"Crimea continues to make the headlines but is having an increasingly smaller impact on markets, though Germany remains sensitive to its dependence on Russian gas and there remains potential for further upheavals. Meanwhile attention is turning to China’s decision to allow the yuan to depreciate.
Russia’s impending annexation of Crimea may have echoes of Soviet hegemony, but the markets are coming to realize this issue will probably be allowed to fade quietly—though the ZEW sentiment survey shows it’s having an impact on German businesses. Ultimately, more important will be the Chinese government’s decision to allow the yuan to depreciate. This should help reinforce an otherwise slowing economy, but it raises concerns about competitive devaluation across Asia, especially with the Japanese making it clear that much more quantitative easing and yen weakness is a policy option. (AM)
UKRAINE: Russia’s annexation of Crimea draws closer after President Vladimir Putin signed a decree recognizing Crimea’s independence from Ukraine.
There is plenty of jaw-jaw from the West about Russia’s impending absorption of Ukraine’s Crimea province, but there is little appetite to do anything more than to make hollow gestures in what is ultimately a regional issue and probably reflects the will of the Crimean people more fairly than any other election in the past century".
