Bloomberg: Asian Stocks sink,Gold gains as China concerns Mount

    Bloomberg reports,"the MSCI Asia Pacific Index sank 1.6 percent by 12:06 a.m. in Tokyo, set for its lowest close since Feb. 10. A gauge of Chinese firms in Hong Kong fell as much as 20 percent from a Dec. 2 high. The Nikkei 225 Stock Average slid 2.7 percent as the yen headed for its biggest weekly advance since Jan. 24. Standard & Poor’s 500 Index futures rose 0.1 percent. The cost of insuring Asia-Pacific bonds from default jumped 4 basis points. Gold advanced to a six-month high while copper headed for its biggest weekly slump since April".

About $1.2 trillion was wiped from global stocks this week through yesterday as Chinese economic data missed estimates, overshadowing signs of improvement in the U.S. economy. The Black Sea region of Crimea votes March 16 on becoming independent or rejoiningRussia, with the U.S. and Germany threatening Moscow with sanctions over its support for the secession. The U.K. reports trade data and India releases a key inflation indicator.

Bank of America Corp., UBS AG, JPMorgan Chase & Co. and Nomura Holdings Inc. lowered their forecasts for Chinese economic growth in 2014. Data yesterday showed factory output rose in January and February from a year earlier by the least since the global financial crisis, while retail sales grew at the slowest rate for the period since 2004. Reports at the weekend showed an unexpected plunge in overseas shipments.

The Hang Seng China Enterprises Index fell as much as 1 percent to 9,230.38, more than 20 percent below its high from December last year, before paring the decline to 0.8 percent. The Hang Seng Index (HSI) dropped 1.2 percent and is on track to cap its biggest weekly drop since May 2012. The Shanghai Composite Index retreated 0.7 percent.

WSJ: Russians Fret About Economic Impact of Sanctions Over Ukraine

      The Wall Street Journal reports,"since Russian forces took control of Crimea on Feb. 28, markets in Moscow have plunged to levels not seen since the global economic crisis, with the top 50 companies shedding $110 billion in capitalization".

The ruble has hit record lows and many economists have slashed their 2014 growth forecasts by more than half. And that is before any sanctions have even been introduced.

The increased nervousness within Russia's business community comes as Western leaders have turned up the volume in recent days on the threat of sanctions.

But so far, Mr. Putin has shown no signs of backing down from increasingly tough talk coming from the West, and appears ready once again to dismiss complaints from Russia's moguls.

His personal approval rating rose almost 10 points to a three-year high of 71.6% over the past month, state pollster VTsIOM said Thursday. Almost two-thirds of those polled last weekend cited the Ukraine crisis as the biggest factor in their opinion, while 32% cited the Winter Olympics in Sochi.

The government official said those in Mr. Putin's inner circle are convinced they have a historic opportunity to regain Crimea, a territory ceded to Ukraine only in 1954, and see the possible economic cost as less important.

A spokesman for the Russian president acknowledged that the country's leading businessmen had been in "constant contact with the government" about sanctions, but said Mr. Putin hadn't met with any of them.

A person who attended a recent meeting between some of Russia's richest industrialists and high-ranking government officials to discuss the overall economy said the mood turned tense when the issue of sanctions was brought up.

"Questions were asked about how the situation with Ukraine might further affect the market and how the government might respond," the person said. "People wanted to know exactly how things might go."

Still, veteran bankers in Russia say the threat alone has taken its toll on Russia's already sluggish economy.

"Even if they all start kissing and making up now, the momentum of the events of the last month means that any hope of the cavalry storming in and saving the day in terms of economic growth for this year has gone out the window," said a senior banking adviser in Moscow. "The damage has already been done."

Russia was already dealing with slowing growth, rising inflation, a weakening ruble and persistent capital flight. Economic growth last year clocked in at just 1.3%, and Russia's central bank has forecast just 1.5% growth this year.

Russia's primary stock index plummeted 11% on March 3, the first day of trading after Russian troops entered Crimea, and has lost ground since. The ruble has declined 11% against the dollar since the beginning of the year and the central bank was forced to spend $11.3 billion on the day of the market plunge to stabilize the currency.

