Daily Note – End Game?


Russia: Don’t expect Putin to roll over
United States: Initial Claims falls to recovery low
South Africa: SARB hikes by 25bp
Eurozone: ECB to give banks preliminary stress test findings in September/October

Good morning,

When you outsource bad behavior to your thugs, you are unfortunately at their mercy. This happened with the British government in Northern Ireland and the Yugoslavian government in Bosnia. Eventually the thuggish tail can wag the official dog.

Yesterday’s murder of hundreds of people on a Malaysian jet by Russian separatists in Ukraine means that the calculation of Putin has backfired badly. The Russian market is not to be touched now, even though valuations are attractive, because Putin will be forced to rein in these guys and if he doesn’t, more sanctions on Russia are a certainty.

If he does bring the pro-Russian militia to heel, he will be seen as a coward in Russia and he won’t do this. So Russia’s collision course with the West is now unavoidable. This is bad news for Europe and Germany in particular, given Germany’s exposure to Russian energy and the Russian consumer market.

To use market parlance, this was the tail risk event in Ukraine and now it has happened.

Download a FULL PDF version of the Daily Note:

Global Macro-Daily Note 18th July 2014



  • The statements, opinions and analyses presented in the articles, newsletters, and other materials appearing on this website are provided as general information and for educational purposes. Opinions, estimates and probabilities expressed herein constitute the judgment of the author as of the date indicated and are subject to change without notice. Nothing contained in this website is intended to be, nor shall it be construed as, investment advice, nor is it to be relied upon in making any investment or other decision. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. David McWilliams shall not be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided.

Categories: Daily Note