Archive - Mar 19, 2014

Just days before the annexation of Crimea, while promising that they would not instigate actions to antagonize the West, Russia launched a massive unscheduled military drill. Now, with Crimea under their pro-Russian forces control, and despite promises that Putin seeks to go no further than Crimea, the Wall Street Journal reports that Russia will begin unscheduled military aviation exercises in regions bordering Ukraine. The crews will be practicing "actions during airstrikes" on enemy military targets, communications jamming, air defense and attacks by military jets, the spokesman said.

It only makes sense that now that Crimea is officially Russian territory once again, that the Russians would do with it as they see fit. Which they did. Overnight Russian troops and unarmed men stormed Ukraine's naval headquarters in the Crimean port of Sevastopol and raised the Russian flag in what Reuters described as "a tense but peaceful takeover that signals Moscow's intent to neutralize any armed opposition." Russian soldiers, and so-called "self-defense" units of mainly unarmed volunteers who are supporting them across the Black Sea peninsula, moved in early in the morning and quickly took control. But nowhere is the resignation within Ukraine's acting political leadership more evident than in a statement just uttered by potential presidential candidate and former boxer, Vitali Klitschko:

UKRAINE GOVT SHOULD WITHDRAW TROOPS FROM CRIMEA, KLITSCHKO SAYS

More appeasement of Putin: will it result in the annexation of east Ukraine? Surely. The only question is when.

Remember when in what at the time was the ultimate #Ref! moment, in January UPS missed and guided lower due to a, drumroll, surge in business resulting from "an unprecedented level of online shopping that included a surge of last-minute orders." Yes, not only was it the weather's fault the company had a surge in business and shipments, but the company actually missed and guided lower due to this surge? Moments ago it was FedEx' turn to miss Q4 revenues and earnings across the board, and to guide lower due to, what else, the weather.

• How Putin Parried Obama's Overtures on Crimea (WSJ)
• West Readies Tighter Sanctions After Russia Seals Crimea Claim (Bloomberg)
• Putin says U.S. guided by 'the rule of the gun' in foreign policy (Reuters)
• JPMorgan Said to Agree on Commodities Unit Sale to Mercuria (BBG)
• Short Sellers Target Chinese Developers as Rout Deepens (BBG)
• HFT finally under the spotlight: High-Speed Trading Firms Face New U.S. Scrutiny (WSJ)
• Chinese Dollar Bond Investors Demand Higher Yields After Default (BBG)
• According to Joe LaVorgna it's the snow's fault: Deutsche Bank Said to Plan Job Cuts at Investment Bank (BBG)
• Israeli airstrikes kill 1 Syrian soldier, wound 7 (AP)

As Putin rejoices at his new-found wealth in Crimea after it was annexed (in a duff referendum where there was either ‘now’ or ‘later’ up for grabs to join the Russian Federation), the USA is wiping its tears with things that are closer to home and causing a great deal more grief than far off Ukraine. 

In an overnight session that had little in terms of macro and news flow, the most notable event was that the Dollar-Renminbi finally crossed above 6.20 which as a reminder is the suggested "max vega" point beyond which even more max pain lies for levered accounts long the Yuan. However, in a world in which nothing is discounted and in which no news matters, the "market" broadly ignored this significant development (which as we explained further yesterday means an accelerated unwind of Chinese Commodity Funding Deals, and a potential drop in global commodity prices), and eagerly awaited today's non-event of an FOMC conference, where nothing new will be announced save for the novelty of it being Yellen's first appearance before the press as the head of the Fed. And of course the Fed will almost certainly scrap the 6.5% employment threshold, as the FOMC scrambles to make the economy appear worse than it is reported to be, in a stark reminder that the biggest optically manipulated tool meant to boost confidence in the recovery was nothing but a number meant to serve political purposes.