On Wednesday, Mr. Putin said in a meeting with the heads of Russia's central bank, finance ministry and economy ministry that the current growth rate wasn't good enough, and "we need to achieve stronger dynamics."

Alexei Kudrin, a former finance minister who attended the meeting, warned in a speech in St. Petersburg on Thursday that the authorities were underestimating the potential impact of sanctions, the Interfax news agency reported.

"The negative impact isn't coming from sanctions at all. The negative impact here is more from the perception of Russia from the main sources of global capital as a tough place to justify investment," he said. "This takes 5% at the very least off the value of Russian assets for a long time to come."

In a recent research note, Deutsche's Bank John-Paul Smith advised clients to steer clear of Russia entirely and suggested no longer considering it an emerging market but rather a riskier frontier market.

WSJ: Asian Markets Tumble

     The Wall Street Journal reports, "Japanese stocks tumbled almost 3% on Friday, with the Nikkei on track for its worst week since August, as evidence that China's economy is slowing sharply and  rising tensions in Ukraine fuel a broad selloff in Asia in recent days.

The Nikkei lost 2.7% in early trade, with the market weighed by a yen that had strengthened substantially overnight, and continued to pull down markets. The dollar fell 0.9% overnight against the yen, its largest daily fall since early February, and stabilized in Asia at ¥101.81".

Slower-than-expected growth in Chinese industrial production and retail sales came out just before some markets closed in the previous session, giving Japan and South Korea little time to react. But by Friday morning, markets in Wall Street had suffered their worst day since February, in part due to the bad news from China, as well as continued tensions over Ukraine and Russia, which left Asia vulnerable to a selloff.

It was a similar story in Australia, where stocks stopped trading on Thursday before the Chinese data was released. On Friday, the S&P/ASX 200 fell 1.4%.

South Korea's Kospi was down 0.7%.

Trading in Asia all week has been centered on developments in China. Data out over the weekend showed a sharp decline in exports in February, raising concerns over the health of the world's second-largest economy. There were also jitters in the corporate sector, with fears that another solar company could default, just a week after China experienced its first default in its corporate debt market.

Markets dislike uncertanty.

This has translated into poor performance for the week, especially for markets linked to China. Hong Kong's Hang Seng Index is 4% lower since last Friday and the S&P/ASX 200—a market heavy with resource companies that sell to China—fell 2.3%. It was Japan, a market that has been particularly volatile in recent weeks, that was affected the most from the downbeat sentiment, and the Nikkei was down 5.6% over the same period.

WSJ: U.S. Balks at Ukraine Military-Aid Request

 The Wall Street Journal reports,"Ukraine's interim government has appealed for U.S. military aid, including arms, ammunition and intelligence support, according to senior U.S. officials. But the Obama administration has agreed to send only military rations for now, wary of inflaming tensions with Russia.

The U.S. decision reflects the Pentagon's reluctance to be seen as directly supporting Ukraine's beleaguered armed forces during the standoff with Russia, which has seized the Ukrainian region of Crimea.

The risk of escalation was underscored by Russia's move on Thursday to conduct another military exercise near Ukraine. The Kremlin also confirmed it has sent six Sukhoi fighter jets and three transport planes to another former Soviet republic, Belarus, for joint patrols.

Belarusian officials said the move came in response to increased air patrols in the region by the North Atlantic Treaty Organization amid the Ukraine crisis".

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Be prepared for the next great transfer of wealth. Buy physical silver and storable food.

The latest from Jim Rogers, author of A Gift to My Children: A Father's Lessons for Life and Investing andHot Commodities: How Anyone Can Invest Profitably in the World's Best Market.

“I started buying Russia in recent months. Yesterday (March 5) and the day before, I bought more. I haven’t bought too much, but have been looking for things to buy in Russia. I bought shares in the Moscow Stock Exchange. I bought Aeroflot. I own airlines around the world. And I’m looking to buy more in Japan, if given the chance.

I like to buy things that are depressed. Agriculture is very depressed. The American stock market is hitting all-time highs. I don’t find that particularly attractive.” 

Source: IB Times

Warren Buffet thoughts. Need to remind in time of Crisis

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”

 “Someone's sitting in the shade today because someone planted a tree a long time ago.” 

