Daily update
Daily update
- South Korea’s trade data for the first 20 days of January showed a decline in exports—there were more holidays this year than last, affecting the data. Chip exports remain strong, but exports to the US, EU, and China all declined.
- UK labour market data is due—in limited form, as the statistical agency does not trust a lot of the numbers. UK companies have been grouching about a modest increase in employment taxes and threatening dire employment consequences. Recent strong retail sales data does not really fit with that narrative.
- In a scripted inauguration speech, US President Trump gave only limited mention to taxing US consumers of imported goods. As yesterday wore on, the tone of Trump’s remarks shifted, and unscripted remarks in the Oval Office revived the idea of a 25% tax on consumers of goods from Mexico and Canada. Inflation fears associated with that pushed down equity futures. Such a tax would hit the politically sensitive food and fuel sectors, and a 25% tax would directly raise US consumer prices for imported products by around 10 percentage points.
- The scripted remarks and executive orders may also potentially pose a challenge to the rule of law in some areas (including the 14th Amendment of the US Constitution). Investors tend to value rule of law.