There's an all-out Global currency war being waged and yesterday the Dollar was the clear winner.
In this day and age, it is imperative that we all learn how to think for ourselves. The foundations of our society are crumbling, our economic system is failing and the blind are leading the blind. If we do not learn to make our own decisions, we are just going to follow the rest of the herd into oblivion. In addition, we all need to start taking a long-term view of things. Just because the economic collapse is not going to happen this month does not mean that it is not going to happen. When you step back and take a broader view of what is happening, it becomes exceedingly clear where we are heading. Sadly, most Americans will never do that.
Following Russia’s annexation of Crimea and Sebastopol last month, Western leaders have been pondering how to get back at Moscow for its actions without starting a new world war. The situation is what the Brits may describe as a sticky wicket. They want to get back at Russian President Vladimir Putin but at the same time they don’t want to upset him too much seeing that he controls much of the oil and natural gas that flows to Eastern and Western Europe via a number of pipelines. The options available to punish Russia for its actions are really quite limited when you think about it; but President Putin now has two new weapons which in some ways frightens some of the old Soviet republics and the Europeans even more than conventional and nuclear weapons
Russia's Gazprom and China are poised to conclude a gas supply contract in coming weeks, the first in a series of energy projects planned between the two countries. "We’re working now to sign a gas contract in May," said Deputy Prime Minister Arkady Dvorkovich. "Consultations are continuing and Gazprom's leaders are holding talks with Chinese partners on the contract terms. We hope to conclude the contract in May and believe it should come into effect by the year end.
Symbolism is important and Putin may be sending the U.S. a message, in the aftermath of JP Morgan unilaterally deciding to block an official Russian wire transfer, regarding how they might use gold as a geopolitical weapon should economic and currency wars deepen ...
- Top Medicare Doctor Paid $21 Million in 2012, Data Shows (BBG)
- Separatists build barricades in east Ukraine, Kiev warns of force (Reuters)
- Greece launches sale of five-year bond (FT)
- High-Frequency Trader Malyshev Mulls Accepting Outside Investors (BBG)
- U.S. defense chief gets earful as China visit exposes tensions (Reuters)
- GM Workers Who Built Defective Cars Fret About Recall (BBG)
- Kerry, Congress Agree: Superpower Status Not What It Was (BBG)
- Crimeans Homeless in Ukraine Seek Solace in Kiev Asylums (BBG)
- JPMorgan's Dimon says U.S. banks healthy, Europe lagging (Reuters)
The positive sentiment stemming from a positive close on Wall Street and saw Shanghai Comp (+0.33%), Hang Seng (+1.09%) trade higher, failed to support the Nikkei 225 (-2.10%), which underperformed its peers and finished in the red amid JPY strength as BoJ's Kuroda failed to hint on more easing. Stocks in Europe (Eurostoxx50 +0.32%) traded higher since the open, with Bunds also under pressure amid the reversal in sentiment.
Alcoa kicked off earnings season yesterday, with shares up 3% in after-market hours. Focus now turns to the release of the FOMC meeting minutes.
Ealier we learned that a great number of Americans don't even know where the Ukraine is located. We also learned that those who actually were familiar with the location of the former USSR nation were the least interested in a US military intervention (as opposed to those who inexplicably thought Ukraine is right next to Omaha or in Alaska). And now, we learn that according to the Defense Ministry of the Ukraine, which is citing a "military expert", one Dmitry Tymchuk whose pretty maps have graced these pages in the past, Ukraine is sounding the alarm on what it reports is an imminent invasion by Russia into east Ukraine, which could take place as soon as tonight.
While the Nasdaq was unable to get back above its crucial 100DMA, it outperformed today (Biotechs went nowhere) as the S&P 500 dipped-and-ripped off its 50DMA (and the crucial 1840 level for bulls). The problem with all this "the correction is over" chatter... nothing else is buying it... Treasury bond yields slumped lower (7Y -15 bps from Friday highs and back to FOMC levels) with 10Y < 2.70% again. Credit spreads on high-yield debt made new swing cycle wides (did not hold teh dead cat bounce gains). Gold jumped back above $1310 (and on a separate note oil prices surged as "tanks" hit the headlines once again in Ukraine). But perhaps the most notable 'negative' for this being anything but a dead-cat-bounce was the collapse in JPY carry - USDJPY's biggest drop in 8 months. VIX was pegged to the S&P 500 all day - but even there we saw notable steepening (as hedgers termed out protection). S&P 500 futures close perfectly at yesterday's closing VWAP.
Accounting tricks and manipulation of economic data is taking place globally and will contribute to people being misled regarding the true state of national economies and the global economy. The false sense of security seen before the global financial crisis has returned ... it can only end in tears ...
While the world is watching US stocks and breathing a sigh of relief that they are not crashing (yet) today, there are some significant moves afoot in other critical markets. USDJPY has broken below 102 continuing its slide (JPY strength) on the heels of the BoJ's disappointing lack of additional money-printing. Perhaps even more critically is the surge in prices of oil (Brent and WTI) as news break of tanks rolling once again in Eastern Ukraine. A glance at the charts below and one can't help but wonder how long stocks can hold these gains today...
Update: as expected the denial of the propaganda didn't take long: PROTESTERS IN LUHANSK, UKRAINE, DENY HAVING EXPLOSIVES AND HOLDING HOSTAGES IN STATE SECURITY BUILDING
While the source of the most recent developments in the Ukraine is the country's state security services and should thus be taken with the usual mine of salt, Reuters is reporting that pro-Russian separatists have placed explosives in a building they seized in the eastern city of Luhansk and are using weapons to hold around 60 people against their will.
As we noted previously, the US remains convinced that "there is strong evidence suggesting some of [the pro-Russian] demonstrators were paid," and Russia, in the same vein, responded that they "are particularly concerned that the operation involves some 150 American mercenaries from a private company Greystone Ltd., dressed in the uniform of the [Ukrainian] special task police unit Sokol." So, this morning's 'claims', substantiated, we presume, by YouTube clips and CIA promises, that John Kerry blasted to his Twitter followers is remarkable: "it is clear that Russia special forces and agents have been the catalysts behind the chaos of the last 24 hours in Ukraine." Clear... proof?
Despite Russia's veiled threat that any ongoing action against pro-Russian demonstrators had the potential to instigate civil war and bring action by the Russian forces, Ukraine's interior minister Arsen Avakov has announced, Reuters reports, that Ukraine has launched an "anti-terrorist" operation in the eastern city of Kharkiv and about 70 "separatists" have been arrested for seizing the regional administration building. Is this the red-line that Putin laid down last night?