  “I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make less impulse decisions than most people in business. I do it because I like this kind of life.” 

“Risk comes from not knowing what you're doing” 

 “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that you'll do things differently.” 

  “There comes a time when you ought to start doing what you want. Take a job that you love. You will jump out of bed in the morning. I think you are out of your mind if you keep taking jobs that you don't like because you think it will look good on your resume. Isn't that a little like saving up sex for your old age?”

 “It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction". 

Ukraine Crisis Latest Developments

"Moscow has deployed 10,000 troops along its border with Ukraine, deepening the crisis in Crimea ahead of a last desperate effort by the US secretary of state, John Kerry, to broker a deal with his Russian counterpart, Sergei Lavrov, in London on Friday".

      "Ukraine's prime minister, Yatsenyuk told the UN security council on Thursday he is convinced Russians do not want war. He urged Russia's leaders to heed the people's wishes and return to dialogue with Ukraine. "If we start real talks with Russia, I believe we can be real partners," Yatsenyuk said".

Russian troops now control the Crimean peninsula, where voters will decide on Sunday whether to become part of Russia.

Western diplomats have expressed little optimism ahead of the London talks, scheduled to begin on Friday . Nothing resembling a peace plan has been sketched out between the two sides, one said.

The Russian deployment coincided with a vote in the Ukrainian parliament to create a 60,000-strong national guard. Ukraine's national security chief, Andriy Parubiy, said the force would "ensure state security, defend the borders and eliminate terrorist groups".

US state department spokeswoman Jen Psaki said Kerry would reaffirm US support for Ukrainian sovereignty and territorial integrity without interference or provocation by Russia. The secretary of state had previously declined a Russian invitation to Moscow and his decision to go to London prompted speculation the Kremlin may have offered concessions to ensure he would not leave empty-handed.

Before leaving Washington for London, Kerry warned Russia that the EU was planning to join the US in imposing more sanctions on Moscow if the referendum went ahead. The sanctions would include a travel ban and a freeze on bank accounts.

Reuters reported that the German vice-chancellor, Sigmar Gabriel, warned that Germany would not hesitate to go beyond a second round of European sanctions planned for Monday if the referendum goes ahead.

David Cameron and foreign secretary William Hague will meet Kerry before his meeting with Lavrov. A Foreign Office spokesman said Hague had phoned both Kerry and Lavrov to encourage them "to hold talks in London with a view to de-escalating the situation in Crimea and setting up dialogue between Russia and Ukraine".

Source: theguardian

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UKRAINE Breaking News Bloomberg. Putin urged government to ensure ability to react immediately to Western sanctions

Russian bonds and the ruble fell for a fifth day as tension persisted. The Micex Index of equities dropped 2 percent, while Ukraine’s UX Index tumbled 3 percent in the biggest decline among 94 world stock gauges.

Putin’s approval rating among Russians climbed to a three-year high of 72 percent, the state-run All-Russia Center for the Study of Public Opinion said on its website. That compares with 67 percent last month when Russia hosted the Winter Olympics in Sochi. Another poll by the Levada Center found that 58 percent of Russians back some degree of military intervention in Ukraine.

Russia stepped up military maneuvers on the border with Ukraine, the Russian Defense Ministry said today, according to the Interfax news service. Six Russian fighter jets and three transport planes arrived in Ukraine’s northern neighbor, Belarus, for joint drills, the Defense Ministry there said.

“If negotiations with Russia don’t take place in the next days -- and by that is meant negotiations that bring results and don’t play for time -- then the EU foreign ministers will at their council meeting next Monday, March 17, seal further second-stage measures,” said Merkel, who likened Russia’s efforts to annex Crimea to the imperialism of centuries past. “That includes bars on travel, freezing bank accounts and cancellation of EU-Russia Summit.”

Russian government officials and businessmen are bracing for sanctions resembling those applied toIran, according to people with knowledge of the preparations. Putin met senior officials yesterday in Sochi, his spokesman, Dmitry Peskov, said by phone. Putin urged the government to ensure Russia’s “ability to react immediately to internal and external risks.”

