Daily update
Daily update
- US President Clinton’s admonition “It’s the economy, stupid” puts economists in their proper (superior) place. But which economy? Economists get excited about inflation, but voters think in terms of price levels—a higher price level can be considered unfair even as inflation falls. GDP is too abstract for voters, who do not care whether “growth” is -0.1% or +0.1%. Economic perceptions (honest perceptions, not sentiment surveys) drive politics.
- Current UK Prime Minister Sunak has asked the king to dissolve Parliament and call an election. Does this matter to markets? Almost certainly not. This is the one vote this year where markets express almost no uncertainty about the outcome.
- The G7 finance ministers have a late spring break getaway to Italy. Using income from Russian assets, mainly held in Europe, to aid Ukraine is likely to be discussed. This highlights the shifting concepts of what it really means to claim to own an asset in the age of economic nationalism.
- Minutes of the last Federal Reserve meeting are being branded hawkish (though a lot of the “hawkish” spin was more statements of the obvious. If inflation were to get out of control, the Fed would obviously raise rates). With market-determined prices disinflating, does “higher for longer” really achieve anything?
