With Interfax reporting that Belarus has begun full-scale military drills in a "readiness check", and despite Lavrov's comments that:
RUSSIA HAS HAD AND CAN HAVE NO PLANS TO INVADE SOUTHEAST OF UKRAINE - LAVROV
Images from Russia and Ukraine suggest anything but with reports are pouring in from across Russia of even more firepower on the move.
We are sure it is just coincidence - and awkward combination of luck and suspicious timing - but Vedomosti reports that Viktor Zubkov, the Chairman of Russia's massive energy monopoly Gazprom, dumped his entire stake in the company just a few weeks before Vladimir Putin crossed the red line. Gazprom shares have dropped 25% in the last 3 weeks so his timing was impeccible.
One of the key lessons we can take away from history is that the global financial system changes… frequently. Since the end of World War II, the US dollar has been the dominant currency in the world. And even though Richard Nixon ended the dollar’s convertability to gold and unilaterally abandoned the US government’s obligations under the Bretton Woods system back in 1971, the world has still clung to the dollar for the past 43-years. But this is changing rapidly...
US Issues Travel Alert For Russia, Warns Of "Potential Military Clashes (Either Accidental Or Intentional)"Submitted by Tyler Durden on 03/14/2014 - 18:01
Just out from the State Department, which in the aftermath of the most recent failure by John Kerry to resolve the Ukraine situation, appears to be escalating to populism and engaging the general public. The best part in the warning is the following clarification: "all U.S. citizens located in or considering travel to the border region, specifically the regions bordering Ukraine in Bryansk, Kursk, Belgorod, Voronezh, and Rostov Oblasts and Krasnodar Krai, should be aware of the potential for escalation of tensions, military clashes (either accidental or intentional)." Somehow we have a feeling we may be seeing a spike in "accidental military clashes" over the next week.
"Had the thing been armed it would have let out a 200-metre blast...You could be talking about a major loss of life," one source noted as The Telegraph reports British military chiefs have launched a major investigation after a Royal Navy warship accidentally fired a torpedo at a nuclear dockyard. Workers watched in disbelief as the tube-shaped projectile flew through the air before blasting a hole in a security fence and slamming into a storage container. "Someone has obviously pushed the button, presumably by accident - the big question is who," as the Royal Navy stiff-upper-lippedly stated "during a training exercise, an inert Test Variant Torpedo unexpectedly jettisoned onto the wharf. There was no explosion and no casualties." Perhaps they should stay away from the Black Sea for a while - just in case.
This past week has seen the market struggle due to continued weak economic data, rising tensions between Russia and the Ukraine and an extended bull market run. Market internals are showing some early signs of deterioration even though the longer term bullish trajectory remains intact. Therefore, this week's "Things To Ponder" wades through some broader macro investment thoughts, from the safety of your investments to how market tops are made.
If anyone ever said John Kerry - arguably the worst Secretariat of State in recent US history - didn't know how to look regal in photo ops of failure after epic failure, they obviously have never this picture. Such majesty, such posture, such a shiny coat. Just don't look him in the mouth.
We started the week exuberant wearing the cleanest dirty shirt scoffing at the weakness of 'foreign' markets. By the end of the week, the Dow has dropped 5 days in a row in a week for the first time since May 2012 and the Nasdaq had its worst week in 9 months. The S&P dropped back into the red for 2014 - despite a late-day ramp effort - tracking AUDJPY all day long once again (and financials also red for 2014). VIX surged above 18% (and its term structure steepest since US downgrade) as credit spreads blew wider. Treasury yields tumbled 10-14bps on the week - the biggest drop since June 2012. Gold prices rose over 3% on the week to 6-month highs. Copper saw its biggest 2-week drop in 30 months. The USD slipped lower on EUR and JPY strength (JPY +1.9% - biggest surge in 7 months). YTD Gold +14.7%, S&P 500 -0.07%.
An American scout-attack drone, "almost invisible at a height of 4000 meters" has, according to AFP, been intercepted in the Crimean sky. Reports from the Russian state arms and technology group Rostec stated, judging by side-markings it was an MQ-5B drone - which is likely part of the 66th US Recon Brigade based in Bavaria. It was possible to break the drone’s link with its American operators with the help of the EW (electronic warfare) complex Avtobaza. As a result, the device made an emergency landing and passed into the possession of the self-defense forces almost unbroken." It is perhaps ironic that the US is complaining abouit Russia's military presence in Ukraine even as its own equipment is reportedly operating in the country.
Precious metals (gold in particular) continue to push higher and along with copper (to the downside) hold 'center-stage' among world commodity markets. As Citi's FX Technicals group notes gold has traded above very strong resistance on the $1,350 to $1,362 range suggestng a test up to $1,434 and the next level at the 200-week moving average at $1,493. Gold is also getting close to the "golden cross" where the 50DMA will cross above the 200DMA. Such a move, if seen, would strongly suggest that the corrective low is in (at $1,182) and that a re-test of the all-time highs at $1,921 and beyond is highly likely.
While most understand that Ukraine owes Russia a few billion here or there for its energy bills that are past due, there is a more concerning issue. The Ukraine owes $3 billion to Russia in bonds that have been issued under UK law. One of the stipulations of the bonds is that if the Ukraine's debt-to-GDP ratio should exceed 60%, the bonds will become immediately callable. Once the Ukraine gets funding from the IMF, this is of course going to happen right away – its debt-to-GDP ratio will then most definitely exceed 60%, so the first $3 billion of any aid the Ukraine receives in the form of loans will right away flow into Russia's coffers. The American and European tax cows will no doubt be thrilled.
Utah state prosecutors have received accusations of wrongdoing and gathered evidence in a wide-ranging corruption scandal involving Majority Leader Harry Reid and rising Republican Senator Mike Lee. However, as The Washinton Times reports, FBI agents have been thwarted in their efforts to launch a full federal investigation by the Justic Department. "DOJ risks creating the perception of a cover-up," warned one senior FBI official.
History suggests that low-intensity conflict within the ruling Elite is generally a healthy characteristic of leadership in good times. As times grow more troubled, however, the unity of the ruling Elite fractures into irreconcilable political disunity, which becomes a proximate cause of the dissolution of the Empire if it continues. We recently proposed the idea that Wall Street now poses a strategic threat to national security and thus to the Deep State itself. Many consider it "impossible" that Wall Street could possibly lose its political grip on the nation's throat, but I suggest that Wall Street has over-reached, and is now teetering at the top of the S-Curve, i.e. it has reached Peak Wall Street.