• Risk iStock_000016809464SmallCosta Rica – Moody’s has lowered the sovereign credit rating to junk and drastic personnel cutbacks by Intel and BofA will hurt;
  • Lesotho –elections have been pulled forward after a coup attempt;
  • Peru – a new Finance Minister and expectations for an economic rebound.

AUSTRALIA: The government has become the first to detail its support for a US-led effort to “degrade and destroy” ISIL. The latest developments show that it has good reason for this. Despite acting decisively also in other areas, however, the government has been losing support, and economic difficulties are a large part of the reason.

AUSTRIA: The government shakeup that came with Vice Chancellor Spindelegger’s resignation will not create enough of a problem to jeopardize the governing coalition ahead of the next elections. There are difficulties to be overcome, however, including the impact of the sanctions on Russia.

FRANCE:  Premier Valls has won a parliamentary confidence vote, but the tough part is yet to come for him and President Hollande. The Socialist Left is seriously disgruntled and the business community still needs to be convinced that there is determination behind the leaders’ declared reformist intent.

GERMANY:  The economy’s second-quarter setback may have been due to transient forces, but there are concerns about lasting difficulties. These include internal as well as external factors. In the political arena, the anti-euro Alternative fuer Deutschland has grown to a point where the CDU needs to take it more seriously.

SOUTH AFRICA: The Reserve Bank, faced with the task of curbing inflation while supporting a weak economy, decided to leave its benchmark interest rate unchanged this month. Getting conflicting goals to mesh will then be the job of a new CB Governor, as Gill Marcus is calling it quits.

SWEDEN: The country faces a politically difficult period, now that the Center-Right government of Prime Minister Reinfeldt has been denied an (unprecedented) third term in office and the Social Democrats will lead the next administration. While forging it will be problematic, the ensuing policy shifts will not be exactly earth-shattering.

SWITZERLAND: The CB’s pause in its FX market intervention to hold down the franc may be about to end, as the CHF is traded persistently close to its top. While the country is not finding it easy to preserve its cherished neutrality in today’s turbulent world, it is taking great care in managing its semi-detached relationship with the EU and the US.

UKRAINE: Left with no option to do otherwise, Kiev has signed a truce agreement with the Eastern separatists that is custom-tailored to Moscow’s wishes and will produce a “frozen conflict” while the Kremlin works on biting off other pieces of Ukraine. The confrontation is making another massive financial bailout inevitable.

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