Archive - Apr 21, 2014 - Story

John Kerry (and more secretly, John Brennan) came, saw, and failed miserably, and repeatedly, to "de-escalate" (or, re-escalate in the case of the CIA visit) the Ukraine situation. So the time has come to bring out the bug gun. Sure enough, heeeeere's Joe, as he arrived in Ukraine. And now sit back and watch as world peace breaks out in 5.... 4.... 3....

While no business cards were left this time, a Russian-flag-toting APC has been spotted driving through the center of Slavyansk - the pro-Russian held city where several people were killed over the weekend. Of course, it is unclear whether this is yet another brazen attempt at provocation - proving the truce has been broken - as we can't help but notice how comfortable the military vehicle seemed to be posing for the cameras...

Meanwhile, we are still puzzling over the miracle produced by the Fed. Uri Geller could bend spoons. The Fed bends the entire economy. Hardly a single price is unaffected. Hardly a single business plan or investment strategy goes forward without an eye on the central bank. Jesus turned water into wine and multiplied loaves and fishes. But the Fed make Him seem like a two-bit shell game hustler. The loaves and the fishes couldn’t have had a market value of more than a few thousand shekels! Every year, more resources must be drawn from the future and enjoyed in the present. Every year, the claims on future earnings increase… and every year the debt becomes even more unsupportable. Somehow. Someday. Those claims on the future will be marked down.

While hardly coming as a surprise to anyone, Russia is getting increasingly more vocal about the near certainty that the country is about to slam headfirst into a technical (at first), and then outright recession.

• RUSSIA MAY ENTER `TECHNICAL RECESSION' IN 2Q, ORESHKIN SAYS
• RUSSIAN 2014 CAPITAL OUTFLOWS MAY REACH $70B-$80B: ORESHKIN
• RUSSIAN 2014 CURRENT-ACCOUNT SURPLUS MAY EXCEED $50B: ORESHKIN
• RUSSIAN GDP MAY CONTRACT IN 2Q OR 3Q VS YR EARLIER: ORESHKIN

Earlier today, the Central Bank of Russia announced that starting April 21, it would revoke the license of Moscow’s Bank Zapadny. According to reports, "the bank had cooked its books and failed to comply with regulations on the amount of assets a financial organization must maintain to ensure its stability, the central bank said." In other words, your typical FDIC Failure Friday only on Monday morning. Hardly notable. It is what happened next that was shocking. Shortly after the bank shutdown announcement, an armed man took three hostages at a Belgorod branch of precisely this failed Bank Zapadny. Tt appears this may simply be the latest case of a disgruntled bank client taking matters into his own hands.  As RT reports, "he may be a client of the bank wishing to withdraw his deposit despite the bank losing its license.....Life News tabloid says it has identified one of the attackers as 46-year-old Aleksandr Vdovin, a client who holds the bank’s promissory notes for a large sum, and who decided to reimburse them at gunpoint."

• Putin playing the long game over Russian kin in Ukraine (Reuters)
• U.S.-Russia Relations Come Full Circle After Ukraine (WSJ)
• Japan PM makes offering to Yasukuni Shrine, angers China, South Korea (Reuters)
• In Gold Miners' Talks, Scale Is Crucial: Combined Barrick-Newmont Would Be Able to Trim Costs (WSJ)
• SEC Said to Weigh Shining Light on Brokers’ Stock Routing (BBG)... and protmply unweigh it
• Exelon Beating Facebook in S&P 500 After Valuation Scare (BBG)
• Court Case May Help Define 'Insider Trading' (WSJ)
• Spanish banks face tough rivalry in small companies bet (Reuters)

It has been a largely event-free weekend except, of course, for the previously reported re-escalation in Ukraine following what was a lethal shooting in the east Ukraine city of Slavyansk blamed on Ukraine's Right Front, which has made a mockery, as expected, of the Geneva Ukraine de-escalation announcement from last Thursday. Overnight in Asia, Japan reported its largest ever trade deficit, providing yet more evidence that Abenomics has been an abysmal failure: all we are waiting for now is confirmation that basic Japanese wages have fallen yet again, which would make nearly 2 years in a row of declines. Still, the USDJPY, gamed as usual by HFT algos for which FX is now the last respite as the equity market crackdown gets louder, is doing its best to ramp from the overnight lows and ahead of the traditional US market open surge, as a result equity futures are modestly higher.