While the images and local news have been suggesting that Russia is in control on the Crimean peninsula, US officials (according to Bloomberg) have confirmed this:
*RUSSIAN FORCES IN COMPLETE CONTROL OF CRIMEA: U.S. OFFICIAL
*RUSSIA HAS 6,000 TROOPS IN CRIMEA, U.S. OFFICIAL SAYS
*KERRY TO REAFFIRM SUPPORT FOR UKRANIAN SOVEREIGNITY, PSAKI SAYS
Obama, Merkel, and Cameron are now on a conference call to discuss this "fact" and officials have just reported that US Secretary of State John Kerry will visit Kiev tomorrow (though we suspect not Sevastopol).
Chinese Manufacturing PMI Slumps To 8-Month Low, Services PMI To 3-Month High; Goldman Admits Growth DeceleratingSubmitted by Tyler Durden on 03/02/2014 - 20:09
UPDATE:*CHINA HSBC MANUFACTURING PMI AT 48.5 FOR FEB. (as expected and marginally above the Flash print)
Chinese manufacturing PMI fell to an 8-month low holding barely above the crucial 50 level yesterday forcing Goldman to admit that "this signals further deceleration" in Chinese growth. All sub-indices showed signs of cyclical slowdown from January to February with perhaps the two most-critical ones - production and new orders - showing considerably larger falls than the headline index itself as we await this evening's HSBC print to confirm an average 'contraction'. China's Services PMI just printed at 55, up from 53.4, to a 3-month high led by a surge in the "expectations" sub-index.
By now it was only a formality, as the likelihood of the G-8 meeting taking place in Sochi in June, months after the Russian invasion of the Ukraine, was zero at best. So the fact that G-8, pardon, G-7 countries announced the halting of their preparation for a June vacation on the Black Sea should not surprise anyone.
The Bitcoin phenomenon has now reached the mainstream media where it met with a reception that ranged from sceptical to outright hostile. The recent volatility in the price of bitcoins and the issues surrounding Bitcoin-exchange Mt. Gox have led to additional negative publicity. It is clear that on a conceptual level, Bitcoin has much more in common with a gold and silver as monetary assets than with state fiat money. The supply of gold, silver and Bitcoin, is not under the control of any issuing authority. It is money of no authority – and this is precisely why such assets were chosen as money for thousands of years. Gold, silver and Bitcoin do not require trust and faith in a powerful and privileged institution, such as a central bank bureaucracy. Under a gold standard you have to trust Mother Nature and the spontaneous market order that employs gold as money. Under Bitcoin you have to trust the algorithm and the spontaneous market order that employs bitcoins as money (if the public so chooses). Under the fiat money system you have to trust Ben Bernanke, Janet Yellen, and their hordes of economics PhDs and statisticians.
With all eyes dismally fixed on Eastern Europe and the esclating tensions between the world's most powerful nations, we thought perhaps a little levity was appropriate. "Way To Blue" trawls the social media stratosphere of intellect and calculates a "desire to win" index that summarizes who we, the lowly members of the public, would most like to win the celebrated Academy Awards. It appears, in an odd coincidence to real-life, the debt-serfs of the world would most like to see "12 Years A Slave" win for Best Film.
Surprise! The pump on Friday afternoon has given way to the 5th 'dump' in 5 days as US equity futures have crumbled back top Friday's lows and are catching down to USDJPY's early weakness. Gold is up $10 at $1,338. It seems once again that stocks, despite all those talking heads on Friday afternoon so confidently explaining how Ukraine was priced-in, knew nothing... US Treasury futures are well bid implying 10Y -5bps at 2.60% and 5Y -4bps at 1.46%.
Explosions Heard In Semferopol; Belbek (Sevastopol) Air Force Base Seized By Russian Forces, BBC & Pravda ReportSubmitted by Tyler Durden on 03/02/2014 - 17:40
Several unconfirmed reports of two explosions being heard in Crimea's capital, Semferopol were on the wires and now The BBC has confirmed,
A loud bang was heard about 23:10 local time (21:10 GMT), following by a smaller blast, BBC reporters in Simferopol say.
Reports vary from "didn't hear any explosions" in Semferopol to Belbek Air Force base (In Sevastopol) is under Russian attack. Ukrainian Pravda confirms:
"Russian military, using 'stun' grenades, seized nearly all the buildings of the Ukrainian military in Belbek."
At this stage we see very little from the Ukraine priced into the market as a best-case (encroachment into Eastern Ukraine that is quickly and peacefully resolved) scenario appearing to be the blissful hope. However, as some of the other scenarios (described below) potentially come into play, whether in reality or perception, the risk to further downside in the market is significant. Since we are already recommending being short based on the economy and the misperception of the Fed’s next steps, you effectively pick up the conflict for free. With VIX being so low, picking up some downside protection makes a lot of sense here.
The last two weeks have seen events escalating at a rapid pace in Ukraine with the center of attention quickly shifting from Kiev's deadly protests to Crimea's "invasion." With Russia's Prime Minister Dmitry Medvedev warning that Ukraine's new leaders seized power illegally and predicting their rule would end with "a new revolution" and more bloodshed, we thought the following infographic would provide some context for how Ukraine got here so fast.
A picture explains things best, and The South China Morning Post's Jake van der Kamp's chart on China's net capital flows certainly says all you need to know about why Beijing is "playing silly games with the yuan again".
Here is what is and is not known about the location of US naval forces.
Since the start of 2014 the Russian Ruble has been for sale, and BofA's Macneil Curry warns, that trend will persist. With desk chatter that Russia's 2nd largest state owned bank VTB setting USDRUB exchange rate to 39.45 (a huge shift relative to Friday's close on MICEX was 36.05), trendlines are in peril.
With Friday's farcical 3:30pmET ramp firmly in mind, USDJPY has opened decidedly down-beat in very early (and illiquid) trading suggesting a rude-awakening for US equity futures when they open...
Following last week's confirmation that capital expenditure in the land of the Free runs a very poor third to buybacks and dividends (and well anything that props up the over-inflated share prices of US corporates), and merely confirming what we have been discussing for the last few years (that Fed policy has focused management on short-term gratification and not long-term growth and stability), ex-PIMCO shit-cleaner-upper Mohamed El-Erian notes six reasons why the collapse in capex spend will continue and how central banks have failed to prime the pump of the real economy.
Overnight, there had been numerous rumors that the newly appointed chief of the Ukraine navy, who was just made head of the navy on Saturday, had defected to the Crimean people explicitly, and to pro-Russian forced in the region implicitly. The sourcing of most were various Russian outlets so we discounted these until we got confirmation from a "western" source. The BBC did just that moments ago: "The newly appointed head of Ukraine's navy has sworn allegiance to the Crimea region, in the presence of its unrecognised pro-Russian leader. Rear Admiral Denis Berezovsky was only made head of the navy on Saturday, as the government in Kiev reacted to the threat of Russian invasion."