Baltic Dry Index. 1325 +49
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Q:
What is Communism?
A:
The Poles say it's the longest and most painful of the roads to capitalism.
Today we reminisce
on murderous communism.
As the US Secretary of State played catch up to Russia’s President Putin, the rest of the world yawned and went back to the business of making money yesterday. With Germany effectively blocking meaningful sanctions against Russia, and no one caring about who runs the rest of a deeply divided bankrupt Ukraine, it was virtually game, set and match to Russia yesterday. Few expect Kiev’s coup government to last very long, and the appointment of two Russian leaning oligarchs to run eastern, Russian speaking, industrial Ukraine, signalled business as usual in deeply corrupt Ukraine. If this version of the Ukraine attempted to join the EU, 28 out of the 28 members would likely seek to veto them. If America wants to pour in billions to a bottomless pit on the Black Sea, go ahead and make President Putin’s day. Much of it will end up in Russian banks and in London.
As the US Secretary of State played catch up to Russia’s President Putin, the rest of the world yawned and went back to the business of making money yesterday. With Germany effectively blocking meaningful sanctions against Russia, and no one caring about who runs the rest of a deeply divided bankrupt Ukraine, it was virtually game, set and match to Russia yesterday. Few expect Kiev’s coup government to last very long, and the appointment of two Russian leaning oligarchs to run eastern, Russian speaking, industrial Ukraine, signalled business as usual in deeply corrupt Ukraine. If this version of the Ukraine attempted to join the EU, 28 out of the 28 members would likely seek to veto them. If America wants to pour in billions to a bottomless pit on the Black Sea, go ahead and make President Putin’s day. Much of it will end up in Russian banks and in London.
Europe in
the shape of Germany, having poured in millions to stage a pro EU coup, only to
see it usurped by far right, anti-Semite nationalist nutters, and upstaged by
President Putin’s de facto annexation of the Crimea, is now rapidly back
peddling from plunging continental Europe back into a deep recession. Outside
of Europe and America, nobody cares it seems, not even President Putin.
Below,
Germany declared a war but only a half-hearted Russia came.
Q:
What is 150 yards long and lives entirely on potatoes?
A: A
Moscow queue waiting to buy meat.
Putin Says No Immediate Need to Invade Eastern Ukraine, Leaves Threat Dangling
Mar 4, 2014 7:42 PM GMT
Vladimir Putin said he sees no immediate need to invade
eastern Ukraine as the Obama administration prepares $1 billion in loan
guarantees for the cash-strapped nation and threatens sanctions against Russia.
In his first public remarks since Ukraine said its Crimean peninsula had been taken over by Russian forces, President Putin said he reserved the right to use force to defend ethnic Russians while there’s “no such necessity” at present. U.S. Secretary of State John Kerry arrived in Kiev to offer an aid package to Ukraine’s interim government, as President Barack Obama challenged Putin’s rationale for intervening.
----Stocks in Moscow rebounded after Putin’s
remarks on optimism that the worst crisis between Russia and the West since the
end of the Cold War is cooling. The U.S. and Europe, which have decried Russian
military activity in Crimea, are racing to seal aid to help the new government
in Kiev avoid bankruptcy. Russia is also staking its own claim, saying Ukraine
owes state-controlled energy giant OAO Gazprom
$2 billion.
More
Ukraine crisis: separatist in Donetsk proclaims 'people's government'
As tensions mount in eastern Ukraine, supporters of Moscow storm city hall and fly the Russian flag
A pro-Russian separatist has proclaimed a "people's government" in Donetsk, eastern Ukraine's major city, that rejects Kiev's authority.Pavel Gubarev spearheaded a takeover of the government headquarters by a mob that broke through security grilles and smashed down the doors on Monday. A day later supporters of the new regime filled the red leather seats in the provincial chamber to consider his agenda.
The advertising executive declared he would co-opt a planned local vote on autonomy from Kiev and tilt the city away from Ukraine in a new alignment with Russia.
