Moving in to the new week, other than the Ukrainian/Russian situation, we have a collapse in credit in China with some of the worst export deficits seen. Copper is in free-fall as the collateral is being sold as Chinese banks make cash calls, bond deals are being halted, Chinese banks are hoarding cash. Japan is imploding with some of the worst macro data on record and Abenomics an utter mess. Tensions are rising between China and Japan and Europe's fate may reside in Russia's Gazprom, but other than that and a plane missing like it flew through the Bermuda triangle, everything is hunky-dory.
First in China, the Global Recovery is perhaps not as real as some would have hoped or tried to sell. China's Exports collapsed Friday -18.1% y.o.y on consensus of a +7.5% rise making this the BIGGEST MISS ON RECORD and the second biggest deficit on record. The February month on month Exports printed DOWN -34%!
China banks are hoarding cash as evidenced by the 7-day repo rate being near record lows, but the Chaori default being allowed to happen has spooked the Chinese market. Corporate Bonds are falling, banks won't lend , new deals on debt/bonds are being cancelled for lack of cash as the banks hoard it. Copper has gone limit down in Shanghai for the day as cash calls (as copper has been used as collateral for cash) are coming in, down -5% as companies sell whatever they have to meet bank cash calls, Iron Ore is following in the same footsteps for the same reason. The Yuan has dropped the most in trading since 2008. Most Chinese futures are down around -1.7 to -2+%
Other BRIC nations are faring no better with seeing 20+% declines in exports as the Emerging Market Crisis is truly taking on the shape of a crisis.
In Japan, Abenomics as we saw when first released with QE-Zilla, is the disaster we predicted in the two articles on the member's site, "A Currency Crisis " written April of 2013, it was evident back then and is more so today. Sunday night Japan printed the WORST account deficit on record and the worst GDP growth since the introduction of Abenomics.
If that weren't enough, Japan scrambled military jets as China provoked them again by flying a spy plane and two bombers between two Japanese Islands (but still in international airspace) out to the Pacific and then back on the same route.
However the real trouble is still in the Ukraine.
Saturday morning pro Russian forces fired in the air at a convoy of the Organization for Security and Cooperation in Europe (OSCE) who was making a third attempt to enter Crimea, they were turned away as they were told they had no authority to enter Crimea.
Russian soldiers are said to have stormed a border post, seizing Ukrainian border guards' weapons, BEATING THEM and sending them and their families fleeing the area after taking their mobile phones presumably to make sure no photos or video were released.
Next the Russian Defense Minister is said to be considering canceling inspections that are part of the 2010 Start treaty to reduce nuclear arsenals , saying that the US/NATO threats are seen as an "unfriendly" gesture.
Sunday morning we saw news that the Eastern City (this is where the real problem and threat of break away would be most damaging) of Lugansk in the Ukraine (not in Crimean territory) saw Pro-Russian mobs take over the City's Administration building with demands that they too BE ALLOWED TO PARTICIPATE IN THE MARCH 16TH CRIMEAN REFERENDUM TO JOIN RUSSIA.
It appears, despite denials from the Ukrainian government, that Ukrainian forces are being mobilized across the nation as all kinds of heavy weaponry was on the move. Meanwhile Russian forces are digging in in Crimea and pro-Russian forces are laying mine fields.
The USD/JPY and other Yen based carry trades opened like this tonight...
5 min chart, the pair gaps down, meets resistance at the gap and is rather flat. The Index futures are down a bit, but not that much of a move.
It would seem to me that unless something major happens that Friday's late day 3C analysis of some early price strength or at least not a complete collapse is probable, there's talk Putin may consider Ukraine talks, but says Crimea has the right to self determination and Russia is there under international law so that's obviously off the table, but perhaps the news that Putin is willing to consider talks will send the retard market up early, of course anyone who believes Putin, just remember the Tuesday de-escalation of tensions as Putin seemed cowed, he was obviously ANYTHING BUT which could bring the rest of the analysis of broad market weakness early in the week in to play, for a recap of that analysis, check this link and this link...
I see nothing that changes my mind as to early action this week since Friday's posts based on the charts linked above.
See you in a few hours.
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