In today’s briefing:
- UK: Tax Hikes Disrupt Housing Market
- MAGA Will It Work?: A REALITY CHECK
- Finance Minister Choi Quits and Lee Jae-Myung’s Fate Remains Uncertain Post Supreme Court Ruling
- Flash : Egypt & Kuwait, May 1st 2025
- 2025 First Quarter Letter to Investors
- Japan: Policy Rate Held At 0.5% (Consensus 0.5%) in May-25
- Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 2 May 2025
UK: Tax Hikes Disrupt Housing Market
- Domestic tax hikes are more substantial than US tariffs in April, so the impact should not be forgotten, even if the UK government wants to blame any damage on Trump.
- Frontrunning April’s stamp duty increases stoked transactions and lending, and may take at least a few months to recover afterwards. Resilient approvals are reassuring.
- Higher transaction costs probably won’t break expectations into a downwards spiral, but are now widely cited as a major hurdle, contributing to slower UK activity growth.
MAGA Will It Work?: A REALITY CHECK
- April customs numbers report that tariff collections may double in April; however, at an annualized rate, it would fall well short of the Administration’s promises.
- The Administration has adjusted its narrative to focus on bringing high-tech manufacturing to the U.S. with more robots than blue-collar line workers.
- GDP surprisingly declined in the first quarter, indicating a coming recession. Media focus is on the drag from net exports, but ignores the inventory build and poor consumption numbers.
Finance Minister Choi Quits and Lee Jae-Myung’s Fate Remains Uncertain Post Supreme Court Ruling
- The Finance Minister Choi Sang-Mok resigned as the National Assembly was trying to vote to impeach him just before Choi resuming role as South Korea’s acting President once again.
- The Supreme Court “reversed and remanded” the case of Lee Jae-Myung, the leading candidate of the Democratic Party of Korea, for being guilty of violating the Public Official Election Act.
- All in all, given the uncertain political landscape, this could result in more overseas institutional investors in the Korean stock market to sit out longer on the sidelines.
Flash : Egypt & Kuwait, May 1st 2025
- For many coming here in the Gulf and UAE in particular, security is an important part of the discussion. Much has been said about the climate in UK and London, where even in the best neighbourhoods, walking while chatting on the phone or taking a picture is taking a big risk.
- Recently, the police raided a flat in the city where they discovered over 50 000 phones in various stages of dismantling, hacking and all.
- I also discovered recently bicycle hijacking ! Two guys on a scooter stop a cyclist, threaten him with a hammer and speed away with the bicycle.
2025 First Quarter Letter to Investors
- At the current time, we find the rebound in US equity markets increasingly difficult to rationalize.
- With trade war uncertainty still high, limited new stimulus from tax policy (especially given the high likelihood that no progress on meaningful spending cuts will be achieved), and a patient Fed, there’s little clarity on how growth or earnings can improve enough to justify what were already high valuation levels.
- Cross-asset signals, such as tighter credit spreads and a falling dollar, highlight a disconnect between market optimism and the administration’s ongoing efforts to address trade imbalances.
Japan: Policy Rate Held At 0.5% (Consensus 0.5%) in May-25
- The BoJ held the policy rate steady at 0.5%, in line with expectations, while market sentiment shifted more dovishly, reducing the perceived likelihood of further rate hikes.
- Growth and inflation forecasts for 2025–26 have been revised down, with underlying inflation expected to remain weak and only gradually return to target levels as wage pressures intensify.
- Despite maintaining a tightening bias, the BoJ’s emphasis on downside risks and its data-dependent approach suggests a slow and cautious path toward further policy normalisation.
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Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 2 May 2025
Thailand cuts rates again amid weak domestic growth and deteriorating external outlook, diverging from global central bank caution.
Japan maintains ultra-loose policy; any rate hikes likely delayed until year-end despite persistent inflation.
Strong U.S. investment offsets weak trade balance, but volatility masks real economic trends; concerns grow over fiscal sustainability and reindustrialization feasibility.
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