Daily Note- Toothless

World Politics: Guns come first
Markets: Frothy now?
United States: Not much inflation anywhere really
United Kingdom: Little improvement in the public finances
China: Large-cap stocks continue to outperform


Good morning,

One wouldn’t expect financial contracts to be particularly sacrosanct for Socialists. Especially contracts that involve sending military equipment to authoritarian regimes fomenting unrest in neighbouring countries and accused of aiding the mass murder of civilians. France’s President Francois Hollande appears to be an exception.

He has insisted that the first of two French-made Mistral military helicopters must be delivered to Russia in October. Speaking to reporters he said “The Russians have paid. Should we repay 1.1 billion euros if the boat was not delivered to the purchaser?” Well, full marks for honesty Monsieur Hollande. Rarely has a political leader been so candid about the influence of money over foreign policy.

David Cameron is facing similar questions this morning after a Commons committee found 200 licences for British firms to sell weapons to Russia remain in place, which must be particularly embarrassing given that Cameron had announced on Monday that “Future military sales from any country in Europe should not be going ahead. We have already stopped them from Britain.” Britain’s new Foreign Secretary Phillip Hammond had also been pushing for a harder line.

Yesterday EU leaders proposed a widening of sanctions, but echoing St. Augustine’s famous dictum (see our previous note), they will not take effect just yet. As Ryan Littlestone wrote on forexlive.com, European leaders appear to have “one eye on the speedos and suncream”.

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Global Macro-Daily Note 23rd July 2014


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