Ukraine

• EU Fines Financial Institutions Over Fixing Key Benchmarks (Reuters)
• Euro-Area Economic Growth Slows as Exports, Consumption Cool (BBG) - someone has a very loose definition of growth
• Ukraine Officials Scour Globe for Cash as Protests Build (BBG)
• Oops: Franklin Boosted Ukraine Bet to $6 Billion as Selloff Began (BBG)
• Japan Plans 18.6 Trillion Yen Economic Package to Support Growth (BBG) - or about 2 months of POMO
• How Peugeot and France ran out of gas (Reuters)
• Iran threatens to trigger oil price war (FT)
• Abe Vows to Pass Secrecy Law That Hurts Cabinet’s Popularity (BBG)
• Brazil economy turns in worst quarter for 5 years (FT)
• Australia’s Slowdown Suggests RBA May Need to Do More (BBG)
• Biden calls for trust with China amid airspace dispute (Reuters)

While there was a plethora of macro data (starting with some ugly numbers out of Australia which clobbered AUD pairs overnight), China HSBC Services PMI dipping slighlty from 52.6 to 52.5, Final Eurozone PMI Services (printing at 51.2 up from 50.9 and beating expectations of the same on an increase in German PMI numbers from 54.5 to 55.7 and a decline in French PMI from 48.8 to 48.0), Eurozone retail sales declining by 0.2%, on expectations of an unchanged print, and much more (see  below), perhaps the most important news of the day came from Japan which many expect will be the source of much more easing in the coming months and thus serve as marginal lever to push global fungible markets higher. However, not only did various BOJ officials for the first time in a while talk down expectations of a QE boost, but the head of the Japan GPIF said that it doesn't need to sell JGBs right now as it would "rock markets" and that instead can achieve its targeted 52% weighing as bonds mature, that it may buy foreign bonds instead to raise weighting to core target (as the Fed buys Japan bonds?), and that it will be very difficult for Japan to hit the BOJ's inflation target in 2 years. Is Japan already getting cold feet on rumors of more QE and did it realize there are only so many assets it can monetize. If so, watch out below on the EURJPY which has now priced in about 700 pips of expected BOJ QE boosting in early 2014.

Ongoing anti-regime demonstrations in Ukraine are weighing on investor's risk perceptions as CDS spike to near three-year highs today (up over 100bps). At a minimum developments lower president Yanukovich's chances of remaining in power beyond the spring 2015 elections and possibly undermine his hold on power earlier, further decreasing the likelihood of sizeable financial support from Russia. With Moody's earlier comments on the nation's "precarious external liquidity" position; as Goldman warns, with even higher political uncertainty ahead, an acceleration of capital outflows might also follow and while they think the authorities will eventually turn to the IMF to avoid a disorderly sell-off of the currency, recent events arguably raise the risks to that view. However, the capital outflows are already having an impact as Reuters notes, Russian banks are considerably exposed as Ukrainian banks should deposit runs escalate.

Is Low-Level Radiation Dangerous … Or Harmless?  How Much Radiation Will We Be Exposed To?  How Can We Protect Ourselves from Radiation?

While events in the Ukraine continue down a very slippery path, and just a few short minutes ago the Prime Minister Azarov fired the Kiev chief of Police who got into hot water over the weekend for various clips showing Police brutality in dealing with demonstrators, one specific party that is keeping a very close eye on the ongoing developments is Russian leader Vladimir Putin who scored a major victory over Europe when he managed to realign the Ukraine away from the EU and sign a trade pact with the "European bread basket" nation, an event which according to the prevailing narrative the main reason for the surge in civil discontent as hundreds of thousands took to the streets over the weekend. As such, it is important to keep track of news not only from Kiev but also from Moscow. One such update which came moments ago was the following:

• President Vladimir Putin has said Russia respects any choice made by Ukraine, Dmitry Peskov tells Bloomberg in Yerevan, Armenia.
• Russia not in talks with Ukraine on loans, bailout
• Russia not involved in current unrest in Ukraine: Peskov

This came just hours after Putin stated that events unfolding in Ukraine should not be described as a revolution, but were rather more reminiscent of a “pogrom.”

With Ukraine's CDS spiking and the protests growing ever more violent, the government is oddly honest:

• *AZAROV SAYS KIEV PROTESTS SPINNING OUT OF CONTROL: INTERFAX
• *AZAROV SAYS GOVT AWARE OF PLAN TO SEIZE PARLIAMENT BUILDING:IFX
• *AZAROV SAYS UKRAINE ASKING WEST FOR HELP TO CALM PROTESTS: IFX

Of course, the only voice that matter is still calm:

• *PUTIN SAYS CRISIS IN UKRAINE WILL SUBSIDE

Is that a directive or a statement...?

Previewing the rest of this week’s events, we have a bumper week of US data over the next five days, in part making up for two days of blackout last week for Thanksgiving. Aside from Friday’s nonfarm payroll report, the key releases to look for are manufacturing ISM and construction spending (today), unit motor vehicle sales (tomorrow), non-manufacturing ISM (Wednesday), preliminary Q3 real GDP and initial jobless claims (Thursday), as well as personal income/consumption and consumer sentiment (Friday). Wednesday’s ADP employment report will, as usual, provide a preamble for Friday’s payrolls.

