Daily Note – Behind the Curve


United States: Market behind the curve
Libya: Fighting intensifies
United States: Pending Home sales rate of decline improves
Eurozone: Italian business confidence slows


Good morning,

A few weeks back we wrote about how St Augustine’s plea to the almighty of “Make me virtuous – but not yet” summarised the thinking behind Bank of England Governor Mark Carney’s half-hearted policy towards Britain’s bubbly housing market. The more I read in the news, the more I think St Augustine’s cry captures the zeitgeist of political and economic policy today. You can’t beat the Germans for capturing in one word what takes a lifetime to explain in English!

In the financial world, nowhere is the language of virtue, trust and purity used more than in central banking. It would seem, however, that the market suspects the FOMC is made up of closet Augustinians. Market expectations of Fed funds are below that of the Fed itself.

Meanwhile, American and EU leaders are well and truly out of the closet. They have agreed to tough new sanctions against Russia’s financial, energy and defence sectors but France will be allowed to send two Mistral warships from a previous contract. Perhaps this has something to do with the parlous state of the French economy – they can little afford to hand back over a billion euros to the Russians. Russia’s natural gas sector will also be excluded from the sanctions due to many European’s heavy Russian energy reliance, particularly the Germans.

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Global Macro-Daily Note 29th July 2014


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