January 27, 2020
U.S.-China Trade-Deal Targets May Be Too Ambitious
“Purchase targets in the Beijing-Washington trade deal would boost U.S. exports of goods and services to China from roughly $160 billion in 2019 to $309 billion in 2021 — a near-doubling of exports in two years, with the bulk of the increase reached in 2020. If these ambitious targets are met in full, and wholly reflect increases in volumes — not prices — the expansion of trade would amount to a contribution in excess of 50 basis points to GDP growth in 2020, and 10-20 basis points in 2021. There are reasons to discount the full impact, according to research by Bloomberg Economics: BE estimates exports will add no more than 20 basis points to GDP in 2020, and for net trade to continue to subtract from full-year growth.”
Falling Unemployment Boosts Macron’s Reform Drive in France
“The number of registered job-seekers in France fell to its lowest level in six years, giving President Emmanuel Macron a boost in his efforts to convince the French his reforms are working. Macron is in need of vindication as labor unions continue to contest the pension reform, and the the country’s highest administrative jurisdiction warned it can’t guarantee the legal certainty of his plans. France’s labor market has proven more resilient than expected over the last year with unemployment continuing to decline despite a slower pace of economic growth.”
China’s Markets Are Likely to Stay Shut on Extended Break
“China’s massive financial markets may remain closed until at least next Monday after authorities extended the Lunar New Year break by three days as they grapple with the worsening virus crisis. There has been no official comment from the China Securities Regulatory Commission or the Shanghai or Shenzhen stock exchanges on whether markets will reopen on Friday as originally planned. In 2003, officials extended a May Day holiday market closure by four trading days during the outbreak of SARS. Meantime, Shanghai authorities advised that companies shouldn’t start work until at least Feb. 9.”
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