"Today and tomorrow we will work on the structure of the new administration. Then we will set out a plan for the new direction of Donetsk," he said. "We don't want to give our money any more to Kiev. We want more freedom for our city in a new federation or confederation that allows use to embrace the friendly ties and positive feelings towards us of the people of Russia."
It is 60 miles from the town to the border checkpoints that guard the frontier with Russia. Reports yesterday said that Russia had built-up a substantial troop presence just two miles inside its territory, near the road to Donetsk.
The city was the political support base
of Ukraine's ousted president, Viktor Yanukovych and has not adjusted well to
his downfall. Two days before Mr Gubarev and friends stormed the building, the
Russian flag was erected on the roof. But despite setting a referendum on
autonomy, the provincial council was effectively ousted by more radical
elements from the street.
More
Russia cancels Ukraine's gas discount and demands $1.5bn
Vladimir Putin insisted that Gazprom’s decision was unrelated to political tensions
Russian energy giant Gazprom has increased the price of gas supplies to Ukraine, sending a chilling reminder of the power Russia holds over European energy markets.The price rise comes as escalating unrest in Ukraine threatens to boil over into war – a situation that has already stoked fears of disruption to energy supplies from Russia to other parts of the world.
Gazprom chief executive Alexei Miller said his company would raise prices next month because Ukraine was not able to pay its debts in full, and would owe the company around $2bn if it did not meet its bill for February.
In the past, Russian president Vladimir Putin has granted Ukraine a discount on its gas supplies. However, the deal, which has to be renegotiated every three months, has not been renewed and has handed Russia a mechanism with which to ratchet up pressure on Kiev.
Mr Putin insisted that Gazprom’s decision was unrelated to political tensions. “This makes perfect commercial sense. This has nothing to do with situation in Ukraine. We gave them money, they failed to deliver," he said in a televised conference.
More
Asian Stocks Rise as Wheat Drops on Receding War Threat
Mar 5,
2014 4:51 AM GMT
Asian stocks rose, with the regional index joining a global rebound, wheat
dropped and credit risk fell to the lowest level this year as the threat of war
in Ukraine
receded. Chinese shares fell after a solar company warned it is unable to meet
a bond-interest repayment. The MSCI Asia Pacific Index climbed 0.9 percent by 1:46 p.m. in Tokyo, its biggest increase since Feb. 21, as Japanese shares rallied after the yen retreated yesterday. Standard & Poor’s 500 Index futures were little changed after the gauge closed at a record. The Shanghai Composite Index lost 0.2 percent. The cost of insuring Asian debt fell to the lowest since Dec. 30. Wheat retreated after tensions in Ukraine, on course to be the world’s No. 6 producer, triggered the biggest three-day rally since July 2012.
----China set an annual economic growth target of 7.5 percent, unchanged from 2013, according to the transcript of a report Premier Li Keqiang will give at an annual meeting of lawmakers in Beijing today. Asia’s largest economy reported an increase in services activity in February ahead of similar reports from Europe to the U.S., where the Federal Reserve will release its Beige Book survey.
“There’s falling concern about the conflict in Ukraine supporting risk assets,” Ashley Davies, a strategist at Commerzbank AG in Singapore, said by phone. “The growth target China established is largely a barometer of the government’s reform appetite. The 7.5 percent growth suggests not-particularly strong appetite for dramatic reform to take place this year. Perhaps there’ll still be an uncertainty premium attached to February’s data. March data will be more important.”
More
In other
news, China aims for another Goldilocks’s
year. As with every statistic in China, it will be met without fail whatever
happens in the real world. In the real world, while America moved to bailout
the Ukraine, China moved to match Japan’s increased defence budget. A clash
over the Diaoyu Islands seems on the cards for next year.
Q:
What did the Russian people light their houses with before they started using
candles?
A: Electricity.
