UBS On-Air: Paul Donovan Daily Audio 'Firing, not ceasing'
5/28/20263 min
In the past day, the US fired on Iran, Iran fired on Kuwait, Israel fired on Lebanon, US President Trump threatened to “blow up” Oman. The US administration says the ceasefire (sic) is holding. Market reactions have been negative but muted. Investors are eyeing US domestic political pressures as grounds for expecting a resolution, in spite of Trump’s denials. Trump’s approval rating hit a new low in a recent opinion poll, and the administration is being directly blamed for higher prices.
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First 90 secondsPaul Donovan· Host0:00
Good morning. This is Paul Donovan, Chief Economist at UBS Global Wealth Management. It's seven o'clock in the morning London time on Thursday, the twenty-eighth of May. Unnamed US officials are claiming the ceasefire with Iran continues to hold. The US fired on Iran yesterday. Iran fired on Kuwait. Israel fired on Lebanon. US President Trump threatened to, quote, "blow up" Oman. To an economist, this seems a lot of firing and relatively little ceasing. The firing back and forth has led to some market reactions. But again, the optimism bias and a resigned sense that this sort of thing is perhaps inevitable has limited the extent of that reaction. One thing that may be supporting investor optimism is the fact that the war situation has not necessarily developed to Trump's advantage. In The Economist's tracking poll, Trump's approval rating hit thirty-four percent, the lowest approval of either term and lower than US President Biden ever reached. A separate poll had more US voters blaming Trump for the cost of living crisis, more properly the affordability crisis, than any other cause by a substantial margin. Trump has said that this hostility will not deter the administration from its stance in the war. But simply put, markets don't