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

China Sides With Russia on Ukraine | The Diplomat

Shannon Tiezzi writes:

China’s ambiguous position reveals its dilemma. Beijing’s instinct is to back Moscow, both to uphold the fruitful cooperation between these two nations and to stand firm against pressure from the West. However, vocally supporting Russia would violate China’s principle of non-interference. More importantly, it could arguably set a precedent of Chinese support for military intervention to protect separatists unhappy with their government—which goes against all China’s instincts, given its own issues with Tibet and Xinjiang provinces. Yet as the Global Times put it, at the end of the day power calculations mean more than principles. China’s geopolitical strategy requires Beijing to at least tacitly support Russia, and at the end of the day that argument outweighs more abstract philosophical concerns.

Read more at China Backs Russia on Ukraine | The Diplomat.

Europe: Shaken but not stirred

The Euro has held up well despite rising tensions with Russia over the Ukraine. Reversal below $1.365 would warn of a test of primary support at $1.35. Bearish divergence on 13-week Twiggs Momentum suggests another correction. Breakout above $1.38 is less likely at present, but would signal an advance to $1.43*.

Euro

* Target calculation: 1.38 + ( 1.38 – 1.33 ) = 1.43

Dow Jones Euro Stoxx 50 retreated below 3100 and is likely to test primary support at 2920/2950. Breach of primary support would signal reversal to a down-trend.

Dow Jones Euro Stoxx 50

* Target calculation: 3150 + ( 3150 – 2950 ) = 3350

Germany’s DAX is stronger, with rising 13-week Twiggs Money Flow suggesting another attempt at 10,000. But retreat below 9500 would test primary support at 9000.

DAX

DAX Volatility spiked above 20, but still reflects moderate risk.

DAX

As China looks on, Putin poses risky dilemma for the West | Reuters

David Rohde at Reuters quotes James Jeffrey, a retired career U.S. diplomat:

Jeffrey said the days and months ahead will be vital. If Putin faces few long-term consequences for seizing Crimea, it will set a precedent for China and other regional powers who may be considering establishing 19th century-style spheres of influence of their own.

“The Chinese,” Jeffrey said, “are in the same position.”

Read more at As China looks on, Putin poses risky dilemma for the West | Reuters.

E-mini jumps on Putin order

E-mini jumps on Putin order for troops to return to bases (Reuters).

E-mini

Breakout above 1850 is a bullish sign. S&P 500 follow-through above 1860 would signal an advance to 1950.

Realpolitik In Ukraine | Anatole Kaletsky , Gavekal

Quote from Anatole Kaletsky, Gavekal, in John Mauldin’s Outside the Box newsletter:

…..it is literally inconceivable that Putin will ever withdraw from Crimea. To give up Crimea now would mean the end of Putin’s presidency, since the Russian public, not to mention the military and security apparatus, believe almost unanimously that Crimea still belongs to Russia, since it was only administratively transferred to Ukraine, almost by accident, in 1954. In fact, many Russians believe, rightly or wrongly, that most of Ukraine “belongs” to them. (The very name of the country in Russian means “at the border” and certainly not “beyond the border”). Under these circumstances, the idea that Putin would respond to Western diplomatic or economic sanctions, no matter how stringent, by giving up his newly gained territory is pure wishful thinking.

Read more at John Mauldin: Outside the Box.