| MARKET ROUNDUP | |
| Dow | -161.39 to 16,976.81 |
| S&P 500 | -23.45 to 1,958.12 |
| Nasdaq | -62.521 to 4,363.447 |
| 10-YR Yield | -.073 to 2.454% |
| Gold | +19.60 to 1,319.40 |
| Crude Oil | +2.17 to 103.37 |
Just when you thought the Ukraine crisis was settling down, two dramatic developments unfolded in the past 24 hours.
First, and more worrisome, a Malaysian Airlines flight with 295 civilian passengers and crew on board vanished from radar over Ukraine. Early reports suggest it could have been shot down by a surface-to-air missile, and a sophisticated one at that, given the fact it was cruising at 33,000 feet. That’s well beyond what a rogue rebel could have done with a simple shoulder-launched system.
I’m sure we will learn much more in the hours and days ahead, and I don’t want to comment too much on it now before more details are available. But considering that a separate Ukrainian cargo plane had already been downed earlier this week, and U.S. sources suggest that attack came from the Russian side of the border, this dramatically raises the stakes in the region.
Second, on the political front and before the reports of the plane crash, President Obama slapped Vladimir Putin with more severe sanctions targeting multiple Russian companies, Russian officials and the Russian stock and bond markets. Subject to the sanctions are companies including the oil behemoth OAO Rosneft; No. 2 gas firm Novatek; and two major banks, Gazprombank and Vneshekonombank.
The idea behind the new sanctions? Make it more difficult for them to get equity and debt financing from U.S. investors and lenders, while still allowing normal business operations to continue. Exxon Mobil (XOM, Weiss Ratings: B+) has an oil exploration pact with OAO Rosneft in the Arctic, for instance, and that joint venture won’t be eliminated.
Some other, odder sanctions include a provision preventing Americans from buying Kalashnikov rifles from the Russian arms giant that goes by the same name.
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“U.S. business groups are clearly concerned about potential economic spillover here at home.” |
Why the political escalation all of a sudden? The Obama administration believes Putin hasn’t backed up his more conciliatory talk with concrete action to rein in the eastern Ukrainian separatists. He believes Putin is still providing covert support for the rebels, including personnel and weapons, a conclusion our European allies reportedly share. That means additional moves could emerge from Brussels later this month.
Needless to say, Putin was not amused. He railed at Obama, saying sanctions “Tend to have a boomerang effect, and without a doubt, in this case they have driven Russian-American relations to a dead end, causing very serious damage.”
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| The U.S. has slapped new sanctions on Vladimir Putin’s Russia, targeting companies, Russian officials and the Russian stock and bond markets. Reports of a plane crash in the region only intensified the geopolitical worries. |
It’s worth noting the sanctions announcement comes on the heels of news that Russia is going to reopen an espionage hub in Cuba. The facility south of Havana opened in 1967, but was shuttered in 2001 to save money and improve relations with the U.S. So reopening it just underscores how things are rapidly heading south between the U.S. and Russia.
U.S. business groups are clearly concerned about potential economic spillover here at home. And investors aren’t exactly thrilled either. News of the sanctions helped knock stocks for a loop overnight and earlier today, and helped send crude oil prices up by around $2 a barrel at one point. The reports of the plane crash only riled markets further.
The question is how much will all of this intensify market fears? Will it drive oil prices back toward $110 and beyond? Or gold to $1,400? Or the Dow back below support around 16,800?
I’m more sanguine about stocks, because the underlying economic data in the U.S. continues to come in fairly strong (outside of rate-sensitive sectors like housing; more below). But I believe that gold should continue to benefit from the geopolitical tensions and war cycles my colleague Larry Edelson has discussed, and I’m clearly bullish on a wide range of energy stocks. After all, these increasing overseas tensions should only accelerate the ongoing trend toward domestic exploration, production, distribution, and refining.
What about you? What do you think is behind Obama’s decision? Will poking the Russian bear again help the situation by forcing Putin to back down and stop supporting the separatists? Or is it just going to make things worse? Can there be peace again in Ukraine, and if so, when? Let me know at the Money and Markets comments section here.
| OUR READERS SPEAK |
The economy and the merger wave I discussed in the last couple of columns both continue to be hot topics.
