Finance ministry affirms China growth story in response to IMF warning of hard landing

While IMF chief Christine Lagarde warns of a hard landing in the Chinese economy, China's Vice Finance Minister, Zhu Guangyao, says China doesn't agree with this analysis, and that U.S. monetary policy is the main wildcard.

"The Federal Reserve has shown that it will increase interest rates, if the economy stays stable after ending QE tapering. That move will have impact on the U.S., on the world economy, of course, as well as China. So we are very concerned about U.S. monetary policy decisions," Zhu said.

While the IMF urges China to curb risks in shadow banking and asset quality. Zhu says the problems are controllable.

He said: "Does China have a shadow banking problem? Yes, we have. But its nature and content differ from the western concepts. Our shadow banking are mainly shown in trust funds, which are off balance sheet. Their total amount is not too big, but the challenge is the fast pace of growth.

"Meanwhile, we note that the shadow banking could also support the real industry. So we will be careful in dealing with it."

Zhu Guangyao says China will stick with its structural reforms in the face of both external and internal challenges.

Chinese manufacturers optimistic despite trade slipping

 Chinese manufacturers attending the ongoing Canton Fair in south China's Guangzhou City are expecting steady trade growth this year despite poor economic data in the first quarter.

The Canton Fair, or China Import and Export Fair, opened on Tuesday following data that showed exports and imports both fell sharply in March. But many exhibitors remain optimistic.

"Although overall data slumped, we managed to grow slightly in March year on year," said Sun Shubao, a senior executive of Haier Group, one of China's leading home appliance firms.

Sun attributed Haier's resilience to customer care. "We have kept innovating to satisfy our consumers worldwide," he said.

Sun said he was confident that their "smart" appliances, which can be accessed through mobile Internet, will secure them another year of growth.

DIFFICULTIES

According to customs statistics, China's total foreign trade volume in March was 332.5 billion U.S. dollars, down 9 percent year on year. Exports last month fell 6.6 percent year on year to 170.11 billion U.S. dollars, while imports were down 11.3 percent to 162.41 billion U.S. dollars.

"We are indeed having some difficulties," said Gao Yuanjia, general manager of Jiangsu Chunlan IMP.& EXP. Co., Ltd., an air conditioning manufacturer.

Gao said the increasing cost of labor in China as well as rising international market competition both dampened trade expectations.

But Gao is not all doom and gloom, saying his company was focusing on its strengths and will "innovate to capture any potential growth opportunities."

Wu Jianfeng, general manager of Hongyu Ceramics, told Xinhua at the fair that the company's export volume had been stable over the past two years, despite challenges of sluggish demand and anti-dumping disputes.

"We're cautious about this year's situation. Flat figures have been quite normal in China's ceramics industry in recent years," Wu added. "But we'll continue to invest in R&D, and keep making new products."

INNOVATION TO SECURE GROWTH

"In the past three months, exports of some of our core products have surged 700 percent year on year. We have overseas orders up until the third quarter of the year. I believe we could realize 60 percent annual growth," said Fang Xueyu, deputy general manager of Hisense International Co., Ltd., another leading home appliance company in China.

Fang said economic indicators pointed to an economic slowdown but that it would not be like the global economic crisis in 2008.

This year, 24,581 exhibitors from China and 43 other countries and regions are expected at the Canton Fair, up by 64 from the previous session in autumn 2013. The fair has an exhibition area of 1.17 million square meters and 59,708 booths, up by 169 from the previous session.

"Though some international factors may dampen trading expectations, we believe exhibitors attending the fair this year will be up," Liu Jianjun, the fair's spokesman said.

Exhibitors welcomed Liu's remarks, which, in other words, mean that over 190,000 global buyers will come to their booths during the fair, reflecting the appeal of "Made in China."

China has set this year's target of economic growth at about 7.5 percent. But growth in Q1 is set to be below the year target.

Premier Li Keqiang said last week at Boao Forum for Asia that the word "about" indicated there was a range for GDP growth.

As long as there is sufficient employment and no major fluctuations, actual GDP growth will be considered to be within the proper range, be it slightly higher or lower than the target, he said.

Zhong Shan, China's vice minister of commerce, encouraged manufacturers to look on the bright side and vowed that the ministry will join other departments to further optimize policies regarding trade, tax and finance.

Zhong also said that the ministry is drafting new guidelines on "cultivating new competitive edges in overseas trade."

Chen Shaolin, overseas sales director of Gree, the world's largest maker of air conditioners, believes that China is able to strike a balance between economic stimulation and deepening reform.

"Like many of our peers, we don't pin our hopes on protective polices. Chinese companies can gain a firm foothold in global markets if they innovate and constantly improve customer experience. That's the direction we're heading to," said Chen.

Source: Xinhua

China's power consumption rises 5.4 percent in Q1

China's power consumption rose 5.4 percent in the first quarter from a year earlier, official data showed on Tuesday.

Power use, an indicator of economic activity, gained 7.2 percent in March from a year ago, according to National Energy Administration (NEA) data.

In the first three months, electricity use by the primary industry dropped 7 percent year on year to 17.4 billion kwh, said the NEA.

