Did somebody say de-escalation?

Earlier today, photos were distributed showing the latest military convoy reinforcements heading into the Crimea, accompanies by a Police car demonstrating Moscow license plate numbers, most likely providing further support to the pro-Russian forces in the peninsula.

Read more.....

Did somebody say de-escalation?

Earlier today, photos were distributed showing the latest military convoy reinforcements heading into the Crimea, accompanies by a Police car demonstrating Moscow license plate numbers, most likely providing further support to the pro-Russian forces in the peninsula.

Supposedly the trucks are carrying troops to reinforces the members of the new Crimean army, pictured below:

While at the same time along the makeshift border between Crimea and the mainland, the Pro-Russian forces are putting down minefields.

However, the Ukrainians, having already been mobilized for over a week, finally appear set to seize back the offensive:

The first clip below captured the 80th Airborne Regiment out of Lviv moving out, direction mainland, preparing to repel foreign attack.

The next video shows what are allegedly Buk SAM batteries deployed in the Donetsk region, a city in Eastern Ukraine which in the past week has swayed between Ukraine and Russian authority.

The clip below shows the 95th Airborne brigade also moving out of their barracks in Zhytomyr in western Ukraine, heading East, with an impressive deployment of trucks and APCs.

Finally, 20 T-64 tanks preparing to depart in Bila Tserkva, a city in central Ukraine:

So where again are all those pundits who were so eager to explain away the Ukraine confrontation as one that will promptly be forgotten, and is by now most certainly priced in?

(Source: @Ukroblogger, @SergeyPonomarev)

With 40% of the portfolio in cash and having returned $4 billion to clients at year-end, Seth Klarman's Baupost Group has "drawn the line in the sand" as they reflect on the diminished opportunities in the so-called "Truman Show" market we see today. In the face of mixed economic data and at a critical inflection point in Federal Reserve policy, Klarman notes, the stock market, heading into 2014, resembles a Rorschach test - "what investors see in the inkb Read more.....

Submitted by Brandon Smith of Alt-Market.com,

When one studies history, all events seem to revolve around the applications and degenerations of war. Great feats of human understanding, realization and enlightenment barely register in the mental footnotes of the average person. War is what we remember, idealize and aggrandize, which is why war is the tool most often Read more.....

Submitted by Brandon Smith of Alt-Market.com,

When one studies history, all events seem to revolve around the applications and degenerations of war. Great feats of human understanding, realization and enlightenment barely register in the mental footnotes of the average person. War is what we remember, idealize and aggrandize, which is why war is the tool most often exploited by oligarchy to distract the masses while it centralizes power.

With the exception of a few revolutions, most wars are instigated and controlled by financial elites, manipulating governments on both sides of the game to produce a preconceived result. The rise of National Socialism in Germany, for instance, was largely funded by corporate entities based in the U.S., including Rockefeller giant Standard Oil, JPMorgan and even IBM, which built the collating machines specifically used to organize Nazi extermination camps, the same machines IBM representatives serviced on site at places like Auschwitz. As a public figure, Adolf Hitler was considered a joke by most people in German society, until, of course, the Nazi Party received incredible levels of corporate investment. This aid was most evident in what came to be known as the Keppler Fund created through the Keppler Circle, a group of interests with contacts largely based in the U.S.

George W. Bush’s grandfather, Prescott Bush, used his position as director of the New York-based Union Banking Corporation to launder money for the Third Reich throughout the war. After being exposed and charged for trading with the enemy, the case against Bush magically disappeared in a puff of smoke, and the Bush family went on to become one of the most powerful political forces in America.

Without the aid of international conglomerates and banks, the Third Reich would have never risen to power.

The rise of communism in Russia through the Bolshevik Revolution was no different. As outlined in Professor Antony Sutton’s book Wall Street And The Bolshevik Revolution with vast detail and irrefutable supporting evidence, it was globalist financiers that created the social petri dish in which the communist takeover flourished.  The same financiers that aided the Nazis...

The two sides, National Socialism and communism, were essentially identical despotic governmental structures conjured by the same group of elites. These two sides, these two fraudulent ideologies, were then pitted against each other in an engineered conflict that we now call World War II, resulting in an estimated 48 million casualties globally and the ultimate formation of the United Nations, a precursor to world government.

Every major international crisis for the past century or more has ended with an even greater consolidation of world power into the hands of the few, and this is no accident.