The following seven minutes of mayhem look eerily reminiscent of the violent pre-ambles to the middle-east's recent coups or non-coups. As anti-government protesters demonstrated against the shunning of a European trade agreement (President Yanukovych - "I will not allow any serious economic losses and decline of living standards"); the clashes became ever more violent as the police cracked down. Following heavyweight boxing champion (and opposition leader) Vitali Klitschko's call for a new government - "our main task is Yanukovych’s resignation. But the first step is the resignation of Azarov’s government" - the clashes left at least 265 people injured. The crackdown followed Interior Minister comments that they "won’t allow Ukraine to become another Libya or Tunisia, where uprisings toppled governments in recent years." Of course, the main difference is the Ukraine is now squarely under Putin's sphere of influence.

As reported yesterday, in the aftermath of the violent crackdown on a pro-Europe rally, and the resulting call by the opposition for president Yanukovich's resignation through nationwide strikes, the situation in the Ukraine is increasingly more unstable. Moments ago Reuters reported that Ukrainian nationalist protesters broke into Kiev's city hall and were occupying at least part of the building during mass protests that drew several hundred thousands out on the streets to protest the government's decision to forego an EU deal. Nationalist leader Oleh Tyahniboh told Interfax that representatives of his party had taken over the building. "Today literally 40 minutes ago, our boys took the Kiev Council," he told crowds on Kiev's Independence Square.

A week ago Europe was furious, and Putin once again glorious, after Europe's "bread basket", the Ukraine, under president Yanukovich decided to terminate its pro-European stance, and instead in a very symbolic shift, chose Moscow as its future trading partner hub. "This is a disappointment not just for the EU but, we believe, for the people of Ukraine," EU foreign policy chief Catherine Ashton said in a statement. Yanukovich said he had declined to sign the EU pact as the cost of upgrading the economy to meet EU standards was too great and that economic dialogue with Russia, Ukraine's former Soviet master, would be revived. Today, tensions in the Ukraine finally spilled over when following the break up of a pro-Europe protest by local police, the opposition announced it would call a countrywide general strike to force the resignation of president Viktor Yanukovich.

While moderate recovery in growth and inflation is BofAML's rates team's base case, there are numerous risks to that forecast. The risk of tapering is already quite well known and they suspect it may not result in the significant market-moving event many expect when it actually happens; however, the following downside and upside risks threaten BofAML's central scenarios for 2014 as well.

Yesterday, Ukraine was faced with a historic choice: "go West" by signing a new trade pact with the European Union and align against its former master the USSR... or "East", and go back, at least symbolically, to mother Russia. To Europe's shocked amazement, the Ukraine picked "East" in yet another very visible win for Vladimir Putin in what has just been the former KGB spy's year. Sure enough, Putin spokesman's welcomed "the desire to improve and develop trade and economic cooperation" with a "close partner". Europe on the other hand, was shocked and appalled at this unprecedented snub: "This is a disappointment not just for the EU but, we believe, for the people of Ukraine," EU foreign policy chief Catherine Ashton said in a statement. Ah yes, because Europe's unelected dictators are so concerned with the popular choices of wayward "democracies."

The following Top Ten Market Themes, represent the broad list of macro themes from Goldman Sachs' economic outlook that they think will dominate markets in 2014.

1. Showtime for the US/DM Recovery
2. Forward guidance harder in an above-trend world
3. Earn the DM equity risk premium, hedge the risk
4. Good carry, bad carry
5. The race to the exit kicks off
6. Decision time for the ‘high-flyers’
7. Still not your older brother’s EM...
8. ...but EM differentiation to continue
9. Commodity downside risks grow
10. Stable China may be good enough

They summarize their positive growth expectations: if and when the period of stability will give way to bigger directional moves largely depends on how re-accelerating growth forces the hands of central banks to move ahead of everybody else. And, in practice, that boils down to the question of whether the Fed will be able to prevent the short end from selling off; i.e. it's all about the Fed.

Within the last seven years 11 countries (Poland (2006), Russia (2008), Finland (2009), France (2009), Sweden (2010), Iceland (2011), Spain (2011), Denmark (2012), Singapore (2012), Canada (2012) and Japan (2013) have realized the need to appoint their own Arctic ambassadors. These ambassadors are used for analysis and situational assessments in the emerging “grand Arctic game,” with the ultimate aim of exploiting mineral resources and using the Arctic route for shipping cargo from Europe to Asia. At present, China’s Arctic initiatives suggest that Beijing is eager to camouflage its true interests in the region with environmental monitoring, Arctic life protection and concerns about indigenous peoples. At the same time, Beijing is dropping hints that China is not satisfied with the current balance of power in the Arctic region.

As DB notes, it appears that markets continue to steadily price in a greater probability of a December taper judging by the 2bp increase in 10yr UST yields, 1.2% drop in the gold price and an edging up in the USD crosses yesterday. Indeed, the Atlanta Fed’s Lockhart, who is considered a bellwether within the Fed, kept the possibility of a December tapering open in public comments yesterday. But his other comments were quite dovish, particularly when he said that he wants to see inflation accelerate toward 2% before reducing asset purchases to give him confidence that the US economy was not dealing with a “downside scenario”. Lockhart stressed that any decision by the Fed on QE would be data dependent - so his comments that the government shutdown will make coming data "less reliable" than might otherwise have been, until at least December, were also quite telling. The dovish sentiments were echoed by Kocherlakota, a FOMC voter next year. In other words, an Oscar-worthy good-cop/bad-cop performance by the Fed's henchmen, confusing algotrons for the second day in a row.