Power consumption by the secondary industry reached 913.3 billion kwh in the first quarter, up 5.3 percent year on year, while that by the tertiary industry rose 6.6 percent year on year to reach 163.3 billion kwh.

Source: Xinhua

China's property sales fall in Q1

  A total of 201.11 million square meters of property was sold in the first quarter this year, down 3.8 percent year on year, the National Bureau of Statistics (NBS) said on Wednesday.

The fall widened from the 0.1-percent drop seen in the first two months of the year, according to NBS.

In terms of sales revenue, the volume went down 5.2 percent year on year to 1.33 trillion yuan (215.9 billion U.S. dollars).

Source: Xinhua

China's Q1 industrial value added up 8.7 pct

China's industrial value added expanded 8.7 percent year on year in the first quarter of 2014, official figures showed on Wednesday.

Industrial value added in March edged up by 0.81 percent from February, the National Bureau of Statistics (NBS) said.

China uses industrial value added to measure business activities of designated large enterprises each with an annual turnover of at least 20 million yuan (3.26 million U.S. dollars).

The statistics showed that the value added of state-owned enterprises saw a 4.6-percent growth year on year in March, while that of joint stock companies expanded by 10.1 percent.

Last month, the value added of the manufacturing sector grew by 9.9-percent, while that of the mining industry grew by 2.9 percent, according to the NBS.

The bureau said that industrial value added in March grew by 8.6, 7.9 and 10.4 percent in east, central and west China, respectively.

Chinalco resumes copper mining in Peru

Aluminum Corporation of China (Chinalco), the country's top producer of aluminum, announced Tuesday that its copper mining in Peru has resumed.

Chinalco halted its Toromocho Project in central Peru on March 28 after Peru's environmental protection agency ordered it to suspend copper mining activities until Chinalco stopped waste water spillover.

The mining giant immediately launched checks and found the spillover was caused by rainfall.

Chinalco solved the problem and upgraded the water management system in the mining project before April 10. Peru's authorities lifted the restrictions on Chinalco's copper mining activities in Toromocho Project after on-site inspections on April 11.

The company resumed the project with a goal to realize full production capacity in the third quarter of 2014 and provide China with 220,000 tons of copper concentrate every year, equal to 18 percent of the country's copper production.

Chinalco has been developing the Toromocho Project since 2008 in Peru, the world's second biggest copper producer.

Source: Xinhua

The Guardian: Ukraine on the brink as troops take on rebels Vladimir Putin denounces Kiev for mobilising forces against pro-Russian gunmen in east of country

Ukrainian government forces launched their first significant military action in the east of the country on Tuesday, clashing with about 30 pro-Russian gunmen at a provincial airfield and heightening fears that the standoff could escalate into a major armed conflict.

Shots were fired in Kramatorsk airport as Ukrainian special forces stormed in to reassert Kiev's control. As troop helicopters hovered above and tempers flared, a Ukrainian general was set upon by a group of local people incensed that two protesters had been injured, knocking off his military-issue fur hat and yelling, "Jail him."

At the same time as Kramatorsk airport was being seized, elite Ukrainian units were also gathering outside the nearby city of Slavyansk in an operation aimed at taking back control from armed pro- Russian groups.

The deployment involved regular army troops alongside special forces from the interior ministry and the security service in at least nine troop carriers and seven buses. Tracked troop carriers could be seen parked in the woods.

It was the first major operation since the Ukrainian government vowed to take "anti-terrorist" action if the rebels did not vacate government buildings in eastern Ukraine. A smaller, abortive operation in Slavyansk on Sunday ended in a shoot-out, in which one Ukrainian soldier died and two were wounded, apparently by pro-Russian forces.

Ukraine's acting president said the recapture of the airport was just the first such action aimed at restoring Kiev's control over the east.

WSJ : US Markets Volatility Up, Down, and Back Up Again.

    The WSJ reports, "another erratic day of trading, with the Dow up 100 points at its early morning high, and down 110 points at its low, before another late-afternoon rally pushed it up 89 points on the day. All this volatility could just be the market digesting recent gains, or it could be a pivot point. We just have to wait and see. Keeps it exciting, doesn’t it?"

"Meanwhile, earnings season is in full swing, and there were a few blue-chip names for investors to chew on, including Coke and Johnson & Johnson. Yahoo reported after the bell, and shares are up sharply in late trading after the Internet company showed tepid signs of growth, and Alibaba showed torrid signs of growth.

Intel rose in late trading, too, as earnings topped views even though profit contracted from last year, and revenue rose marginally".

IMF & World Bank 2014 Spring Meetings. Q&A Greece

Partial Transcript of an IMF Press Conference on Europe

Washington, D.C.
April 11, 2014

Reza Moghadam, Director, European Department
Phil Gerson, Deputy Director, European Department
Aasim Husain, Deputy Director, European Department
Ranjit Teja, Deputy Director, European Department
Mahmood Pradhan, Deputy Director, European Department
Ángela Gaviria, Senior Communications Officer

"QUESTION: The fact that Greece went to the financial markets contradicts your previous estimation that the debt is not sustainable and needs restructuring.

MR. MOGHADAM: Is this a question?