Reader George C. weighed in on the cultural implications of a potential Fox-Time Warner mega-merger. He said: “I found the Fox offer more interesting in terms of a conservative versus liberal take. Fox doesn’t worry about CNN because it blows it away. If I am not mistaken, TWC, HBO, and CNN would all be considered liberally bent, and would cringe at a Fox takeover. Personally, I would love it. Might be a huge plus for American culture and integrity.”
But Reader Van R. looked at the deal from a broader, economic standpoint. His take: “Mergers are great for shareholders and management but ultimately lead to fewer jobs for the two firm’s employees. With the farming out of manufacturing to offshore companies and the mergers, it should not be a mystery why there are fewer people employed in America. We seem to value shareholder equity more than we do supporting our society. When no one is employed, who are the consumers that will buy products and drive the economy?”
Speaking of the economy, it’s hard to find a commenter more bearish than Reader Louie. His take: “I take everything that the government or media say with a grain of salt. The plain and simple truth is that this country has been mired in ‘GREATER DEPRESSION NUMBER TWO’ since the 3rd quarter of 1999 … Real wages are at the lowest as a percentage of the national GDP while the real cost of living keeps exploding (been to the grocery store lately or try to pay your medical bills?).
“The only thing that is going up is POVERTY for the 95% of the population while the top 5% reaps any increase. This is the greatest disparity between the rich and poor … This nation’s economy is a great big JOKE!”
Strong opinions all around, no doubt. If you’d like to add your views to the mix, definitely hop on over to the comment section.
| OTHER DEVELOPMENTS OF THE DAY |
 We got more earnings news from the likes of financial giant Morgan Stanley (MS, Weiss Ratings: B) and chip bellwether SanDisk (SNDK, Weiss Ratings: A-). Morgan Stanley posted a hefty 90% rise in earnings; at $1.9 billion, or 91 cents a share after adjustments, MS easily topped forecasts for 55 cents per share in adjusted profit. But SanDisk got slammed after it warned of weaker-than-expected sales in the current quarter. Gross margins also failed to live up to expectations.
Starts plunged 9.3 percent in June to a seasonally adjusted annual rate of 893,000. That was the lowest since September, and well below economist forecasts. Both single-family and multifamily starts fell, and permit issuance also declined 4.2 percent.
Reminder: You can let me know what you think by putting your comments here.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
{ 42 comments }
Impeach Obama and his regulations and Appts. Vote out the Neo-Cons on both sides of the aisle. Pray McCain has a stroke and retires. Reid should go to prison. And follow the Constitution!! That would help the Ukraine situation and quell the US Military Corporate Complex for starters.
Otherwise, just conquer the world by force. That’s what TPTB want, after all. Take *all* the bloody oil! There shouldn’t be much complaint from the Euro zone – they are our servants, after all. Might as well be honest about it.
RIGHT ON, get behind Palin!
We put such a high significance and emphasis on new home starts. Why?!! I don’t want tons of new homes being built that further floods the market when we have banks holding years worth of depressed homes (REOs) that need to be cleared off their balance sheets as well as helping the communities rid themselves of these bad properties by putting new buyers into those. Additionally it allows house to retain or increase their value. I could care less if we don’t build a new home for the next few years. Many of the construction day laborers had to move on post 2007 financial meltdown when the home builder’s market was distressed for 6 years. So you can’t tell me it’s jobs that’s so important with the new home building. These immigrant workers go to other areas or realize that the US doesn’t have the plethora of jobs they were hoping for and stay home. Screw the New Homes Report.
Putin and the Russians are simply responding the the US covert activities in Ukraine. They have no choice but to counter our activities there.
Get your head out of you A HOLE
Correct.
