+353 1 662 3001 info@greshamhouse.ie

Share Appians news

  • The Federal Reserve (Fed) Chairman Jay Powell provided the anticipated dovish testimony to Congress. Unfortunately, the Fed have to navigate the necessary fundamental actions required for the observed slowdown in the economy against the perception that they are acting under the influence of political pressure. The belief among investors is that the Fed will cut rates at their scheduled meeting at the end of the month.
  • The EU downgraded their economic forecasts but the changes were minor in size. GDP for this year is expected to be 1.2% y/y and 1.4% y/y in ’20 as the headwinds of trade wars and Brexit have a negative impact on prospective growth.
  • The trade wars are likely to continue to be part of the economic backdrop under the Trump administration. The most recent target for Trumps chagrin is the EU. Previous missives were critical of the EU auto and aerospace sector, but the most recent criticism has been the proposed digital tax to be applied by French authorities. The Trump administration has suggested they will use tariffs as a form of retaliation, whilst the French Finance Minister replied succinctly by saying “France is a sovereign country. It will make its own decisions on fiscal measures”. Hopefully, French authorities will emulate this view with regards the Irish corporate tax rate.
  • US inflation (see chart) remains below the Fed’s target. In spite of continued job growth, inflation expectations remain well anchored and provides the Fed with one of their pillars of defense for cutting interest rates.