UBS On-Air: Paul Donovan Daily Audio 'Competitiveness considerations'
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Good morning, this is Paul Donovan, Chief Economist at UBS Global Wealth Management. It's six o'clock in the morning London time on Monday the 20th of January. German December producer price inflation is due. This does not tend to be a major focus for financial markets, but at a time when competitiveness of different manufacturing economies is coming into focus, with the threat of trade taxes offering additional distortions, there may be a little more interest.

Producer price inflation has slowly ground its way out of deflation, turning positive in Germany in November. Japan's final November industrial production data remains negative, which is not a surprise especially. However, there is a contrast with the strong pickup in US industrial production that came in stronger than expected for the month of December.

German industrial production also showed more strength than had been expected. Or, to be more accurate, less weakness than had been expected. There is demand for goods out there. Even with spending on having fun being favoured by consumers, goods demand is rising as real incomes rise. Over in the United States, the popular social media app TikTok shut itself down and then opened itself up in voluntary actions.

These are complicated political steps which seem to mimic the action of a TikTok dance. Slightly inept, slightly comic, but with serious money behind them if successful. Why should markets care about this? In one way, the voluntary actions might signal how business is going to be done under the incoming US administration. In addition, US President-elect Trump has said that they will postpone the ban.

If this means the ban on the app being on platforms, that would be in defiance of enacted legislation. Given how important rule of law is to investors, the way in which this situation is handled is going to be relevant. The US Federal Reserve is in its communication blackout period, which gives us a bit of peace and quiet on the central bank front. However, the European Central Bank is always happy to rush to fill a vacuum, and there are a cluster of ECB speakers today.

Markets remain relatively confident in the pace of further ECB easing, however. That's all for today. Have a good day.

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