Anybody that thinks the Russians are our “best friends” or ought to “be trusted” have their heads in “dark places”……. The screw up that we made after bankrupting them with Star Wars, was to allow our oil companies to go in there and modernize their antiquated oil and gas extraction facilities, then encouraging the Europeans to buy Gas from them….. That new funding has only allowed them to have a weapon to use against the Europeans and the funds to modernize their military and return to the “Cold War”… When will we ever learn!. :(
Just a month ago two Russian B-52 bombers where just on the coast of California , I really think we as the United States must be super wise in our actions and decisions dealing with this strange bear Nation for Boston was and is the sign of what they really think about America @ Also with them back in Cuba ? like in the book it say’s ” You know them by the fruits they bare ” and we have a border problem next to silly Mexico ! Wake the world up here America @
Having lived in Moscow, for two yrs(language studies).
I can & will make this generalization: Russians dont trust ANYONE!
Anyone! Not outsiders,insiders,eachother or themselves..ha
Ya ever notice ppl who dont trust others r usually shifty, shady, sneaky folk
We are seeing the consequences of “progressive” policies. From immigration to foreign policy the most liberal president in history has been a disaster. Foreign strong men have no fear, we have an invasion on our southern boarder, the middle class is being squeezed by higher costs for rent, food, and gasoline (not counted by the government) and wages are depressed by 30 million illegals. The uber rich on Wall street are being subsidized by the poor, the one true government health care system (the VA) is a harbinger of what the left wants (they will, of course, exempt themselves.) President Obama and his friends cannot defend any of their policies so fall back on race bating and the ‘war’ on women and the promise of hand outs to the desparate.
What part of…………. ILLEGAL………… DONT THEY GET !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
The US disparity in the US ecinimy is a jike as the stalemate in DC continues so that the top 5% gwt richer and the Middke ckass goes under.
This will continue as long as the Replecans refuse to work with Obama, making it a personel issue instead of working for the American people making the government a big jole
I don’t think the U.S. government has any business in the U krane and Russia. It looks like to me that president Obama sees himself as the world’s disciplinarian. He wants to dictate his beliefs to everyone or face punishment and that includes the American People as well. Putting stiff sanctions on any country can lead to war! That’s what Franklin Roosvelt did to Japan provoking Japan to attack Pearl Harbor, that brought us in to world war 2.
Very true!
what about the espionage hub in Mexico city, the one that never closed?
So the Russian, Ukrainian, American, etc. politicians will now do what all good politicians do best – obfuscate and lie. And whoever it was that pulled the trigger on that airliner had better watch his back and run. Dead men can’t talk.
Eliminate Putin,an u eliminate the whole problem!when I was in Russia many yrs ago,(right after the fall of communism,fall of the berlin wall.i was treated very well by the Russian people,enjoyed my stay for 30 days,an later narried an Russian lady,divorced her,an had her deported 6-8 months later.Putin trying to copy “Napolean”.hes very crafty,highly intelligent,but he is human.
I have spent over two years in Ukraine in the last 10 years specifically right next to and in both the Donetsk & Lugansk regions. I can tell you IMHO, the majority of the people in this area of Ukraine are more pro Russian than you can imagine as most of them are former or current Russians themselves. They are frustrated with the lack of real representation for many years of their needs & wants which Kiev has consistently never delivered, only broken promises over and over again. I was in Odessa in February of this year when the killings were ordered by the police and ensued in Kiev. I had to take the train to Kiev and on the bus ride from the train station to Borispol airport, we went through 5 different pro-Russian roadblocks and until you have had the experience of masked men doing a full body search with AK-47’s pointed at you, well let;s just say you haven’t experienced all the rides in life yet. I do not foresee a peaceful resolution in this situation until Russia either 1. is allowed to annex the Donetsk & Lugansk regions or 2. Russia takes these 2 regions via the current pro-Russian forces and/or a land invasion by Russian troops. or 3. Ukraine wipes out all of the pro-Russians which is not realistically possible. God help us (the USA) from any more direct involvement in the likely event this escalates further from here INCLUDING supplying arms to Ukraine. Putin is not one to mess with and from today we can see the real effects (and ramifications) of our imperialistic ways & actions (sanctions) unfold as Putin said/predicted himself just hours before this event unfolding, “the boomerang effect sanctions will bring.” We should mind our own business and take care of our own which we all know will not happen either. You might be best served to buy precious metals and stocks and pray.