When I discuss the concept of the false left/right paradigm with people, especially those in the liberty movement, I often see a light turn on, a moment of awareness in their faces. Many of us understand the con game because we live it day to day. We see past the superficial rhetoric of Republican and Democratic party leadership and take note of their numerous similarities, including foreign policy, domestic defense policy and economic policy. The voting records of the major players in both parties are almost identical. One is hard-pressed to find much difference in ideology between Bush and Barack Obama, for example; or Obama and John McCain; or Obama and Mitt Romney, for that matter.

When I suggest, however, that similar false paradigms are used between two apparently opposed nations, the light fades, and people are left dumbstruck. Despite the fact that globalist financiers shoveled capital into the U.S., British, German and Soviet military complexes all at the same time during World War II, many Americans do not want to believe that such a thing could be happening today.

In response, I present the crisis in Ukraine versus the crisis in Syria...

Ukraine Versus Syria

It seems as though much of the public has already forgotten that at the end of 2013, the U.S. came within a razor’s edge of economic disaster — not to mention the possibility of World War III. The war drums in Washington were thundering for “intervention” in Syria and the overthrow of Bashar Assad. The only thing that saved us, I believe, were the tireless efforts of the independent media in exposing the darker motives behind the Syrian insurgency and the bloodlust of the Obama Administration. The problem is that when the elites lose one avenue toward war and distraction, they have a tendency to simply create another. Eventually, the public is so overwhelmed by multiple trigger points and political powder kegs that they lose track of reality. I often call this the “scattergun effect.”

The crisis in the Ukraine is almost a carbon copy of the civil war in Syria, culminating in what I believe to be the exact same intent.

The Money

Money from globalist centers has been flowing into the Ukrainian opposition since at least 2004, when the Carnegie Foundation was caught filtering funds to anti-Russian political candidate Viktor Yushchenko, as well as to the groups who supported him.

The Ukrainian Supreme Court called for a runoff due to massive voter fraud and the rise of the pro-Western Orange Revolution, determining the winner to be Yushchenko over none other than Viktor Yanukovych. Yanukovych went on to win the 2010 elections, and the revolution returned to oust him this year.

It has been discovered that the current revolution has also been receiving funds from NATO and U.S. interests, not just from the State Department, but also from billionaires like Pierre Omidyar, the chairman of eBay and the new boss of journalist Glen Greenwald, the same journalist who is now famous for being the first to expose National Security Agency documents obtained by Edward Snowden.

Much of the monetary support from such financiers was being funneled to men like Oleh Rybachuk, the right-hand man to Yanukovych during the Orange Revolution and a favorite of neoconservatives and the State Department in the U.S.

The International Monetary Fund has also jumped at the chance to throw money at the new Ukrainian regime, which would prevent default of the country and allow the opposition movement to focus their attentions on Russia.

The revolution in Syria was also primarily driven by Western funds and arms transferred through training grounds like Benghazi, Libya. There is much evidence to suggest that the attack on the U.S. consulate in Benghazi was designed to possibly cover up the arming of Syrian rebels by the CIA, who had agents on the ground who still have not been allowed to testify in front of Congress.

After this conspiracy was exposed in the mainstream, globalist-controlled governments decided to openly supply money and weapons to the Syrian insurgency, instead of ending the subterfuge.

The ‘Rebels’

Some revolutions are quite real in their intent and motivations. But many either become co-opted by elites through financing, or they are created from thin air from the very beginning. Usually, the rebellions that are completely fabricated tend to lean toward extreme zealotry.

The Syrian insurgency is rife with, if not entirely dominated by, men associated with al-Qaida. Governments in the U.S. and Israel continue to support the insurgency despite their open affiliation with a group that is supposedly our greatest enemy. Syrian insurgents have been recorded committing numerous atrocities, including mass execution, the torture of civilians and even the cannibalism of human organs.

The revolution in Ukraine is run primarily by the Svoboda Party, a National Socialist (fascist) organization headed by Oleh Tyahnybok.  Here is a photo of Tyahnybok giving a familiar salute:

So far, the opposition in Ukraine has been mostly careful in avoiding the same insane displays of random violence that plagued the Syrians’ public image. It is important to remember though that mainstream outlets like Reuters went far out of their way in attempts to humanize Syrian al-Qaida. Their methods were exposed only through the vigilance of the independent media. With the fascist Svoboda in power in the Ukraine, I believe it is only a matter of time before we see video reports of similar atrocities, giving Russia a perfect rationalization to use military force.

