So after all the saber rattling, the whole Ukraine situation looks more and more like it will gradually fade. Russia is moving ahead with annexing Crimea, and the Western response was a very limited sanction of some Russian and Crimean individuals and a ruling out of a military response. Without NATO, it seems unlikely that Ukraine will try to invade Crimea on its own, especially since it could give Russia a pretext to invade eastern Ukraine. I’m no expert on this, but historically these things need to keep getting worse to stay on front page headlines. Like Libya, Egypt, Syria, Georgia and most geopolitical incidents, after a while people just get… bored.

Separately – interesting chart from the WSJ showing that ARMs remain very popular with well off home buyers. I had no idea they’ve remained more than 50% of mortgages > 1mm:


  • 95% of voters in Crimea supported a union with Russia on a turnout of over 80%. Western leaders have rejected the vote and are preparing for sanctions. Further:
  1. The Ukrainian defense minister, Ihor Tenyukh, said Monday that he had negotiated a truce with the commanders of the Russian Black Sea Fleet and the Russian Defense Ministry, affecting Ukrainian military units stationed in Crimea and surrounded by Russian troops wearing uniforms without insignia.
  2. The truce will extend through March 21, he said, and will allow the Ukrainian military to resupply bases, which have been running low on food. Most important, the truce appears to reduce the possibility of an immediate confrontation over any of the bases if Russia formally annexes the peninsula in the coming days.
  3. The European foreign ministers meeting in Brussels made clear that they were not considering a military response. “We are not looking at military options here,” Foreign Secretary William Hague of Britain said in a radio interview. “This is not about a Crimean war.”

US Empire Mfg improved to 5.6 vs 6.5 exp and 4.5 prev

NAHB Survey improved to 47 vs 50 exp and 46 prev

China widened the yuan trading ban to 2% daily from 1% prior. This was largely anticipated but a bit earlier than expected.

Bank of Korea governor Lee said South Korean households need to prepare for possible rate hikes.

US Corporate profitability is probably the highest it has ever been according to the WSJ; the trailing 12 month net profit margin hit the highest level likely on record in Q4. Analysts think margins have room to rise even more.

Positioning Data:

  1. The equity allocation of US households rose to 34.1% in Q4 surpassing its previous 2007 peak, adding to signs of overextension. -JPM
  2. Hedge funds have moved their net long S&P to a net short -BAML
  3. Gold Spec positions spike to the highest level since Feb 2013 -JPM

Upcoming Data:

  • Tue: German Zew, US CPI, Housing Starts, NZ Current Acct
  • Wed: UK Employment, FOMC, Yellen Press Conference, NZ GDP
  • Thu: US Jobless Claims, Philly Fed, Existing Home Sales
  • Fri: Canada Retail Sales, CPI, EU Consumer Confidence
  • Weekend: Kuroda Speaks, China Markit Flash PMI
  • Mon: EU PMI, US Markit Prelim PMI