European Economy

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.

European bank stress tests have been greeted with an avalanche of cynicism, from Bloomie: The problem is that the tests, in effect, continue to turn a blind eye.

George Soros via Foreign Policy: The refugee crisis was already leading to the slow disintegration of the European Union.

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.

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.

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.

From Citi: Like most boys, my three-year old loves see-saws.

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.

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.

From Citi:  The sudden withdrawal Monday of Andrea Leadsom for the Conservative party leadership leaves Home Secretary Theresa May as the sole candidate.

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.

The Brexit panic is over almost before it began.

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.

From George Soros at Project Syndicate: Britain, I believe, had the best of all possible deals with the European Union, being a member of the common market without belonging to the euro and having secured a number of other opt-outs from EU rules.

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.

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 the FT, a decent backgrounder on France’s surging National Front: The stronger this party gets the weaker the euro and stronger the US dollar.