Rabobank's Michael Every: Close but no cigar

by Michael Every, Chief Investment Strategist, Rabobank

According to Michael Every, Chief Investment Strategist at Rabobank, following Treasury Secretary Yellen's warning about a major economic and financial crisis if the US reaches its debt ceiling, President Biden has canceled his visits to Australia and Papua New Guinea to instead negotiate a deal in D.C. Nevertheless, while the White House is optimistic about reaching a deal by the end of the week, the situation remains tense and uncertain. It's not yet time to break out the cigars.

In terms of economic indicators, US retail sales and industrial production have exceeded expectations, and even Japan's GDP has outperformed predictions. Despite these positive signs, there are concerns about global stability, particularly in regards to Russia and China. For instance, Western firms operating in Russia may lose their assets without adequate compensation, and similar issues could potentially arise in China if sanctions are imposed. Furthermore, Wall Street banks are reconsidering their expansion plans and profit goals in China due to the deteriorating geopolitical climate and President Xi Jinping’s focus on security over economic goals.

Meanwhile, tensions continue to escalate in Ukraine, with the UK and other countries providing military support. The financial implications of this conflict are significant, with estimates suggesting that Ukraine will need $250 billion to rebuild. As a final note, a heartwarming story amidst the global tension: the hometown of Michael Every, Luton, has made it to the championship playoffs for a chance at promotion to the Premier League. Today, we look forward to hearing from ECB's De Cos and the final Eurozone April CPI, and the US Senate's hearing on 'Strengthening Fed Accountability'.

Copyright © Rabobank

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