What is going on in the US equity market? I think that the story is pretty simple. Liquidity from Japan has improved global financial conditions, pushing up equity markets (visible in the behaviour of JPY). At the same time — and perhaps as a result of the market strength — US economic expectations have improved (visible in market measures of inflation), in spite of data disappointments.

On this analysis, US equities will remain strong until the wave of Japanese liquidity abates. When equities are not going up, the market will find that there are reasons to be cautious about the economy, the most important being fiscal tightening.

David Cameron has achieved some cuts in the EU budget. It seems to me that Mr. Cameron is doing quite well in Europe at present. The British tend to view the EU either with hostility or with naive commitment. Mr. Cameron appears to be viewing it as the politicians of other countries do: as a forum in which to pursue Britain’s national interests. Finally a British Prime Minister is playing the game as it is supposed to be played.

I think that there is a structural problem in Britain’s relationship with the EU: the EU is all about political integration, and the British do not want it (the best that “pro-Europeans” can argue is that we ought to want it). But there is a possibility that a more assertive, and realist, approach to the EU could give Britain enough sway to get itself, and others, an opt-out from ever-closer union. Still, I remain sceptical because 1) it is early days and 2) the integrationists’ tactics are to wait out intransigent governments and lock in gains when they can get them. I would much rather that Britain pulled out.

I was buy on Friday morning and failed to digest a raft of news, including Mr. Carney’s appearance before MP’s, Mr. Draghi’s press conference and the Irish manoeuvres with Anglo-Irish. I need to catch up with all this today.

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