Did IMF Just Win The War Of Ukraine Debt Annexation?

The Russians had dangled their multi-billion euro carrot - then swiftly removed it pending further details of who is really running the show (demanding a crackdown on the extremists who are trying to establish power). The Europeans have promised an even bigger carrot - predicated on, we presume, total abdication of sovereignty. But now the Americans are jumping in - Treasury Secretary Jack Lew "urged" Ukraine's interim leader Yatsenyuk to start talks with the IMF as he and Lagarde agreed the fund would be the best foundation for advice and financing (if sought by a fully established Ukrainian government). And the winner is...

  • *UKRAINE'S KUBIV PLANS TO INVITE IMF MISSION, UNIAN SAYS

Which means only thing - Russia is locked out and gas prices are about to take off.

Is This What Sent Stocks To A Record High This Morning?

Many are confused this morning at the exuberance in US equities after dismal data and a bond market that is barely budging. Of course, the answer lies deep in the fun-durr-mentals of the JPY carry trade... but this time it's different as it would appear a note from BofA proclaiming "it's time to buy AUD" coincided perfectly with a ramp in AUDJPY and thus - new all-time highs in stocks...

President Obama Tells The Governors What They Need To Do - Live Feed

We are sure the President knows best as he addresses the National Governors Association this morning. Having explained to them all that he wants to "partner" with each governor, his week of action continues... “If there’s one thing in common in the moments like these, it’s that our cooperation is vital to make sure that we’re doing right by the American people,” Obama said. “That of course will require that we collectively take action on what matters to them — jobs and opportunity.”

Dallas Fed Misses; Dumps To 9-Month Low, Harsh Texas Weather Blamed

Last month's Dallas Fed print at 3.8 barely beat expectations of 3.7 to stall a 3-month missed expectations slump as the data basically has flatlined for 4 months. However, it appears the lack of snow in Texas did not help (though the word weather appears 7 times in survey responses) as Feb's data missed expectations by the most in 4 months and slumped to a 9 month low. What is perhaps most concerning is the outlook for 6-months foward dropped dramatically (with 11 sub-indices tumbling) and CapEx also slumped to a 5 month low. Of course, US equities are surging to new highs on this dismal news...

Guest Post: The Dollar And The Deep State

What others describe as the Deep State we term the National Security State which enables the American Empire, a vast structure that incorporates hard and soft power--military, diplomatic, intelligence, finance, commercial, energy, media, higher education--in a system of global domination and influence. One key feature of the Deep State is that it makes decisions behind closed doors and the surface government simply ratifies or approves the decisions. A second key feature is that the Deep State decision-makers have access to an entire world of secret intelligence. What would best serve the Deep State is a dollar that increases in purchasing power and extends the Deep State's power.

Russia Awakes: Accuses Ukraine's New Government Of "Armed Mutiny", Says It Poses "Real Threat To Our Interests, Citizens"

Prime Minister Dmitry Medvedev on Monday said Russia had grave doubts about the legitimacy of those in power in Ukraine following President Viktor Yanukovich's ouster, saying their recognition by some states was an "aberration". "We do not understand what is going on there. There is a real threat to our interests and to the lives of our citizens," Medvedev was quoted by Russian news agencies as saying. "There are big doubts about the legitimacy of a whole series of organs of power that are now functioning there."... Dmitry Medvedev said Monday, according to Russian news agencies, that the new authorities have come to power as a result of "armed mutiny," so their legitimacy is causing "big doubts."

S&P 500 Surges To New All-Time Highs

Weakness in Asian data, check. Weakness in European data, check. Weakness in US data, check. USDJPY overnight sell-off primed for US day-session ramp, check... New highs for US stocks, check...

Ukraine's President-In-Hiding Yanukovich Located In Russian Base In Sevastopol, Preparing To Depart For Russia

Ever since the weekend's coup d'etat (as he called it: remember, it isn't officially a coup until John Kerry deems it so - see Egypt), Ukraine's overthrown president Victor Yanukovych (despite signing an agreement with the opposition and blessed by Europe which foresaw new legitimate presidential elections sometime after September) has been in hiding, following an aborted attempt to depart the country by plane. This is understandable: after all a warrant has been issued for his arrest. Which perhaps explains why as Gazeta.ru, citing UNIAN.net, reports his latest location is the Russian military base in Sevastopol, the one place where the Ukraine government, legitimate or not, will never dare to tread. UNIAN adds that Yanukovich will "board a landing ship of the Black Sea Fleet of the Russian Federation, which the deposed president will use to go to Russia, according to TV channel ATR."

