Category: Countries & Regions

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Ukraine should sell its gas pipeline to stabilize the region

From OilPrice.com

Gas supply, and the threat to that supply for Europe, is what has forced Russia to move aggressively on multiple fronts to defeat Ukraine in its efforts to modernize and westernize its economy, its future, and its way of life.

So, how to start the liberalization process? Ukraine has argued that its gas transportation system is a strategic asset. Business-minded people take issue with this interpretation, which ignores the commercial potential of the pipeline system. Now that we have come full circle in a long-brewing Ukraine-Russia gas war, perhaps the pipeline should be considered “strategic” — if not in the way the Ukrainian authorities have long understood. The pipeline system, worth $20 to $30 billion, can indeed play a strategic and tactical role in resolving Ukraine’s crisis with Russia, but only if it’s sold off.

Ukraine should sell 50 to 75 percent of it for cash to a consortium involving the EU, U.S. and Russia and operated by a U.S. business enterprise, preferably based in Houston. This can only happen if Russia agrees to remove troops and other proxies in eastern Ukraine and then works with Ukraine to secure the border and cease all low-intensity conflict efforts, including on the ground, and in cyberspace and the trade arena….

Read more at EconoMonitor : EconoMonitor » 5 Things Ukraine Must Do to Become Energy Independent.

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EconoMonitor » China, Not Piketty, Explains ‘Confused Signals’ in U.S. Asset Prices

From Benn Steil & Dinah Walker:

As for bond prices, China’s central bank holds the key.After more than three years of steady appreciation, the RMB has declined over 3% this year – erasing the past year’s rise. Driven by the Chinese government’s desire to re-juice failing economic growth, RMB depreciation has naturally been accompanied by an increase in China’s foreign exchange reserves.China usually allocates about 40 percent of its foreign exchange reserves to Treasuries; so far this year, however, its official holdings of Treasuries have actually declined. What explains this? Given that China comes under pressure from the U.S. Treasury and Congress whenever it appears to be pushing down its currency, China is almost certainly disguising its Treasury purchases by holding them in Belgium.

Read more at EconoMonitor : EconoMonitor » China, Not Piketty, Explains ‘Confused Signals’ in U.S. Asset Prices.

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Explaining Richard Koo to Paul Krugman | SNBCHF.com

George Dorgan writes:

….Prof. Steve Keen’s and Richard Koo’s recipe is to increase public debt, when the private sector is de-leveraging and to reduce public debt when the private sector is leveraging. According to Keen, the Americans are currently doing the complete opposite of what they should do. They should continue reducing private liabilities, but they should increase public spending.

The Fed wants the average American to spend, even deficit spending, while the state is doing austerity. According to Keen, the current increase of private US debt could lead to a new recession.

Read more at Explaining Richard Koo to Paul Krugman, to Austrian Economists and the SNB #Balance Sheet Recession.

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Will Inflation Remain Low? | FRBSF

From Yifan Cao and Adam Shapiro at the Federal Reserve Bank of San Francisco:

The well-known Phillips curve suggests that future inflation depends on current and past inflation and a measure of economic slack or resource utilization. Using the unemployment gap to measure slack, a simple Phillips curve currently predicts that inflation will remain quite low through 2015. Two variations of the model, which impose a higher anchor for inflation expectations or focus only on a short-term unemployment gap, still predict that inflation will remain low, albeit higher than implied by the basic model.

Read more at Federal Reserve Bank San Francisco | Will Inflation Remain Low?.

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Shanghai rally

Dow Jones Shanghai Index rallied Monday, headed for another test of resistance at 270/272. Momentum is rising, but only recovery above 282/284 (with TMO above zero) would signal a trend change. Further consolidation is more likely, ranging between 258 and 284. Downward breakout, unlikely at present, would warn of a decline to 240*.

Dow Jones Shanghai Index

* Target calculation: 260 – ( 280 – 260 ) = 240

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Canada: TSX 60 up-trend continues

Canada’s TSX 60 continues towards its target of the 2008 high at 900. Rising troughs on 13-week Twiggs Money Flow signal strong buying pressure. Reversal below support at 845 remains unlikely.

TSX 60

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Europe: Mild selling pressure

DAX again retraced to test support at 9750/9800. A small decline on 13-week Twiggs Money Flow indicates mild (medium-term) selling pressure. Failure of support would warn of a correction to the primary trendline. Respect is less likely, but would suggest a fresh advance; confirmed by breakout above 10000.

DAX

* Target calculation: 9750 + ( 9750 – 9000 ) = 10500

The Footsie shows similar selling pressure to the DAX, with a mild decline on 13-week Twiggs Money Flow. The long tail on last week’s candle suggests support at 6700 and the rising trendline. Recovery above 6900 would signal an advance to 7200*. But reversal below 6700 is as likely and would warn of a correction to primary support at 6400/6500.

FTSE 100

* Target calculation: 6800 + ( 6800 – 6400 ) = 7200

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ASX 200 selling pressure

The ASX 200 is once again testing support at 5380/5400. Declining 21-day Twiggs Money Flow below zero indicates medium-term selling pressure. Correction to 5300 is likely. The primary trend remains upward and this should prove a good entry point for long-term investors. Recovery above 5470 is unlikely at present, but would signal another primary advance.

ASX 200

* Target calculation: 5550 + ( 5550 – 5400 ) = 5700

ASX 200 VIX remains low, indicative of a bull market.

ASX 200

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Japan and India test new support

Japan’s Nikkei 225 retraced to test its new support level around 15000. Respect would confirm a rally to 16000. Completion of a 13-week Twiggs Money Flow trough above zero indicates long-term buying pressure. Reversal below 14800 is unlikely, but would warn of another test of primary support at 14000.

Nikkei 225

* Target calculation: 16000 + ( 16000 – 14000 ) = 18000

India’s Sensex is far stronger — retracing to test its new support level at 25000. Bearish divergence on 13-week Twiggs Money Flow warns of medium-term selling pressure. Breach of support would warn of a correction to 24000. But the primary trend is upward and recovery above 25500 would signal another advance.

Sensex

* Target calculation: 21000 + ( 21000 – 16000 ) = 26000

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