Ukraine

Having threatened Russia that "any military move would be a grave mistake" and sounding awefully like a "line" to be crossed, US Secretary of State John Kerry told reporters that the US is ready to bail out Ukraine...

• *KERRY: RUSSIA MILITARY MOVE ON UKRAINE WOULD BE GRAVE MISTAKE
• *KERRY SAYS U.S. PLANNING $1 BLN LOAN GUARANTEE FOR UKRAINE
• *KERRY SAYS U.S. WORKING WITH IMF, OTHERS ON AID TO UKRAINE

One has to wonder how many US jobs this will create (or save)? Or will Ukraine offer unlimited vodka to citizens of Detroit (or Puerto Rico for that matter)?

The TOTUS is at it again, creating more jobs and repaving old freeways on paper, as transcribed by the president... but why bother? The US is so fixed, America is now issuing bailout loans to the Ukraine.

Pop quiz: When really nasty criminals and dictators want to hide their illicit gains, which country do they go to? We’ll make this easy for you - multiple choice:

a) Switzerland
b) British Virgin Islands
c) Hong Kong

or d)...

As today's actions by Russia have raised concerns and stirred flight-to-safety flows in the markets, The White House has decided to add its $0.02 worth:

• *OBAMA AIDE EARNEST URGES 'OUTSIDE ACTORS' TO RESPECT UKRAINE TERRITORY
• *EARNEST SAYS RUSSIA SHOULD AVOID `PROVOCATIVE' ACTIONS
• *U.S. WARNS RUSSIA TO RESPECT UKRAINE SOVEREIGNTY

Or else...? On the bright side, he did not say anything about crossed lines.

Shortly after today's surprising announcement by Russia that it would conduct broad military drills in Central and Western Russia, which would include 150,000 troops, we posted a rhetorical question: How will NATO respond?  Moments ago NATO responded:

• NATO: INDEPENDENT, STABLE UKRAINE KEY TO EURO-ATLANTIC SECURITY
• NATO ALLIES CONTINUE TO BACK UKRAINE SOVEREIGNTY, ALLIANCE SAYS
• NATO BACKS `INVIOLABILITY OF FRONTIERS' ON UKRAINE: ALLIANCE
• NATO SAYS IMPERATIVE THAT UKRAINE ARMY DOESN'T INTERVENE

And as the military escalations - now on both sides - escalate some more, the algos are BTFATH. Let's sit back and watch which back off first.

A few days ago we reported that the Ukraine decided to call Russia's "trump card" bluff - that would be everyone else's reliance on Russian gas supplies - when it drastically cut imports of Russian gas by 80% in February, seemingly to demonstrate its energy independence from Puting. Now Russia has decided to take the Ukraine to task, by announcing it has halted oil deliveries to the Ukraine Odessa refinery. Hopefully the Ukraine, whose foreign currency reserves tumbled from $17.9 billion on February 1 to $15 billion currently, has alternative means of supplying itself with energy from benevolent sources, particularly those who are willing to provide the country with oil in exchange for goodwill.

We haven't seen the once ubiquitous morning drubbing of precious metals for a while but this morning gold (and more so silver) have been hammered. US equities' overnight quiet meltup has given way as AUDJPY is once again fully in charge. Emerging market FX is tumbling (Turkish Lira as well as Ukraine). Treasuries are rallying once again as the USD soars on the back of EUR weakness. It appears Russia's actions (Readiness tests) this morning are prompting a flight to USD and bond safety for now (and as the turmoil picked gold has stopped dropping).

Not a day passes without a YouTube clip being released showing some collonade of Russian vehicles headed into the Ukraine, and specifically into the Crimea, where the Russian base of Sevastopol is located, and where the biggest pro-Russian support groups are to be found. Today, we show the following Youtube clip taken recently with a dashcam, several miles above the port of Novorossiysk near the village of Gaiduk, which shows Russian vehicles carrying assorted military equipment being carried toward the Crimean.

Following yesterday's admission by the new head of Ukraine's central bank of the considerable bank runs in recent days and the rapid dwindling of central bank reserves, Sergiy Kruglik - the director of international affairs for the bank - announced this morning that Ukraine has adandoned the dollar peg and will adopt a flexible exchange rate. The Hyrvnia collapsed through 10.00 on the news and is now trading 10.40 at record lows against the USD.

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• Obama to Propose Highway-Repair Program (WSJ)
• Ukraine Pledges to Protect Deposits as Kiev Rally Called (BBG)

PUTIN ORDERS URGENT COMPREHENSIVE CHECKS OF TROOPS' COMBAT READINESS IN WESTERN AND CENTRAL MILITARY DISTRICTS, AND OF AEROSPACE, AIRBORNE TROOPS, LONG-RANGE AND MILITARY TRANSPORT AVIATION - SHOIGU

For the second night in a row, China, and specifically its currency rate which saw the Yuan weaken once more, preoccupied investors - and certainly those who had bet on endless strenghtening of the Chinese currency - however this time it appeared more "priced in, and after trading as low as 2000, the SHCOMP managed to close modestly green, which however is more than can be said about the Nikkei which ended the session down 0.5%. Still, the USDJPY was firmly supported by the 102.00 "fundamental" fair value barrier and as a result equity futures, which had to reallign from tracking the AUDUSD to the old faithful Yen carry, have been propped up once more and are set to open at all time highs. If equities fail to breach the record barrier for the third time in a row and a selloff ensues after the open in deja vu trading, it will be time to watch out below if only purely for technical reasons.

"The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of..." - 1928

As a society we have fallen asleep at the wheel. We’ve allowed ourselves to be lulled into complacency, distracted by minutia, mesmerized by technology, turned into consumers by corporations, pacified by financial gurus and Ivy League economists, and fearful of our own shadows. Surveillance, censorship and propaganda are the tools of the oppressive state. Free speech and truthful revelations about the Deep State are a danger in the eyes of our oppressors.

... The Russians are staking out their claim, after those ships which we wrote about and docked at the main Crimean port, have unloaded their cargo.

Well that escalated quickly. It seems the ouster of Yanukovych, heralded by so many in the West as a positive, has done nothing to quell the fear of further economic collapse in Ukraine:

• *UKRAINIANS WITHDREW AS MUCH AS 7% OF DEPOSITS FEB. 18-20: KUBIV
• *DEPOSIT WITHDRAWALS STILL HIGH IN THE EAST, KUBIV SAYS

This is around a 30 billion Hyrvnia loss (over $3 billion) in just 2 days for the banks and the new central bank chief is considering "stabilizing loans" to help banks deal with the liquidity crisis (though Ukraine's reserves stand at a mere $15 billion).