Category: Countries & Regions

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Europe’s Five Deadly Sins on Ukraine | Carnegie Europe

Jan Techau of Carnegie Europe writes:

….In recent years, Russian President Vladimir Putin has talked about the Kremlin’s fears of Western encirclement. He has declared that EU and NATO enlargement are part of a conspiracy to destroy Russia, that Ukraine is not really a sovereign nation, and that Western agents provocateurs were behind Ukraine’s 2004–2005 Orange Revolution.

Amid all that rhetoric, the West failed to recognize that Putin was deadly serious. Such talk was dismissed either as cheap propaganda or as the mild lunacy of a handful of overideologized true believers. Nobody imagined that Putin himself really believed his own bluster.

But for the Russian president, the fight over Ukraine is not an imperialistic adventure, it is a fight for survival against a mortal Western enemy. Just because observers in the West know that’s nonsense, that doesn’t mean that others think the same. Such Western projections were finally debunked when German Chancellor Angela Merkel remarked to U.S. President Barack Obama on March 2 that Putin was “in another world.”

Read more at Europe’s Five Deadly Sins on Ukraine – Carnegie Europe.

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Recession time for Russia | The Market Monetarist

Lars Christensen at The Market Monetarist writes:

….. sharply increased geo-political tensions in relationship to Putin’s military intervention on the peninsula of Crimea has clearly shocked foreign investors who are now dumping Russian assets on large scale. Just Monday this week the Russian stock market fell in excess of 10% and some of the major bank stocks lost 20% of their value on a single day.

In response to this massive outflow the Russian central bank – foolishly in my view – hiked its key policy rate by 150bp and intervened heavily in the currency market to prop up the rouble on Monday. Some commentators have suggested that the CBR might have spent more than USD 10bn of the foreign currency reserve just on Monday. Thereby inflicting greater harm to the Russian economy than any of the planned sanctions by EU and the US against Russia.

By definition a drop in foreign currency reserve translates directly into a contraction in the money base combined with the CBR’s rate hike we this week has seen a very significant tightening of monetary conditions in Russia – something which is likely to send the Russian economy into recession (understood as one or two quarters of negative real GDP growth).

Read more at Recession time for Russia – the ultra wonkish version | The Market Monetarist.

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The Crimean principle

The Crimean regional government in the Ukraine plans to hold a referendum, to leave Ukraine and join the Russian Federation, amongst its predominantly Russian-speaking population. The Russian parliament has voiced its over-whelming support for the idea.

Gary Kasparov, former world chess champion and member of the Russian opposition, points out that the same principle could apply to Kaliningrad.

Geographically isolated from the rest of Russia, Kaliningrad — formerly known as Königsberg — was part of Germany (East Prussia) until annexed by Josef Stalin at the end of WWII.

Kaliningrad

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Putin invaded Ukraine because he had to | Foreign Policy

Leon Aron at Foreign Policy writes:

The right foreign-policy move at the right time can boost a leader’s ratings and the regime’s popularity. This is doubly true for authoritarian regimes that lack democratic legitimacy, and it is true for Russia today.

In Vladimir Putin’s Russia, as one top pollster told me in Moscow a few weeks ago, “foreign policy is pretty much the only thing that works.” What he meant was that, with the country’s economy slowed to a crawl, and with the regime facing near-universal revulsion over the corruption, thievery, and incompetence of officials at every level, racking up foreign-policy successes has become vital to maintaining Putin’s popularity — which, in turn, is key to the legitimacy of the whole enterprise.

Read more at The Front Lines on Russia's Home Front.

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India decidedly bullish

India’s Sensex, on the other hand, is decidedly bullish. Completion of a 13-week Twiggs Money Flow trough above zero signals buying pressure. Breakout above 21500 would offer a target of 23000*. Respect of resistance is less likely, warning of further consolidation between 20000 and 21500. Failure of support is unlikely, but would signal a primary down-trend.

Sensex

* Target calculation: 21500 + ( 21500 – 20000 ) = 23000

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Shanghai remains bearish

China’s Shanghai Composite Index is testing short-term resistance at 2080. Breach would suggest another test of 2180. But the primary trend is downward and follow-through below 1990 would signal a decline to 1850*.

Shanghai Composite Index

* Target calculation: 2000 – ( 2150 – 2000 ) = 1850

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Nikkei finds Yen support

The US Dollar found solid support at ¥101 against the Yen. Recovery above ¥103 would suggest an advance to ¥111*. Breakout above ¥106 would confirm. Recovery above the December 2013 high on 13-week Twiggs Momentum would strengthen the signal. Breach of support at ¥101 is unlikely, but would warn of a correction to primary support at ¥96.

Nikkei 225

* Target calculation: 106 + ( 106 – 101 ) = 111

The Nikkei 225 found support at 14000. Recovery above 15000 would indicate another attempt at 16000. Completion of a 13-week Twiggs Money Flow trough above zero would strengthen the signal.

Nikkei 225

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

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Never argue with the tape

I daily read predictions of the imminent collapse of stock prices. But ask yourself one question: Is this a bull market or a bear market?

S&P 500

CBOE Volatility Index (VIX) is below 15.

VIX Index

A prudent speculator never argues with the tape. Markets are never wrong, opinions often are.

~ Jesse Livermore

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Putin’s ploy

The Wall Street Journal quotes Vladimir Putin’s justification for occupying the Crimea:

Russian President Vladimir Putin said Tuesday that Russia reserves the right to use force in Ukraine to protect Russian-speaking residents there…….”

This was a ploy used by Hitler to assert control of the Sudetenland in 1938. Sudetenland is the name given to the border districts of Bohemia, Moravia, and parts of Silesia, within Czechoslovakia, that had large German-speaking populations. Hitler encouraged Konrad Henlein, leader of the Sudeten Nazis, to rebel, demanding a union with Germany. When the Czech government declared martial law, Hitler threatened war. This led to the September 1938 betrayal of Czechoslovakia by France and Britain. Adopting a policy of appeasement, the two countries agreed to give Hitler the Sudetenland, with Chamberlain describing the crisis as “a quarrel in a faraway country, between people of whom we know nothing”. On his return to London, Chamberlain asserted that the accord with Germany signaled “peace for our time”.

Hitler enters the Sudetenland, October 1938

Hitler enters the Sudetenland, Bundesarchiv, Bild | October 1938

In March 1939, German troops occupied the rest of Czechoslovakia. In September 1939, Hitler invaded Poland on a similar pretext of protecting the German minority from persecution. War followed, leaving more than 60 million dead. Almost two-thirds were civilians.

Hopefully Western leaders have learned from history. Appeasement is not an option.

Read more at BBC History and Wikipedia: The Sudeten Crisis.

An appeaser is one who feeds a crocodile, hoping it will eat him last. ~ Winston Churchill

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ASX 200 likely to follow

The ASX 200 indicates short-term buying pressure with a hammer candlestick followed by a harami formation. Rising 21-day Twiggs Money Flow also suggests medium-term buying pressure; completion of a large trough above zero would strengthen the signal. Breakout above 5450 is likely, after the strong showing in US markets, and would signal an advance to 5800*. Reversal below 5350 is unlikely, but would warn of another correction.

ASX 200

* Target calculation: 5400 + ( 5400 – 5000 ) = 5800

ASX 200 VIX below 15 continues to indicate low risk typical of a bull market.

ASX 200

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