Eastern Europe

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Stocks Desperate To Put Ukraine In Rearview Mirror But More Russian Sanctions Loom





Following the overnight ramp in various JPY crosses (dragging equity futures higher, and the Nikkei up 0.8%) it is as if the market is desperate to put all of last week's geopolitical events in the rearview mirror, and while yesterday there were no economic events of note, today's CPI and existing home prints should provide at least some distraction from the relentless barrage of one-line updates on Ukraine and Gaza. Still, that is precisely where the biggest risk remains, with an emphasis on the possibility of more Russian sanctions, this time by Europe.

 
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Saxobank: "Be Warned" Of Delayed Market Reaction To "Escalation Of Global Turmoil"





The escalation of turmoil in the world is yet to play a role for the market, but be warned: everything economic has a delayed reaction of nine to twelve month – whenever there is an action there will be a reaction. If the present state of alertness continues through the summer you can bet on higher energy prices having a serious impact on not only world growth but also on markets. Simply put, Steen Jakobsen concludes, "prepare for less growth, less certainty and more geopolitical risk."

 
Tyler Durden's picture

Quiet Economic Calendar Means All Attention Focused On Ukraine And Gaza





In the absence of any major economic events, it will be another day tracking geopolitical headlines out of Ukraine (lots of accusations, propaganda and fingerpointing on both sides, zero actual evidence and facts - expect more European sanctions to be announced today to match last week's latest US-led round ) and Israel (where the death toll has now risen over 500, almost entirely on the Gaza side), and then promptly spinning any bad news as great news. For now, however, futures are modestly lower from the Friday close pushed down by the AUDJPY which has rebased around 95.00. We expect the momentum ignition correlation algos will promptly take of that as soon as the US market opens, a market which has now been described as bubbly by the BIS, the Fed and the IMF.

 
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A "Tone-Deaf" Obama Mocked By The NYT For Vacationing While The World Burns





For an administration in its sixth year, juggling presidential optics is nothing new. And with some rare exceptions, the public relations team around the president has remained consistently stubborn about refusing to let the never-ending stream of political, economic or international crises affect Mr. Obama’s daily schedule. The current myriad incidents are no exceptions: Moments after making a grim statement about Ukraine on Friday, the president popped into the East Room, where the first lady, Michelle Obama, was holding a mock state dinner for children to promote her Let’s Move nutrition initiative. “My big thing,” he confessed to the kids, “chips and guacamole!” There was plenty of laughter all around.

 
Tyler Durden's picture

Obama's Latest Russian Sanctions Send Global Stocks Reeling





Slowly but surely, all those cans that many hoped were kicked indefinitely into the future, are coming back home to roost. The biggest impact on global risk overnight have been undoubtedly the expanded Russian sanctions announced by Obama yesterday, which have sent the Russian Micex index reeling to six week lows (as it does initially after every sanction announcement, only for the BTFDers to appear promptly thereafter), with the biggest hits saved for the named companies such as Rosneft -5.6%, Novatek -5.1%, and others Alrosa -5.7%, VTB Bank -4.3%, Sberbank -3.4% and so on. Then promptly risk off mood spilled over into broader Europe and at last check the Stoxx600 was down 0.8%, with Bund futures soaring to record highs especially following news (from the Ukraine side) that a Russian warplane attacked a Ukrainian fighter jet. Not helping matters is the end of the dead cat bounce in Portugal where after soaring by 20% yesterday on hopes of a fresh capital infusion, Espirito Santo has once again crashed, dropping as much as 11%, driven lower following downgrades by both S&P and Moodys, as well as the realization that someone was pulling everyone's legs with the rumor of an equity stake sale.

 
Tyler Durden's picture

Russia Rushes To Seal Ukraine-Bypassing Gas Pipeline: Lavrov Pays Bulgaria A Visit





Even as the western media finally remembered over the weekend there was a Ukraine civil war going on following an advance by the Kiev army to retake some rebel strongholds in the Donbas region, with some curious what if anything Putin would do in retaliation, what Putin, or rather his envoy Sergei Lavrov were actually doing, was completely ignoring the Ukraine situation (where the West has long since conceded the loss of Crimea to the Kremlin) and instead focusing on securing the successful launch of the South Stream (remember: the second South Stream goes online, Ukraine becomes irrelevant). And since Russia already signed another historic agreement with Austria in June, which positioned the AAA-country (with some surprising emerging bank troubles subsequently) squarely against its fellow European peers, it was the turn of the other South Stream countries, namely Bulgaria.