John McCain?

I am now thoroughly convinced that John McCain is a pasty ghoul of the highest order. He claims to be conservative yet supports almost every action of the Obama Administration. He is constantly defending anti-Constitutional actions by the Federal government, including the Enemy Belligerents Act, which was eventually melded into the National Defense Authorization Act; NSA surveillance of U.S. citizens; and even gun control.

And for some reason, the guy makes appearances like clockwork right before or during major overthrows of existing governments. McCain was in Libya during the coup against Moammar Gadhafi.

McCain showed up to essentially buy off the rebels in Tunisia.

McCain hung out with al-Qaida in Syria.

And, what a surprise, McCain met with the Ukrainian opposition movement just before the overthrow of Viktor Yanukovych.  Here is a photo of McCain giving a speech to the opposition with none other than Neo-Nazi Oleh Tyahnybok standing over his left shoulder.

Why McCain? I have no idea. All I know is, if this guy shows up in your country, take cover.

Russia In The Middle

The great danger in Syria was not necessarily the chance of war with Assad. Rather, it was the chance that a war with Assad would expand into a larger conflagration with Iran and Russia. Russia’s only naval facility in the Mideast is on the coast of Tartus in Syria, and Russia has long-standing economic and political ties to Syria and Iran. Any physical action by the West in the region would have elicited a response from Vladimir Putin. The mainstream argument claims that the threat of Russian intervention scared off Obama, but I believe the only reason war actions were not executed by the White House and the globalists was because they didn’t have even minimal support from the general public. For any war, you need at least a moderate percentage of the population to back your play.

In Ukraine, we find the globalists creating tensions between the West and the East yet again. Russia’s most vital naval base sits in Crimea, an autonomous state tethered to the Ukrainian mainland. Currently, Russia has flooded Crimea with troops in response to the regime change in Ukraine. The new Ukrainian government (backed by NATO) has called this an “invasion” and an act of war, while Western warmongers like McCain and Lindsay Graham spread the propaganda meme that Russia made such a move only because Putin believes the Obama Administration to be “weak.”

Clearly, the idea here is to engineer either high tensions or eventual war between Russia and the United States. Syria failed to produce the desired outcome, so the Ukraine was tapped instead.

Energy Markets And The Dollar At Risk

In Syria, any U.S. led military action would have resulted in the immediate closing of the Straight of Hormuz by Iran, threatening to obstruct up to 30% of global petroleum shipments.  Foreign resentment could have easily led to the abandonment of the U.S. dollar as the petro-currency.  Both China and Russia implied the possibility of an economic response to American intervention, though they did not officially go into specifics.  In all likelihood, the dollar's world reserve status would have been damaged irrevocably.

In the Ukraine, the chance of intervention has been countered with VERY specific threats from Russia, including a freeze on natural gas imports to the European Union through Gazprom, which supplies approximately 30% of the EU's fuel.  In 2009, a temporary Ukranian pipeline closure led to widespread shortages across Europe.  While some in the mainstream claim that Russia's influence over EU energy has "diminished" the fact is a loss of 30% of natural gas reserves for an extended period would inflate energy prices wildly and cripple the EU's economy.

Another specific reaction given by Russia is the dumping of U.S. treasury bonds.  Russia's bond holdings may not seem like much leverage, except for the fact that China has now publicly backed Russian efforts in the Ukraine, just as they backed Russian opposition to U.S. activities in Syria.  A dump of bonds by Russia would invariably be followed by a Chinese dump as well.  In fact, China and Russia have been setting the stage for a global dollar decoupling since at least 2008.   I have been warning for years that globalists and central bankers needed a "cover event", a distraction or scapegoat imposing enough to provide a veil of chaos in which they could then destroy the greenback as the world reserve and usher in a global currency system.  The Ukraine crisis offers yet another opportunity for this plan to unfold.

The False Paradigm And The Globalist Chessboard

So far, I have outlined what appears to be a correspondence of conspiracy between Syria and the Ukraine and how each event has the continued potential to trigger regional conflict, dollar collapse, or world war. But is this conspiracy one-sided? Are only the West and NATO being manipulated by globalists to box in Russia and provoke a conflict? And what do globalists have to gain by sparking such disaster?

