Daily update

  • Financial markets swung wildly yesterday on apparently false reports of a 90-day halt to US trade taxes (except for China). The volatility highlights two problems. Erratic policymaking means stories of dramatic shifts in policy are credible. The move toward Schlesinger’s “imperial presidency” model means policy shifts depend on the whims of one person. These make fake news plausible, creating market volatility.
  • Such uncertainty is a real world concern. Financial investment decisions can normally be reversed quickly, usually reclaiming some of the original investment. Neither is true with real world business investment. If firms believe policy is both erratic and imperial, the risks around real economy investing increase and investment declines.
  • US President Trump threatened further tax increases on US consumers, with an additional 50% tax on imports from China. Rerouting supply chains becomes a viable avoidance mechanism (again) at such levels. Japan is the first major country to negotiate with the US. That prioritization feels like a throwback to the trading environment of the 1980s.
  • As with the pandemic, economic data is of limited use (referencing the before times, not the aftermath of the shock). However, the US March NFIB business sentiment poll might suggest whether concerns about the economy are penetrating the partisan media bubble.
Current Time 0:00
Duration 0:00
Loaded: 0%
Stream Type LIVE
Remaining Time 0:00
 
1x
    • Chapters
    • descriptions off, selected
    • captions off, selected
      Current Time 0:00
      Duration 0:00
      Loaded: 0%
      Stream Type LIVE
      Remaining Time 0:00
       
      1x
        • Chapters
        • descriptions off, selected
        • captions off, selected
          Go to Paul Donovan
          Read important disclaimer

          Explore more CIO Daily Updates