 
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Largest Austrian Bank Crashes After "Revealing" 40% Surge In Bad Debt Provisions, Record Loss





Ever since 2012, when we first revealed that the biggest problem plaguing Europe's financial sector is the $2 trillion+ in bad debt on the books of European banks (not our numbers, the IMF's), it became clear that the only way Europe can avoid a complete financial meltdown coupled with currency disintegration, is if it can constantly keep rolling over said bad debt (obviously the only way to do that would be to create an epic debt bubble leading managers of other people's money to do idiotic things like buy Spanish debt at 2.75%). This is why not only the BOJ launched its mega QE in 2013, but why Draghi also kicked in with NIRP a month ago: the logic - do anything and everything to reflate the biggest credit bubble possible as otherwise European banks will have no choice but to face up to their trillions in bad loans.

 
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The Arms Race Is Back... With A Twist: US Congressman Urges NATO To Purchase French Warship Destined For Russia





The saga of the French Mistral amphibious assault warship which was ordered by Russia years ago, and whose delivery - at least according to Putin - was the reason behind the US record $9 billion DOJ fine of French BNP (which the Russian president called "blackmail" by the US designed to intimidate France and prevent it from completing the transaction) just took a turn for the bizarre. In a note written in the Atlantic Council's website, Democrat representative for New York's 16th district, Eliot Engel, has proposed that instead of letting France conclude its deal with Russia, now that even the BNP "blackmail" has failed to dent Hollande's intention to see the delivery to its end, that NATO (read the US) should step up and "collectively purchase or lease the warships as a common naval asset."

 
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The Emerging German-Russian Axis





Vladimir Putin commented at a German-Russian official function: “We value the accumulated potential of Russian-German relations and the high level of trade and economic cooperation. Germany, one of the European Union leaders, is our most important partner in enhancing peace, global and regional security.” We would contend that we are seeing a decisive shift in the political character of Eurasia as 'continental empires' are starting to challenge the monopoly of 'legal' international violence that the US has exercised for the last 25 years. Such struggles have the potential to become major regional problems, but what is intriguing is the emerging continental alliance between Russia and Germany - a combination of German industrial might and Russian raw materials and military strength would instantly create a colossus.

 
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Futures Meander Ahead Of Today's Surge On Bad Economic News





Following yesterday's S&P surge on the worst hard economic data (not some fluffy survey conducted by a conflicted firm whose parent just IPOed and is thus in desperate need to perpetuate the market euphoria) in five years, there is little one can comment on how "markets" react to news. Good news, bad news... whatever - as long as it is flashing red, the HFT algos will send momentum higher. The only hope of some normalization is that following the latest revelation of just how rigged the market is due to various HFT firms, something will finally change. Alas, as we have said since the flash crash, there won't be any real attempts at fixing the broken market structure until the next, and far more vicious flash crash - one from which not even the NY Fed-Citadel PPT JV will be able to recover. For now, keep an eye on the USDJPY - as has been the case lately, the overnight USDJPY trading team has taken it lower ahead of the traditional US day session rebound which also pushes the S&P higher with it. For now the surge is missing but it won't be for longer - expect the traditional USDJPY ramp just before or as US stocks open for trading.

 
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Janet Yellen Is Wrong About Inflation





Janet Yellen has dismissed rising inflation figures. They were “noisy,” she said. She didn’t like the sound of them. Valid numbers are harmonious. Invalid ones are cacophonous. But after so many years of listening to such loud noise coming from her own colleagues, poor Ms. Yellen may be tone deaf. At least, that is one explanation for her nonchalance toward the threat of inflation.

 
Marc To Market's picture

Momentous EU Summit This Week





An overview of the chess game being played out in Europe. 

 
Tyler Durden's picture

LNG: The Long, Strategic Play For Europe





Liquefied natural gas (LNG) to Europe isn’t a get-rich-quick scenario for the impatient investor: It’s a long, strategic play for the sophisticated investor who can handle no small amount of politics and geopolitics along the way. When it comes to Europe, Russia’s strategy to divide and conquer has worked so far, but Gazprom is a fragile giant that will eventually feel the pressure of LNG.  Robert Bensh is an LNG and energy security expert who has over 13 years of experience with leading oil and gas companies in Ukraine. He has been involved in various roles in finance, capital markets, mergers and acquisitions and government for the past 25 years. Mr. Bensh is the Managing Director and partner with Pelicourt LLC, a private equity firm focused on energy and natural resources in Ukraine.

 
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UK Scrambles 7 Fighter Jets To Intercept Russian Aircraft





Britain's Ministry of Defence said this week it had scrambled Typhoon fighter jets after four separate groups of aircraft were detected in international airspace near the Baltics by NATO air defenses. The British jets intercepted seven Russian military aircraft that, as Reuters reports, did not file a flight plan and did not use their transponders, making them invisible to civilian air traffic control and a safety hazard to commercial air traffic. "The Russian aircraft were monitored by the RAF Typhoons and escorted on their way," noted the ministry. This follows an event last Thursday when Latvia said NATO fighters had scrambled a record four times after a total of 16 Russian military planes were spotted close to the country’s air space.

 
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