• Tim Knight from...
    02/06/2016 - 00:25
    What we must remember is this: we are in a bear market, and the risk of a countertrend rally is present, but confined. The opportunity on the downside movement dwarfs the risk of a push higher, as...

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Russia Warns Of East Ukraine Invasion To "Defend Compatriots", EU Threatens Gazprom, Rosneft CEOs With Visa Ban

While Russia has been massively piling up troops next to Ukraine's eastern border, one thing that was missing to allow the crossing of the border was a provocation, aka the proverbial spark to give Moscow the green light to "defend" Russian citizens in the East. It may have just gotten that last night, when as previously reported, clashes in the eastern city of Donetsk between pro-Ukraine and pro-Russian civilians turned lethal, killing at least one person and dozens injured. Needless to say, this escalation was just the green light Russia needed. As Reuters reports, the Russian Foreign Ministry, responding to the death of at least one protester in Ukraine's eastern city of Donetsk, repeated President Vladimir Putin's declaration of the right to invade to protect Russian citizens and compatriots  - "Russia is aware of its responsibility for the lives of compatriots and fellow citizens in Ukraine and reserves the right to take people under its protection." But perhaps the biggest news so far this morning is that the EU is considering visa bans to 13 Russian politicians and industry leaders, which according to Germany's Bild, include the headest hocnho of all: Gazprom CEO Alexei Miller.


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Missing Malaysian Flight: Hijacking, Sabotage Theories Added To The Mix

Until today, the prevailing theory surrounding the mysterious disappearance of Malaysia Airlines flight MH370 was either catastrophic midair disintegration and/or terrorism. That changed overnight, following reports by various news agencies that the Boeing 777 was deliberately flown hundreds of miles off course, in a westerly direction toward India's Andaman islands, heightening suspicions of foul play among investigators, as reported by Reuters. And like that the theory shifts from one of terrorism to hijacking and sabotage, ostensibly by highly skilled operators, yet considering the results, one gone horribly wrong.


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Frontrunning: March 14

  • Ukraine anxiety triggers flight to safety, stocks tumble (Reuters)
  • Woodrow Wilson’s Ukraine Failure Foreshadows West’s Dilemmas (BBG)
  • Fortress Executives Join Peers Selling Stock After Rally (BBG)
  • 303 Deaths Seen in G.M. Cars With Failed Air Bags (NYT)
  • Putin Deports Executives for Speeding as Sanctions Loom (BBG)
  • Russia blocks internet sites of Putin critics (Reuters)
  • China Bond Risk Exceeds Ireland as Defaults Unavoidable (BBG)
  • China H-Shares Post Biggest Weekly Drop Since October (BBG)
  • Surge in Rail Shipments of Oil Sidetracks Other Industries (WSJ)
  • Blackstone’s Home Buying Binge Ends as Prices Surge (BBG)

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No Overnight Levitation Ahead Of Sunday's Crimean Referendum

It has been a relatively quiet overnight session, aside from the  already noted news surrounding China's halt on virtual credit card payments sending Chinese online commerce stocks sliding, where despite an ongoing decline in the USDJPY which has sent the Nikkei plunging by 3.3% (and which is starting to impact Abe whose approval rating dropped in March by a whopping 5.6 points to 48.1% according to a Jiji poll), US equity futures have managed to stay surprisingly strong following yesterday's market tumble. We can only assume this has to do with short covering of positions, because we fail to see how anyone can be so foolhardy to enter risk on ahead of a weekend where the worst case scenario can be an overture to World War III following a Crimean referendum which is assured to result in the formal annexation of the peninsula by Russia.


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Chinese Authorities Halt Virtual Credit Card Payments; Tencent, Yahoo Crashing

The PBOC issued a statement today, according to 21st Century Business Herald, that halts virtual credit card products and "face-to-face" payment services such as QR code payment:

*PBOC HALTS QR CODE PAYMENT; PBOC HALTS VIRTUAL CREDIT CARDS BY ALIPAY, TENCENT: 21ST HERALD

Tencent is down over 5% and Yahoo was dumped in morning trading in Japan (on the back of Alibaba's Alipay service being affected).

 


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Where The Russian Troops Are - The Full "Pre-Takeover" Infographic

We provide this map showing the latest distribution of Russian military forces along the Ukraine borders so that readers can make up their own mind if, as John Kerry says, "Russia doesn't yet have forces for Ukraine Takeover."


