Trump’s tariff increases have gone into effect overnight, putting another dampener on any hopes of there being a trade deal done any time soon. Interesting article from Reuters this morning points to an Oxford Economics forecast that says the move could end up costing US families another $767 a year and could lead to a loss of 200,000 jobs. The costs coming once retailers are forced to increase prices and the job losses a result from a slowing economy.
In Europe, Italy’s economy minister wants the EU to scrap the ‘fiscal compact’ – a set of rules that keep caps on budget deficits and gradually reduce sovereign debts over time – Mr Tria believes they should be scrapped because it’s a “structurally deflationary mechanism”. It might well be deflationary, but he might also want to overhaul it because, with the way Italy’s budget isn’t going to forecast, they’re likely to fall foul of the regulation: The FT reported earlier this week that the forecast is for their budget deficit gap to swell from 2.5% to 3.5% by next year which would lead to the European Commission taking punitive measures.
If that wasn’t enough for the European budgetary powers to worry about, Greece is planning to cut taxes and raise welfare spending – something that could breach covenants of their creditor agreements following their years of bailouts. There are concerns that politics is getting in the way of economics and that PM Tsipras announcing these ahead of EU elections was a calculated move (clearly) but by the same vein, Greece is outperforming it’s current economic targets and cutting those hit hardest a bit of slack might not be the worst idea!
In the corporate world: Uber is looking at pricing its IPO towards the bottom of the price range. They’re looking at setting a $45 per share opening price, valuing the company at $82bn, much lower than the $120bn some had touted. They’re keen to avoid the issue that rival Lyft is facing, with a stellar launch price but shares now trading 30% below that. They’re likely to go live today, so it’s definitely one to watch.
A corporate story from our world making the news; businesses globally are slowing down on the amount of hedging they’re undertaking, as volatility falls and markets stay within ranges. This looks like a bit of a global trend which could well catch people out when markets do start moving again (and they always start moving again!) as we’re in a low volatility, not a low-risk environment. Reuters has more.
On Iran; Trump has said John Bolton is doing a good job but has admitted he’s got a temper on him! Just what you need in a national security adviser. Bolton is also taking a more interventionist route, which goes against Trump’s ‘not our problem’ approach to foreign policy. Here’s the Washington Post’s take on Bolton’s position on Iran (and his position in the White House)
UK GDP this morning the one to watch…