QUESTION: This is a question.

MR. MOGHADAM: Okay. I think it is positive that Greece is able to tap the financial markets, but I would say that when it comes to the question of sustainability, they are able to tap financial markets for a number of reasons. The most important is that Greece has implemented very important, very difficult reforms to stabilize its economy. The fiscal adjustment in Greece in view of extremely high debt--the highest in the euro zone--has been impressive adjustment. Turning to labor and product market adjustments, in the review that is being completed, there is a very impressive list of structural adjustments on the product market side. So it is a testimony to successful implementation despite difficulty, despite delays. First, I think it is that.

Secondly, I would say that they are able to tap the markets because there was a framework agreed in November 2012 to ensure that debt remains under control and is sustainable. The European countries and Greece have made commitments. Greece has made a commitment to fulfill its obligations on the fiscal side and structural side and reform, and the European countries have made a commitment to make sure that the debt level does not rise above a certain level. So because of those Greece can access the markets.

Finally, I would say that financing needs remain very large, the debt remains very high, and these issues will continue to be addressed, and need to be addressed, by Europe and the Fund in the context of future reviews, because the financing needs for the next two years will be quite large, much larger than the amounts that are currently being raised by the markets. So there will be a continued need for support and looking at the framework".

WSJ: China's Economic Growth Slows to 7.4% Data From World's No. 2 Economy Still Beat Forecasts

      The Wall Street Journal,"China's gross domestic product growth slipped in the first quarter to its slowest level in 18 months as the world's second-largest economy continued to downshift.

The 7.4% year-over-year growth was below the 7.7% level seen in the fourth quarter of 2013, and slightly below the target of "about 7.5%" set by China's leadership for all of 2014. But it came in slightly above economists' expectations".

The weakened growth signals more choppy waters ahead for the global economy. But the slightly faster-than-expected result could stem immediate pressure on Beijing to step up measures aimed at supporting growth. In early April, the government announced a series of "mini-stimulus" measures to offset recent slippage in trade and industrial production. These included the acceleration of planned spending on railroad infrastructure and a razing and rebuilding program for shantytowns.

The Shanghai and Hong Kong stock markets both rose following the news. The Australian dollar—which is sensitive to Chinese economic results because Australia is a heavy supplier of resources—strengthened against the U.S. dollar.

According to Pitkin; the problems with stupidity is that nobody has a really good definition of what it is. In fact, geniuses are often considered stupid by a stupid majority (though nobody has a good definition of genius, either).

Stupidity is a quality or state of being stupid, or an act or idea that exhibits properties of being stupid. According to Pitkin; the problems with stupidity is that nobody has a really good definition of what it is. In fact, geniuses are often considered stupid by a stupid majority (though nobody has a good definition of genius, either). But stupidity definitely is all around us and there is much more of it than our wildest nightmares might suggest. In fact, it runs the world – which is very clearly proven by the way the world is run. According to Jaspreet Kaur; stupid management mistakes never cease to amaze me, and every day I hear stories from people who leave me wondering why smart managers can be so dumb, for example: Got a problem? Set-up a committee? Want someone to do something? Throw them in to the deep end with little training, then come down hard on them when they screw-up… Ask your workforce for feedback, and then ignore everything that’s been suggested… Want to treat your staff like demented idiots who can’t think for themselves? Just micro-manage everything and talk down to them when they come up with ideas…  According to Susan Heathfield; organizations do dumb things to mess-up relationships with the people they employ, for example; failing to tell people what they’re supposed to do and then wondering why they fail, adding layers of paperwork and bureaucracy to stop things getting done, and treating people as if they are untrustworthy, or telling employees to change the way they are doing things without providing good explanation why, and then sending them off to ‘change management’ training or Siberia, when they resist… According to Carlo Maria Cipolla; there are five fundamental ‘laws of stupidity’, here are three: The probability that a given person is stupid is independent of any other characteristic possessed by that person… A person is stupid if they cause damage to another person or group of people without experiencing personal gain, or even worse causing damage to themselves in the process… Non-stupid people always underestimate harmful potential of stupid people; they constantly forget that at– anytime, anywhere, and in any circumstance, dealing with or associating themselves with stupid individuals invariably constitutes a costly error…

The Wall Street Stupidity Index FortuneMagazine

Seeking Growth, The Payments Industry Embraces New Technologies

Now a victim of its own omnipresent success, the global electronic payments industry is increasingly turning to new technologies as it looks to expand its footprint and find new ways to make money by getting consumers to spend theirs.

The pace of technological advancement in the payments market has even caused regulators to take notice, with innovations like cryptocurrencies continuing to grab headlines and attract government scrutiny at the federal and state level.

Those same regulators are also looking for ways to alleviate the financial pressures and burdens that affect the underbanked and to address the issues of privacy and security that continue to bedevil the industry.

These are no small problems, but then again, the electronic payments business is no small industry. In 2013 there were $4.9 trillion worth of volume on cards in the U.S. in 82 billion transactions, according to data from the Electronic Transaction Association, the industry’s trade group — that’s 2.6K transactions per second.