Where is ,,, J.F.K. … when we need him…Its NOT …OBUMMER !!!!!!!!!!!!!!
Wait a minute, the US/Nato trouble makers spend 5 billion to capture the Ukraine so they can proceed to destabilize Russia (never ending fantasies) and because they are outsmarted the US is acting in its usual petulant fashion – one day the US will learn it’s not playing a board game of Risk – the hard way.
unless putin backs off within the next 24/48 hours the world will find itself in a severe recession. it the price to pay for a bad decesion. admitting Ukraine in nato. a coutry bordering russa. how stupid.
remenber cuba and the missiles base. it was unacceptable for the us why is acceptable in for Ukraine.
the worst is stil to come.
I really don’t know what you guys at Weiss are smoking these days. The problem in Ukraine was and continues to be orchestrated by the USA – NOT RUSSIA!! By their own admission the USA spent lots of money to engineer the removal of the democratically elected president and put the Kiev fascists into power and they have then schooled and advised and helped militarily and via US mercenary companies that puppet regime in how to cause maximum disruption. Of course, the US media seem to be constrained to even fairly investigate the matter on the ground and, in any event, seem to be firmly in the pocket of the Administration. However, if one takes the trouble to read a wide range of reports from different country’s media outlets it soon becomes clear that the Ukraine/USA propaganda is just that.
The sniper incident and the burning massacre that has been so carefully sidestepped by the western media is worth investigating in the same way and you will then see that the evidence is very strongly pointing to the Kiev based thugs as those responsible.
Yes Bob the sniper from Syria was on a working holiday in Ukraine and was interviewed by Russian News HTB and SHE was quite proud of her achievements whilst on a working holiday in Ukraine.
Since 1991 on their own admission the USA has spent in excess of US$5 billion to destabilise the Ukraine Government so they could get a puppet in power there.
Mike – You ask, “Can their be peace again in Ukraine.” Of course there CAN but it is highly unlikely. You really need to think and look at the bigger picture. Maybe something miraculous is happening unbeknownst to all of us and maybe not. As much as the political machine may not like dictators and prefer to attempt to shove democracy down the entire worlds throat it won’t happen.
Look at Eygpt, Mubarak kept the people generally in toe. It was the U.S., political machine that thought they’d back the protesters and try to change Eygpt. So we got rid of Mubarak. Yes, the U.S., got rid of Mubarak. All hell has broken loose since and it continues through today. Of course the main scream media doesn’t even cover it!!! How about Libya? Kadaffi may be an awful man but Libya was stable. Not after the U.S., got involved. Another disaster. The U.S., has made a mess of Syria as the rebels try to overthrow Assad. Who does the U.S., back? The rebels of course! Now we can move on to Ukraine. Basic same story. The U.S., continues to meddle in the worlds business and all they do is make a mess out of every situation.
So, peace in Ukraine? That depends how many more planes fall out of the sky. This is the 2nd plane in two weeks. You ask 2nd? Yes. The media just doesn’t cover it all.
As death and taxes are a certainty in our world….so is WAR. All i can say is buy the defense sector, sit back, be patient and you’ll be highly rewarded.
No peace.
Eric
Live one day at a time. Pray for divine interve tion. Live a frugal and humble life and avoid debt.
Our liberal dominated government seems to think that the USA is better suited to telling other nations what is best for them than the other nations are capable of determining for themselves. The USA needs to back out of the Ukraine-Russian situation. Historically until the breakup of the USSR greatly aided by US involvement, the Ukraine is part of Russia. The Ukrainians are Russian, they speak a dialect of Russian, they are Eastern Orthodox by religious preference, and they have economic ties with Russia. The current Ukraine government is illegitimate and may be as corrupt as the government they drove from office. If the Europeans are so concerned with the Ukraine-Russian conflict, I say, let Europeans get involved with their aid and military. Please let the US government stay out!
