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October was all about talk of deals and crucial deadlines. What happened? The deals got nowhere and the deadlines were missed. How did markets react? Equities went up still more and bonds hung around. It is remarkable how untroubled markets can be when central banks keep serving them monetary cocktails.

On one side of the Atlantic, the crucial deals and deadlines have to do with trade and the economic war between the United States and China. Time is pressing, because on December 15 the next stage of American punitive tariffs will apply to goods imported from China. These are primarily consumer goods and if their prices go up before Christmas, or even after it, the electorate is not likely to be happy. You can therefore see why it might pay President Donald Trump to reach a deal – or, more precisely, "phase-one deal" of a far-reaching trade agreement. What might, however, be agreed beyond that phase one is becoming more and more questionable. In the United States, there is talk of 'decoupling' the U.S. and Chinese economies. In China, trade officials warned a long-term trade agreement with Trump might not be possible. These doubts are only exacerbated by the impeachment proceedings against Trump.

On the other side of the Atlantic, Boris Johnson's new deal with the European Union (EU) and the dispute with Parliament, which will not approve it, is keeping investors on their toes. Whether the new elections scheduled for December will ultimately serve Johnson and the Brexit cause is completely uncertain. Johnson had promised the UK would leave the EU without fail on October 31. It did not. How voters will react to that missed deadline and to all they have learned about Brexit in the three years of division and turmoil since the 2016 vote remains to be seen.

Read the complete article here.

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