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[Bloomberg]( Tariff deadline, U.K. election, and monetary policy set to dominate this week. Tick tock With a new round of U.S. tariffs on China set to kick in at the end of this week, pressure on trade officials is mounting to make sufficient progress in talks to allow that move to be postponed, at least. There have been signs of progress recently, but [confusion remains]( as to how close both sides actually are to reaching a phase-one deal. A Chinese Ministry of Commerce official said the country hopes the talks [can produce “satisfactory results](.” Adding further impetus to Beijing’s search for a deal is the unexpected drop in the country’s exports last month, with the total to the U.S. [down 23% from a year ago](. Johnson lead The U.K. election on Thursday is looking likely to produce a solid majority for Prime Minister Boris Johnson, with polls showing his Conservative Party [maintaining a 10% lead]( over the main opposition Labour Party. Johnson is spending the final days of the campaign in Labour strongholds as he tries to [maximize his majority](. Should the polls prove accurate, then the U.K. should finally [leave the European Union on Jan 31 next year](, bringing an end to the first stage of Brexit and starting the next round of negotiations with the EU on future arrangements. Sponsored by The Centrale [Introducing The Centrale in Midtown Manhattan with world-class amenities designed by Champalimaud, and architecture by Pelli Clarke Pelli Architects. Effortless, elegant, individual. The life that awaits at The Centrale. 1-5 Bedroom Condominiums from $1.70M. Full Floor Tower Residences from $10.25M. Immediate Occupancy.Â](  Fed, ECB Wednesday’s Federal Reserve monetary policy decision is not expected to produce any change in policy, with last week’s [blowout jobs number]( backing policymakers’ view that the jobs market in the U.S. remains strong. While there is also no change expected from the European Central Bank’s decision on Thursday, it will be an interesting meeting as it is the first with new president Christine Lagarde at the helm. While her predecessor Mario Draghi started his term with successive rate cuts, she is more likely to concentrate on a [strategic review of the institution’s toolkit](. Markets wait With this week’s calendar packed with potential market-moving events, investors are very much in wait-and-see mode. Overnight the MSCI Asia Pacific Index climbed 0.4% while Japan’s Topix index closed 0.5% higher. In Europe, the Stoxx 600 Index was broadly unchanged at 5:50 a.m. Eastern Time with retailers among the better performers. S&P 500 futures [pointed to a quiet open](, the 10-year Treasury yield was at 1.821% and gold was slightly higher. Repo test Any [liquidity]( fears will be on show as the New York Fed [embarks]( on a $25 billion 28-day auction. There is also a $120 billion overnight operation. There is no data of note for the U.S. economy today. In earnings, Toll Brothers Inc., Thor Industries Inc. and Casey’s General Stores are among the companies reporting. What we've been reading This is what's caught our eye over the weekend. - Odd Lots: How nearly two decades of Fed policy [contributed to bubbles, busts, and a boom in debt](. - [Repo blowup]( was fueled by big banks, hedge funds, BIS says… - …And now [distortions are emerging]( in Europe’s $9 trillion repo market. - Japanification is the scourge [threatening to go global]( in 2020. - U.S. wage growth [eclipses mortgage rate]( for the first time since 1972. - A [$1 billion grudge]( drove GM’s shock suit against Fiat Chrysler. - People’s real-world behavior often “deviates strongly” from [standard economic theory](. And finally, here’s what Joe's interested in this morning I'm typically not in the business of offering advice to anti-Fed conspiracy theorists and cranks. But today I'm in a generous mood. So there's this meme that always goes around about how the Fed prints up a bunch of money in some nefarious attempt to "inflate away the debt." But this makes no sense either empirically or theoretically. Empirically, we know that bondholders have done extraordinarily well in modern times, so if the Fed has been trying to inflate away the debt, they've failed miserably. Furthermore, from a theoretical standpoint, inflating away the debt would imply that the Fed is on the side of borrowers, as opposed to powerful creditors. And what kind of good conspiracy theory posits that the Fed is on the opposite side of the powerful. It makes no sense! So here's some advice. Check out the latest episode of the Odd Lots podcast, where I speak with [Srinivas Thiruvadanthai]( of the [Jerome Levy Forecasting Center]( about his new paper on the [folly of inflation targeting](. The basic gist is that over the last two decades, the Fed has focused aggressively on inflation stability. This approach has been amazing for creditors. Basically the Fed protects creditors in two ways: It fights recessions by cutting rates, which prevents mass debt defaults, and it also fights inflation by hiking rates, which protects the value of a bond's future income stream. The obsessive focus on stability, he argues, has the effect of facilitating more lending, creating a massive buildup in private-sector debt. Anyway, Thiruvadanthai is no anti-Fed conspiracy theorist. He's not arguing that this is all some secret plan to help lenders. However I'm saying that if you are going to go full-on crank, then this narrative makes a lot more sense than the "inflating away the debt" narrative, which has no basis in reality. Listen to the podcast [here]( and read his paper [here](. 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