Overall, Pretty Strong

The nice thing about self-imposed deadlines is that you can always extend them, which is apparently what Boris Johnson may do with Thursday’s artificial cutoff date for negotiations with the EU looming.

This farce (Brexit) is now in its fourth year and I’d venture it’s no less absurd now than it was in 2016, when the public was duped into a referendum on something (the EU) that many voters had to Google both before and after casting their ballots in order to read more about what it is they decided to stay in or leave.

Johnson threw things back into disarray over the summer and now, the UK is staring down a no-deal scenario (again), on top of surging coronavirus cases and calls for fresh lockdowns.

Rather than walk away promptly as planned, Boris will make a decision after a two-day summit on Thursday and Friday. Draft conclusions seen by Bloomberg for the two-day meeting in Brussels find EU leaders lamenting that “progress on the key issues of interest to the Union is still not sufficient for an agreement to be reached.”

Describing the mood in the UK via a series of headlines from the Daily Telegraph, Rabobank’s Michael Every writes that “there is a populist revolt brewing against the British populists and both their populism and their attempt at technocracy.” And it’s not just about Boris, he says. Rather, “it underlines a wider point: people are rejecting everything they can get their hands on, while others are clinging even more tightly to the status quo ante that got us here.”

Earlier this week, the UK logged its highest daily virus death toll since June. The recovery in the UK (where the economy suffered an especially grievous blow, even by pandemic standards) is slowing and fresh lockdowns would obviously slow it down some more. For example, according to JPMorgan, shutting down the hospitality sector for just two weeks would lop 2% (at least) off the country’s GDP. A headline from SocGen from Tuesday reads: “The UK labour market – the rot is setting in.”

Meanwhile, in a country that looks increasingly stable and sane by comparison to western examples of democracy and capitalism gone awry, Chinese credit creation came in well above expectations for September.

New yuan loans were 1.9 trillion in the month, more than the 1.7 trillion consensus was looking for and well ahead of even the highest estimate (1.81 trillion).

Aggregate financing was 3.48 trillion yuan, not quite at the high-end of the range, but still well more than the 3 trillion consensus.

Outstanding credit rose at a 13.5% clip and M2 grew 10.9% from a year ago, easily ahead of the highest guess from two-dozen economists.

“Overall it’s pretty strong,” Larry Hu, chief China economist at Macquarie, said of the numbers.

Right. Of course, there’s nuance, but rather than bore anyone with the breakdown, I’d just note that “overall it’s pretty strong,” isn’t a description that applies to most western economies these days — let alone their political systems.


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One thought on “Overall, Pretty Strong

  1. Looking at something of the coincidental paths of the US and the UK it appears that COVID is actually a derivative virus that arrived on both our respective shores as a dormant plague attached to the more virulent “Stupid 16” virus.

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