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Trade wars loom between EU and US

Published: Monday 25 June 2018

  • German Ifo indices expected today
  • Week is light on further data
​​By David Johnson

A sporting extravaganza
Sorry to be so parochial, but what a fantastic weekend for English sport. Cricket, Football, Formula 1, Rugby, you name it, we had a significant win. I am told it was sunny outside as well but I didn’t see a lot of it I am sorry to say. The lead on the TV isn’t long enough. I hope your weekend was hunky dory.
Brexit bias
Then we had a weekend in which there was a march in London to support Brexit, although you’d never know it because the press only reported on the anti-Brexit march that also happened. A little media bias, methinks?
Canadian Dollar falls foul of poor data
Last week finished with poor Canadian Data which tazered the Canadian Dollar. Inflation at 2.2% missed the forecast and retail sales contracted by 1.2% as car sales slumped.
Euro susceptible to shocks from home and away
We start this week absorbing the US President’s threat to charge EU manufacturers a 20% tariff on cars they export to the USA. We don’t buy a lot of US cars, to counter the imbalance, but there must be other US goods that the EU could target in retaliation. Whether we all need a global trade war is another matter entirely. Many reports suggest the EU isn’t ready for that kind of shock and neither is it prepared for the sort of strife Italy could bring as support rises for anti-EU parties. The Euro is not dropping right now, but these warnings are worth bearing in mind.
Today brings nothing more than the German Ifo institute’s Business Climate and Sentiment Indices and these key Eurozone health indicators are forecast to be a tad on the negative side. So a smidgeon of Euro weakness may ensue.
A lack of data this week means politics takes centre stage
The fourth week of the month is rarely data-heavy and this one is no exception. There are some bright spots in the US Gross Domestic Product (GDP) data and EU Consumer Confidence. We will get the European Central Bank’s (ECB) economic bulletin and US Consumer Confidence too. But that is about as exciting as it gets, I am sorry to say. That doesn’t mean the US president won’t entertain us with more twitter-based nonsense and it doesn’t mean the subject of Brexit won’t be mentioned ad infinitum, but we will just have to brace ourselves for that.
Tag, you’re it!
Now, if you have nothing better to do, a lot of news wires are covering the story of Drew McEwan , who was speechless after Georgina Wilkinson flew from America to Loch Lomond to tell Drew “You’re it,” before running away with a maniacal laugh in an international game of tag. Georgina flew back home that same day to avoid being tagged back. The two met in China in 2014 along with eight others and they have been playing the game since then. Personally, I love the bizarre nature of it.
Facts of life?
Having been playing outside with his friends, a small boy ran into the house and asked: “Grandma, what is it called when two people sleep in the same room and one is on top of the other?”

His grandma was surprised to hear such a forthright question from a six-year-old but decided to answer as honestly as she could. So she launched into a fairly sanitised version of the ‘facts of life’ discussion. After about 15 minutes, the boy said, “OK. Thanks Grandma,” and ran back into the garden.
A few minutes later, he came back in and said angrily: “Grandma, it isn’t what you said. It’s called bunk beds and Jenny’s mum would like a word with you!”

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 09:00 EU: German Ifo Business Climate 102.3 101.8
USD 15:00 US: New Home Sales 662k 665k

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