Archive for March, 2014

There are evidence (even you tube videos and geolock so you know it is real, thank you) of Russian amassing new heavy weaponry on the border of Ukraine.

At least 24 Gunship Mi24, several columns of battle tanks by  road and train.

Well you amass that level of fire power just to tell Ukraine to stand down against such a force – anyway you will be killed.

The natural target would be the Dniepr River (which by the way was the last “real” stand of the Germans in WW2 against USSR).

It would also leave West Ukraine  (the Pro USA one) with no sea-access. Shall we do a repeat of the siege of West Berlin too?

It feels so Europe around 1933 unless the US intervene for real. 

In that case let’s make a minor makeover (in minor, as Russia is not yet at USSR level) to the Red Storm Rising book of Tom Clancy.

Mmmmhhh and someone bet 200 millions of options the US SP500 is going down…yesterday


Yesterday someone between 11.57am and 1.12pm bought Sp PUT  expiring May 2014.

They  bought 15,450 of these options for a total of USD200 million with a total exposure  of USD$2.8 billion!


I do not know …but there are three causes that someone like them could know.

1. Issue with US interest rates

2. China issues

3. Russia next move 

4 Something geopolitical we can’t see (thinking who can have that kind of money other than 3 above (US, China, Russia) is the Saudis and the Israelis

5. A simple protection for an immense portfolio since the SP500 is overextended in respect of the 200 SMA (but May is a bit short…looks more a speculative position

Ukraine updated

Posted: March 26, 2014 in Uncategorized

After some confirmation that some Spetznaz (Russian SAS equivalent – but more specialised on the dark art of political unrest and terrorism) have been operating in Ukraine (outside Crimea), there are unconfirmed voices that  the Ukrainian leadership hired professional security experts (what now are called contractors – the old  mercenaries) from the infamous Greystone Corporation (the one that was called Blackwater and then every few years changes name as it gets caught up in killing, shooting etc. Practically hires ex SEAL, SAS specialist for private use). Interesting

Love: some regions of Ukraine and Transdiester (region between Moldova and Ukraine) would love to join Russia.

Fear: Poland recalled over 7,000 reservist for normal drills. The abnormal fact is that it never recalled reservists since War World 2

Fear: Finland PM got to extreme length to explain that while Finland is not part of NATO, it is part of the European Union and leaning towards NATO

Fear: Sweden it is said reconsidering joining NATO

Fear: US is moving some jet fighters to Lithuania and Poland

Last Friday, in the US market, apparently nothing major happened. But in reality something very strange happened.

There has been a spike in volume of buying and selling at the same time.

Very unusual, like if someone wants to hide something (you can actually dump Nasdaq growth share and buy protective healthcare share if you do not want to spook the market).

Nasdaq is showing more weakness than other indexes.

Conclusion: it looks more and more like a suckers rally, we a probability for a final move up before something really bad happens.



During the last week, the Fed marketing office invested a lot of time with the various financial media outlet trying to undo the first Yellen speech (end of QE in October 2014 and first interest rise in April 15, summarizing), explaining that nothing is set in stone and trying to calm the market.

As the economy is not as good as it seem…once Q3 is ended we could find ourselves with QE4 or some other fancy names (Eg the operation twist in the bond market).

At the same time there was the first official comment from China on how they see things (Vice Finance Minister Zhu at China Development Forum):

– They are preparing for eventual consequences

-They are aiming at quality growth and not mass growth (so letting some defaults happen)

– Interesting Lou (Finance Minister) said this year there will be NO major stimulus program

So they are preparing for things to get worst before they get better. So should you

China is having a major problem and already in Hong Kong some of the mansion bought by Chinese millionaires have been sold for 50% less as the rich have to sell fast to avoid bankruptcy (HSBC stress test).

So what?

Well the statistic says clearly that the latest surge in Australian real estate price has been driven by Chinese buyers and speculators (it is very easy to avoid the foreign ownership rules). Credit Suisse estimates that Chinese investor spent USD24 billion in the Australian Real Estate in the last 7 years (mainly Sydney and Melbourne)

So if the turmoil in China continues, the Chinese will start selling guess what…after Hong Kong there is Australia and Canada.

So if you do not want the value of your real estate to keep where it is or growing….don’t let the Chinese neighbour go home.

PS lot of the houses bought had a collateral …commodities…so it would be a vicious circle

-From 2004 (and specially since 2008) company profits are driven by financial engineering, not economic growth

– Buybacks and dividend increase have been financed by low interest debt issuances, not growth

-Full time employment relative to the entire population is almost 48% (higher than the lows of 46.5%, but lower than the pre GFC of over 52%


What does it means? Any interest rate hike, due 2015,  will have much more effect than estimated by the general market expects.

Meanwhile in the Middle East

Posted: March 20, 2014 in Uncategorized

While everyone watches Russia-Ukraine and China… the Middle East some funny things happens.

Israel’s Knesset just approved USD2.9 billion in military spending. A leaked document clearly points that those extraordinary expenses are for a potential 2014 strike against Iran – since US decided “to haggle in the Persian bazaar (Brig. Gen. Yehezkel words).

After a Israelis patrol got blown up in Golan, Israeli Air Force retaliated on Syria (not Hezbollah) military forces.

Libya is practically split in two. A “rebel” oil tanker has been boarded and secured by a US Seal team and returned to the Libyan government.

In Egypt there is full on battle between military and jihadist.

In the news they talk to you of Russia, Ukraine they will talk to you of Russia taking over Crimea and the West that does only sanctions.

In reality the war has already started as a financial war.

The US is trying to economically crippling Russia with a triple hit (depreciation of currency, stock market crash, oil shorting – plus the freezing of assets).

They are also trying to assess how much Treasury Bond the Russian have has they will retaliate. A note I saw, says that the Russian do not have enough T bonds to hurt the US. But you can never trust Putin….also investigating why Belgium is the third largest T Bond holder with USD 310 Billion at the end of January (Belgium has a GDP of just $100Bn).

Let’s see how the Russian will retaliate…cutting the gas is one idea (but it is bad also for them)…we will see

I am not saying that the US have them or the Russian have them. I just say that is illogical and someone parked there the amount of money (one third of the entire US Treasury bond market and, if true, Belgium in two months would have bought the equivalent of its entire GDP in Treasury Bonds*).

*Font Zerohedge