Kazakhstan

Unrestricted flow of capital is the most effective way to encourage reforms, and North Korea is no exception. History has proven time and again that regime change does not occur when conditions are at their worst, but when circumstances begin to improve and the people grow impatient for further progress.

After another, even deadlier, terrorist attack in Urumqi, Beijing must reevaluate its anti-terrorism strategy.

While we are no experts in either geography (did Iran and Kazakhstan just get a lot closer?) or inter-continental ballistic missile identification (was anyone else test-firing nuclear missiles last night), the skies over Iran were glowing last night with what the news agency astrological experts said was "according to previous experiences, guessed to be the final stages of a long-range ballistic missile launcher." This is good news, for Iran, but, according to the Russian Navy blog, they are preparing for another ICBM test-firing next week... so Norway might want to be on the look-out.

A specter is haunting Washington, an unnerving vision of a Sino-Russian alliance wedded to an expansive symbiosis of trade and commerce across much of the Eurasian land mass - at the expense of the United States.

Both sides have run their nuclear drills (US here and Russia here) and it had all gone eerily quiet in the detente between the West and Russia...until now:

RUSSIA TEST FIRES INTERCONTINENTAL BALLISTIC MISSILE: INTERFAX
INTERFAX CITES RUSSIAN DEFENSE OFFICIAL EGOROV ON MISSILE TEST

That should wake things up for the 2nd time in two months. Time to BTFWWIII.

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• China Home-Price Growth Slowdown Spreads as Sellers Discount (BBG)
• The new face of NSA: Mike Rogers (Reuters)
• Putin orders troops near Ukraine to return home (AP)
• Wall of Worry Rebuilt as Nasdaq Rout Sends Cash to High (Nasdaq)
• Bank of England's Mark Carney highlights housing market's risk to UK economy (Guardian)
• Greek Selloff Shows Rush for Exit Recalling Crisis (BBG)
• Anti-austerity Greek radicals ahead in Athens local election (AFP)

Two days ago Russia retaliated against US sanctions by banning the US from using the International Space Station after 2020, and by barring the use of Russian rockets as launch vehicles for US military satellites. Then, moments ago, a Russian Proton rocket, with advanced satellites on board, crashed during take off, during the activation of the third rocket stage some 9 minutes into the launch.

Just in case the message was unclear when Russia held its "massive nuclear attack" drill last week, Putin - unlike Obama who has had a problem with clarifying over the past three months just what "costs" means - intends to hammer the point ten days from today when Ukraine is set to hold its presidential elections, when the Russian military has scheduled to hold yet another military drill, "Aviadarts 2014", this time involving fighter jets (including as Su-27, Su-24, Su -25, Su-34 and MiG-29 jets and Mi-8 , Mi-24 , Mi-28, Ka-52 helicopters) and will see the participation of 71 crews of military aircraft and helicopters rehearsing the "countering of enemy air defenses, destruction of ground targets and carpet bombing enemy territory." Somehow we think Ukraine (and NATO) will get this particular message loud and clear.

...What’s left for the Empire of Chaos is to pray for chaos to keep spreading across Ukraine, thus sapping Moscow’s energy. And all this because the Washington establishment is absolutely terrified of an emerging power in Eurasia. Not one, but two – Russia and China. Worse: strategically aligned. Worse still: bent on integrating Asia and Europe. So feel free to picture a bunch of Washington angry old men hissing like juvenile delinquents: “I don’t like you. I don’t want to talk to you. I want you to die.”

The Conservative Canadian government’s hard line on sanctions against Russia has scuttled the launch of a key Canadian military satellite that was to be put into orbit by a Russian rocket. As The Ottawa Citizen reports, on the heels of Russia expelling a Canadian diplomat in Moscow, labelling him a spy, Canadian Space Agency spokeswoman Maya-Olivia Eyssen said the spy satellite, which was to have been launched from Russia’s facilities in Kazakhstan, is now trying to find another country or private company willing to send it into space. Russia has indicated it is more than willing to launch the Canadian satellites, say sources.

As China's ravenous appetite for oil surpasses that of the US which is enjoying an unexpected, if transitory, boom of shale oil production, which according to some experts may have already peaked, it means suddenly China is far more are the mercy of its core suppliers - the same way that for decades the US had no choice but to be best friends with Saudi Arabia, at least until Canada became the biggest supplier of crude to the US by a huge margin. So which are the countries that China relies most on for its daily energy importing needs? The map below has the answer.

after shocking the world with its unilateral decision to halt Russian money transfers without a direct order from the administration, Reuters reports that JPM has folded and will process said payment from Russia's embassy in Kazakhstan to insurance agency Sogaz, easing tension after Moscow accused the U.S. bank of illegally blocking the transaction under the pretext of sanctions.

While everyone was gushing over the spectacle on TV of a pro-HFT guy and anti-HFT guy go at it, yesterday afternoon we reported what was by far the most important news of the day, one which was lost on virtually everyone if only until this morning, when we reported that "Monetary Blockade Of Russia Begins: JPMorgan Blocks Russian Money Transfer "Under Pretext" Of Sanctions." This morning the story has finally blown up to front page status, which it deserves, where it currently graces the FT with "Russian threat to retaliate over JPMorgan block." And unlike previous responses to Russian sanctions by the West, which were largely taken as a joke by the Russian establishment, this time Russia is furious: according to Bloomberg, the Russian foreign ministry described the JPM decision as "illegal and absurd."  And as Ukraine found out last month, you don't want Russia angry.

JP Morgan blocked money transfer from #Russia diplomatic mission in Kazakhstan "under pretext" of sanctions, says Foreign Ministry

— Thomas Grove (@tggrove) April 1, 2014

Russia has increased its gold holdings by 7.247 tonnes to 1,042 tonnes in February. Turkey and Kazakhstan also raised their bullion reserves, data from the International Monetary Fund showed today. Turkey's gold holdings rose 9.292 tonnes to 497.869 tonnes, the data showed. Many analysts are ignoring the important context of today's new geopolitical backdrop. Russia alone has some $400 billion in foreign exchange reserves - mostly in U.S. dollars. If they were to diversify just 5%, worth some $20 billion, of those reserves into gold - it would be equal to nearly 500 tonnes of gold or nearly 25% of global annual production.  It will be interesting to see what Russian demand is in March and indeed in the coming months. Sanctions could lead to materially higher demand from the Russian central bank, Bank Rossii.