US Fiscal Policy Monitor – 10.31.2019


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Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.

  • No change in October: there is no Fiscal Policy, Deficit or Austerity narrative, at least as it concerns markets.
  • Sentiment on these topics has rebounded slightly, but it still remains deeply negative.
  • As with inflation, we believe that is because of narratives in political world. There, we do observe an emerging language about US debt levels, deficits and spending. It exists purely in political and wonkish debates, and has been almost completely untethered from financial markets discussion.
  • We have said that the monetary narrative in 2019 is that it means nothing in the real world and everything in the world of asset prices. Is common knowledge about deficits the opposite? Irrelevant to markets, but meaningful to the real economy?
  • Not yet. But as we argued in our September report, it does imply a complacency about the issue in markets.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention Map

Source: Quid, Epsilon Theory

Narrative Cohesion

Fiat News Index

Narrative Sentiment

Key Articles

Federal Budget Deficit Swelled to Nearly $1 Trillion in 2019 [NY Times]

The Finance 202: Trump team drops push for key economic reform from Chinese [Washington Post]

Expect Bigger Deficits and Energy Unease Under a Trudeau Minority [Bloomberg]

Japan Raises Taxes on Its Spenders Despite Growth Worries [NY Times]

Are Congressional oil sales risking an oil price spike? [Houston Chronicle]


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