This week was nicely summed up by president Trump’s July 4th reimagining of the 1776 revolutionary war to include ye olde airports; incoherent markets with soft expectations fantasies winning out over hard reality. Equities rallied on talk that US and China might restart trade talks, despite data showing that manufacturing sectors in both China and the US have seen a slump in activity. Home purchases have been picking up, but construction has been falling and consumer confidence has risen while business sentiment has deteriorated. It will be interesting to see if shopper’s refusal to acknowledge a slowing economy will actually make a recession less likely.
Elsewhere, Brexit aside, there is no escaping reality in Europe. Germany recorded a record slump in manufacturing activity, led in part by weakening demand for exports particularly cars. This is in contrast to a recent announcement by Jaguar Land Rover that it is investing £1bn in an electric car plant despite its repeated Brexit warnings. The two might be related, with structural change and the sudden drop in diesel popularity behind both events.
Read what the team at FE consider to be significant over the current week.