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MORNING DIGEST: July 18, 2016

EU foreign ministers gather in Brussels Monday, with the situation in Turkey set to top the discussions, along with the ongoing terrorism threats in Europe following the Nice attack. They will be joined by John Kerry, the US Secretary of State, to ta...

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EU foreign ministers gather in Brussels Monday, with the situation in Turkey set to top the discussions, along with the ongoing terrorism threats in Europe following the Nice attack. They will be joined by John Kerry, the US Secretary of State, to talk about EU-US relations and how to move forward with global foreign policy issues. Boris Johnson, recently appointed UK foreign secretary following the British vote to leave the EU, will make his first Council appearance at this meeting.

Arriving in Brussels, Johnson said he would reassure his EU counterparts that Britain would continue to cooperate closely with EU partners, eben following the eventual official departure from the bloc, Reuters reported.

UK Prime Minister Theresa May travelled to Scotland over the weekend, pledging she will not trigger EU Article 50 before finding a nationwide approach to the issue. May wants to involve Scotland in the Brexit process to ensure the departure from the EU will not lead to the break-up of the UK.

However, according to Politico, European leaders are unlikely to support such a position, given that they want to remove political uncertainty and define the new EU-UK relationship as quickly as possible, although of course triggering A50 is entirely within the UK’s control.

Speaking to the BBC, Nicola Sturgeon, Scottish First Minister, said it could not be ruled out that England and Wales exit the EU and Scotland keeps both the British and European memberships. . Sturgeon added a new Scottish independence referendum in 2017 was still possible if PM May does not take the “UK approach” promised.

One of the UK’s leading fund managers told The Guardian that the referendum result will be “horrible” for Britain. Richard Buxton, chief executive and head of UK equities at Old Mutual Global Investors, argued that pre-June 23 warnings were not “doom-mongering” and all the consequences of Brexit outlined by Bank of England Governor Mark Carney were “spot on”.

Properties in central London have already suffered a price adjustment in the wake of the Brexit vote, as survey says. Data from a research firm, LonRes, showed the number of reductions in asking prices rose 163% in the 12 days following the vote in comparison to the 12 days before the referendum. However, the cuts have not boosted sales, the survey suggests, noting completions fell 18% from pre-referendum levels the Financial Times reported.

TOO EARLY TO SEE BREXIT IMPACT ON CITY: European Commission Vice President Valdis Dombrovskis, responsible for the financial services brief following the resignation of UK commissioner Johnathan Hill, told the FT it is too early to draw conclusions over the future of the City of London’s European businesses. Dombrovskis said the issue of clearing houses would play a relevant role in upcoming Brexit negotiations, but admitted that there are several factors at play.

TURKEY COUP COULD GIVE MORE POWER TO ERDOGAN: The failed attempt to bring down the presidency of Turkey’s Recep Erdogan could ultimately give him further power, the Wall Street Journal reports. According to Erdogan, the coup attempt that killed 104 plotters and 190 others, was a gift of God that now allowed him to “clean” the military. Erdogan has asked for the restitution of the death penalty, abolished in 2004, to punish plotters.

FRENCH POLICE DETAIN 6 PEOPLE IN THE WAKE OF THE NICE ATTACKS: The French authorities have detained six people for questioning over links to Mohamed Bouhlel, the 31-year-old man who killed 84 people in Nice last Friday. According to the WSJ, phone records show these six people were in contact with the man in the days prior to the attack.

PORTUGAL REPLIES TO BRUSSELS IN ATTEMPT TO PREVENT DEFICIT SANCTIONS: The Portuguese government finally replied to the European Commission Sunday, arguing against the imposition of sanctions for failing to hit deficit targets in 2014 and 2015, Publico reported. The main argument from Portuguese officials appears to be that this year’s fiscal consolidation is on track, the paper says.


-- ALMERIA: Luis Maria Linde, member of the ECB’s governing council will speak in Almeria, Spain at 0900GMT.

-- FRANKFURT: The ECB will publish the PSPP bond-buying data at 1350GMT.

-- WASHINGTON: Vice President Valdis Dombrovskis of the European Commission will take part in a discussion on the resilience of financial markets, starting at 1700GMT.

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MNI Euro Insight
MNI Euro Insight is an invaluable resource for financial professionals who are responsible for researching and developing investment strategy. Drawing on MNI’s extensive network of contacts and relationships with senior European policy makers - in Brussels, at the ECB, and Eurozone national capitals - Euro Insight is relied on by economists, strategists and fund managers for its unique and dependable analysis.

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