Baltic Dry Index. 1496 -82
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale."
J. K. Galbraith. The Great Crash: 1929.
Yesterday we pointed out Morgan Stanley’s brave
buy recommendation on Chinese and Russian stocks, commenting “But is the Obama government
saying one thing on Russia in public, and quite another in private to Wall
Street’s Great Vampire Squids?” This
morning the answer is increasingly looking like yes. The botched Kievian Coup
has resulted in an unelected government of corrupt oligarchs, backed up by
fascist and anti-semitic far right parties. Few it seems are willing to swap lucrative
contracts with Russia for the dubious benefit of investing in the Kievian Rus.
But if this
is wrong and Germany opts for national suicide, get ready for the mass
migration from the Baltic to the Black Sea into Poland and Germany, as
sanctions and counter sanctions, and IMF austerity programs kick-in in the
Kievian part of the Ukraine.
“The world is a place that’s gone from being flat to round to crooked.”
Mad Magazine.
White House’s Sell Russian Stocks Recommendation Flopping
Mar 27,
2014 2:53 AM GMT
White House press secretary Jay Carney’s debut as a short-selling tout is off to a
rough start. Since Carney said March 18 that the only investments worth making in Russian equities are wagers the market will decline, short sellers have been pulling out as the Micex gauge rebounded 1 percent. The percentage of borrowed shares in the biggest U.S. ETF tracking Russia’s market -- a barometer of short selling -- has fallen to 14 percent of the total stock, from 17 percent the day Carney spoke and a record 21 percent on March 3, according to financial data provider Markit.
Equities are bouncing back in Moscow after President Vladimir Putin’s push to annex Ukraine’s Crimea peninsula sparked the worst standoff with the U.S. since the end of the Cold War and sent the Micex into a bear market. The gauge is up 9.1 percent from a four-year low reached March 14 as traders bet the sanctions imposed by President Barack Obama and his European counterparts don’t go far enough to curb growth in the world’s biggest energy-exporting nation.
“Investors are no longer afraid of sanctions and the market shows that,” Victor Bark, who oversees about $2.8 billion at Alfa Capital as the head of asset management in Moscow, said by phone on March 26. He said no “serious” investor paid attention to Carney’s comments.
---- “International investors want to know that the places they’re investing are places where the rules of the road are followed,” Carney said.
Speaking a week earlier at a press briefing, Carney cautioned people against buying shares in Moscow. “I wouldn’t, if I were you, invest in Russian equities right now, unless you’re going short,” he said.
The rally since then has trimmed the Micex’s decline this month to 6.6 percent. The Bloomberg index of the most-traded Russian shares in the U.S. has gained 3.2 percent over the past three days, sending it toward the biggest weekly advance since October. Traders are also paring back bearish bets in the options market.
The put-to-call ratio on the Market Vectors ETF has dropped to 1.06 from 1.3 the day before Carney spoke, according to data compiled by Bloomberg.
More
Below, the
Ukraine volunteers to become the new Greece.
Ukraine IMF Aid Announcement Near as Obama Warns Russia
Mar 26, 2014 7:58 PM GMT
Ukraine and the International Monetary Fund will probably make an
announcement tomorrow on a bailout, the government said, as the U.S. and Europe
warned Russia it faces more sanctions if the Crimea crisis intensifies. “Most likely it will be tomorrow,” Ukrainian Prime Minister Minister Arseniy Yatsenyuk’s spokeswoman, Olga Lappo, said by phone when asked when the government and the Washington-based lender will unveil an agreement. Talks today in Kiev focused on resolving state natural gas subsidies, according to Deputy Economy Minister Anatoliy Maksyuta.
Battling dwindling reserves and the threat of a third recession since 2008, Ukraine wants a loan of $15 billion to $20 billion, Finance Minister Oleksandr Shlapak said yesterday.
Ukraine’s cabinet, in power since
pro-Kremlin President Viktor Yanukovych was ousted last month, wants to
stabilize the country after four months of political crisis, while facing the
threat of further Russian military incursion. Unpopular measures like those in
the IMF-endorsed austerity campaigns that triggered protests and toppled
governments from Greece to Spain during the euro debt crisis may foment further
unrest.