Greenspan Speaks: Bitcoin, Bonds, & China "Bubble"; US Stocks "No Bubble"

Since his historical track record has been spot on until now, we thought it useful to reflect on the wisdom of the maestro as he speaks this morning and his recent appearances. On the heels of the success of his un-best-selling book, Greenspan explains:

  • *GREENSPAN SAYS 'NO DOUBT' BUBBLES ARISING IN CHINA'S ECONOMY
  • *GREENSPAN SAYS OF BITCOIN: 'IT'S A BUBBLE'
  • *GREENSPAN SAYS 'I DON'T SEE' SIGNS OF A BUBBLE IN STOCK MARKET
  • *GREENSPAN SEES SIGNIFICANT RISE IN LONG-TERM RATES COMING

It appears he bubble-vision is strong and yet he notes that US income inequality is potentially harmful to the US political system and Dodd-Frank doesn't work; adding that the US needs 4% growth to fix itself.

European Inflation Has Biggest Monthly Drop On Record

For those who have been following the abysmal loan creation in Europe, which recently dropped to an all time low today's inflation, or rather make that deflation, data out of Europe should not come as much of a surprise. Then again, with January inflation posting the biggest drop in history, when it tumbled by a record 1.1% from December levels, even the skeptics may be stunned by how rapidly deflation is gripping the continent.

US Services PMI Slumps To Weakest In 4 Months (Ignores Manufacturing Renaissance)

Much as the 3rd grade Markit US Manufacturing PMI 'beat' was blamed for the furious rally last Thursday in stocks, it appears bad news in the form of today's 3rd grade Markit Services PMI 'miss' is (rightly) completely ignored by the market. While the Services segment of the economy is vastly larger and more important for 'guessers', it seems USDJPY would not provide the juice this morning as this is the weakest services performance in 4 months. Of course, "weather" is blamed and optimism for the future remains but what was odd to us is that economists claim that in February manufacturing returned to normal... but clearly services did not.

Chinese Stocks Tumble Most In 4 Months On Latest Government Attempt To Pop Housing Bubble

The last 3 days have seen China's Shanghai Composite index tumble over 3% - its largest drop since October as sentiment comes under pressure from concerns about tightening in the real estate sector. The pace of price appreciation has slowed notably - especially 'existing' apartment sales (i.e. the speculators are exiting) - as it appears houing demand is cooling off with the number of cities with falling MoM home prices rose to six in January from two in December.The PBOC has jawboned as much and real estate sector financial condtions are tightening is slowing as a number of banks curb lending to developers. This is weighing on copper prices also as construction activity slows (exacerbating problems in the shadow banking system's collateral pools). The PBOC is getting what they wanted - but may regret it.

Frontrunning: February 24

  • Ukraine Seeks $35 Billion as Yanukovych Warrant Is Issued (BBG)
  • Ukraine's fugitive president wanted for mass murder (Reuters)
  • Polar Vortex to Bring More Snow on Return to U.S. This Week (BBG)
  • China property prices continue to rise (FT)
  • Microsoft Said to Cut Windows Price 70% to Counter Rivals (BBG)
  • Pentagon to propose shrinking Army, scrapping some jets (Reuters)
  • Hedge Funds Turn Bearish on S&P 500 as VIX Advances (BBG)
  • Draghi’s Data Jigsaw Takes Shape as ECB Readies Showdown (BBG)
  • China, eyeing Japan, seeks WW2 focus for Xi during Germany visit (Reuters)

Chinese Housing Weakness Unable To Keep USDJPY-Driven Futures Lower

Asian equities are trading lower across the board on the back of some negative credit stories from China. Shanghai Securities News noted that ICBC and some other banks have curbed loans to developers in sectors such as steel and cement. Slower gains in home property prices in China’s tier 1 cities are also not helping sentiment. Beijing and Shenzhen prices rose 0.4% in January, which looks to be the slowest monthly gain since October 2012 according to Bloomberg. Elsewhere there are reports that a property developer in Hangzhou (Tier 2 city in China) is reducing its unit prices by 19%. Our property analysts noted that given the strong gains seen in Tier-1 and some bigger Tier-2 cities in 2013, a slowdown or negative trends in price growth should not be a surprise. Nevertheless, it has been a very weak day for Chinese and HK markets with the Shanghai Composite and the Hang Seng indices down -2.0% and -1.2% lower as we type. Across the region, bourses in Japan and Korea are down -1.0% and -0.6%, respectively.

Bitcoin Prices Slide After Mt.Gox CEO Resigns From Foundation Board

In what appears yet another straw on the camel's back of Mt.Gox (following the re-freeze of account withdrawals), the Bitcoin Foundation this evening reported that:

"effective immediately, Mt. Gox has submitted their resignation from the board of directors."

Bitcoin prices on the dying exchange tumbled on the announcement after quite an extreme volatility day - which saw prices swing from $151 to $239 and then down to $190 on the news.

PLA Officer: China Must Establish South China Sea ADIZ; Will "Fight When Appropriate"

A Chinese military officer has said that establishing a South China Sea ADIZ is necessary to China’s national interest. Li Jie's comments come on the heels of remarks made by U.S. Captain James Fanell, director of intelligence and information operations at the US Pacific Fleet (full clip below) on China's preparation for war with Japan (and other regional nations) and sources saying that China’s Central Military Commission has directly given Chinese military the instruction: “Fight if it is appropriate to fight.”