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Mr Cameron: Relief to Retribution

Mr Alex Salmond and his tenure as leader of the SNP is coming to its end, as the leader of the landmark Scottish Independence vote has thrown in the towel along with his resignation. He showed little of the humility one might expect from someone who had in fact lost. Preferring to paint a picture of victory for having had the vote in the first place. Mr Salmond may well have left the Scottish people “at a moment of great political opportunity,” however this opportunity is going to have to be seized quickly.

Mr Cameron’s emotions following the referendum appear to be quickly turning from ones of relief to feeling of retribution. Although he has repeatedly stated that he will “honour in full” promises to deliver more powers on taxes and welfare to the Scottish Parliament another less friendly and amenable tone of voice is taking hold. As now “the millions of voices of England must be heard,” I doubt we will be getting a referendum as Mr Cameron arrogantly assumes he speak for the population rather than himself and his cronies. The battle lines have been drawn “English votes for English MP’s” “Just as the people of Scotland will have more powers, so it follows that the people of England, Wales and Northern Ireland must have a bigger say over theirs.”

Former President Nicolas Sarkozy has announced his return to politics, having lost the election in 2012. The modern man made the announcement on Facebook stating that he would return as a candidate to head the centre-right UMP party. “I am candidate to the presidency of my political family.” Amid such wide spread infighting in French politics and the tenuous house of cards President Francois Hollande is trying to build, certainly now does seem like an appropriate time to strike. Despite the fact that Mr Sarkozy is utterly despised by the left, we are sure after years of scandal and abuse he has thick enough skin to deal with the blows he will surely receive. We eagerly await “ the new political choice.”

Finance ministers from around the world gathered this weekend at the G20 meeting in Australia to chew the Cud. The Cud in this case was focussed entirely on Europe which was mercilessly chewed up and spat out. The Eurozone has been called to sort itself out, “The euro area continues to encounter persistent headwinds, with unemployment still near record highs, and inflation at dangerously low levels. Among the G20 members, there is an intensified call for boosting domestic demand.” Structural change, strong action and political leadership is needed to ensure growth according to the group. However it will take more than words and strong actions to resolve the ailing area.

Germany have come under fire this weekend for not spending enough and for not as far as we can see embarking upon the reckless “spend your way out of trouble premise” that the ECB are hawking. ECB Member Benoit Coeure in one of the most politically charged statements, urged Germany to increase borrowing in order to support investment and cut taxes.

The German government did not react well to the article and the guarded and reserved response needs no translation to colloquial English, “The article does not reflect current government policy and we don’t agree.” Germany have in fact got a significant spending budget which falls within its rather stringent self-imposed fiscal rules. Ironically by not following the orders of the ECB they are the only country doing well. or as well as can be expected given the situation.

The Bank of Japan made history last week buying one-year government debt at negative yields for the first time last week. determined to achieve its 2 percent inflation target and pump up the monetary base as quickly as possible.

The purchase of these negative yielding assets are guaranteed to lose the BoJ money when the bills are redeemed. However determination is required and an unwavering focus if they are to double their money base by the end of 2014 to $2.5tn, which is the target. However headway is being made as japan is about to emerge from deflation, and there being no floor for yields now the task of de-basing seems a little more achievable.

Today’s data releases are all but non existent, markets should continue to rejoice a little bit following the Scottish vote, we should see a degree of correction as they seek to find their new levels. Kicking off the day however we see the ECB’s Praet take to the stand to discuss the future of the Monetary System, followed by Mr Draghi speaking early afternoon. US Home sales and Eurozone consumer confidence complete the afternoon. The evening will see a number of FED members speaking in Michigan.