More
Below, Der
Spiegel on why Germany will never be a team USA player on Russia. Last year
over 132,000 German made vehicles were sold in Russia. 6,000 German companies
do business in Russia, exporting over 36 billion euros, with over 300,000
German jobs dependent on Russia. Uncle Scam it seems, using sanctions, is
really out to break Germany and through it, Euroland and the euro. It’s a funny
old lawless world on QE Forever and ZIRP, to try to prop up the dying Great
Nixoinian Error of fiat money.
“The Germans outside looked from America to
Russia, and from Russia to America, and from America to Russia again; but
already it was impossible to say which was which.”
With apologies to George Orwell and
Animal Farm.
'Dear to Our Hearts': The Crimean Crisis from the Kremlin's Perspective
By Matthias Schepp March 25, 2014 – 06:10 PM
The EU and US have come down hard on Russia for
its annexation of the Crimean Peninsula. But from the perspective of the
Kremlin, it is the West that has painted Putin into a corner. And the Russian
president will do what it takes to free himself.
Last
September, Vladimir Putin invited Russia experts from around the world to a
conference, held halfway between Moscow and St. Petersburg. At the gathering,
the Russian president delivered a passionate address. "We will never
forget that Russia's present-day statehood has its roots in Kiev. It was the
cradle of the future, greater Russian nation," Putin said. He added that
Russians and Ukrainians have a "shared mentality, shared history and a
shared culture. In this sense we are one people."
At
the time, German and European leaders still believed that it would be possible
to bind Ukraine to the European Union by way of an Association Agreement and to
free the country from Moscow's clutches. But Putin had long before made the
decision to prevent such an eventuality.
----
Putin knows that the vast majority of Russians are on his side when it comes to
his Crimean policy. His cool and calculated -- and thus far remarkably peaceful
-- annexation of the peninsula led to celebrations across Russia. After all,
the conviction that Crimea -- with its "Hero Cities" of Sevastopol
and Kerch in addition to Russia's Black Sea fleet -- is Russian soil is
widespread and shared even by many in the opposition camp. These are places,
Putin said in his address last week, that are "dear to our hearts"
and for which Russian soldiers fought and died. Even Nobel Peace Prize laureate
Mikhail Gorbachev said last week that the West should accept the results of the
Crimea referendum. "This should be welcomed instead of declaring sanctions," he said.
---- "Ever since Putin's speech at the Munich Security Conference in 2007, everyone should have known that Russia would no longer accept Western games within its sphere of influence," says Fyodor Lukyanov, Chairman of the Presidium of the Council on Foreign and Defense Policy in Moscow. "But the West never took Putin seriously and never developed a strategy to deal with Russia's legitimate interests."
The West, says Lukyanov,
disregarded every initiative from Moscow to discuss a new security regime for
Europe, constantly suspecting that Russia was seeking to drive a wedge between
Europe and the United States. Putin's proxy, former President Dmitry Medvedev,
even presented a draft for a European security treaty in 2009, one which
addressed territorial disputes and renounced the use of violence. "We are
now paying the price for not having sat down at the table then," Lukyanov
says.
Now, when the US and EU threaten
to turn away from Russia, few in Moscow are particularly impressed. Aside from
a couple of billion-dollar deals that benefited both sides, people close to
Putin say, the only approach from the West consisted in NATO's steady eastward
advance. Instead of appreciation for Gorbachev's having ushered in a peaceful
end to the Cold War, the Russian view holds, the West has sought to waltz all
the way into Red Square.
----- One-quarter of all Ukrainian exports go to Russian, with 2.9 million Ukrainian workers in Russia having sent $3 billion (€2.17 billion) to relatives back home last year, an amount equivalent to roughly 10 percent of the country's budget. A Russian boycott would likely mean a rapid end to the current Ukrainian government, unless the US and Europe were to jump in with a hefty aid package.
As such, Putin could simply play
for time in the hopes that sooner or later Ukraine will simply fall into his
lap like a ripe fruit -- perhaps even a Ukraine bloated by Western aid. Under
no circumstances, however, will Putin simply leave Ukraine to the West. Some
close to Putin even believe that the Russian president would be willing to go
to war to prevent that from happening.
