Mish's Global Economic Trend Analysis

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• Nigel Farage: "UKIP Biggest Threat to Political Establishment in Modern Times"
• ISM Rebounds "Stronger than Expected" But for How Long?
• Ruble Sinks to Record Low; Russia Intervenes in Currency Markets to Stabilize Ruble; Russia Denies Ultimatum
• Ukraine Ships Get Russian Ultimatum; One Misstep from Outright War; Russia Denies Ultimatum

Nigel Farage: "UKIP Biggest Threat to Political Establishment in Modern Times" Posted: 03 Mar 2014 03:32 PM PST Inquiring minds, especially Nigel Farage and UKIP supporters, are encouraged by Nigel Farage's Spring Conference Speech. Farage: "This party [UKIP] is on the march. Indeed, I think and believe we are posing the biggest threat to the political establishment that has been seen in modern times." Let's hope so. And let's hope Rand Paul provides an even bigger threat in the US. I wish UKIP well in the May 2014 European parliament elections. Of course, Rand Paul 2016! Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

ISM Rebounds "Stronger than Expected" But for How Long? Posted: 03 Mar 2014 11:26 AM PST The ISM rebounded this month as noted by the February 2014 Manufacturing ISM® Report On Business®. Economic activity in the manufacturing sector expanded in February for the ninth consecutive month, and the overall economy grew for the 57th consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®. Index Feb Index Jan Index Percentage Point Change Direction Rate of Change Trend in Months PMI® 53.2 51.3 1.9 Growing Faster 9 New Orders 54.5 51.2 3.3 Growing Faster 9 Production 48.2 54.8 -6.6 Contracting From Growing 1 Employment 52.3 52.3 0 Growing Same 8 Supplier Deliveries 58.5 54.3 4.2 Slowing Faster 9 Inventories 52.5 44 8.5 Growing From Contracting 1 Customers' Inventories 46.5 44 2.5 Too Low Slower 27 Prices 60 60.5 -0.5 Increasing Slower 7 Backlog of Orders 52 48 4 Growing From Contracting 1 Exports 53.5 54.5 -1 Growing Slower 15 Imports 53.5 53.5 0 Growing Same 13 "Stronger than Expected" Following the big downward surprise last month, today's release of the ISM Manufacturing report was stronger than expected. The consensus estimate was 52.0, the rebound was to 53.3. Last month the expectation was a reading of 56. Instead the ISM Fell to 51.3 With the Largest Decline in New Orders in 4 Years. No doubt the weather was a factor in some of that plunge. Thus some of the rebound should have been expected. But how much and for how long? It's clear the global economy is slowing, and the US right along with it. Some will hail this rebound as a sign the US economy is out of the woods. I beg to differ, but time will soon tell. Give it two months. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Ruble Sinks to Record Low; Russia Intervenes in Currency Markets to Stabilize Ruble; Russia Denies Ultimatum Posted: 03 Mar 2014 10:09 AM PST Ruble Sinks to Record Low The ruble is down 1.43% today, 9.81% for the year. Russia sold $10 billion and hiked interest rates hoping to stop the decline. Russia Intervenes in Currency Markets to Stabilize Ruble Bloomberg reports Ruble Plunges to Record as Bank Rossii Seen Selling $10 Billion. Bank Rossii poured dollars into the currency market, with traders estimating sales of about $10 billion, and raised interest rates after the threat of Western sanctions against Russia sent the ruble to a record low. Policy makers are stepping up efforts to shore up the ruble as investor demand for Russian assets dries up after President Vladimir Putin's military forces took over parts of neighboring Ukraine. The ruble sank 1.8 percent against the dollar today, more than any other currency tracked by Bloomberg, while the benchmark Micex stock index plunged more than 11 percent and benchmark bond yields soared. "So far, the panic goes on," Dmitry Dorofeev, a money manager at BCS Financial Group in Moscow, said by e-mail. "The central bank's decision should help support the ruble in current conditions, but it's very negative for debt." Bank Rossii sold at least $10 billion to support the ruble today, according to Pavel Demetchik, a trader at ING Groep in Moscow. Dmitry Dorofeev, a money manager at BCS Financial Group, estimated sales of at least $7 billion. Bank Rossii's press service said it won't comment on today intervention. The size of the sales is set to be published in two days, per the regulator's information policy. Russia's foreign reserves have fallen $40 billion since May to $493.4 billion, according to data through Feb. 21. The