As with every other catastrophic fabricated war, the goal is the erasure of sovereign identity while consolidating economic, political and social power. It is not enough that global financiers dominate the banking industry and own most politicians; they want to transform the public psyche. They want US to ask THEM for global governance. This manufacture of consent is often achieved by pitting two controlled governments against each other and then, in the wake of the tragedy, calling for global unification. The argument is always presented that if we simply abandoned the concept of nation states and reform under a single world body, all war would “disappear.”

The question is whether Russia’s Putin is aware of the plan. Is he a part of it?  Are we seeing repeat theater of a puppet Russia versus a puppet NATO like that witnessed during the Cold War?

What I do know is that Putin has, a number of times in the past, called for global control of the economy through the IMF and the institution of a new global currency using the IMF’s Special Drawing Rights (SDR).

Loans from the IMF are what saved Russia from debt default in the late 1990s. And Putin has recently called for consultations with the IMF concerning Crimea. Remember, this is the same IMF that is working to fund his opponents in Western Ukraine.

Bottom line, if you believe in national sovereignty and decentralization of power, Putin is NOT your buddy. Once again, we have the globalists injecting money into both sides of a conflict which could morph into something nightmarish.  Putin wants global economic governance and consolidation under the IMF just as much as the supposedly "American-run" IMF wants consolidation.  Global governance of finance and money creation ultimately means global governance of everything else.

Is a war being created through the false paradigm of East versus West in order to pave the road for global government?  Are East/West tensions being exploited as a smokescreen for the final destruction of the dollar's world reserve status?  It is hard to say if the Ukraine will be the final trigger; however, the evidence suggests that if a conflict occurs, regardless of who “wins” such a scenario, the IMF comes out on top.

Imagine you are playing a game of chess by yourself. Which side wins at the end of that game: black or white? The answer is it doesn’t matter. You always win when you control both sides.

With stocks rising to record high after record high, and with even Goldman's clients now asking "When does the party end?" as noted by Goldman's David Kostin overnight, the answer is simple: nothing has changed. Specifically, between the Fed's ongoing monetization of tens of billions monthly in bonds, the missing piece to the equation is also a known one - corporate buybacks. In fact as Goldman admits, "February was the busiest month in our buyback desk’s history Read more.....

In March of 2011 I had this to say about Puerto Rico and its muni bonds:

The weather is great. The beaches are beautiful. The food is good and the drinks are better. The bonds, on the other hand, Read more.....

The dismal news overnight that a Malaysian Airlines jet, carrying over 200 passengers and crew, had "gone missing" appears to have become considerably more troublesome. News this morning of pools of oil off the Vietnam coast - suggestive of a crash - are dreadful but, as NBC News reports, perhaps more crucially, U.S. officials told NBC News on Saturday they are Read more.....

The dismal news overnight that a Malaysian Airlines jet, carrying over 200 passengers and crew, had "gone missing" appears to have become considerably more troublesome. News this morning of pools of oil off the Vietnam coast - suggestive of a crash - are dreadful but, as NBC News reports, perhaps more crucially, U.S. officials told NBC News on Saturday they are investigating terrorism concerns after two people listed as passengers on the missing Malaysia Airlines jet turned out not to be on the plane and had reported their passports stolen (while in Thailand).

The lastest on the "missing" plane (via The Telegraph),

Vietnam air force planes spot two oil slicks suspected to be from missing Malaysian Boeing 777 jet.

 

The fate of flight MH370 from Kuala Lumpur to Beijing remains unclear more than 12 hours after air traffic controllers lost touch with the plane.

 

However, Vietnamese authorities said they had spotted a 14-mile long oil slick 120 miles off the coast of Cape Ca Mau - the most southerly point of Vietnam's mainland. 

 

A Vietnamese government statement said the slicks were spotted late on Saturday off the southern tip of Vietnam and were each between six and nine miles long.

But there are growing concerns that this was a terrorist attack... (via NBC News,)

Luigi Maraldi, 37, was the only Italian on a passenger manifest released by the airline after the jet disappeared over the South China Sea.

 

 But his father, Walter Maraldi, told NBC News from Cesena, Italy: “Luigi called us early this morning to reassure us he was fine, but we didn’t know about the accident. Thank God he heard about it before us.”

 

Luigi Maraldi was on vacation in Thailand, the father said. He said that Luigi Maraldi’s passport was stolen one year ago.

 

The foreign ministry of Austria confirmed to NBC News that police had made contact with a citizen who was also on the passenger list, and who reported his passport stolen two years ago while traveling in Asia.