An industry that large is bound to attract venture dollars, and indeed, startup companies are beginning to make their presence felt even among giant companies like Visa, Mastercard, and the privately held First Data Corp.

Venture capital investment in payment technologies hit a five-year high in committed capital in the first quarter of 2014, when 59 startups raised $492 million for technologies to support, or supplant, existing payments companies.

While executives in some industries would be quaking in their boardroom chairs over a surge of venture money into their markets, the payments space embraces disruptive technological change more readily than most, according to the organization’s chief executive Jason Oxman.

“Our industry has embraced disruptive technology in ways that others have not,” Oxman said. He pointed to the music industry’s response to Napster as an example. Rather than trying to litigate new technologies out of existence, the group’s members are actively embracing new payment methods via the mobile phone, and working strenuously with technology companies to improve security and provide additional services.

In some cases that means companies like Payoneer, the global payments processor leveraging Mastercard’s transaction network; mPowa, a mobile payment company; or Stripe, which is trying to improve the process of transacting online.

“There’s a synergy between these core players in payments and venture-backed startups,” said Rick Yang, a principal with the multi-billion-dollar venture capital firm NEA. The value-added services that technology companies can provide through software and big data analysis can help juice the payments industry’s razor-thin margins.

And technology companies like the ones backed by Core Innovation Capital can help companies like Visa achieve one of its main objectives — expanding stakeholders in the electronic value chain. Speaking at the ETA Transact conference at the Mandalay Bay Hotel in Las Vegas last week, Bill Sheedy, head of Visa’s corporate strategy and mergers and acquisitions efforts, said the company was looking to create new stakeholders and improve the ease and speed of commerce and securing payment technology. 

Core exclusively backs startups that are working on bringing financial services to the underbanked, according to co-founder Arjan Schutte.

Schutte’s firm isn’t the only venture capital team to tackle the payments market. Investments in payments are fairly evenly distributed among what most would consider to be some of the top quartile funds.

Source: TechCrunch

Online Tour Service Tuniu Files for IPO on NASDAQ to Raise up to $120 Million

Chinese travel service Tuniu has filed with the US Securities and Exchange Commission for IPO under the ticker symbol of “TOUR” to raise up to $120 million funds.

Tuniu offers travel services including organized tours and self-guided tours, and combined air ticket and hotel booking. The company’s business overlaps with that of the other US-listed Chinese online travel services like Ctrip (NASDAQ:CTRP) and eLong (NASDAQ:LONG), but Tuniu claimed that it distinguished itself from other services with its special focus on leisure travelers.

Before the IPO, the company’s board members and senior executives hold an 86.4% stake in the firm on aggregate, of which 10.9% is controlled by Yu Dunde, founder and CEO of Tuniu.

The company’s revenue reached 1.96 billion yuan in 2013, higher than 1.12 billion yuan in 2012 and 772 million yuan in 2011. Its revenue mainly comes from package tours, which account for more than 90% of the total revenue (1.89 billion yuan in 2013, 1.07 billion yuan in 2012, 751 billion in 2011).

However, Tuniu’s overall performance in recent years does not seem ideal for a company poised for an US IPO. It booked net loss of 91.9 million yuan, 107.2 million yuan and 79.6 million yuan (US$13.2 million) in 2011, 2012 and 2013, respectively.  Its gross profit rate stood at a relative low level of 6.2% in 2013, although that is up from 3.5% in a year earlier.

Founded in 2006, the company has raised $60 million in Series D from Temasek and existing investor DCM last September. The company’s investors in previous rounds include Gobi Partners and Sequoia.

As China tech stocks performed pretty well in the US stock markets last year, strings of Chinese tech companies flocked to the US stock market since beginning of this year, including online retailer JD.com, Sina Weibo and Kingsoft Subsidiary Cheetah Mobile.

Source: TechNode

As Pakistan prepares 3G and 4G roll-out, country expects up to 45 million high-speed data subscribers by 2020

Source: TECHINASIA

It’s been a long time coming, but Pakistan will soon be holding its spectrum auction for 3G and 4G networks. Three 3G licenses and two 4G licenses will be sold at the auction, which is slated for April 23. A 3G license will be sold for a minimum price of US$295 million, and the 4G rights for $210 million. The auction comes at a time when Pakistan’s government is undertaking major structural reforms to promote growth within the economy. Pakistan has a vibrant mobile market with five operators providing 2G services to a total of 133.7 million subscribers. Those customers are worth $2.25 each per month to the telcos in terms of ARPU. Mobile subscriber numbers have grown rapidly in the country, up 4.7 percent between June 2013 and January this year. This is the current scene: A report by Plum Consulting (PDF link) predicts that with the deployment of 3G in Pakistan, the number of broadband subscribers will rise from its current 3.35 million to 45 million by 2020 in the more optimistic high-demand forecast, or to 25 million in the low-demand forecast (see chart below). Pricing will play a pivotal role in terms of adoption, as currently users are able to get unlimited access to 2G data services for about PKR 150 ($1.50) per month for 1GB of data. 

