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Hedge Connection is pleased to introduce another DAILY INTELLIGENCE BRIEFING provided by McAlinden Research Partners. A unique briefing is presented early each week as a way to quickly glean important current trends in the global news flow and economic data. This extremely comprehensive report provides a way to identify actionable investment themes early. A snapshot of this report is available to the public on The Edge and full reports can be accessed through Hedge Connection.

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Daily Intelligence Briefing for June 30th

After years of policy ascendance, austerity in Europe has reached its high-water mark. The upshot is that the EU’s political institutions are sinking deeper roots but fiscal policies will increasingly diverge at the national level, at least for the foreseeable future.

While the EU has been quietly loosening the rules for more than a year, last week’s EU summit embraced greater fiscal flexibility as official policy: so long as a country is generally pushing ahead with economic reforms, within certain limits it will be given more time to get its government finances in order. That’s a huge victory for Italy’s popular new prime minister, who called the shift a “turning point” for Europe. It can also give more breathing room for France’s deeply unpopular president, who has yet to make good on his promise to turn the economy around after 2 years in office.

But the shift is a setback for Germany’s Merkel, whose voice has been dominant for the last several years and is now facing new internal challenges as well. And it threatens to further isolate the UK, whose government spectacularly failed to block the nomination of the EU’s new president.

At the same summit, the EU signed an association agreement with Ukraine and gave Russia until Monday night to engage more forcefully in the peace process or face another round of tougher sanctions. However, there is some EU déjà vu at work: Germany’s Merkel is leading the push for more sanctions while Italy’s prime minister is calling for a softer approach. It might not just be austerity that is at a high water mark.

Today’s Issue Cluster: EU  

  • The EU officially starts dialing down austerity as the default policy … Germany outflanked by Italy and France
  • The EU’s new president will be the first to reflect the outcome of the EU parliamentary elections … and the first to lack unanimity from the member states … UK and Hungary outflanked by everyone else
  • Merkel’s dominance is being challenged in the EU, inside Germany, and within the government
  • Poland is enjoying the most influence since the 1500s … policymaking via the “Weimar” triangle with Germany and France
  • Along with Georgia and Moldova, Ukraine signs an association agreement with the EU and would like to become a full member
  • The UK’s government promises a referendum on EU membership if it is re-elected next year … Scotland might be leaving the UK after its referendum this year
  • France’s government is going against the tide to assert more state control in the economy … now in competition with Siemens
  • The EU gives Russia until the end of the day to support Ukraine’s ceasefire more fulsomely …. eastern separatists join forces to form the confederation of “New Russia” and ask for Russia’s intervention

Best of the Rest
Bees – US retailers are starting to limit sales of pesticides that are linked to colony collapse disorder … nearly a fourth of US bees were lost last winter
Power - Hong Kong’s coal plants need to be replaced … either more energy from China or more LNG    
MERS - Saudi Arabia thinks it came from Somali camels shipped to a port near Mecca … pilgrims are now arriving for Ramadan

 

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McAlinden Research Partners, a division of Catalpa Capital Advisors, provides daily, weekly, and other periodic reports that identify actionable investment themes early. As students of change, we specialize in the identification of critical inflection points for asset classes, industry groups, and other clusters of securities. MRP reports complement the individual investment styles of clients by guiding them to where they can find investment opportunities. MRP clients include pension funds, sovereign wealth funds, private banks, asset managers and wealth advisors from around the world.

Disclaimer:

The information provided in this presentation (the “Report”) is not to be reproduced or distributed to any other persons. This Report has been prepared solely for informational purposes and is not an offer to buy/sell/endorse or a solicitation of an offer to buy/sell/endorse Interests or any other security or instrument or to participate in any trading or investment strategy. No representation or warranty (express or implied) is made or can be given with respect to the sequence, accuracy, completeness, or timeliness of the information in this Report. Unless otherwise noted, sources for public data include Bloomberg, Trading Economics, and FRED (Federal Reserve Bank of St. Louis Economic Data).

McAlinden Research publishes daily, weekly, and other periodic reports on the economy and the markets. Catalpa Capital Advisors, LLC (CCA) is a Registered Investment Advisor which manages client accounts. References to specific securities, asset classes and financial markets discussed herein by McAlinden Research are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Securities discussed in the Report may or may not be held in accounts managed by CCA and/or its associated persons, and changes in those accounts may be made at any time without notice to its subscribers. Neither McAlinden Research nor CCA is under an obligation to inform research recipients if any accounts managed by CCA subsequently purchase or sell securities discussed by McAlinden Research and they do not anticipate providing such information.

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