UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Beige flags'
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Oct 16, 2025 The Beige Book remains a reliable economic indicator despite political dysfunction. Tariff impacts on consumer prices show a lagged effect due to complex supply chains. While signs of labor market fragility are evident, a collapse isn’t imminent. Partisanship may influence economic anecdotes, raising questions about bias. Recent trade tensions echo past crises, with political theatrics often leading to pragmatic compromises. Meanwhile, France's political strife seems to leave markets unfazed, and discussions on US support for Argentina highlight potential private funding opportunities.
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Beige Book Still Useful Despite Politics
- The Fed's Beige Book still delivered usable economic anecdotes despite U.S. government dysfunction.
- It shows tariffs feeding into consumer prices and a fragile but not collapsing labor market.
Tariff Lag And Diverging Consumer Spend
- Tariff effects unfold with long lags due to complex supply chains, roughly six months to consumers.
- Higher-income consumers keep spending while lower-income buyers seek discounts, widening spending divergence.
Partisanship Colors Economic Anecdotes
- Political partisanship appears embedded in some Beige Book company responses, colouring anecdotal evidence.
- That injects noise into a document markets may use to infer Fed policy, complicating interpretation.