Brainly, Homework Helper. A Social Learning Network

When I was a kid and needed help with homework, I had to walk a mile to the town library and rifle through mildewy encyclopedias to find a particular answer. It’s a lot easier these days. Aside from Wikipedia, kids can also turn to sites like Brainly. With 23 million users around the world, the Polish startup behind the site calls it a social learning network, but essentially it’s a place to crowdsource answers to a homework problem. Now Brainly is rolling out country-specific sites for several Asian nations. Jakub Bujko, Brainly’s country manager for India, points out that there are now four Asian sites: for Thailand, Indonesia, the Philippines, and of course India. The sites came online quietly at various stages since the start of the year, and they’re rapidly picking up users – a total of 1.5 million in Asia already, says Bujko.

The Thai and Indonesian versions of Brainly are in their respective local languages, but the Philippine and Indian sites are in English. That’s because the Brainly team decided that English would be the most comfortable option for the biggest number of students in those two nations. Bujko tells Tech in Asia that Brainly is working on sites for Japan and Malaysia. “But there is still much work to be done,” he adds. A total of seven local sites are in the works for this year, of which at least two will be for Asian markets. The startup has so far created 15 sites in 35 countries. Among Asia’s schoolkids, Brainly’s data suggests that “the most popular subject,” to use Bujko’s words, is math – but that tends to be the case across Brainly globally. Perhaps ‘hellish’ or ‘perplexing’ would be better adjectives to describe math – hence the fact that so many kids are asking for help with math questions. You can bluff your way through an analysis of women’s roles in Pride and Prejudice, but there’s only one right answer to that calculus problem. Michał Borkowski, Brainly’s CEO, believes that the new sites for Asia can help bring information to a broad spread of people, even “to those for whom it is out of reach because of geographical spacing or socio-economic differences.”

Source: TECHINASIA

Philippine telco PLDT brings LTE into households

Philippine telco Smart first introduced 4G LTE in 2012 for its mobile subscribers. Now PLDT, which is Smart’s parent company, is bringing LTE into the home. This new 4G service for the home connects devices through a router’s wireless, promising speeds of three to 10Mbps. It comes in three different tiers: 3Mbps for Php 999 (US$22) per month, 5Mbps for Php 1599 (US$36) and 10Mbps for Php 1999 (US$45). In countries without super high-speed broadband, LTE is touted as the fastest connectivity option. By bringing 4G into households in the Philippines, PLDT says that a user can load a three-minute video in six seconds. However, this new service has a monthly data cap and speeds can drop to 30 percent of the original speed if the monthly allocation has already been reached. In September, Globe Telecom launched a similar service for subscribers in the Philippines.

Source: TECHINASIA

CNNMoney: Fear & Greed Index in the U.S. Stock Market

Dow Jones newswires: Greece, Bank Eurobank Ergasias SA has secured half of US$ 4 billion it needs

GLOBAL MARKETS-Shares hit by weak data, poor results; bonds rise on Ukraine

Global equity markets declined and government debt rose on Tuesday as tensions spiked in Ukraine as Russia declared the country on the brink of civil war and as disappointing corporate results dogged U.S. and European stock markets.

The New York Federal Reserve said its Empire State general business conditions index fell to a five-month low of 1.29 in April from a reading of 5.61 the month before, pulled down by a plunge in new orders.

A separate report showed confidence among U.S. homebuilders remained downbeat as the NAHB/Wells Fargo Housing Market index rose only a point to 47 in April, the third month in a row it was below 50. Readings below 50 mean more builders view market conditions as poor than favorable.

Worries over escalating tension in Ukraine and weak results by bellwethers including Nestle held back stocks in Europe. Wall Street fell as Nasdaq slumped on another round of selling in technology and biotech names.

Russia declared Ukraine on the brink of civil war as Kiev said an "anti-terrorist operation" against pro-Moscow separatists was under way, with troops and armored personnel carriers seen near a flashpoint eastern town.

"We're cautious in the short term, we're waiting to see how the geopolitical situation evolves. There are a lot of uncertainties about Ukraine, which could become a negative catalyst for stocks if things spin out of control," said Barclays France director Franklin Pichard.

MSCI's all-country world stock index <.MIWD00000PUS> fell 0.5 percent, while the FTSEurofirst 300 <.FTEU3> index of top European shares was down 0.91 percent at 1,307.43.

The Dow Jones industrial average <.DJI> fell 30.38 points, or 0.19 percent, to 16,142.86. The S&P 500 <.SPX> lost 3.84 points, or 0.21 percent, to 1,826.77 and the Nasdaq Composite <.IXIC> dropped 35.19 points, or 0.87 percent, to 3,987.505.

Results also weighed on U.S. stocks. Of the 36 companies in the S&P 500 that have reported earnings to date for the first quarter, 52.8 percent have reported earnings above analyst expectations.

In a typical quarter over the past two decades, 62 percent of companies beat estimates.

U.S. Treasuries prices gained as the rising tensions in Ukraine sparked a safety bid for U.S. bonds. The weak New York state manufacturing survey and housing data pointed to sluggish economic momentum.

Benchmark 10-year notes were up 4/32 in price to yield 2.6229 percent.

The dollar pared gains against the euro after traders discounted comments from European Central Bank policy-makers and a slight uptick in U.S. inflation did not suggest a potential change in the Federal Reserve's dovish monetary stance.

