Baltic Dry Index. 1477 +09
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“Veni,
vidi, vici. (I came, I saw, I conquered.)”
President
Putin with apologies to Julius Caesar.
Is it “Mission Accomplished” for President Putin and
Russia, now that the Crimea has voted overwhelmingly to leave the Ukraine and
join Russia, or is the Crimea just the first slice of the Ukraine salami as
Russia now goes on to slice off eastern and southern parts of the Ukraine? No
one knows, at least no one in Kiev or the west. Will the European Union now go
on to impose meaningful sanctions on Russia, cutting off its nose despite its
face, or will it wriggle out of an American led sanctions regime?
At this time, no one knows, but talk is cheap. All the EU’s
“Great Leaders,” including Her Majesty’s Great Coalition Leader, are all out
huffing up a great storm of words this morning and puffing away like Thomas the
Tank Engine. Real EU sanctions will hurt banks in Germany and Club Med, hurt
Europe’s already suffering car industry, hobble real estate in Spain and
London, halt any recovery in Cyprus and Greece, and in extremis, crash deals in
planes and trains to Russia. Just how high is Europe’s youth unemployment
expected to go, in the cause of rescuing America’s botched Coup in Kiev? We
will likely know more by the end of the week, but the stronger the sanctions,
the less the Russian bear has to lose by slicing off more of the salami. It is
time to be out of leveraged risk, and parked in cash and fully paid up physical
gold and silver. When elephants fight, it’s best not to get in their way. If
Russia retaliates and chokes off Ukraine’s wheat exports later in the year,
expect food price inflation to add to the mix.
Below, the picture this morning as round one in the 21st
century version of the Great Game ends. Round two is just about to start.
“War
is peace.
Freedom is slavery.
Ignorance is strength.”
Freedom is slavery.
Ignorance is strength.”
George
Orwell.
Asia Stocks Drop as Crimea Vote Boosts Micex, Wheat
Mar 17,
2014 6:32 AM GMT
Most Asian stocks fell, extending the regional index’s steepest
weekly slump since 2012, while Russian shares climbed with wheat after Crimea’s
disputed vote to leave Ukraine. Chinese equities rose as the yuan dropped after
the government widened the currency’s trading band. The MSCI Asia Pacific Index lost 0.3 percent by 3:27 p.m. in Tokyo, led by shares in Japan. Standard & Poor’s 500 Index futures were little changed. Moscow’s Micex Index climbed from the lowest since 2010 and the ruble slid.
----Global stocks lost $1.4 trillion in value as concern over
Russia’s actions in Ukraine’s Crimea and China’s slowing economy spooked
investors. Preliminary results show that more than 95 percent of voters in
Crimea chose to leave Ukraine, the world’s sixth-largest wheat shipper, and
become part of Russia in a referendum deemed illegal by the U.S. and the
European Union. China’s central bank doubled the yuan’s trading band as the
government promotes a greater role for markets.
More
Crimea Ballot Fuels Sanctions Speculation: Russia Reality Check
Mar 17, 2014 6:00 AM GMT
----In
a referendum yesterday, disputed as illegal by the West, Crimea residents
backed joining Russia, with preliminary results showing 95.5 percent support
for such a move. European Union politicians meet today to discuss sanctions on
what they view as President Vladimir
Putin’s incursion on Ukrainian territory. The top panel displays the value of the Micex Index of 50 Russian equities, government debt in the Bloomberg Russia Local Sovereign Bond Index, and the ruble relative to the dollar. Credit default swap rates on Russian bonds due in five years appear in the bottom panel. The yield gap between Russian debt and U.S. Treasuries and the one-month implied volatility of the ruble are also tracked.
Russia Facing Escalating Sanctions as EU Foreign Ministers Meet
Mar 16, 2014 11:00 PM GMT
European and U.S. officials will probably hold their most punitive sanctions
on Russia in
reserve as they wait for President Vladimir
Putin to show his hand on whether he plans to push his forces deeper into
Ukraine. EU foreign ministers due to meet in Brussels today are set to impose travel bans and asset freezes on some Russian officials as Putin’s government prepares to annex Crimea after today’s referendum on secession from Ukraine. The “additional and far-reaching consequences” that were floated by the bloc on March 6 will be held back until EU leaders meet later this week in a bid to corral Putin’s ambitions in eastern Ukraine.
