European Economy


Is Germ-exit next?

by Chris Becker The public image of the European experiment is that it has been setup to bring Europe closer together financially, culturally and strategically, a melting pot of medium-sized States so that one big entity cannot shape or rule the continent’s future. The reality is Germany rules Europe for Germany. The financial gains for


Brexit fallout continues as BOE cuts rates

by Chris Becker Last night, the Bank of England held its monthly meeting and made no surprises with the first rate cut – down 0.25% to 0.25% even – as part of a post Brexit referendum easing program. They also announced an expansion in their bond buying program (70 billion pounds) and in news that


Will Italy tear down Europe?

From the AFR: Platinum, the Sydney-based global value investor, is defying the bearish mood and buying more European bank stocks after its positions in banks accounted for almost half of the fund manager’s losses so far this year. The Platinum Unhedged Fund’s latest report shows that its value fell 10 per cent in 2015-16 compared with


Vive la France

From the BBC: A lorry has struck a crowd after Bastille Day celebrations in the southern French city of Nice, killing at least 80 people and injuring dozens, officials say. It happened on the famous Promenade des Anglais after a firework display. The driver was shot dead and guns and grenades were found inside the


73 dead in French truck terror attack

Not clear yet but horrible, from AFR: At least 73 people were killed and many more injured after truck was driven at high speed into a crowd celebrating Bastille Day in the southern French coastal resort of Nice, French media has reported. A gunman reportedly got out of the lorry and fired into the crowd on the


Britain gets a new PM

Summarised by the FT: Theresa May has entered Downing Street with a promise to address the country’s deep divisions, ruling not “for the privileged few” but for people who felt they were losing control of their lives. Within hours of becoming the UK’s second female prime minister, Mrs May made her first cabinet appointments by


Italexit test next for zombieuro

From Morgan Stanley: Italian policymakers are facing a dilemma between the need to reinforce the capital of the banking system, and the need to protect retail savers. We review the options, but argue any government money involvement could put its support at risk in the upcoming referendum in October. Pressure is building to restore confidence


Brexit means Brexit

From Citi:  The sudden withdrawal Monday of Andrea Leadsom for the Conservative party leadership leaves Home Secretary Theresa May as the sole candidate. David Cameron has announced that there will be a new PM by Wednesday night; we expect May to take over as PM shortly.  Given May’s imminent appointment, discussions about the


Goldman slashes the zombieuro

Here is the real problem for Brexit, from Goldman: Following the Brexit surprise, we revised our Sterling forecasts weaker, but – amid lots of doomsday scenarios for the Pound – resisted the temptation to forecast a free-fall. Now that markets have settled somewhat,we are switching to forecast a second leg of weakness for the Pound,


Will Europe make war on exiteers?

From the Daily Mail: Germany’s foreign minister Frank-Walter Steinmeier and his French counterpart Jean-Marc Ayrault today presented a proposal for closer EU integration based on three key areas – internal and external security, the migrant crisis, and economic cooperation. But the plans have been described as an ‘ultimatum’ in Poland, with claims it would mean


Brexit boilover threatens! (updated)

Updated 1.50pm – 1 million votes in front for Leave   New, Brexit on track: Markets charging the USD and all red:   Old, landslide building: Old: Old: Old: Old: East Anglia University model gives Bremain zero probability: 03:00 Fifth forecast update My predictions continue to be much more pessimistic for Remain than the betting markets,


The great ECB fail

From Westpac’s Elliot Clarke: As the ECB has increasingly turned to alternative measures, we have outlined how confidence amongst borrowers and lenders and credit activity have responded. The key takeout has been that, while confidence amongst households has improved materially leading to stronger consumer spending, the impact on non-financial corporates had been much more modest,


Easter links March 25-28, 2016

Sydney Heads, 1865, Eugene von Guérard, Art Gallery of NSW …more to come…   China Chinese premier vows to stabilise the property market – SCMP ‘Skyrocketing’ debt at state firms among biggest challenges facing China’s economy – SCMP Shanghai Said to Be Nearing Purchase Curbs for Warming Property Market – Caixin China’s rust-belt city Shenyang may


Goldman gives Draghi the hint for moar

From Goldman: On perhaps the most important metric – inflation – we are almost back to where we started, with core near last year’s low of 0.6 percent. Looking through the lens of the inflation mandate, sequential (month-over-month) inflation needs to triple from its pace over the past year for the ECB to meet its


Soros: EU is on verge of collapse

Strong words from probably the greatest trader of the 20th century as the “aylites” gather in Davos and make soothing noises, George Soros calls it like he sees it. From an interview at the NY Review: Gregor Peter Schmitz: Merkel used to be very cautious and deliberate. People could trust her. But in the migration


What to expect from the ECB

Via UBS: Quantifying the amount of QE/QE2 that is currently priced into the market is clearly a subjective exercise. Nevertheless we have given it our best shot. Overall, we believe that the market is currently pricing in a €8.5bn increase in monthly sovereign purchases and an extension of QE by 3-6months. Media surveys of market


Will ISIS break the euro?

A new risk for 2016/17 is rising. No, it’s not terrorism but it is its abominable offspring, from The Independent: Meet “le Front National”. They call their leader “our Joan of Arc”, the saintly heroine who has come to lance the Muslim peril and slay the Brussels hydra. And to her supporters, Marine Le Pen,


Greece deja vu

by Chris Becker Change is no change in Greece, with the return to power of Syriza, still led by Alexis Tsipras over the weekend in a snap general election. From Bloomberg: The former prime minister’s Coalition of the Radical Left, or Syriza, received 35.5 percent of the vote, according to an official projection by the