sanctions

The debate about the worth of economic sanctions / blockades has been raging for centuries (remember Troy), in the modern era Cuban, South African, Rhodesian and Iranian. They have been seen as the quick, cheap option to show that a country disapproved of another’s action. The EU experience has changed all that, the conflicting interests of its members in security, energy, trade, finance and culture, manifested most clearly with Russia (evident in other situations) shows how difficult consensus can be. Now it is the travel ban that is the action of first resort when chest beating. Our interest in this area has been Gaza, despite a multiyear blockage of its border by Israel and Egypt (on and off) it is amazing to see the sophistication of the tunnels the Hamas have been able to build under the border. It has been well documented the smuggling tunnels between Egypt and the Strip. For many years news reports have appeared of the scale including livestock, new cars and the whole gambit of products to construction material. The tunnels into Israel where not so well known. If they have dug them, you can be sure they have similar networks to manufacture, protect and launch their rockets, Peenemunde in Gaza. This feat of construction has been done under the noses of the ME’s most sophisticated democratic and authoritarian countries, respectively. This raises the question how much UN and EU aid has been diverted by the Hamas authorities away from housing and infrastructure to the missile offensive effort. The UN and EU have been major donors to Gaza but have they been tracking where the European and global taxpayers money has been going? The biggest winners seem to have been the cement firms and one suspect some steel. The losing candidate in the Indonesian presidential election is challenging the result in the courts, so watch that space.

Relatively quiet on the metals as the US$ crawls higher against € as EU consensus against Russia descends into acrimony. Overnight oil that had been moving higher US$ 105 / bbl fell back to US$ 102 / bbl, as the front Jul futures contract expired. To show how the miners are getting on top of cu production problems, BHPBilliton reported output was 1.7 million tonnes in fiscal ‘14 and could rise to 1.8 million in the current fiscal year to Mch ‘15.

The economic numbers remain thin on the ground, the Australian Q2 CPI rose 0.5% qoq (Q1 0.6%) yoy 3% (2.9%). Jul EU consumer confidence was slipped -8.5 (Jne -7.5). Finally, May Canadian retail sales rose 0.7% (Apr 1.1%). Chinese data does not give an unemployment rates but in a recent paper we saw Q1 unemployment in the major cities quoted at 8.7%, when rural migration was included.

Again apologies no stock update.