Mixed Messages

Mixed MeassageSummary

Mistakes in the Middle East?
Yellen sends a muddled message
United States: CPI slows in August
United Kingdom: MPC talks down the growth outlook
Eurozone: Final August CPI comes in above expectations

Good morning,

As I write to you from a beautiful sunny California, it seems the US is becoming increasingly involved in yet another draining campaign in the Middle East with both vague goals and even more ambiguous tactics to achieve them.

Yesterday, a bill allowing the US to arm and train groups fighting the Islamic State was passed in the House of Representatives by 273 to 156 votes. The bill, strongly backed by both Republican and Democrat leaders, has raised concerns about both the loyalty and ability of the groups they are arming – given the Americans are currently bombing their own equipment which IS fighters seized from the Iraqi army, there is much reason to be cautious. It’s easy to forget that American financing of the Afghan mujahideen, whom they proudly declared “freedom fighters”, during the Soviet invasion led to the creation of the Taliban and other modern terrorist groups.

With little confirmed military commitment from Obama’s global coalition, the US may be forced to rely on the moderate Syrian rebels to fight their battles.

Turning back to the economy, the message from the FOMC in yesterday’s policy statement and accompanying economic projections (SEP) is that the Fed continues to move along the path towards policy normalization but has left the exact timing of the first rate hike ambiguous.

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Global Macro-Daily Note 18th September 2014

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