Putin Tells Merkel "Ukraine On The Verge Of A Civil War" As Germany Agrees To Re-Sell Russian Gas To UkraineSubmitted by Tyler Durden on 04/15/2014 19:36 -0400
A day after Putin called Obama to warn him that only the US president can prevent bloodshed in Ukraine - something which Obama failed at based on this morning's reports out of east Ukraine - German Chancellor Angela Merkel had a follow up phone call with the Kremlin a few hours ago, in which Putin told her that "The sharp escalation of the conflict puts the country, in essence, on the verge of a civil war".
A look at what German is doing and what it does not want to do.
- Ukraine forces move against separatists (FT)
- China GDP Gauge Seen Showing Deeper Slowdown (BBG)
- China Is Losing Its Taste for Gold (WSJ)
- Regulators Weigh Curbs on Trading Fees (WSJ)
- Obama, Putin Talk as Unrest Roils Eastern Ukraine (WSJ)
- Japan PM talks with BOJ chief, does not push for easing (Reuters)
- BRICS countries to set up their own IMF (RBTH)
- IMF Members Weigh Options to Sidestep U.S. Congress on Overhaul (WSJ)
- Zebra to Buy Motorola Solutions Unit for $3.45 Billion (BBG)
- Chinese Thunder God Herb Works as Well as Pain Therapy (BBG)
One can see that while the traditional 6:00 AM USDJPY buy program is just duying to resume aggressive upward momentum ignition, futures are still leery and confused by the recent post-open high beta selloffs. Then again, things like yesterday's ridiculous no news 3:30pm ramp happen and confused them even more just as momentum is about to take a downward direction. Stocks in Asia (ex-China) advanced amid a reversal in sentiment after Citigroup (+4.15%) inspired positive close on Wall Street, however Shanghai Comp (-1.4%) underperformed as concerns over GDP data on Wednesday following weak money supply data weighed on sentiment. Stocks remained on the back foot (Eurostoxx50 -0.42%), with Bunds supported by the release of lower than expected German ZEW survey and also ongoing concerns surrounding the stand-off between Ukraine/Russia. Short-Sterling bear steepened after UK CPI fell to its lowest level since October 2009, but house prices across Britain posted its biggest rise since June 2010, reviving concerns over an overheating market.
Combining China's aggregate domestic production and apparent imports indicates that she has now over 3,514 tonnes. Assuming the U.S. still owns all the gold held by the Fed, this would make China the world's second largest national owner... but it remains unclear whether the Fed's published Gold holdings are actually the property of other nations. Clearly the recent price rise in gold owes something to inflation fears, repressed interest rates and to the Ukrainian situation. In the meantime, a growing awareness of a possible serious and increasing shortage of physical gold and a decline in the power of western central banks to suppress the price, point to a resumption of the fundamental bull market in gold, despite a possible increase in fears of recession.
With Italian and Spanish bond yields at record lows (and spreads - risk premia - near record lows) one can only ascertain that Europe is fixed, Draghi has no need to do QE, and everything in the world is fine again. Except it's not... Draghi is cornered from QE by a lack of uncommitted collateral and a banking system glued at the hip to the sovereign bond markets. But perhaps, for those who are buying Italian and Spanish bonds, it is not enough to see record high unemployment, record loan delinquencies, and record low credit creation... In order to help further with the BTFD, we offer the following chart - showing Spanish and Italian home prices continue to slump (along with Cyprus).
As was expected, so called Russian separatists completely ignored Ukraine's 0600 GMT ultimatum to hand over their weapons and give up, which means Ukraine now is in the clear, according to its leaders, to engage in the previously warned military "anti-terrorist" operation. As a result, as Reuters updates, "towns in eastern Ukraine on Monday braced for military action. As the 9 a.m. (07.00 a.m. BST) deadline issued by authorities in Kiev expired, a Reuters reporter in the flashpoint city of Slaviansk, where armed men had seized two government buildings, said there was no outward sign the rebels were complying with the ultimatum." Subsequent reports indicated that since the deadline passed, at least 4 people have been killed however since virtually no "factual" propaganda news out of Ukraine is to be believed, we would heavily discount this update.
- J.P. Morgan's Dimon Describes Year of Pain (WSJ)
- SAC Faces a Final Reckoning for 14 Years of Insider Scam (BBG)
- New Standards for $693 Trillion Swaps Market Increase Risk of Blowup (BBG)
- China says no major stimulus planned; March trade weak (Reuters)
- As we said in 2012 would happen: Record Europe Dividends Keep $3 Trillion From Factories (BBG)
- Blame it on the algo: Deutsche Bank Said to Find Improper Communication in FX Case (BBG)
- Coke Sticks to Its Strategy While Soda Sales Slide (WSJ)
- Ukraine’s Rust Belt Faces Ruin as Putin Threatens Imports (BBG)
- RBC Joins Goldman in Suing Clients After Singapore Crash (BBG)
- U.S. House panel to look at aluminum prices, warehousing (Reuters)
- Brooklyn Apartment Rents Jump to a Record as Leases Surge (BBG)
There's an all-out Global currency war being waged and yesterday the Dollar was the clear winner.
Even Germany's vice chancellor Sigmar Gabriel realizes that there is no alternative to Russian gas for Germany, at least not in the near future.
“In the debate over Europe's dependence on Russian natural gas it is often falsely pretended that there are many other possibilities. This is incorrect.”
But keep hanging on that "we'll export LNG to fix Putin" meme anyway
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.
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.
Since 2007, when the financial crisis touched down across the world, the proportion of people going hungry in Europe has soared, according to the OECD. As Bloomberg's Niraj Shah notes, the number has doubled in Greece alone from 8.9% in 2007 to almost 18% currently unable to afford food. Across the European Union, the proportion of people going hungry ranges from 4.6% in Germany to over 30% in (ironically) Hungary. However, before one gloats at the weakness in Europe and the cleanest dirty shirt the US pretends to be, at 21.1% of Americans unable to afford food, only Hungary and Estonia are in worst shape... USA USA USA...
For the first time ever in the history of US-Russian relations we are seeing a public debate about a threat of economic sanctions that may have a long-range negative effect on global energy security. The Obama administration acts as if it is guided by a chapter out of an old Soviet textbook on political economy. At the moment, apparently, the sacred dogma of the free market, from Samuelson to Friedman, can be conveniently overlooked for the sake of punishing a sovereign nation. When the head of the most influential state in the world talks about manipulating market prices to punish recalcitrant players, what kind of “global free market” and fair play are we really talking about? After a series of headline-grabbing statements about the possibility of “switching” European consumers over to American gas, the US media hastened to announce the launch of Obama’s oil and gas offensive against Russia. In reality the EU is not currently prepared, neither technically nor in terms of price, to buy its energy resources from the US. It would take at least ten years to adapt even the technically advanced German energy system to work with American gas supply. In a crisis, when it is particularly urgent to see a quick return on an investment, such projects are unrealistic.
The Cyprus bail-in laid the ground for a global wealth tax. The next time a crisis hits, savers will be picking up the tab.