Juan Zarate, a former White House and U.S. Treasury Department sanctions official and the author of “Treasury’s War: The Unleashing of a New Era of Financial Warfare,” said in an interview that he expects the Obama administration and the EU to begin a “calibrated, escalatory financial campaign that demonstrates there are real costs in the short-term, but allows for diplomatic and financial off-ramps if there’s a breakthrough.”
More
U.S. rejects Crimea referendum, warns Russia of imminent sanctions
(Reuters) - The United States warned Russia on Sunday that Western sanctions were imminent and Moscow would pay an increasing price for its military intervention in Ukraine as the White House rejected a referendum in the Crimea region that it was powerless to stop.With Washington and its European allies expected to unveil coordinated punitive measures against Moscow as early as Monday, U.S. Secretary of State John Kerry told Russian Foreign Minister Sergei Lavrov that Russia must pull its forces in Crimea back to their bases.
Confirming what people on both sides of the crisis had seen as a foregone conclusion in the hastily called referendum in Crimea - a region with a Russian-speaking majority - Russian state media said Crimeans voted overwhelmingly to break with Ukraine and join the Russian Federation on Sunday.
More
Putin No Mad Man to Russians as Power Play Trumps Economic Risk
Mar 16,
2014 9:00 PM GMT
Western leaders may think Vladimir Putin is crazy for threatening to annex Crimea
and invade other areas of Ukraine. Most Russians, still bitter about the Soviet
Union’s demise more than two decades ago, couldn’t be prouder. Putin’s approval rating, bolstered after Russia hosted its first Winter Olympics last month, reached a three-year high as he poured troops into Crimea amid the overthrow of the Kremlin-backed government in Kiev. The tensest showdown with the West since the fall of the Berlin Wall has proved to be good for the business of governing in Moscow.
“Putin is just defending his country’s interests,” said Yaroslav Batashev, 32, a manager at a Moscow-based trader of consumer products who says he isn’t necessarily a fan of his president. “Crimea is historically important for Russia and it’s Russian.”
Since overcoming the biggest protests of his 14-year-rule to win a third term in 2012, Putin has reasserted his power at home and abroad. Even at the risk of sanctions that could tip the economy into recession for the second time in five years, Russians see his defiance of the West over Ukraine as a sign of strength, reinforcing his image as a leader who restored his country’s greatness from the post-Communism chaos of the 1990s.
Seventy-two
percent of Russians approve of the work Putin is doing as president, the
independent Levada Center said March 13, citing a survey of 1,603 people that
had a margin of error of 3.4 percentage points. A March 8-9 poll by the
state-run All-Russia Center for the Study of Public Opinion, known as VTsIOM,
also gave Putin 72 percent.
More
Fed Custody Holdings Record Decline Fuels Russia Speculation
Mar 14, 2014 9:09 PM GMT
The record drop in U.S. government securities held in custody at the
Federal Reserve is
fueling speculation that Russia may have shifted its holdings out of the U.S.
as Western nations threaten sanctions. Treasuries held by foreign central banks dropped by $104 billion to $2.86 trillion in the week ending March 12, according to Fed data released yesterday, as the turmoil in Ukraine intensified. As of December, Russia held $138.6 billion of Treasuries, making it the ninth largest country holder. Russia’s holdings are about 1 percent of the $12.3 trillion in marketable Treasuries outstanding, according to data compiled by Bloomberg.
More
Fire-sale of US Treasuries is a warning of acute stress across the world
Ambrose Evans-Pritchard Economics Last updated: March 14th, 2014
Somebody is a selling a fistful
of US Treasuries. It could be Russia, or China, Turkey, South Africa, or
Indonesia, or all frantically selling bonds at the same time for different
reasons.
We don’t yet know. All we know is
that the US Federal Reserve’s custody holdings on behalf of foreign central
banks plunged by $106bn in the week ending March 12, the biggest one-week drop
on record.
Russia’s central bank is
undoubtedly liquidating reserves at a breakneck pace to prevent a collapse of
the rouble, as foreign companies scramble to get all their spare cash out of
Russian accounts before the G7 guillotine comes down on the Putin clan next
week. It is certainly trying to remove its assets beyond the jurisdiction of
the US authorities – though that will not be easy. The SEC takes no prisoners.
In the end, the world is more frightened of US regulators than it is of Putin's
tanks or his polonium. Soft power can trump hard power.
One investor told me that clients
in Russia are literally loading up cars with computers, machinery, and anything
that will fit, and rushing them out of the country for fear that assets will
nationalised. Whatever happens, nobody will forget this in a hurry.