China Retains 7.5% Growth Target for 2014
Mar 5, 2014 6:30 AM GMT
China set a 7.5 percent
target for economic growth in 2014, a pace that may make it more difficult to
achieve the leadership’s goals of curbing credit risks and stemming the
pollution choking the nation’s biggest cities. The growth target, which is the same as last year’s, will boost market confidence and protect jobs, Premier Li Keqiang told the annual meeting of the legislature in Beijing today. “We must keep economic development as the central task and maintain a proper economic growth rate,” Li said.
The government has pledged to move away from growth at all costs as it tries to clean up the nation’s air and water, and control an unprecedented debt surge that’s evoked comparisons to the run-up to Asia’s financial crisis. In the latest sign of financial stresses, a solar company yesterday signaled the risk of what may be the first onshore bond default.
“It is going to be very challenging to achieve everything promised in this work report,” said Yao Wei, China economist at Societe Generale in Hong Kong. “Speeding up reform, fighting pollution, managing debt risk and yet the same growth target –- something has to give.”
More
China Boosts Defense Spending 12% as Xi Strengthens Military
Mar 5, 2014 6:27 AM GMT
China’s central government
will boost defense spending 12.2 percent this year as President Xi Jinping
seeks to create a strong military and the navy extends its reach into
neighboring waters. The defense budget is set to rise to 808.23 billion yuan ($131.6 billion), the Ministry of Finance said in a report today. The percentage increase is greater than that of total government expenditure, which will rise 9.5 percent in 2014, according to the report.
Premier Li Keqiang told the opening session of the National People’s Congress in Beijing today that China will continue to enhance border, coastal and air defenses.
“We will comprehensively enhance the revolutionary nature of the Chinese armed forces, further modernize them and upgrade their performance, and continue to raise their deterrence and combat capabilities in the information age,” Li said. China will boost research on national defense and the development of new and high technology weapons, he said.
China’s military modernization is increasing tension in the region as it challenges the guarantee of security provided by the U.S. for more than a half a century to sea lanes that handle the bulk of world trade. Xi has made a strong military a key priority for a revitalized China and said he wants the nation to be a maritime power
----“Since China’s defense spending is
growing more quickly than any other country in the region, it always
intensifies concerns about China’s intentions as a great power,” said Taylor Fravel,
a professor at Massachusetts Institute of Technology who studies China’s ties
with its neighbors. “The presence of active disputes in the maritime domain
plus the increasing pace of Chinese naval exercises in the Western Pacific and Indian Ocean
further intensifies this concern.”
More
In other
less rosy China news, it’s time for China’s magic bailout tooth fairy to show
up once again. One day soon, not too far away, Cinderella will not go to the
ball.
Q:
What occupies the last 6 pages of the Lada User's Manual?
A: The
bus and train timetables.
First China Onshore Default Looms as Chaori to Miss Payment
Mar 5, 2014 4:55 AM GMT
Shanghai Chaori Solar Energy Science & Technology Co. said it may not be
able to make an 89.8 million yuan ($14.6 million) interest payment in full on March 7, in
what would be the first default of an onshore bond. The maker of energy cells to convert sunlight into power, plans to pay 4 million yuan to bondholders, the company said in a statement to the Shenzhen stock exchange yesterday. The stock has dropped 41 percent over the past 12 months to 2.59 yuan a share before trading was halted on Feb. 19.
A default would highlight strain in China’s $4.2 trillion bond market after a trust product issued by China Credit Trust Co. was bailed out in January. China’s renewable energy industry faces a record $7.7 billion in bonds maturing this year, testing the resolve of Premier Li Keqiang who needs to allow industry consolidation to slow a buildup of debt in the economy estimated by a state think tank to account for 215 percent of gross domestic product.
“This is the first onshore default,” said Yang Kun, a Shanghai-based bond analyst at Guotai Junan Securities Co. “It shows regulators’ attitude toward defaults has changed and they’re silently permitting defaults. Risk appetite will slump substantially.”
More
Elsewhere in
Asia, trouble mounts in India. Anyone seen a pin lately? Why do I think I have
heard this old story before. Any readers out there know the likely ending?