---- The West is now
attempting to force Putin to back down by way of sanctions. It is a strategy
that is much more comfortable for the US than it is for Europe, with just 1 percent of
American trade being conducted with Russia and a lack of reliance on Russia oil
and natural gas. Germany's trade with Russia, by contrast, represents 3 percent
of Berlin's imports and exports, with a value of €76.5 billion. One-third of
Germany's oil and natural gas imports come from Russia. It has always sounded
good when EU politicians insisted that Russia cannot be allowed to have a say
in Ukraine's future. But it was never particularly realistic.
More
But Uncle Sam has
other far bigger problems than Germany. Through shale oil and fracking, Uncle
Sam is no longer dependent on the 1973 Kissinger Saudi Arabia, US protection
for oil priced in dollars deal, with petrodollars recycled through the G-1 and
the 6 dwarfs. China is now the world’s largest oil importer, and President
Obama seems to be playing fast and loose with the Saudis and Israel. How long before China wants to pay for oil in
Yuan? Can President Obama really get away
with burning his Middle East candle at both ends? A whole lot is riding on just
that outcome.
U.S. Oil Boom Shifts Alliance as Obama Visits Saudi King:
Mar 27,
2014 5:43 AM GMT
When Barack Obama sits down tomorrow with Saudi Arabia’s King Abdullah, he’ll do so knowing the U.S. is
importing the least crude in two decades, a shift changing America’s strongest
relationship in the Arab world. Five years after Obama’s first visit to Riyadh, the drilling of shale oil fields from North Dakota to Texas has put the U.S. on the path to energy independence, weakening economic interdependence between the two nations as they work through disagreements on Syria and Iran.
The U.S. energy boom that’s upended global markets is now reshaping political alliances built over decades. Almost 70 years after Franklin Roosevelt cemented relations with the Saudi royal family, the U.S. finds itself free to address policy differences with oil as less of a bargaining chip, analysts said. The shift gives the U.S. a freer hand in shaping Middle East policy, especially in seeking an accommodation with Iran while lessening Saudi influence in Washington.
“The global picture for Saudi Arabia has changed fundamentally as a result of the growth of unconventional oil in the U.S.,” said Valerie Marcel, an associate fellow at Chatham House, a think-tank in London. “Saudi Arabia and the rest of the Gulf exporters are turning their attention eastward and that has an impact on how they see the West.”
While the U.S. stresses the closeness of the relationship on security and counter-terrorism matters, Obama’s likely to confront discomfort on his policy toward Saudi Arabia’s main regional rival, Iran, where he’s pursuing a deal on the country’s nuclear program that may eventually end economic sanctions against the Islamic Republic.
More
In America,
the Fed’s final bubble got a late dose of the jitters. Not everyone can sell
out at the top, and the Great Vampire Squids know it. When the music stops,
only a fool or a drunkard keeps dancing. With China wobbling, Russia in the
doghouse, Venezuela and Turkey imploding, Brazil and Argentina getting ready to
implode, and Japan less than a week away from raising its sales tax, the music
is all too likely to stop next month. Is the Social Media bubble getting ready to collapse?
"In
economics, hope and faith coexist with great scientific pretension."
J. K.
Galbraith.
U.S. Stocks Cap Biggest Drop in Two Weeks; Facebook Drops
Mar 26,
2014 11:45 PM GMT
U.S.
stocks fell, led by technology and commodity companies, after President
Barack Obama warned the crisis in the Ukraine may escalate and Facebook Inc.
dropped the most since 2012. Losses extended in the last hour as investors sold
companies that have led the bull market. Facebook sank 6.9 percent after buying virtual-reality headset maker Oculus VR Inc. King Digital Entertainment Plc, the maker of the “Candy Crush” smartphone game, slumped 16 percent on the first day of trading. Citigroup Inc. lost 5.4 percent in extended trading after the Federal Reserve said the bank’s capital plan failed its stress tests.
The S&P 500 fell 0.7 percent to 1,852.56 at 4 p.m. in New York, the biggest drop since March 13. The Dow Jones Industrial Average lost 98.89 points, or 0.6 percent, to 16,268.99. The Nasdaq Composite Index retreated 1.4 percent. The Russell 2000 Index sank 1.9 percent, the most in almost two months.
