A MACRO MINUTE: A compromise on German cars, China fears the sentence ...

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07/05/2018 | 11:10 am
Welcome back to our daily review of macroeconomic and geopolitical news impacting financial markets around the world. Today, Europe is spinning around Germany thanks to a positive news on German car taxes. Here are the main events of today, updated regularly as fresh announcements come in.

Germany. News that resonates this morning: the US ambassador of Germany said Washington would not tax German sedans if the EU stops imposing a 10% tax on US cars. It's give-and-take. So far, the automotive sector very much welcomes the news. Angela Merkel has said she is ready to reduce taxes on American and other countries' cars. 

In other, less welcome news for Germany: the IMF has reduced its growth target for this year from 2.5 to 2.2%, citing the increasing protectionism and the consequences of Brexit in the short term as the main reasons for this. The IMF encouraged the Chancellor to promote public investments especially in education and infrastructure as well as private investments, in order to reduce the current account surplus (8% last year).

China. Trade war fears are still palpable in China, with 9 negative closings over the last 10 days. While tomorrow will be crucial, all eyes are turning to Donald Trump. China brings in its wake the entire Asian continent as well as emerging countries, already weakened by the US dollar rise.


Evolution on the Shanghai Composite and the MSCI Emerging markets over one year: the gap is widening since 2018 (Source: Bloomberg)
 
OECD. The employment outlook 2018 published yesterday is quite reassuring as the employment rate has finally returned to its pre-crisis level. But still, the organization is worried about stagnant wages, especially for the lowest-paid workers, deepening further inequalities within developed countries.


Wage growth in Q4 2017 compared to Q4 2007 (pre-crisis)


Floriane Rousseaux
MarketScreener.com 2018
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