And Reuters confirms that both passports were stolen in Thailand (where there is considerable social unrest occurring currently),

"[The Austrian] embassy got the information that there was an Austrian on board. That was the passenger list from Malaysia Airlines. Our system came back with a note that this is a stolen passport," he said.

Police found the man at his home. The passport was stolen two years ago while he was travelling in Thailand, the spokesman said.

The foreign ministry in Rome said no Italian was on the plane either, despite the inclusion of Maraldi's name on the list.

Newspaper Corriere Della Sera reported that his passport was stolen in Thailand last August. The police could not confirm press reports that it had been registered as lost or stolen there, as they said the Ministry of Foreign Affairs was responsible for thefts abroad.

The Telegraph with more color:

Perhaps it is time to finally admit that anyone who thought Putin's Tuesday press conference, which the market so jubilantly assumed was a case of "blinking" and de-escalating tensions with the west, was wrong. If there is still any confusion, following yesterday's news that Gazprom officially threatened Ukraine with cutting off its gas supplies, as well as the Read more.....

Perhaps it is time to finally admit that anyone who thought Putin's Tuesday press conference, which the market so jubilantly assumed was a case of "blinking" and de-escalating tensions with the west, was wrong. If there is still any confusion, following yesterday's news that Gazprom officially threatened Ukraine with cutting off its gas supplies, as well as the storming of a Ukraine base by Russian troops - luckily with no shots fired so far - then today's developments should any remaining doubts. Moments ago AP reported that as the latest, third in a row, group of OSCE inspectors tried to enter Ukraine, they were not only barred from doing so, but warnings shots were fired to emphasize the point by pro-Russian forces.

From AP:

An Associated Press reporter says pro-Russian forces refused to let a foreign military mission enter Crimea on Saturday.

 

After the officers had stopped, the armed men fired warning bursts of automatic weapons fire into the air to make other unidentified vehicles halt. No injuries were reported.

 

The multinational group of military officers from the Organization for Security and Cooperation in Europe was attempting to enter the embattled peninsula from the north. The armed men told them they had no authorization to enter Crimea.

 

The OSCE mission will likely return to the Ukrainian city of Kherson where it had spent the night, the AP reporter said.

 

Russia and Ukraine are locked in a tense standoff over Crimea.

the OSCE tweeted:

Military assessment visitors from OSCE States returning to Kherson to plan next steps after being denied entry to Crimea at Armyans'k today

— OSCE (@OSCE) March 8, 2014

Bloomberg adds:

OSCE tried to enter Crimea for third day, warning shots were fired as it attempted to do so today, Tatyana Baeva, OSCE spokeswoman, said by phone from Vienna.

 

Nobody injured in incident, OSCE mission is now back in Kherson, southern Ukraine.

 

OSCE 29 member states that provided people for Crimea mission may meet today or tomorrow in Vienna to discuss further action: Baeva

Then there was this overnight escalation as reported by Ukraine's TV5 station (of questionably credibility), via Bloomberg:

Pro-Russian armed men today captured building in Simferopol, capital city of Crimea, TV5 private news channel reports, citing Vladislav Selezniov, spokesman for Ukraine’s defense minister in Crimea.

 

Russian soldiers seized Ukraine’s state border guard division in Shcholkino near Kerch Strait, Ukraine’s border service says in statement on its website

 

Russian soldiers stormed Shcholkino unit last night, seized weapons storage, beat Ukrainian border guards, took away their mobile phones and forced them and their families to leave

 

Currently, 11 border guard units are being blocked: Ukraine border service says in separate statement

 

Ukraine denied entrance to 513 “extremists” from Russia during last 24 hrs, state border guard service says in another separate statement on its website

Remember, all it takes is for one stray bullet to hit a human target, on either side of the conflict, for the market to grasp just how wrong its assessment of de-escalation has been.

Elsewhere, while inspectors were trying to make their way into Ukraine - unsuccessfully - Russia announced it was considering a further freeze of U.S. military inspections under arms control treaties in retaliation to Washington's decision to halt military cooperation with Russia, news reports said Saturday.

