European Union

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S&P Brings Out The Big Policy Guns - Downgrades Russia To Outlook Negative





S&P, still deep in the mire of a legal battle with the US government, has decided now is an opportune time to cut the ratings outlook on Russia:

  • *RUSSIAN FEDERATION OUTLOOK TO NEGATIVE FROM STABLE BY S&P
  • *S&P SEES EU-U.S. IMPOSING FURTHER SANCTIONS

Russia remains a BBB credit (but with the outlook shift remains open to a downgrade with 24 months). S&P has cut 2014 GDP forecast to 1.2% and 2015 to 2.2%. Of course, we are sure, this would have nothing to do with currying favors with the US government (who threatened them when they downgraded the USA). Full report below.

 
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Estonia Next? Russia "Signals Concern" For Its Citizens In The Baltic Republic





Amid the growing Crimea crisis, Estonia, Latvia and Lithuania - which like Ukraine were all parts of the old Soviet Union and have very significant concentrations of ethnic Russian-speaking citizens - have expressed growing apprehension over Moscow's intentions. As Reuters reports, Russia signaled concern on Wednesday at Estonia's treatment of its large ethnic Russian minority, comparing language policy in the Baltic state with what it said was a call in Ukraine to prevent the use of Russian. "Language should not be used to segregate and isolate groups," the envoy noted, referencing the same 'linguistic tensions' that supported its annexation of Crimea.

 
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Frontrunning: March 20





  • Possible debris off Australia a 'credible lead' for missing Malaysia jet (Reuters)
  • Maldives and Afghanistan: Theories Blossom for Airliner (BBG)
  • Ukraine Military Concedes on Crimea as Russia Takes Hold (BBG)
  • Asia Stocks Drop on Fed; H-Share Index Enters Bear Market (BBG)
  • Scientists say destructive solar blasts narrowly missed Earth in 2012 (Reuters)
  • GM’s Ignition Victims Need Help From Bankruptcy Judge (BBG)
  • U.S. Alleges Inside Traders Used Spycraft, Ate Evidence (WSJ)
  • God Meets Profit in Obama Contraceptive Rule Court Case (BBG)
 
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Ukraine Announces Joint US Military Exercises As Obama Rules Out "Military Incursion" - Recap Of The Day's Events





With the story of the day undoubtedly Yellen's first (bungled) press conference, it was easy to forget that the second coming of the Cold War is raging in the Ukraine. For those curious what they may have missed, here is a summary of the major events that took place in the troubled country this afternoon. Highlights from AP, AFP, Reuters, WSJ, Bloomberg, RIA and Interfax.

 
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Frontrunning: March 18





  • Lost Jet’s Path Seen as Altered via Computer (NYT)
  • Fed Links Low Rates to “Persistent Headwinds” in Economy (Hilsenrath)
  • Top German Court Clears Euro-Zone Bailout Fund (WSJ)
  • U.S., EU set sanctions as Putin recognizes Crimea "sovereignty" (Reuters)
  • Indian wealth effect: Sensex, Nifty hit life highs as domestic-focused firms rally (Reuters)
  • China bond default has positive effect on local government groups (FT) - unless it's negative
  • Russia tensions  risk higher gas prices (FT)
  • China Home-Price Growth Slows in Big Cities on Tight Credit (BBG)
  • ECB's Weidmann says German surpluses "here to stay" (Reuters)
  • Microsoft Office for iPad (AAPL) to be introduced this month (The Verge)
 
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European Union Joins Obama, Sanctions 21 Russian, Crimean Officials





Just a few short hours after Obama issued an executive order declaring sanctions against a select group of Russians and Ukrainians, here comes the EU, whose unelected leaders have just slammed not only those Crimeans and pro-Russian Ukrainians who dared to organize and execute the Crimean referendum vote in which the population overwhelmingly voted to support becoming part of Russia, but in keeping with the US, also launched a salvo making it quite clear that neither Russian politicians nor various Russian military commanders are welcome to park their assets, or buy houses in the EU as of this moment. Needless to say, one person, Germany's chancellor Angela Merkel, is already dreading what the Russian response to this latest escalation will be, and grudgingly stated that "RUSSIA FORCED EU'S HAND WITH CRIMEA BALLOT." Perhaps, and perhaps Russia will be "forced" to if not freeze German gas exports as a result of this diplomatic move, then just happen to pull an Amazon Prime, and hike prices by a few dozen percent. We will find out shortly.

 
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Lady Gaga's Vomit And State Department "Haircuts In Search Of A Brain"





Those of you too caught up in Lady Gaga’s latest cutting edge art project - she arranged for another woman to vomit on her while seated at the keyboard to show, well, I guess to demonstrate that not even vomit cannot stop the power of pop music - may have missed the latest moves in our nation’s foreign policy quest to remain Hall Monitor of the World. State Department chess players are gloating at the moment that the Russian ruble has lost ten percent of its value this year. No doubt a few functionaries in the Kremlin are going boo-hoo over this. But remember: they are a nation who lost about 8.6 million soldiers to overcome Hitler. Do you think a little austerity will persuade them to cede Ukraine to the Walt Disney Company? Have the Lady Gaga fans forgotten that our country set this whole fiasco in motion by promoting a tug-o-war between a proposed Russian free trade zone (the Customs Union) and the European Union (another trade zone) with Ukraine as the rope?

