President Trump has urged Congress to pass tax cuts.

In a speech delivered yesterday he said: “So this is our once-in-a generation opportunity to deliver real tax reform for everyday hard-working Americans, and I am fully committed to working with Congress to get this job done, and I don’t want to be disappointed by Congress -- do you understand me?”.

Unfortunately, the precise details of what tax cuts President Trump would like to see have not been given, and it’s not certain that investors really care what President Trump would like to see.

Investors are increasingly inclined to ignore the President in those matters of policy that require Congressional approval, and instead markets look to Congress for leadership in these areas.

Markets will of course pay more attention to those areas where Presidential authority is less constraint by Congress, but even here there are limits.

President Trump’s rhetoric over North Korea with a suggestion that international diplomacy is not the solution is largely ignored for instance.

On Wednesday morning, Mr. Trump tweeted: “The U.S. has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!”

It could be of interest for investors taking notice that only a couple of hours thereafter, Defense Secretary Jim Mattis told reporters: “We’re never out of diplomatic solutions,” which obviously brought assurance back to the markets.

There is something a little more substantial on offer from the States today with the release of the personal income and personal spending data and with those numbers the PCE deflator that is the Fed’s favored measure of inflation.

Inflation is ever more vulnerable to technical quirks, which are hard to forecast, and the PCE deflator has different technical quirks from those who inflicts the consumer price inflation (PCI) numbers.  

The expectation is for a fairly static reading today, but nevertheless bound to the upside overall for reaching 113.34 Index Points by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations.

Looking further out, Trading Economics estimates the GDP Deflator to stand at 114.49 within the next 12 months while In the long-term, the GDP Deflator is projected to trend around 134.00 Index Points in 2020.

All this is important to understand, albeit perhaps only in part, why the Federal Reserve will likely remain on its path of raising interest rates and start rather sooner than later its very long way to the normalization of its “very, for not saying way too big” balance sheet.

All this comes ahead of the always important labor market data tomorrow, which came in at 4.3 percent in July, matching the 16-year low that was touched in May.

An interesting and of course unanswered question is which of these numbers is more important to investors?

We know that the U.S. labor market is now operating at full employment and there is little prospect of that being challenged.

At present, the PCE deflators are close to, but a little below their long-term averages and there is perhaps more interest in these as policy drivers right now.   

The Euro area just released its flash consumer price inflation (CPI) data with the CPI Estimate (Y/Y) in August at 1.50 percent and up from July at 1.30 percent. The CPI Core (Y/Y) in August came in at 1.30 percent, up from July at 1.20 percent.

These data should be not solid enough for the ECB announcing any QE tapering program next week, which, if so, is important for investors.

The euro area (EA19) seasonally-adjusted unemployment rate was 9.1 percent in July 2017, unchanged to June 2017.Youth unemployment was the lowest in Germany at 6.5% percent, while the highest were recorded in Greece with 44.4 percent in May 2017, Spain with 38.6 percent and Italy with 35.5 percent. 

Finally, this morning, the French Minister of Finance Bruno Le Maire said that a stronger euro is a concern for France.

Etienne "Hans" Parisis is a bank economist who has advised investors on financial markets and international investments.