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Ron Paul: Putin's Crimea Invasion "Has Law On Its Side"

The West will claim "everything Putin does is illegal," but while Ron Paul notes "he's no angel," the former congressman adds Putin "has some law on his side." America has a right of secession and Crimea should have it too - "it's such a facade," Paul explains, noting that "contracts, and agreements, and treaties" linked to the Sevastopol base provide Putin with a legal basis to militarily occupy Crimea, "Russia could accuse America of occupying Cuba because it, too, holds a lease on the land around the Guantanamo Bay prison."


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Here's Why The Market Is Shrugging At TBE's "Promise" Not To Default In July

The "good" news this evening is that Baoding Tianwei Baobian Electric Co (TBE), the company which as recently as two days ago was rumored to be the second "imminent" Chinese corporate bond default which sent copper to multi year lows, has issued a statement that it will not default on its upcoming interest payment (due July 11th - so how the delisted company is convinced it will have enough cash four months from now is a mustery). The "bad" news is that markets don't care. There is a slight whiff of positivity in Copper futures but aside from that, weakness continues in China's corporate bond and stock market. Simply put, the market gets it - this is no longer about the next idiosyncratic bond (or trust) to default; this is about Xi's renewed confidence in efforts to 'clean up' the mounting local government and corporate debts and shrink the shadow-banking bubble. This is systemic, and the markets know it.


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Complete Breakdown Of Financial Controls In US Government, Says Austin Fitts

Former HUD Assistant Housing Secretary and investment advisor Catherine Austin Fitts reveals her thoughts on the ever-rising debt ceiling... what Obamacare is really about (and that’s not socialized healthcare)... why over $4 trillion missing from federal programs may not be incompetence, but a covert strategy... how to protect yourself from the constant devaluation of the US dollar... and what exactly the Popsicle Index measures and why it matters... "are we going to create a society where one hundred percent of everything is digitized and under central control?”


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Is This The Cheapest (And Most Levered) Way To Play The Chinese Credit-Commodity Crunch?

"The best way to define the mood in the market right now is panic," warns one commodity broker, adding that "everyone understands why we are going down, but nobody can tell where the bottom is." As the WSJ notes, the economic slowdown in China is hammering prices of some raw materials, driving down industrial commodities from copper to iron ore and coal - exacerbated by the vicious cycle of credit-collateral-contraction. So what is the cheapest way to play continued stress (with potentially limited downside)? The diversified natural resources company Glencore has a huge $55 billion of debt, is drastically sensitive to copper (and other commodity) prices, and its CDS remains just off record tights...


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A Russian Explains The Real Stakes In The Fight For Crimea (And Ukraine)

Today, as a result of the Ukrainian crisis, U.S.-Russian relations have hit their lowest point since the invasion of Afghanistan in 1979 or of Czechoslovakia in 1969 — or perhaps even since they bottomed out during the Cuban Missile Crisis. The crisis escalated into a conflict between the U.S. and Russia after the West supported a coup, then lied by violating the Feb. 21 agreement when it recognized the formation of a new and illegitimate government of extremists. This conflict has the potential of sparking a new Cold War — something we never thought could happen in modern times since we believed it would have to be rooted in ideological differences. Moscow does not see the revolution in Ukraine as an attempt to create a more democratic or law-based society. Instead, it sees the events in Kiev as an attempt to make Ukraine as anti-Russian as possible.


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"It's The Weather's Fault"

...but the second half of the year is going to be great... (or 3rd or 4th)

 


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Guest Post: What Is Happening With Gold In India?

The Indian government has imposed a duty of ~11.3% on gold imports. Additionally, they have created bureaucratic complexities, including a requirement from gold importers to export 20% of their imports. The government claims that this has resulted in a serious drop in imports, something they wanted, given consistently high, unsustainable current-account deficits. The spot price of gold is $1,300 per ounce. In India, however, it is trading at a premium of 18%, at a price of $1,534. One might ask who is pocketing this premium? Have imports really come to a stand-still? Let's look at the reality on the ground...


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Nope, No Bubble Here

We've discussed margin debt records, the jump in earnings-less-IPOs, the massive surge in junk-debt-issuance, and the spike in penny-stock speculation - which we are told by Janet Yellen are no indication of a bubble in US equities. Given her perspective then we are sure the following two charts will doubly-confirm the lack of any exuberant activity...


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5 Ways Russia's Ukraine "Boomerang" Could Strike

Putin has warned that U.S. action over Ukraine would have a boomerang effect. With the situation anything but de-escalating (and the weekend's Crimea referendum set as a potential catalyst), it seems timely to consider what actions Russia could take against the United States if tensions were to spiral out of control. Clearly Vladimir Putin has a number of options to create significant havoc in multiple areas of American national interest—especially in Asia.


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