 
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Obama Issues Executive Order Freezing Assets Of Seven Putin Aides





As was largely expected, the first retaliation by Obama has arrived, courtesy of a just issued Executive Order by the president, in which he has blocked and frozen "all property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person" (i.e. assets) of not only the pre-coup Ukraine president Yanukovich and the Crimean leader Aksyonov, including all Russians that operate in the Russian arms industry, but most notably seven Putin aides. Not Putin himself of course - that would be too "escalatory"...

 
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Frontrunning: March 17





Putin Is No Mad Man to Russians as Power Play Trumps Economy (BBG)
Alibaba picks U.S. for IPO; in talks with six banks for lead roles (Reuters)
Russia hearts selling German energy: Billionaire Fridman’s L1 Buys RWE Unit for $7.1 Billion (Bloomberg)
Malaysia plane search straddles continent as police focus on crew (Reuters)
Saudi Crown Prince’s visit to China set to bolster investment (Al-Awsat)
Bugatti-Driving 26-Year-Old Tied to Penny-Stock Website (BBG)
Vodafone agrees $10 billion deal to buy Spain's Ono (Reuters)
The Hidden Rot in the Jobs Numbers (WSJ)
SocGen Ex-Trader Kerviel Walks to Forget Loss as Judgment Looms (BBG)
U.S. Banks’ $75 Billion Payout at Stake in Fed Tests (BBG)

 
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Congress May Impose Sanctions On Russia... When It Comes Back From Vacation On March 24





If one listens to the endless rhetoric of hollow threats and escalating war of words between Russia and DC, one thing should be clear by now: with the passage of the Crimean referendum, accepted (not to mention planned) as perfectly normal by Moscow and blasted as illegal by the West (since it is the former whose troops are in the Crimea, not the latter) then Putin has certainly crossed the Rubicon this time especially since as it was reported earlier, Crimea will formally apply to join Russia tomorrow. Surely, if nothing else, than at least the, drumroll, sanctions must be coming - after all if there is no forceful response now when Putin has called the Western bluff, the West may as well not bother. Well they very well may be... in about a week. The reason: Congress is now in vacation until March 24, so there will be at least one week before any response to the formal Russian annexation can be debated, let alone enacted into law.

 
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Fourth Turning: The People Vs. Big Brother





“The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. If there is a war, it is likely to be one of maximum risk and effort – in other words, a total war. Every Fourth Turning has registered an upward ratchet in the technology of destruction, and in mankind’s willingness to use it.”

The core elements of this Fourth Turning continue to propel this Crisis: debt, civic decay, global disorder. Central bankers, politicians, and government bureaucrats have been able to fashion the illusion of recovery and return to normalcy, but their “solutions” are nothing more than smoke and mirrors exacerbating the next bloodier violent stage of this Fourth Turning. The emergencies will become increasingly dire, triggering unforeseen reactions and unintended consequences. The civic fabric of our society will be torn asunder.   

 
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Russia Warns Of East Ukraine Invasion To "Defend Compatriots", EU Threatens Gazprom, Rosneft CEOs With Visa Ban





While Russia has been massively piling up troops next to Ukraine's eastern border, one thing that was missing to allow the crossing of the border was a provocation, aka the proverbial spark to give Moscow the green light to "defend" Russian citizens in the East. It may have just gotten that last night, when as previously reported, clashes in the eastern city of Donetsk between pro-Ukraine and pro-Russian civilians turned lethal, killing at least one person and dozens injured. Needless to say, this escalation was just the green light Russia needed. As Reuters reports, the Russian Foreign Ministry, responding to the death of at least one protester in Ukraine's eastern city of Donetsk, repeated President Vladimir Putin's declaration of the right to invade to protect Russian citizens and compatriots  - "Russia is aware of its responsibility for the lives of compatriots and fellow citizens in Ukraine and reserves the right to take people under its protection." But perhaps the biggest news so far this morning is that the EU is considering visa bans to 13 Russian politicians and industry leaders, which according to Germany's Bild, include the headest hocnho of all: Gazprom CEO Alexei Miller.

 
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A Russian Explains The Real Stakes In The Fight For Crimea (And Ukraine)





Today, as a result of the Ukrainian crisis, U.S.-Russian relations have hit their lowest point since the invasion of Afghanistan in 1979 or of Czechoslovakia in 1969 — or perhaps even since they bottomed out during the Cuban Missile Crisis. The crisis escalated into a conflict between the U.S. and Russia after the West supported a coup, then lied by violating the Feb. 21 agreement when it recognized the formation of a new and illegitimate government of extremists. This conflict has the potential of sparking a new Cold War — something we never thought could happen in modern times since we believed it would have to be rooted in ideological differences. Moscow does not see the revolution in Ukraine as an attempt to create a more democratic or law-based society. Instead, it sees the events in Kiev as an attempt to make Ukraine as anti-Russian as possible.

 
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China Warns West Not To Enforce Sanctions Against Russia





"Sanctions could lead to retaliatory action, and that would trigger a spiral with unforeseeable consequences," warns China's envoy to Germany adding that "we don't see any point in sanctions." On the heels of Merkel's warning that Russia risked "massive" political and economic damage if it did not change course, Reuters reports ambassador Shi Mingde urged patience saying "the door is still open" for diplomacy (though we suspect it is not) ahead of this weekend's referendum. Russia's Deputy Economy Minister Alexei Likhachev responded by promising "symmetrical" sanctions by Moscow. So now we have China joining the fray more aggressively.

 
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