UBS On-Air: Paul Donovan Daily Audio 'Optimism, of a sort'

Paul Donovan · UBS Global Wealth Management

Trump's Iran remarks carry little market weight because politics will limit his ability to act.

Trump's weekend remarks on Iran carry much less weight in financial markets. Investors assume the domestic politics of the situation will limit his ability to act. The evidence cited is that retail diesel prices in the US keep rising and gasoline prices have stopped declining, which adds political pressure against escalation.

“Investors assume that the politics of this situation will thus limit Trump's ability to act.”at 0:52

Paul Donovan · UBS Global Wealth Management

Lula's fourth term will be constrained by a rightward shift in Brazil's Congress.

Lula won a fourth term despite markets not pricing it after he came second in the first round. However, he will be constrained by a broader rightward shift in Brazil's politics. Congressional elections increased support for Lula's opponents, which limits what he can do.

“However, Lula will be constrained by a more general rightward shift in the political spectrum in Brazil at congressional elections having increased support for Lula's opponents.”at 1:15

Paul Donovan · UBS Global Wealth Management

French protests will hit consumer spending, partly offset by police and repair spending.

The protests in France have an economic cost because they disrupt consumer spending patterns. Some of that is offset by government spending on police presence and on repairing damage. The net effect is a modest drag rather than a large shock.

“The protests do have an economic consequence in as much as they disrupt consumer spending patterns, there is some offset from spending money on a police presence and repairing any damage incurred.”at 1:51