The euro recovered against the dollar after ECB President Mario Draghi indicated on Saturday that the central bank would act to prevent deflation in the euro zone.

The impact of Draghi's comments receded somewhat, with traders awaiting more decisive action from the ECB.

The dollar edged up against the euro , trading up 0.05 percent against the dollar at $1.3811.

The dollar was down 0.22 percent against the Japanese yen at 101.62, and was down 0.11 percent against the Swiss franc to trade at 0.8789 francs.

The U.S. dollar index <.DXY> was last up 0.07 percent.

Brent crude fell further below $109 as investors weighed the prospect of a gradual recovery in Libyan oil exports against rising tension between Russia and Ukraine.

Brent shed 27 cents to $108.80 a barrel. U.S. oil dropped 17 cents to $103.88 a barrel.

Source: Reuters

WSJ: Better West Economic news can offset risk of China Slowdown?

The divisions between the developed and developing worlds were evident in the news and data out today. India is still grappling with inflation, China’s banks are possibly still lending too much more than the central bank wants them to, and Ukraine is descending into war. By contrast, the U.K.’s retail sales are in decent shape and business is holding up in Germany, even if expectations about the future are on the gloomy side. It’s not as if the West is booming, though. Investors will have to determine whether the modestly better economic news out of Europe and the U.S. of late is enough to offset the risk of a China slowdown and of the risk of war between Ukraine and Russia. 

UKRAINE: Ukrainian forces began an operation to exert government control over pro-Russian militants in the country’s east.

One step closer to civil war and outright military conflict with Russia. Having ceded Crimea to Russia without a fight, Ukraine looks to be making more of an effort with its eastern regions. Eventually either Russia or Ukraine will have to back down or face war.

Cramer's TheStreet rates NBG a SELL Guess What Trade is He Doing? Its Wall Street Way!!!!

TheStreet Ratings team rates NATIONAL BANK OF GREECE as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate NATIONAL BANK OF GREECE (NBG) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.82%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 87.77% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
• NATIONAL BANK OF GREECE has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, NATIONAL BANK OF GREECE turned its bottom line around by earning $1.98 versus -$27.80 in the prior year. For the next year, the market is expecting a contraction of 92.4% in earnings ($0.15 versus $1.98).
• NBG, with its decline in revenue, slightly underperformed the industry average of 12.1%. Since the same quarter one year prior, revenues fell by 16.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

Russian forces spotted on ground in eastern Ukraine: Bloomberg

 Russia's 45th Airborne Regiment has been spotted on the ground in the eastern Ukrainian cities of Slavyansk and Kramatorsk, Ukraine's First Deputy Prime Minister Vitali Yarema said on Channel 5 on Tuesday, according to an unconfirmed report from Bloomberg . The move comes as Ukraine earlier on Tuesday launched a military operation to regain control of cities in the country's east, where the majority of sites commandeered by pro-Russian forces are located. Russia's state-run RIA Novosti news service reported that four militants were killed and two wounded when Ukrainian forces stormed an airport in Kramatorsk, according to Bloomberg. Earlier on Tuesday, Russia repeated that any action against pro-Moscow separatists could push Ukraine closer to a civil war . European stock markets took a dive in afternoon trading on the rising tension on the continent's eastern borders.

Source: Marketwatch

WSJ: Gold Drops on China Demand Worries China's Money-Supply Growth Lower Than Expected

         The WSJ reports,"Gold prices fell below $1,300 an ounce Tuesday as worries about weaker demand for physical gold in China triggered a selloff across precious metals.

Gold for June delivery, the most actively traded contract, dropped $33.30, or 2.5%, at $1,294.20 a troy ounce on the Comex division of the New York Mercantile Exchange. Gold is on track for its biggest one-day loss in percentage terms since Dec. 19.

Silver futures also posted steep declines. Silver for May delivery, the most active contract, fell 58.5 cents, or 2.9%, at $19.425 a troy ounce on the Comex".

Gold prices erased a week's worth of gains after data showed China's money-supply growth was lower than expected in March, intensifying investor fears that a slowing economy will weigh on the country's demand for gold.

Despite robust credit growth, China reported lower-than-expected money-supply growth in March. At the end of the month, the broad M2 measure of money supply was up 12.1% from a year earlier, short of the median 13% increase forecast by the economists and February's 13.3% rise.

Citigroup economist Ding Shuang said the slower growth in money supply was a result of the central bank's open-market operations, which brought a net withdrawal of liquidity in March.

"But I don't think that's a signal of monetary-policy tightening," Mr. Ding said. "On the contrary, I think the below-target M2 could offer more room for loosening by the central bank in the months ahead."

China's central bank is expected to conduct more open-market operations in the following months to inject liquidity into the domestic market, said Mr. Ding.

The Battle of Words on Ukraine Crisis

 Russia declared Ukraine on the brink of civil war on Tuesday as Kiev said an "anti-terrorist operation" against pro-Moscow separatists was under way, with troops and armoured personnel carriers seen near a flashpoint eastern town.

