Here we go again

Daily update

US politics intrudes into financial markets, with the US House of Representatives trying to elect a speaker today. US Speaker Johnson has been endorsed by US President-elect Trump’s influential adviser Musk, and by Trump. However, the Republicans hold a very small majority (219 to 215), and one Republican has pledged to oppose Johnson. Investors’ focus will be on what this process suggests about the ease of passing legislation in the new administration.
US President Biden is reportedly preparing to prevent Nippon Steel acquiring US Steel. Economic nationalism is often talked of in terms of trade taxes, which are relevant, but capital flows are also vulnerable. This works with both inflows and outflows: “how dare you invest overseas rather than here?”, and “how dare foreigners buy our assets?”. Neither approach promotes economic efficiency.
UK consumer credit data offers a moment of economic sanity amidst the political noise. There may be hints as to whether consumers were cautious ahead of the UK budget, or had the confidence to spend with rising real incomes.
A US business sentiment survey is due. Partisan bias gives upside risks (Republicans tend to be more emotional in surveys, so their swing from negative to positive is greater than Democrats’ swing from positive to negative).