Indian Shadow Financier’s Custody Extended Over Refund Plan
Mar 5, 2014 4:09 AM GMT
India’s top court yesterday extended custody of Subrata Roy, owner of the
financial services group Sahara India Pariwar, until he
presents an improved plan to refund $3.9 billion to depositors. A two-judge panel at the nation’s Supreme Court in New Delhi also remanded two Sahara directors into custody until March 11, the next hearing in the case. Roy had surrendered to police on Feb. 28 after the court issued a non-bailable arrest warrant two days earlier for failing to heed its summons.
Roy needs to provide bank guarantees or something equally concrete before he will be released, the judges said. Repayment documents produced by Sahara in the last 1-1/2 years haven’t been verifiable, they said.
“The court is communicating that promises are not good enough anymore,” Jitendra Nath Gupta, a former executive director at market regulator the Securities and Exchange Board of India, told Bloomberg TV India in Mumbai yesterday. “They have been very patient with Sahara for the last year and a half.”
Roy, who started collecting daily deposits of as little as 30 cents in 1978 and went on to build an $11 billion conglomerate, is fighting charges that his group failed to comply with a court order to repay 240 billion rupees ($3.9 billion). India’s market regulator in June 2011 faulted two of his companies for selling convertible debt without approval and ordered the money refunded.
----Roy had black ink thrown on his face yesterday by an assailant as he entered the Supreme Court escorted by security personnel. He apologized to the court for failing to appear on Feb. 26.
SEBI has refused to sell Sahara’s properties, saying the assets are geographically dispersed and many of them are not saleable. In a statement yesterday, Sahara said it has offered to “depute hundreds of competent workers” to assist SEBI in verifying documents and said the two parties should work “harmoniously” to honor the court’s verdict.
The financier, who calls himself “Sahara Sri”, is part of the $670 billion shadow-banking industry in Asia’s third-largest economy and owns properties such as New York’s Plaza Hotel, London’s Grosvenor House and at least 120 companies, including television stations, a hospital, a dairy farm, retail shops selling products from detergents to diamonds and a stake in India’s only Formula One racing team. Sahara also claims to own 14,600 hectares (36,000 acres) of land, an area the size of Liechtenstein.
Shadow banking assets in India have increased 20 percent annually in the past five years, according to a November 2012 report by the Financial Stability Board. That makes India the world’s second-fastest-growing market, after Indonesia, for lending outside the banking system, or shadow banking
More
We close for
the day with the EU having dodged a misfired German bullet in the coup run Ukraine.
Is the ECB going Japanese? Be sure all Euros carry that vital German “X”.
ECB May Repeat Japan Mistake That Triggered Lost Decade
Mar 5, 2014 12:10 AM GMT
The central bank failed to sound a deflation alert. “At present there is no reason to expect that overall prices will drop sharply and exert deflationary pressure on the entire economy,” policy makers wrote in their monthly report, signed off by the governor.
That governor was Yasuo Matsushita and the report was published in January 1998. Within six months, Japan’s consumer prices excluding food began falling in a trend that would mark the next 15 years.
The concern now for economists from Barclays Plc to Morgan Stanley and JPMorgan Chase & Co. is that European Central Bank President Mario Draghi risks making the same mistake as the Bank of Japan -- publicly playing down a deflation threat -- and ultimately may have to introduce quantitative easing.
Among a series of similarities between 1990s Japan and modern-day Europe: Weak economic expansion after a series of shocks? Tick. A reluctance by banks to lend? Tick. A rising exchange rate? Tick. A debatable monetary-policy stance? Tick.
“The risk of a Japanification of the euro area is high and rising,” said Joachim Fels, chief international economist at Morgan Stanley in London, who puts the odds of a price decline at about 35 percent. “Deflation wasn’t on Japan’s radar either.”
The Bank of Japan’s complacency hurt an economy that has slipped in size behind China’s as companies and consumers retrenched in anticipation of even cheaper prices. The country’s gross domestic product, unadjusted for changes in price, was 10 percent smaller last year than its 1997 peak. The Nikkei 225 Stock Average, at 14,721 (NKY) yesterday, is less than half its 1989 high, and public debt tops 200 percent of GDP.
