Good morning New York,
David on the curse of Merkel: coalition partners in her last two terms have lost double-digit shares of the German vote…
Angela Merkel’s Christian Democrats began the search for a coalition government. Sunday’s German election left the CDU just five seats short of an absolute majority in the Bundestag, but also pushed the Free Democratic Party, its former coalition partners, below the minimum 5 per cent of the vote needed tp secure any seats in parliament. The CDU could now negotiate with the Social Democratic party to create a ‘grand coalition’. Ms Merkel led a previous such coalition from 2005 to 2009 — but it took 65 days to negotiate (Financial Times).
FDP supporters blamed its collapse on the rise of Alternative für Deutschland, a new anti-euro party. The FDP polled 4.8 per cent of the vote to the AfD’s 4.7 per cent — an ignominious exile from the Bundestag for a pro-business party which had served in coalition governments for 46 of the last 64 years (Wall Street Journal).
Shorts are being burned in European stocks. Shares out on loan in Euro Stoxx 50 Index companies have fallen to 1.7 per cent of the total, from 3.2 per cent two years ago — the lowest level of short-selling activity in seven years (Bloomberg).
UK home-building approvals rose 49 per cent in the second quarter. Approvals for construction rose to 37,000 from a year earlier, and hit 156,608 in the 12 months to June. But they remain below the 220,000 a year rate seen as required to keep up with population growth (Bloomberg).
Egypt paid back $2bn in central bank deposits to Qatar after negotiations over converting the money into bonds broke down (Reuters).
Banca Monte dei Paschi di Siena suspended interest payments on three hybrid securities to comply with European conditions on a state bailout (Reuters).