Interfax blasted earlier:

• UNJUSTIFIED U.S., NATO THREATS SEEN AS UNFRIENDLY GESTURE, ALLOW TO DECLARE FORCE-MAJEURE - RUSSIAN DEFENSE SOURCE
• RUSSIAN DEFENSE MINISTRY CONSIDERING SUSPENSION OF RECEIVING INSPECTION GROUPS UNDER START TREATY, VIENNA DOCUMENT 2011 - SOURCE

AP has more:

Russian news agencies carried a statement by an unidentified Defense Ministry official saying that Moscow sees the U.S. move as a reason to suspend U.S. inspections in Russia in line with the 2010 New START treaty on cutting U.S. and Russian nuclear arsenals and the 2011 Vienna agreement that envisages mutual inspections of Russian and NATO military facilities as part of confidence-building measures.

A Defense Ministry spokesman wouldn't comment on the reports, which are a usual way in Russia to carry unofficial government signals.

The U.S. and the European Union have introduced sanctions over Russia in response to its move to send troops that have taken control of Ukraine's Black Sea peninsula of Crimea.

So if the START treaty is suspended how long until its anti-proliferation clauses are scrapped completely once more, and the Cold War arms race returns once again.

Also while escalations such as these threaten to transform the new Cold War into a Hot one, the clock is ticking, and in favor of Russia, because the longer Ukraine remains without western aid, the quicker its foreign reserves will run out, and the faster the country will become a vassal state of Gazpromia. Add the ticking countdown to the March 16 Crimean referendum, which the west and Ukraine have both declared illegitimate yet have no power to stop, and suddenly one can see how Putin once again outsmarted everything the west had to throw at it. WSJ explains:

Gazprom's demand raises the prospect that some of the aid Western powers have guaranteed could end up flowing into Moscow's coffers to pay Ukraine's gas bill. Virtually all of the country's natural-gas imports come from Russia. Late last year it was granted a discount that Moscow has threatened to rescind since the fall of Mr. Yanukovych.

 

"This now becomes an EU/U.S. problem: Who is going to lend Ukraine the money to pay the gas bill? If so, what will be the conditions?" said Jonathan Stern, an analyst at the Oxford Energy Institute.

 

A spokesman for Gazprom said that the threatened cutoff wouldn't affect supplies to Europe, which gets about a third of its gas from Russia, much of it via pipelines that run through Ukraine.

 

 

In 2009, after the Russian energy giant switched off the supply to Ukraine, Ukrainian authorities began using the supply transiting their territory that Gazprom said was destined for customers in Europe. Gazprom then cut off the flow altogether, causing shortages and price increases for end customers.

 

"The EU, U.S. and IMF have just about three weeks to resolve this," Mr. Stern said.

At which point it's game, set match Putin once more.

Finally, what certainly helped Putin is that, as expected, China took the side of Russia, not of the "free world", in what is now a very distinct and clear axis of power the New Normal dipolar world.

The euro and Swiss franc rose to new highs since Q4 2011, while sterling moved to within half a cent of the best level since 2009 set in mid-February in recent days.  The market was all rife with speculation of a break out.  However, our reading of the technical and fundamental condition, suggests dollar bears tread carefully.

If the past week was about the lack of escalation in both Russia/Ukraine and China, coupled with the ECB holding pat, next week may see t Read more.....

The euro and Swiss franc rose to new highs since Q4 2011, while sterling moved to within half a cent of the best level since 2009 set in mid-February in recent days.  The market was all rife with speculation of a break out.  However, our reading of the technical and fundamental condition, suggests dollar bears tread carefully.

If the past week was about the lack of escalation in both Russia/Ukraine and China, coupled with the ECB holding pat, next week may see the pendulum swing back a bit. This could lend itself to a more consolidative trading, which in the current context, may be somewhat supportive of the greenback.  

With a referendum planned in Crimea next weekend that will likely lead Russia's annexation, the confrontation may escalate again.  Although the yuan strengthened in the past week, we suspect that uncertainty spurred by the first on-shore default and the apparent official desire to inject more volatility may weigh on the yuan..  China unexpectedly reported a large trade deficit in February, and although it was the distorted by the lunar new year, some will see evidence that the yuan is now over-valued.  The ECB did not change policy, but the large pay down of LTRO borrowings, and the strength of the euro, may spur speculation that the door to easing has not closed.  Moreover, official efforts to jawbone the euro lower may also increase. 

Euro:  The rally in the second half of last week, left the euro stretched.  This is illustrated by the fact that it spent the pre-weekend session above the top of its Bollinger Band (two standard deviations about the 20-day moving average).     That last time it did anything close to this was in mid-September last year.     In addition, its proximity to the psychological and technically significant $1.40 area may change the risk-reward calculations for many participants.   This is not to say that a deep pullback is necessary, but we can see a move back into the $1.3780-$1.3825 band. 