Twenty-four hours after an Ukrainian ultimatum expired for the rebels to lay down their arms, witnesses however saw no signs yet that Kiev forces were about to storm state buildings in the Russian-speaking east that armed militants have occupied.

Interim President Oleksander Turchinov insisted the operation had started in the eastern Donetsk region, although it would happen in stages and "in a considered way".

Amidst the deepest East-West crisis since the Cold War, the leaders of Russia and the United States have called on each other to do all in their power to avoid further bloodshed.

The standoff has raised fears that Moscow might turn off gas supplies to Kiev, disrupting flows to the European Union. Russian exporter Gazprom promised it would remain a reliable supplier to the EU, but German energy company RWE began deliveries to Ukraine on Tuesday - reversing the usual east-west flow in one central European pipeline.

Russian Prime Minister Dmitry Medvedev gave a gloomy assessment after at least two people died on Sunday when Kiev unsuccessfully tried to regain control in the town of Slaviansk, about 150 km (90 miles) from the Russian border.

"Blood has once again been spilt in Ukraine. The country is on the brink of civil war," he said on his Facebook page.

Turchinov said the offensive, which he first announced on Sunday, was finally underway. "The anti-terrorist operation began during the night in the north of Donetsk region. But it will take place in stages, responsibly, in a considered way. I once again stress: the aim of these operations is to defend the citizens of Ukraine," he told parliament.

At least 15 armoured personnel carriers displaying Ukrainian flags were parked by the side of a road around 50 km (30 miles) north of Slaviansk, witnesses said.

Ukrainian troops wearing camouflage gear and armed with automatic weapons and grenade launchers were stationed nearby, with a helicopter and several buses containing interior ministry personnel near the road.

Source: Reuters

The Guardian: Ukraine Crisis Five Possible Scenarios

        Ukrainian government uses force
Ukraine carries out its threat and uses the army to take on pro-Russian activists occupying government buildings in the east of the country. The risk is that moving against them will trigger large-scale violence and – asRussia has warned – even civil war. Many in eastern Ukraine already dislike the interim government in Kiev that replaced the administration of the former president Viktor Yanukovych, even if they are not separatists or active in the protest movement. Large-scale fighting could force the Ukrainian authorities to suspend the constitution and delay next month's presidential elections – a potentially important landmark. It could also trigger direct Russian intervention. "They are tempted to use force against the attackers," warned the Kiev-based analyst Mykola Riabchuk, "but must also be careful not to give an excuse for a Russian intervention."

     Russia intervenes directly

Having in effect annexed Crimea last month, Russia has repeatedly declared it has no intention of sending troops into Ukraine. The president, Vladimir Putin, will not want to risk starting a war. Still, the Duma has authorised him to intervene militarily if Moscow's interests are threatened, and Putin says these include Ukraine's Russian speakers – though the vast majority are ethnic Ukrainians. He could respond to a manufactured "appeal for help" from pro-Russian "compatriots", supporters of what he calls "federalisation". But a fully fledged invasion would be problematic: Ukrainian forces would be in a better position to resist Russia in mainland Ukraine than in Crimea, where Russian units were already stationed. Support for Russian action is also far weaker in Ukraine than in Crimea. Overall, Moscow wants Ukraine to stay weak and under its influence, and will try to avoid an election that produces a new president with a strong mandate and helps set Ukraine back on track to normality. Western governments have highlighted the presence of 35,000-40,000 Russian troops near the border with Ukraine equipped with combat aircraft, tanks, artillery and logistical support units. For the moment though, Russia's involvement looks more likely to remain covert, even if its denials are increasingly implausible.

   US and EU impose tougher sanctions

Highly likely. Washington has made clear that it will step up sanctions against Moscow if pro-Russian military actions in eastern Ukraine continue. Sanctions in energy, banking and mining could all be on the table. Russia's central bank has admitted to a net capital outflow of $63bn in the first three months of this year – as much as for the whole of 2013. Russia's exclusion from the G8 has already been a heavy blow to its prestige. "Putin's behaviour suggests he believes that the US and the EU have neither a concept for stabilising Ukraine nor the appetite to bail it out economically," said John Lough of Chatham House. "He also does not appear to take seriously the threat of strong western economic sanctions." But the EU remains divided. Germany is reliant on Russia for gas, France has defence contracts with the country, and there is heavy Russian investment in the UK finance industry. It will be harder to overcome those divisions in the absence of overt Russian intervention, rather than the less clear-cut situation of involvement behind the scenes.

Nato intervenes

Extremely unlikely. The alliance has repeatedly expressed concern about the Ukraine crisis. Anders Fogh Rasmussen, its secretary general, has called it "the greatest challenge to Europe's security in a generation" and warned of "grave consequences" if Russia were to invade. Nato needs to talk tough, especially after failing to prevent the annexation of Crimea.

Diplomatic options

In a complex and fast-moving situation it is hard to predict what will happen next. Four-party talks planned for Thursday in Geneva will be the first time since the start of the crisis that Russian, EU, US and Ukrainian leaders have met together. The growing unrest and destabilisation in eastern Ukraine is likely to strengthen Moscow's hand as it pushes for a political solution that serves its interests – and those of pro-Russian Ukrainian groups who want a new constitution creating a federal system of government with greater autonomy for the regions.