U.S. positive data. Jobless claims in surprise drop; Retail sales climb in February

"The U.S. retail sales rose 0.3% last month, comparing favorably with the estimates of economists, who forecast a 0.2% rise. Over the prior two months, retail sales had dropped a combined 0.9%. The increase in retail sales in February came from a variety of sectors, including auto dealers, Internet retailers, clothing and sporting goods stores.

Data also showed the number of people who applied for unemployment benefits last week dropped to a three-month low. Jobless claims fell by 9,000 to 315,000. That belied expectations of a rise to 330,000 on a seasonally-adjusted basis.

Import prices also jumped 0.9% in February, mostly because of higher fuel costs. Economists polled by MarketWatch had expected a rise of 0.4%".

Source: Marketwatch

Losing Crimea Could Sink Ukraine's Offshore Oil and Gas Hopes

"Without Crimea, Ukraine looks set to lose an important piece of its economic and energy future: valuable undersea oil and gas fields that lie just offshore the Crimean peninsula. Exploiting those Black Sea fields could help reduce Ukraine’s dependence on Russian gas imports".

And Big Oil had been interested: Before the overthrow of former President Viktor Yanukovych, Ukraine was on the verge of signing a deal with a group, including Exxon Mobil  and Royal Dutch Shell , that was prepared to spend $735 million to drill two wells off Crimea’s southwest coast. “Exxon and Shell are now in a legal limbo,” Chris Weafer of Moscow investment group Macro Advisory told Bloomberg News. If Crimea votes in a March 16 referendum to secede from Ukraine, the government in Kiev “may soon no longer have jurisdiction over the region.”

The so-called Skifska area that Exxon and Shell want to develop is part of an undersea field that extends westward along the Black Sea coastline to Romania. Within the area now under Ukrainian jurisdiction, however, “the most interesting exploration areas are all effectively [under] Crimean waters,” says Julian Lee, an analyst at the Center for Global Energy Studies in London. Losing control of those areas “would be a significant loss for Ukraine.”

Source: BloombergBusinessweek

WSJ: Ukraine crisis outcome

   Inspite of tough talk from Chancellor Angella Merkel and her warnings to Russia.
"The Crimean crisis continues, but the markets hardly care. The growing sentiment is that Russia’s annexation of Crimea and possibly parts of eastern Ukraine is a fait accompli and that the West will hold off putting any real pressure on Russia. The strong words are just a political smokescreen–Germany and big swathes of eastern and central Europe are just too dependent on Russian gas to make a more forceful stand on a regional matter. Especially as Crimeans by and large seem happy to join Russia". 

Source: WSJ

WSJ: China Data Hold Back Markets But Reaction Muted

             The Wall Street Journal reports,"markets were a bit lower in Asia and Europe following another spate of poor Chinese data, but the news hasn’t come as the knockout blow it might have been.

The weakening Chinese growth picture is a worry for the rest of the world as so many countries’ own economic performance depends on Chinese demand.  But in addition to the fact that there are mitigating factors — such as the distorting effect of the Lunar New Year holidays last month – the news need not be taken so badly. Investors are perhaps accepting that for all the structural changes that China’s economy needs to go through – for the benefit of its own citizens and those of the rest of the world –  this degree of necessary slowdown is quite bearable". 

"CHINA: A bunch of fresh data points out of China Thursday disappointed: Industrial output rose 8.6% on-year in January-February (the data is combined to minimize distortion from the Lunar New Year holiday), down from 9.7% in December and vs. 9.5% expected. Fixed-asset investment grew by 17.9% on-year – the weakest pace since 2002 – down from 19.6%  in 2013. Retail sales rose 11.8% on-year in January-February, down from 13.6% in December. Construction starts fell by 27%.

The data add to the pile of evidence that China’s growth is slowing, but don’t materially change the picture. Indeed, markets – which have been hit quite a bit lately by the China outlook, especially for commodities — largely shrugged off Thursday’s news. Earlier in the day, Premier Li Keqiang said China could still meet its 7.5% growth target for the year, but also emphasized that the leadership was no longer pursuing growth at all costs. Li’s administration has been repeating that message quite a bit lately. It may involve some short-term pain now but in the long run it’s a good thing that China is putting its economy on a more sustainable path and getting its banking system under control".