Sterling:  Short-term market positioning, judging from the Commitment of Traders remains extreme for sterling.  This might help explain the market's cautiousness as sterling approached $1.68.  There is a mild bearish divergence that is evident on the daily RSI.    Support is seen $1.6640-60.   Separately, we note that the euro's downtrend against sterling from last August high near GBP0.8770 has been approached.  We draw it coming in on Monday, March 10 near GBP0.8310, which is near the top of the Bollinger Band,  and GBP0.8298 by the end of the week.  While a convincing break has to be respected, we are bit wary.  

Yen:  The dollar is over-stretched against the yen.  At its high, the dollar was nearly 3 standard deviations away from its 20-day moving average (~JPY103.55).  The top of the Bollinger Band comes in near JPY103.10.     By this measure, the dollar is the most stretched against the yen as it has been in years, including the earlier run-up in anticipation of Abenomics beginning in late-2012.     We had suggested dollar potential into the JPY103.10-65 band, and now that it has reached it, we suspect a consoldative phase is near, especially if we are correct about the larger investment climate.  Initial support for the dollar is pegged near JPY102.80-JPY103.10 now, with additional support near JPY102.50.  

Canadian dollar:   The optics of Canada's jobs data were worse than the details, but the Bank of Canada is now the most dovish within the dollar-bloc.  The US dollar tested important technical resistance near CAD1.11 before the weekend.  This corresponds to a retracement objective and a trend line off the Feb 21 high near CAD1.12.   Our reading of the technical indicators warn that the dollar will likely rise through the CAD1.11 area and test CAD1.12 in the days ahead.  

Australian dollar:     With the help of spectacular first tier data, especially robust retail sales and trade surplus, the Australian dollar was the strongest currency last week gaining about 1.75% against the US dollar.  It closed on March 6 above the top of its Bollinger Band, for the first time since mid-January and moved back barely within in before the weekend.  The close was near its lows after new four month highs were recorded.   The close below $0.9080, which corresponds to both the 100-day moving average and the minimum retracement objective of the Aussie's slide since last October, warns of additional near-term losses. There is potential from a technical point of view back into the $0.9015-40 range.    On the upside, the $0.9200 is an important psychological level and coincides with the 50% retracement objective of the slide.  

Mexican peso:   The peso participated in the move against the dollar at the end of last week.  After breaking  below the lower end of the trading range since mid-January around MXN13.20, the greenback found support near MXN13.11.   Technically, we see the risk that the break is not sustained and the greenback moves back into the MXN13.20-MXN13.40 trading range and possibly toward the middle to upper end again.  On March 6, the US dollar closed below the bottom of the Bollinger band for the first time since last September.  It moved back into the band before the weekend.  The 20-day moving average, the middle of the Bollinger Band comes in near MXN13.26 and that seems to be the immediate risk. 

Observations from the speculative positioning in the CME currency futures:  

1.  Position adjustments remained minor.  In the previous reporting period there were no gross position changes of more than 10k contracts.  In the most recent reporting period there was one:   the gross long euro position rose 10.9k contracts to 103.9k.  This is the largest gross long position since last November.    There were no other gross position adjustment that exceeded 6k contracts. 

2.  Among the small adjustments, the general pattern was to add to gross short currency positions.  They were only reduced in sterling (-4.3k contracts to 41.4k) and peso (-2.6k to 29k contracts). In both of these currencies, exposure was reduced as both the longs and shorts were pared.  

3.   Outside of the euro, which as we have noted saw a large rise in the gross longs, the gross longs of the other six currencies we review were evenly split between buying and selling.  

4.  The gross long euro and sterling positions dominate the speculative currency future long positions (103.9k and  71.0k respectively).  None of the other currencies' gross long position is more than 24k.   The 12.2k gross long Australian dollar futures position and the 6.2k peso futures position seems particularly small.  It may be begging for a contrarian stance, but as we note above the technical outlook suggest this is not the time.  

5.  The gross short positions are less concentrated.  The yen, of course, is the leader with 100.1k gross short futures contracts, but the euro's 80.4k and Canadian dollar's 84.4k contracts are also substantial.  They are followed by the Aussie (53.4k contracts) and sterling's gross short 41.4k contracts).  The lower level of gross short peso (29.0k contracts) and franc (19.7k contracts), in part simply reflects the lack of participation presently.