central bank surprised investors today by raising its key rate 1.5 percentage points to 7 percent today in a bid to halt the declines at the risk of deepening an economic slowdown. Russia Hikes Rates to Salvage Ruble; Stocks sink Marketwatch reports Russia Hikes Rates to Salvage Ruble; Stocks sink. While Russian troops amassed on the Crimean border, investors dumped the Russian ruble and stocks, following a weekend of tensions over Ukraine. The selling — including an 11% plunge in the local market index — was such that the Russian central bank decided to "temporarily" hike interest rates to 7% from 5.5% on Monday, though the policy move hasn't turned the tide. "The decision is aimed at preventing the emergency of risks to inflation and financial stability associated with the recently observed increased levels of volatility in the financial markets," the Central Bank of the Russian Federation said in a translated statement on its website. The ruble had been slowly sinking against the dollar over the last few months, but the move accelerated on Monday after a weekend of escalating tensions. Western leaders threatened sanctions on Sunday and Ukraine's leaders called the Russian troops that have massed in Crimea a "declaration of war." The ruble sank more than 1.8% against the dollar, to uncharted territory, and also 1.8% against the Euro. Other currencies, such as the Hungarian forint and Polish zloty declined as well, losing 0.5% and 1% against the dollar. Russian stocks also were hammered Monday. The blue-chip MICEX index plunged 11% on Monday and is down 14% so far this year. Russia Denies Ultimatum Moments after I reported the ultimatum story, Bloomberg had this followup: Ukraine Crisis Intensifies as Russia Denies Navy Ultimatum Claim. Ukraine said Russia's navy ordered two of its ships in Crimea to surrender amid the worst standoff between the West and Russia since the end of the Cold War. A Russian Defense Ministry official denied the claim. Russia's Black Sea fleet gave the ships, located near the port of Sevastopol, until 5 a.m. to give up weapons and capitulate, Oleksiy Kirchkov, deputy commander of the Ternopil, told Ukraine's Channel 5 by phone. The Russian official, who asked not to be named, called Ukraine's claim disinformation. Western diplomats are seeking to calm tensions in Ukraine, with U.S. Secretary of State John Kerry arriving in Kiev today. It is difficult keeping up with fast-flowing news and denials. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Ukraine Ships Get Russian Ultimatum; One Misstep from Outright War; Russia Denies Ultimatum Posted: 03 Mar 2014 09:40 AM PST The situation in Europe took another turn for the worse as Ukraine Ships Get Russian Ultimatum. Ukraine said Russia's navy ordered two of its ships in Crimea to surrender amid the worst standoff between the West and Russia since the end of the Cold War. The head of Russia's Black Sea fleet gave the ships, located near the port of Sevastopol, until 5 a.m. tomorrow to give up weapons and capitulate, Oleksiy Kirchkov, deputy commander of the Ternopil, told Ukraine's Channel 5 by phone. Western diplomats are seeking to calm tensions in Ukraine, with U.S. Secretary of State John Kerry arriving in Kiev today. Calls to Russia's Defense Ministry and navy in Moscow and the Black Sea fleet in Sevastopol went unanswered. One Misstep from Outright War  One misstep, by either side, is likely to start a war. Let's hope it does not come to that. Addendum  Russia Denies Ultimatum Moments after I reported the ultimatum story, Bloomberg had this followup: Ukraine Crisis Intensifies as Russia Denies Navy Ultimatum Claim. Ukraine said Russia's navy ordered two of its ships in Crimea to surrender amid the worst standoff between the West and Russia since the end of the Cold War. A Russian Defense Ministry official denied the claim. Russia's Black Sea fleet gave the ships, located near the port of Sevastopol, until 5 a.m. to give up weapons and capitulate, Oleksiy Kirchkov, deputy commander of the Ternopil, told Ukraine's Channel 5 by phone. The Russian official, who asked not to be named, called Ukraine's claim disinformation. Western diplomats are seeking to calm tensions in Ukraine, with U.S. Secretary of State John Kerry arriving in Kiev today. It is difficult keeping up with fast-flowing news and denials. Nonetheless, to paraphrase my previous warning, one misstep by either side can cause serious complications. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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