United States: Taxing times

Senate Majority leader Mitch McConnell Thursday night postponed a vote on the long-anticipated tax reform. After a week of strong momentum – even John McCain now favors the bill – the efforts stalled when the Joint Committee on Taxation (JCT) issued its assessment of the package. Major changes to the tax proposal are now in…

German Jamaica collapse

After weeks of negotiations and missing several self-imposed deadlines, the liberal FDP last night walked out of the coalition negotiations with the CDU/CSU and Greens. Citing a lack of trust between the parties, FDP-leader Lindner saw no reason to continue, ”No government is better than bad government”. Not surprisingly, the blame game is well under…

United States: Another step forward

Congressional Republicans yesterday moved forward on tax reform. The House of Representatives passed the tax bill with 227 votes – all Democrats and 13 Republicans voted against. However, it was a much more comfortable margin than would have been expected a couple of weeks ago. The process is far from over, but House Republicans were…

Strong European growth in Q3

The European economy displayed impressive strength in Q3 with growth rates in both the euro area and surrounding countries exceeding expectations and running at multi-year highs. Euro area GDP grew by 0.6% q/q (confirming flash estimate) and 2.5% annually in Q3. It is the highest growth since 2011, and was carried by an acceleration across…

Democrats win in Virginia

Democrats won crushing victories in yesterday’s off-year elections in the Commonwealth of Virginia sending a strong message to both Democrats and Republicans in Washington. The Democratic gubernatorial candidate Ralph Northam beat Republican Ed Gillespie by a comfortable 54 to 45 margin. Both belong to the establishment wing of their parties and both ran mean-spirited campaigns.…

One year of President Trump

The 8th of November 2016 was a beautiful day in Washington DC. People queued to vote and anticipation was running high. Hillary signs everywhere. It was difficult to find anyone who even remotely thought this could go… wrong. New sophisticated exit polling showed healthy Clinton leads in battleground states throughout the day.   But it…

Order restored in the job data

Key takeaway The October job report restores order to the job data, but also highlight the lack of wage inflation. Federal Reserve is set to hike interest rates in December, and this report does not change that.   Hurricane impact erased The October job report reversed some of the hurricane-induced weakness in September with a…

Baby steps towards tax reform

Once upon a time when I was a diplomat in Washington DC (2003-06), Democrats and Republicans almost agreed on a major tax reform. The sticking was that Republicans insisted on budget neutrality – no net effect on the budget balance – while Democrats wanted to generate additional revenue. The proposal put forward yesterday by Kevin…

Powell to head the Fed

The noise from the White House and Washington can be deafening at times. Erratic and confrontational, President Trump has lashed out at friends and foes creating continued confusion about both domestic and foreign policy. However, one area stands out as a sea of relative calm: Many of President Trump’s nominations to important positions have been…

Brexit negotiations deadlocked

As the clock is ticking, one would expect negotiations between the EU and the UK to speed up. Instead they have come to a halt with the British government now trying to change the format while conducting direct bilateral talks with EU capitals. In London, there is little sign of clarity. PM May has the…