Yet the latest financial ructions
go beyond Russia, they reek of stress in the international system. “Countries
are intervening all over the place to defend their currencies, (which means
they are tightening). Their central banks built up huge war chests of reserves
for a rainy day, and now it is raining,” said David Bloom, currency chief at
HSBC.
Indeed it is. The international
order is unravelling. Russia is of course smashing the post-Cold War order by
seizing Ukraine, and blowing up the global architecture of nuclear
non-proliferation. Let us not forget that Ukraine agreed to give up its nuclear
weapons – the world’s third biggest arsenal at the time – in exchange for a
guarantee by the great powers in 1994 that its territorial integrity would be
upheld. Russia was one of the signatories.
China is laying claim to large
parts of the East China and South China Seas, and has established an air
identification control zone over the Japanese-controlled Senkaku islands.
China and Japan are one blow – or
misjudgement – away from outright military conflict. The battle on the Pacific Rim
is ultimately even more dangerous than the West’s clash with Russia over
Ukraine.
More
Speculators See Gold Gaining With Wheat on Ukraine: Commodities
Mar 17, 2014 5:35 AM GMT
After shunning gold and wheat for most of last year, hedge fund managers are
piling back in as the escalating crisis in
Ukraine spurs a rebound in the prices of both commodities. Speculators have the biggest bet on a gold rally since December 2012 and turned bullish on wheat for the first time since November, government data show. Bullion last week reached a six-month high and wheat entered a bull market as Crimea prepared for a referendum. A majority in the disputed vote March 16 chose to leave Ukraine and join Russia, exit polls showed.
Global equities erased this year’s gains last week as the turmoil in Ukraine escalated and the U.S. and the European Union discussed sanctions against Russia, poised to be this season’s fifth-biggest wheat exporter. Investors who rejected gold in 2013 are now buying the metal at the fastest pace since 2007, surprising bearish forecasters including Goldman Sachs Group Inc. Investors also bought more coffee, sugar and corn.
“We have already seen higher prices for gold because of safe-haven bids, and I expect to see more tensions unfolding if sanctions are imposed,” said Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., which oversees $290 billion. “The region is a big supplier of wheat, so any disruption is price supportive.”
More
“It is forbidden to kill; therefore all murderers are punished
unless they kill in large numbers and to the sound of trumpets.”
Voltaire.
At the Comex
silver depositories Friday
final figures were: Registered 52.32 Moz, Eligible 130.52 Moz, Total 182.84 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks today, just some thoughts as the war
drums beat from Washington to Warsaw.
China warns of dangerous Russia sanctions 'spiral'
By Noah
Barkin and Andreas Rinke BERLIN
(Reuters) - China's top envoy to Germany
has warned the West against punishing Russia
with sanctions for its intervention in Ukraine,
saying such measures could lead to a dangerous chain reaction that would be
difficult to control.In an interview with Reuters days before the European Union is threatening to impose its first sanctions on Russia since the Cold War, ambassador Shi Mingde issued the strongest warning against such measures by any top Chinese official to date.
"We don't see any point in sanctions," Shi said. "Sanctions could lead to retaliatory action, and that would trigger a spiral with unforeseeable consequences. We don't want this."
---- Chinese President Xi Jinping, who will visit Berlin and other European capitals later this month, held separate phone calls on the Ukraine crisis with Merkel and U.S. President Barack Obama earlier this week.
But beyond urging restraint and dialogue, China has shown little public interest in becoming involved diplomatically, a stance that is in keeping with its low-key approach to many international crises.
More
“Laws
are silent in times of war.”
Cicero.
“In peace, sons bury their fathers. In war, fathers bury their sons.”
Herodotus.
“Supreme
excellence consists of breaking the enemy's resistance without fighting.”
Sun
Tzu.
“When
you surround an army, leave an outlet free. Do not press a desperate foe too
hard.”
Sun
Tzu.
“I
think war is a dangerous place.”
George
W. Bush.
“In
War: Resolution,
In Defeat: Defiance,
In Victory: Magnaminity
In Peace: Good Will.”
In Defeat: Defiance,
In Victory: Magnaminity
In Peace: Good Will.”
Winston
Churchill.
The monthly Coppock Indicators finished February.
DJIA: +203 Up. NASDAQ: +353 Up. SP500: +255 Up.
The new Fed bubble continues, but the DJIA and S&P seem to be running out
of momentum.
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