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June

US economy may not be all it’s cracked up to be…

Published: Friday 08 June 2018

  • Brexit meltdown ahead?
  • Trade tensions laid bare
  • US economy could fall off the cliff
  • Euro under pressure again
​​By Zafer Deniz
 
Brexit meltdown ahead?
 
In a leaked recording of private comments, UK Foreign Secretary, Boris Johnson, said there could be a “meltdown” in Brexit talks, but not to panic…
 
“The Brexit fight at the heart of government is very, very difficult and there’s a risk Britain could remain trapped in EU structures after the split,” Johnson said. At the same time, Foreign Office Minister, Alan Duncan, said  that a second referendum on the Brexit deal would, “I suppose, just be possible.” On any other day, that would have been big news, however, the US is stealing the scene.
 
Trade tensions laid bare
 
Tensions between President Trump and other world leaders over trade have been laid bare ahead of the G7 summit in Canada, which starts today. In a series of tweets, Mr Trump criticised Canada, the EU and France for charging what he called massive tariffs. President Macron of France said earlier that, although Mr Trump didn't appear to care about being isolated, the other six leading rich nations together represented an economic market that has become a real international force. He said no leader was forever. Apparently, Trump will be leaving the G7 summit four hours earlier than was scheduled – a case of dropping the mic, or a fast getaway?
 
US economy could fall off the cliff
 
In an eye-opening address to Washington think tank, the American Enterprise Institute, former Chairman of the Federal Reserve, Ben Bernanke, said that there could be a challenging slowdown for US economic growth, claiming that monetary stimulus is “at the very wrong moment” and that the tax cuts made by the US president have made the job of the Federal Reserve “…more difficult all round.” Bernanke believes it will “… hit the economy in a big way this year and next” and talked of falling off the cliff…
 
Euro under pressure again
 
Recent data has put pressure on the Euro once more, as German and French industrial and trade data came in well below expectations. These results raise questions about the anticipated rebound in the Eurozone economy.
 
Chinese trade balance disappoints
 
In Asia Pacific, China’s May trade balance also fell short of expectations and this will have repercussions for the commodity currencies and those countries closely tied to Chinese imports and exports.
 
#FridayFeeling
 
I was delighted to see someone give away a free coffee to whomever wanted it on the train this morning. Seems it was a case of mistaken identity, as the kind people at the coffee shop had given the coffee to the wrong person rushing for the train. A case of good karma, hopefully, and a nice way to start the day. It’s a very rare occurrence on London public transport to see everyone in the train carriage laughing and smiling together! Hope your weekend is equally happy.
An uphill battle

While carrying my 3-year-old son up the stairs, I told him, “Just think, when you get older, you can carry me up the stairs.”

He thought about this and then, with a worried look, he asked, “Will you be any smaller?”

Today's Major Economic Releases

Market BST Data/Event Previous Expected
ALL Day One G7 Meetings    
CAD 13:15 Canada: Housing Starts 215k 219k
CAD 13:30 Canada: Employment Change -1.1k 19.1k
CAD 13:30 Canada: Unemployment Rate 5.8% 5.8%

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