“Investors around the world have been waiting to see what kind of reaction the United States and the EU would really take regarding Russia’s annexation of Crimea beyond sanctions,” Frederic Dickson, chief investment strategist who helps oversee $44.5 billion at D.A. Davidson & Co. in Lake Oswego, Oregon, said in a telephone interview. “Any hints of escalation in terms of rhetoric or action would probably trigger investors to stand back and take recent profits.”
Selling intensified in the last 60
minutes of trading, with gauges of technology stocks, drugmakers,
and consumer and industrial companies all losing 0.7 percent. About half of the
day’s 6.5 percent gain in the Chicago Board Options Exchange Volatility Index
occurred during the period, data compiled by Bloomberg show.
More
Elsewhere,
Asia followed the US lead.
Japan shares rebound, China tech stocks track U.S. fall
By Wayne
Cole SYDNEY
(Reuters) - Asian markets were in skittish mood on Thursday
following a soft finish on Wall Street and amid simmering tensions over
Ukraine, while Chinese tech stocks
took a tumble in sympathy with their U.S. counterparts.Trading was thin and choppy with the month and quarter-end fast approaching. Tokyo stocks initially skidded as investors counted down to a rise in sales tax that is expected to chill consumer spending and test the market's faith in Abenomics.
But the Nikkei .N225 met solid support near 14,200, as it has for weeks now, and rebounded to be up 0.6 percent.
Some blamed Wall Street's slip on news the United States and the European Union had agreed to work together to prepare possible tougher economic sanctions in response to Russia's actions in Ukraine.
More
Ominously
the Baltic Dry Index has started swooning again, after its 600 point rally following
the Chinese New Year.
"If ever there was an area in which to do the exact opposite of that which government and the media urge you to do, that area is the purchasing of gold."
Robert Ringer
At the Comex
silver depositories Wednesday
final figures were: Registered 53.24 Moz, Eligible 128.36 Moz, Total 181.60 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today Germany. Tomorrow, France, Holland, Sweden
and Great Britain. And just wait until sanctions
against Russia and Russian retaliation, send thousands of Ukrainians flooding
into Poland and Germany. Both had better be prepared for thousands of Balts
too, if Russia really decides to share the pain. It may be madness, but it’s
what passes for grown up government in the early phase of the 21st
century. Stay long fully paid up physical gold and silver. Western politicians
have taken leave of their senses and interests.
"The paper standard is self-destructive."
Hans F. Sennholz
Germany tackles benefit abuse as migration soars from eastern EU
By Stephen
Brown BERLIN
(Reuters) - Germany
expects the number of Romanians and Bulgarians moving to the country to double
this year, now that they are free to work anywhere in the European Union, and
will defend its welfare system from potential abuse, the government said on
Wednesday.Economic growth and low unemployment in Germany are luring EU citizens taking advantage of free labor movement in the bloc, and industry is short of workers. But EU expansion to the east has fuelled fears of an influx of people fleeing poverty.
"It's good news when migrants come here to work, train or study and contribute to Germany's welfare and development," said Interior Minister Thomas de Maiziere. "But we shouldn't be blind to the fact that this immigration sometimes brings problems."
Presenting the preliminary findings of a panel set up by Angela Merkel's government in January to look into how to avoid "benefit tourism", de Maiziere said net migration from Romania and Bulgaria hit 75,000 last year and would double this year.
Most Romanians and Bulgarians come to study or work, they are less likely to be unemployed than the average EU migrant and make up only 0.7 percent of total welfare claimants, he said.
But immigration hotspots such as Duisburg, Frankfurt, Munich, Hamburg and Hanover are already overwhelmed by unemployed east Europeans needing healthcare, schools and welfare, he said.
"The number of immigrants from Bulgaria and Romania and the social problems linked to some of them can be managed nationally but in certain regions it is alarming, and the rise in numbers is alarming," said de Maiziere. "So we must take measures to avoid this becoming a problem for the whole of Germany."
More
"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
William F. Rickenbacker
The monthly Coppock Indicators finished February.
DJIA: +203 Up. NASDAQ: +353 Up. SP500: +255 Up.
The new Fed bubble continues, what could possibly go wrong?
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