Plenty of excuses out there for this evening's collosal miss in Chinese exports (-18.1% YoY vs an expectation of a 7.5% rise) mainly based on timing issues over the Lunar New Year (but didn't the 45 economists who forecast this data know the dates before they forecast?) This is a 6-sigma miss and plunges China's trade balance to its biggest miss on record and 2nd largest deficit on record. Combining Jan and Feb data (i.e. smoothing over the holida Read more.....

Plenty of excuses out there for this evening's collosal miss in Chinese exports (-18.1% YoY vs an expectation of a 7.5% rise) mainly based on timing issues over the Lunar New Year (but didn't the 45 economists who forecast this data know the dates before they forecast?) This is a 6-sigma miss and plunges China's trade balance to its biggest miss on record and 2nd largest deficit on record. Combining Jan and Feb data (i.e. smoothing over the holiday), exports are still down 1.6% YoY - not good for the much-heralded global recovery. Exports to the rest of the BRICs were all down over 20% but no there is no contagion from an emerging market crisis.

Even when the trade deficit was last this large, economists were more accurate - this is the biggest miss on record...

Seasonally-adjusted the data is stunningly bad...

• *CHINA FEB. SEASONALLY ADJUSTED EXPORTS FALL 34% MOM
• *CHINA FEB. SEASONALLY ADJUSTED IMPORTS FALL 0.4% MOM

and non-seaonally-adjusted

• *CHINA'S FEB. EXPORTS FALL 18.1% FROM YEAR EARLIER (vs +7.5% expectations)

The excuse...

"The Spring Festival factor caused sharp fluctuations in the monthly growth rate as well as the monthly deficit," Customs said in a statement accompanying the data.

 

Chinese traders followed their "business habit" of bringing forward exports ahead of the holiday, and focusing on imports immediately afterwards, it added.

But, our simple question is - didn't they already know this when applying their forecasts? If so - then why a 6-standard-deviation miss?

At least they didn't blame the weather?!!

It seems the massive imports of copper - to act as collateral for all the shadow banking loans - also did not help as imports surged...

*CHINA JAN.-FEB. COPPER, PRODUCT IMPORTS 915,000 TONS

All that apparent demand and yet the price is collapsing - not good for the credit unwind

And what does it say about the US that our trade balance with China collapsed MoM...

Via Martin Armstrong of Armstrong Economics blog,

For Obama to claim that a public vote in Crimea would violate the Constitution of Ukraine and International Law is really just as absurd that the same argument put forth by Putin that nothing in Kiev was legal because it was not signed by Yanukovych. There should be a vote, but it should be monitored independently to e Read more.....

Via Martin Armstrong of Armstrong Economics blog,

For Obama to claim that a public vote in Crimea would violate the Constitution of Ukraine and International Law is really just as absurd that the same argument put forth by Putin that nothing in Kiev was legal because it was not signed by Yanukovych. There should be a vote, but it should be monitored independently to ensure it is real. To argue that no state may move to secede from a federal government is ridiculous. Obama said:

“Any discussion about the future of Ukraine must include the legitimate government of Ukraine. In 2014, we are well beyond the days when borders can be redrawn over the heads of democratic leaders.”

Texas has the ABSOLUTE right to secede from the United States if it so desired and the Washington has no right to invade Texas to prevent that – although they too would in the blink-of-an-eye. There are no “democratic” leaders in Kiev as of yet because this is a grass-roots uprising that distrusts anyone who has EVER been in government before.

Meanwhile, you cannot say the people have no right to decide their own fate because this violates the will of “democratic” leaders. No elected official has the right to trump the wishes of the people and let us call a spade a spade – the EU suppresses the right to vote because they are afraid the people in Europe would vote against the euro. The EU interfered with Italian elections and it threatened Georgios Papandreou of Greece that it was NOT ALLOWED to allow the people to vote on staying in the Euro. Greece back-down and did not allow that to take place – so much for democratic ideals.

Let the people decide and YES we can redraw the borders if the PEOPLE so desire. If splitting Ukraine PREVENTS war – then so be it. The word for “slave” in Latin is “servus” and that is the root of public servant. Politicians should remember they are NOT the dictators of the people, but the servants of the people. There can never be any justification to deny the people the right to be heard. That is the oldest right...