The malaise prompted BOJ Governor Haruhiko Kuroda to pledge last year he would boost the monetary base to lift inflation to 2 percent. Consumer prices excluding food climbed 1.3 percent in January.
“Until too late, the Bank of Japan didn’t think Japan was going to be entangled with deflation,” said Kenji Yumoto, vice chairman of the Japan Research Institute Ltd. and an economic adviser to the government in the late 1990s. “The ECB still can’t be complacent. Europe is lucky to have Japan’s case study.”
More
Wendy’s
Soviet Fashion Show.
At the Comex
silver depositories Tuesday
final figures were: Registered 52.41 Moz, Eligible 130.35 Moz, Total 182.76 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, the totally doubled over Ukraine. Has anyone seen the deposed ex-President’s borrowed car? And we’re seriously thinking of lending them dollars?
March 3, 2014, 4:11 p.m. EST$2 mln car missing from Ukraine president’s collection
$2 mln Horch 855 Spezial Roadster disappears from Ukraine ex-president’s villa
Ex-Ukrainian President Viktor Yanukovych, now hiding in Russia,
seemed to have everything imaginable and unimaginable in his car collection on
the Dnieper River. Except now the most valuable car in the collection is
missing, its legal owners and whereabouts unknown.
Recently,
Autoweek
showed his collection in detail , showing all the vehicles that
anti-Yanukovych activists and journalists saw when they made their way to the
compound following Yanukovych’s hasty departure for Sevastopol by helicopter.
The collection included everything from a fiberglass-bodied Ford Custom Coupe
based on a 1994 Ford Mustang, to an early postwar GAZ M20 Pobeda.
It
was immediately apparent that the most valuable car in the collection might
have disappeared with the fleeing president: a 1938 Horch 855 Spezial Cabriolet
estimated to be worth at least $2 million.
All
the cars in the collection had information placards on stands next to them, and
the placard for the Horch 855 Spezial Roadster was still there, next to a ZiL
41045 and a ZiL 41047 limousine. But the Horch was nowhere to be found.
Ukrainian
news outlets now report the Horch might have been the sole car that Yanukovych
managed to take with him somehow, perhaps removing it days before the protests
toppled his administration.
The
car collection itself was not entirely Yanukovych’s to begin with; the
information placards list various owners who lent their cars to the
administrations of the Mezhyhirya complex, some of them being large
corporations based in Ukraine and in Europe.
The
Horch 855 placard lists an erroneous manufacture date of 1935 for the Spezial
Roadster, which is actually believed to be 1938. It cites a few technical
specs, including a 4,911-cc inline-eight cylinder engine making 120 hp, mated
to a five-speed manual transmission, but little other information was
available.
Some
people familiar with the collection confirmed to Ukrainian media that the Horch
was indeed there recently, so this isn’t believed to be a case of a placard
announcing a car that was never there. But the story of the missing Horch would
likely have not gotten out if whoever stashed away the Horch had taken the
little information tag with them.
The
Horch 855 Spezial Roadster was a shorter version of the Horch 853, featuring
similar coachwork. Only three are believed to have been made in addition to
seven more 855 Gläser Spezial Roadsters that featured different bodywork. One
example is currently being exhibited at the Audi factory museum, on loan from
its U.S. owner for a period of 20 years in exchange for Audi’s complete
restoration of the car. Stateside examples of the 855 have appeared at the
Pebble Beach Concours, and its sibling, a Horch 853, recently took Best in Show
at Greenwich Concours.
More
A
Briton, a Frenchman and a Russian are viewing a painting of Adam and Eve
frolicking in the Garden of Eden. "Look at their reserve, their
calm," muses the Brit. "They must be British."
"Nonsense," the Frenchman disagrees. "They're naked, and so beautiful.
Clearly, they are French." "No way! They have no clothes and no
shelter," the Russian points out, "They have only an apple to eat,
and they are being told they live in a paradise. Obviously, they are
Russian."
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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