Another convulsion

Daily update

Technology equities are having one of their periodic convulsions—without any obvious economic driver. The South Korean market is at levels last seen in April. This underscores the speed of technology equities’ rise; that speed limits the correction’s economic consequences. Households are still likely to spend—cash stockpiles and the ability to reduce how much income has been saved, more than equity wealth effects, have been sustaining consumer spending.
US President Trump suggested talks with Iran are going well. US retail gasoline prices far above consumers’ idea of a “fair” price creates an incentive to sound upbeat on talks. One issue is the extent to which uncertainty may paralyze corporate decision making—the Gulf war has more uncertain economic consequences than, say, the Russia-Ukraine war.
There was a modest UK disinflation signal, with the July BRC shop price index showing less inflation than expected—though the inflation pressures in the UK come primarily from the peculiar electricity pricing structure. Far-right leader Farage’s main election challenger, Count Binface, unveiled their manifesto to muted market reaction.
US June trade data may attract some attention, given the rise of economic nationalism. US consumer confidence data says little about economics, given extreme political partisanship, but may feed back into the political policy-making process.