentiment, but only for registered Republicans. Consumers today are buying goods imported before the oppressive burden of trade taxes (on average, it will take about three months for pre-tax inventory to be used). This means economic reality has not penetrated the partisan media bubble around consumers. Businesses are faster to react, with uncertainty fueling a collapse in US port activity as companies “wait and see”.
US President Trump suggested that trade tax revenues could finance an income tax cut for people earning less than USD 200,000 a year. This hints at an understanding that low income households pay trade taxes, not foreigners. However, trade tariffs cannot replace income taxes—to suggest otherwise either raises questions of policy competence, or implies a deficit-financed tax cuts. Neither is likely to shore up waning faith in the safety of the US dollar.
The Federal Reserve is in its blackout period, and there are just a couple of ECB speakers today. Last week’s barrage of policy-maker comments reduces the impact of today’s remarks.
There are some sentiment surveys, which are not to be taken as reflecting reality. The US Dallas Fed manufacturing sentiment data does offer the always entertaining comments section.