Ukraine

Six months ago a "glitch" halted all ATM withdrawals, and Credit and Debit card transactions for Russia's largest bank but today, the CEO of the huge bank has no such "glitch" to blame:

*SBERBANK SEES RUN ON ITS BANK MACHINES IN UKRAINE, GREF SAYS
*SBERBANK HALTS LENDING IN UKRAINE, GREF SAYS

We suspect that whether an agreement is in place or not, this will continue.

Several hours ago, and a day after the latest truce lasted about a few minutes before the the shooting returned and resulted in the bloodiest day of Ukraine's protests so far, there was hope that the situation in Ukraine may finally be getting resolved, when Ukraine's President Viktor Yanukovich announced plans for early elections in a series of concessions to his pro-European opponents. As Reuters reported earlier, Russian-backed Yanukovich, under pressure to quit from mass demonstrations in central Kiev, promised a national unity government and constitutional change to reduce his powers, as well as the presidential polls. He made the announcement in a statement on the presidential website without waiting for a signed agreement with opposition leaders after at least 77 people were killed in the worst violence since Ukraine became independent 22 years ago. This comes in the aftermath of S&P's announcement overnight that the Ukraine will default in absence of favorable changes.

So is this the favorable change that everyone has been expecting. Nope.

• RBS plans dramatic scaling back, to fire 30,000 of its 120,000 workers (FT)
• Zuckerberg’s Data Stance Faces Privacy Backlash in Europe (BBG)
• WhatsApp Shows How Phone Carriers Lost Out on $33 Billion (BBG)
• Markets flooded with cash, should Fed prep to stamp out risk? (Reuters)
• Venezuela threatens to expel CNN over protest coverage (BBC)
• Firm Stops Giving High-Speed Traders Direct Access to Releases (WSJ)
• Obama Budget to Delete Proposal to Limit Social Security (BBG)
• Energy Holdings Prepares for a Breakup (WSJ)
• EU Struggles to Streamline Bank-Failure Plan for Weekends (BBG)
• Madoff said JPMorgan executives knew of his fraud (Reuters), and JPM admitted as much when it settled with the DOJ

This was one of the all too real Bloomberg headlines posted overnight: "Asian Shares Rally as U.S. Manufacturing Data Beats Estimates." Odd: are they refering to the crashing Philly Fed, or the just as crashing Empire Fed data? Wait, it was the C-grade MarkIt PMI that nobody ever looks at, except to confirm that where everyone else sees snow, the PMI saw sunshine and growth. Remember: if the data is weak, it's the snow; if it's strong, it's the recovery. Odder still: one would think Asian shares care about manufacturing data of, say, China. Which happens to be in Asia, and which two nights ago crashed to the lowest in months. Or maybe that only impact the SHCOMP which dropped 1.2% while all other regional markets simply do what the US and Japan do - follow the USDJPY, which at one point overnight rose as high as 102.600, and brought futures to within inches of their all time closing high. Sadly, it is this that passes for "fundamental" analysis in this broken market new normal...

"The American people are very leery of getting involved in another squabble in some other country," warns Ron Paul following the breakdown in the truce in Ukraine and President Obama's drawing of more red-lines. In this succinct interview with FOX, the former congressman sums it up perfectly, "That’s their business, and it certainly isn’t ours," he said. "We’ve tried it for too long, and the American people are sick and tired of it, and we’re also out of money." Indeed, but the Keynesians must be getting excited...

With all eyes focused on Ukraine, the situation in Venezuela has once again escalated as protest leader Leopoldo Lopez' arrest (and possible 10 year jail sentence) prompted more violence overnight. However, as we warned, the government crackdown is starting to raise concerns about the stability of the government.

*VENEZUELA PROTESTS ESCALATING INTO NATIONWIDE UNREST; ESCALATION OF PROTESTS PUTS STABILITY OF GOVT AT RISK; RISING VIOLENCE COULD LEAD TO MADURO OUSTER BY MILITARY: IHS

As opposition leader Capriles asks Venezuela's military to uphold the constitution, he exclaims that "the poor' must participate for government to change.

Following hours of talks between three European foreign ministers and Ukrainian President Viktor Yanukovych in Kiev, the EU has decided to go ahead with sanctions:

• *EU COMMITS TO SANCTIONS AGAINST UKRAINE
• *EU TO WORK OUT UKRAINE ASSET FREEZE, VISA BAN SOON
• *EU TO SUSPEND UKRAINE EXP0RT LICENSES FOR `REPRESSIVE' GEAR

Having already proclaimed this move as "blackmail", we are sure the Russians will be utilizing this move to further their support for the catastrophically divided nation.

In the aftermath of the Snowden revelations about the NSA's ubiquitous presence in everyday lives, and unconstitutional interception, eavesdropping and recording of every form of electronic communication, the logical assumption would be that the next step for the NSA would be its reduction instead of expansion, especially following the president's heartfelt reading from the TOTUS several months ago in which he promised to do all he could, to curb the spy agency. "Surprisingly" expansion is precisely what will happen to the NSA - as WSJ reports the "government is considering enlarging the National Security Agency's controversial collection of Americans' phone records—an unintended consequence of lawsuits seeking to stop the surveillance program, according to officials." Unintended? It is very much intended now that Americans know that the concept of privacy is dead and buried and will instead seek other methods to communicate. Which simply means the NSA has to get even bigger in order to thwart the imminent, daily and "clear and present" danger that US citizen-cum-terrorists pose to the US despotic totalitarian state republic.