WSJ: Ukraine Military Operation Begins in East

10.59 ET    The Wall Street Journal reports,"armored Ukrainian units began moving into the county's restive east Tuesday as part of a military operation to take back control of cities seized by pro-Russian militants.

Soldiers riding aboard armored personnel carriers took up positions around the region at the heart of the unrest, setting up checkpoints along key roads, with transport helicopters parked in fields nearby. In the late afternoon, a Ukrainian official said shots were fired at a military airfield near the city of Kramatorsk, but no other clashes had been reported.

Acting President Oleksandr Turchynov said the "antiterrorist" operation began in the early morning hours in the northern part of the Donetsk region, where the majority of the cities commandeered by pro-Russian forces are located. He described it as "phased, responsible and balanced."

"The purpose of the actions, I stress once again, is to protect the citizens of Ukraine," he told Ukraine's parliament.

The Guardian: Ukrainian troops have begun 'anti-terrorist operation', Kiev says

       The Guardian reports,"Ukrainian troops were reported to be deployed outside a separatist-held city on Tuesday as the country's acting president claimed an "anti-terrorist operation" was under way".

An Associated Press reporter said at least 14 armoured personnel carriers with Ukrainian flags, one helicopter and military trucks were north of the eastern city of Slavyansk, where pro-Russian protesters took over key facilities on Saturday.

Government troops at a checkpoint outside the town of Izyum searched vehicles driving in and out for weapons.

Roads into Slavyansk were dotted with protester checkpoints, at least one with a Russian flag. Another bore a sign reading: "If we don't do it, nobody will."

The military moves came as western powers stepped up calls for Russiato act to end the crisis in Ukraine. The US president, Barack Obama, told his Russian counterpart, Vladimir Putin, in a tense telephone call on Monday night that Moscow should use its influence to get separatists in the country to stand down. The US has also deployed additional fighter aircraft to the Baltic states and Poland.

The British foreign secretary, William Hague, on Tuesday warned Russia it faced being frozen out by the west for years if it did not stop destabilising Ukraine, and the Nato chief, Anders Fogh Rasmussen, joined the US and UK in issuing an urgent public call on Russia to de-escalate tensions in the Ukraine.

Hague said it defied common sense for Putin to deny that the storming of government buildings in eastern Ukraine had been carried out by Russians.

The mayor of Slavyansk, where pro-Russian armed men have seized police and security service buildings, said on Ukrainian television on Tuesday that troops from Russia and Crimea had been involved in the takeovers.

After a mob seized police headquarters in Horlivka on Monday, a man in camouflage appointed a new police chief, later identifying himself as a lieutenant colonel in the Russian army.

Pro-Russian protesters, many of them armed, continued to occupy government, police and other administrative buildings in at least nine cities in the country's Russian-speaking east of the country, demanding broader autonomy and closer ties with Russia. The central government has so far been unable to rein in the separatists, and many of the local security forces have switched to their side.

Early on Tuesday, pro-Russian separatists pulled out of one building they had occupied in Kramatorsk but then seized another in the same town, officials said.

Obama told Putin on Monday that the US preferred a diplomatic solution to the crisis but criticised Russia for taking actions that were not "conducive" to such a path. He said Kiev had made "real offers" to address concerns about the decentralisation of powers to local governments in the country, a senior US government official said.

In a sign of rising tensions, the Pentagon said on Monday that a Russian military fighter flew past a navy destroyer in the Black Sea 12 times over the weekend in a "provocative and unprofessional" move.

The unarmed fighter Su-24 aircraft, or Fencer, made 12 low-altitude passes of the USS Donald Cook on Saturday, coming within 1,000 yards of the vessel, according to the Pentagon. The incident lasted around 90 minutes and a Pentagon source said the USS Donald Cook "was never under threat" and was "more than capable of defending herself".

WSJ: Lukoil to sell its 50-percent stake in the Caspian Investment Resources Ltd to China's Sinopec.

       The Wall Street Journal reports,"LUKOIL OPTIMIZES HYDROCARBON ASSET PORTFOLIO IN KAZAKHSTAN"

"Vagit Alekperov, OAO LUKOIL President, signed a purchase and sale agreement today that allows the company to sell its 50-percent stake in the Caspian Investment Resources Ltd to China's Sinopec. The total price of the shares for sale will be around USD 1.2 billion and will be subject to a number of adjustments as of the closing date.

Caspian Investment Resources Ltd., through a number of joint ventures, owns various stakes in four hydrocarbon-production projects in Kazakhstan. LUKOIL's share in commercial hydrocarbon production as part of the above projects equaled 10.2 million BOE in 2013.

The transaction is meant to optimize LUKOIL's overseas hydrocarbon asset portfolio. The transaction closing is subject to a number of conditions precedent, specifically, the approval by the Kazakhstan state authorities. The complete closing of the transaction is expected before the end of 2014.

At the same time, LUKOIL will continue to participate in Kazakhstan hydrocarbon-production projects, including Kumkol, Karachaganak and Tengiz. The company is also a member of the Caspian Pipeline Consortium".