Political noise drowns out economics
- Italy's president explained that the proposed anti-party finance minister was rejected because such an appointment might trigger fears Italy would leave the Euro (for which there was no political mandate). It is worth noting in passing that almost every monetary union breakup of the twentieth century led to authoritarian government, or civil war, or both.
- Spain has a vote of confidence in its government on Friday, because why not? A series of ECB speakers today are likely to be questioned about the implications of this political noise. Chancellor Merkel of Germany was in no doubt of the cause of this anti-party wave. The cause is not a failure of political leadership. The cause is bankers.
- Oil prices weakened further on Monday as traders consider production responses from Saudi Arabia and others. For now the economic narrative is still the effect of higher oil prices – changing global economic demand patterns, raising headline and core inflation, and changing demand for the dollar.
- Turkey's central bank raised rates yesterday, and promised to simplify its policy structure. The lira rallied back to levels not seen since last Wednesday. Investors will want to see a policy stance that creates sustainable growth and a manageable current account.