More economic nationalism - UBS

Following Canada's decision to dramatically tax Canadian consumers of electric vehicles made in China, China has launched anti-dumping investigations into Canadian exports, UBS macro strategist Paul Donovan notes.

US ISM poll of manufacturing sentiment is due

"'Dumping' is the deliberate sale of exports at below market price. It is not a common occurrence, but it is a convenient way of pursuing economic nationalism (per US and EU accusations of dumping against China). The environment of economic nationalism is most obvious in traded goods, but it is also taking place elsewhere."

"Restrictions on capital flows have been a characteristic of economic nationalism in the past. Regulation can also be used to further national interests (and markets like the EU, with a sizable middle-class consumer base, have an advantage in this area). Economists have to distinguish the destructive trends of economic nationalism from the more positive forces of localization efficiency."

"The US ISM poll of manufacturing sentiment is due. While the questions are supposedly objective, political bias can easily be introduced into the answers. The poll has tended to surprise the consensus negatively this year. The UK BRC shop sales index showed modestly positive growth in the value of sales. Several parts of the durable goods sector are in deflation, which naturally lowers the overall value of goods sold."