The Ukrainian health minister just state that at least 64 have died since February 18th; protesters claim the number is over 100 - either way, this is horrific (and we suspect, once the Olympics is over, will get worse). As Martin Armstrong outlines below, Ukraine is the pawn on the chessboard. The propaganda war is East v West.

WHITE HOUSE URGES UKRAINE PRESIDENT TO IMMEDIATELY WITHDRAW SECURITY FORCES FROM DOWNTOWN KIEV, RESOLVE CRISIS BY POLITICAL MEANS; 'OUTRAGED' BY ACTIONS OF UKRANIAN SECURITY FORCES

Ad Russia proclaims US/EU sanctions as "balckmail." However, those power plays are masking the core issue that began with the Orange Revolution – corruption. Armstrong warns that "Yanukovych is a dictator who will never leave office. It is simple as that. There will be no real elections again in Ukraine." This is starting to spiral down into a confrontation that the entire world cannot ignore.

Sadly, everything you need to know about the crisis in Ukraine in one worrisome map which summarizes all the relevant "red lines."

At least 50 are dead, according to Reuters, and hundreds injured as fresh fighting broke out in central Kiev this morning breaking the apparent truce that was in place last night. Who is to blame is up for discussion but of little import in the end as the death toll mounts and live ammunition is being used by the police. A Ukrainian presidential statement said dozens of police were killed or wounded during the opposition offensive hours after Yanukovich and opposition leaders had agreed on a truce... Other witnesses said they saw government snipers firing into the civilian crowds during the clashes..."What truce? There is no truce! It is simply war ahead of us! They are provoking us..."

• Facebook CEO Raises Dealmaker Profile With $19 Billion Takeover (BBG)
• WhatsApp’s Founder Goes From Food Stamps to Billionaire (BBG)
• U.S. Feels Putin's Sharp Elbows in Ukraine (WSJ)
• PBOC Drains Cash as Overnight Rate Slides to Lowest in 10 Months (BBG)
• Fed Puts Rate Increase on the Radar (Hilsenrath)
• Banks Flouting Bonus Rules in Denmark Set to Be Named by FSA (BBG)
• Work Set to Resume on Upgrading Panama Canal (WSJ)
• Euro-Area Recovery Loses Pace as Manufacturing Weakens (BBG) - uh, what recovery?
• Ukraine Exposes EU Policy Disarray (WSJ)

After learning that it snowed in China this winter following the release of the abysmal February Flash HSBC PMI numbers, we found out that there had also been snow in Europe, following misses across virtually all key French, German and composite PMIs with the exception of the German Services PMI which was the sole "beater" out of 6. To wit:

• Eurozone PMI Manufacturing (Feb A) M/M 53.0 vs Exp. 54.0 (Prev. 54.0); Eurozone PMI Services (Feb A) M/M 51.7 vs Exp. 51.9 (Prev. 51.6)
• German Manufacturing PMI (Feb A) M/M 54.7 vs. Exp. 56.3 (Prev. 56.5); German PMI Services (Feb A) M/M 55.4 vs Exp. 53.4 (Prev. 53.1)
• French PMI Manufacturing (Feb P) M/M 48.5 vs. Exp. 49.6 (Prev. 49.3); French PMI Services (Feb P) M/M 46.9 vs. Exp. 49.4 (Prev. 48.9)

Of course, economic data is the last thing that matters in a manipulated market. Instead, all that does matter is what the USDJPY does overnight, and as we forecast yesterday, the USDJPY 102 tractor beam is alive and well and managed to pull equity futures from a -10 drop overnight to nearly unchanged, despite the now traditional pattern of USDJPY selling during the overnight session and buying during the US session.

Presenting a few of tonight's headlines...

• *OBAMA: 'THERE WILL BE CONSEQUENCES IF PEOPLE STEP OVER THE LINE' (like last time with Syria?)
• *FACEBOOK TO BUY WHATSAPP FOR ABOUT $16B CASH AND STOCK ($50 per user!)
• *U.S. COULDN'T REACH UKRAINIAN OFFICIALS IN FEW DAYS: OFFICIALS (can you hear me now?)
• JAPAN JAN. IMPORTS RISE 25.0% Y/Y (Abenomics is nailing it)
• *CNN LIES ABOUT VENEZUELA EVERY DAY: MADURO (no comment)
• Vietnam Bans Import of Used Electronic Devices
• *WILLIAMS: FED HAS REACHED `END OF THE LINE' ON JOBS THRESHOLD (that didn't last long)
• *SUGA: EXPECTS IMPROVEMENT IN TRADE BALANCE IN FUTURE (any day now)
• *MADURO SAYS `IT'S YOUR LAST CHANCE OR YOU'RE TOAST' (but you wanted peace?)
• *OBAMA SAYS WILL SEEK COOPERATION WITH PUTIN ON UKRAINE (worked last time?)
• And lots more...

Has the world gone mad?

Ukraine and Thailand are in the midst of chaotic turmoil right now, characterized by riots and violent clashes between protestors and police. It reminds us of the old quote from Louis XVI upon being informed in 1789 that the French people had stormed the Bastille. “Is it a revolt?”, the King asked; “No, sire,” the duke replied, “It is a revolution.” History is packed with examples of how people rise up in the streets whenever economic conditions deteriorate. The French Revolution in 1789 is one famous example where the people finally reached their breaking points after nearly starving to death. In our system we award a tiny elite with the power to kill, steal, wage war, educate our children, and conjure unlimited quantities of paper money out of thin air. This is just plain silly. The real answer is within ourselves.