Back in the 50’s, 60’s & 70’s housing starts pretty much were on 3 year cycles. 3 years up and 3 down always with a target of 2,000,000 starts which was seldom if ever achieved. These cycles ended in the 80’s & 90’s and it is doubtful they will ever return but the fact remains that starts in 800,0000 to 900,000 level leave a shortfall that doesn’t meet demands of a population that wants to own their own single family home. Barring a complete collapse of the U.S. economy which is not out of the question and if interest rates stay at or near current levels housing starts should begin to improve in the next 12 months or so provided we see improvements in employment. The gas and oil boom that is taking place in the U.S. should provide a big push to employment particularly on infrastructure projects such as highways, bridges and hopefully pipe lines. In my view rust belt manufacturing will never return to the old levels with so many of our products now being made in China, Mexico and a host of other developing countries. I’ll keep my fingers crossed.
I think obama will do anything to bring down economy
Safe Money appears to be on the right track again. War escalations are in the presence of everyone involved. Larry Edelson had stated that gold & silver would continue to climb because of continued conflicts and this just seems to support that. We live in a dangerous world and it looks like Larry has a “finger on the pulse” of what to expect, basically more conflicts.
If Russia was such a big bad bear as everyone claims they why at this very moment 15 Ukraine army personnel being treated for injuries received during the conflict in a Russian hospital. Why have almost 500,000 people vacated Ukraine and are now being cared for by the Russian people. Why does the Ukraine army and their private military continue to bomb pro-Russian people, killing 110 orphaned children when they blew-up a refuge, why does the Ukraine military and their private military continue to destroy peoples homes and cities and their lives in the name of ethnic cleansing. Why does……and the list continues.
The Obama-nation has not done one thing in this nations best interest, in fact I feel certain he is trying to destroy this country. No other answer makes sense. It’s no longer just differences between Dems. and Repubs. Obama is on a roll, his presidency is already the train wreak to top all presidentual train wreaks. As for Putin, he’s just a gangster running a country.
The huge stimulus programs have led to war not prosperity. The wars will kill the real economies of the world. The masses will suffer big time.
Putin will continue to rush for a Russian Ukraine, no matter the cost or the sanctions. He needs to appease his retired military who are all set for a return to the older and stronger
U.S.S.R Remember that he counts on their support to stay in power with over 66% approval.
I think it is outrageous that while Microsoft is cutting 18,000 American jobs that Mr. Gates is advocating the Federal Government increase the immigration of foreign workers.
And this surprises anyone when POTUS pulls down his pants, bends over in front of a thug terrorist saying ‘ don’t worry, I’ll have more flexibility once reelected’. Not just the US but the EU needs to drop a set and show Putin there are going to be consequences for his terrorist action around the globe. Deploy the missle defense shield in eastern Poland, Northern Ukraine, Kazakhstan and let Putin know that his 15 minutes are up.
What about Obama’s 15 minutes? He’s just a lousier politician than Putin. The trouble is, both of them have their fingers on a red button. Politicians with nukes is NOT a very good formula for peace in the world.
Addendum: Even the gullible media recently got onto the story that the U.S. is taking steps to bring it’s ICBM forces up to a higher level of efficiency. Will Obama push the button first?
The West (America and its European allies) should not meddle in the East (Russia and its closest neighbors) anymore than the East should meddle in the West.
Since the East does not meddle in the West at this time, the West should keep out of it and watch developments. Trying to dictate to Russia is of dubious merit. The US and Europe would not allow Russia to dictate to them. Russia knows not to.
Extrem caution is called for. Otherwise —
In response to George C’s comment concerning Fox’s bid for Time Warner. Are you serious?! Most intelligent people dismiss Faux Noise as not even news. It is right
wing nut editorializing, much like MSNBC is on the left…
The US is creating Economic War against many Nations who have refused to bend to US desires, thus causing the Nations to be impoverished for not bending.to the US. Now the US is doing the same to Russia, to show that the US is the most powerful in the World both Militarily and Financially.
Results – the BRIC and Africa on Monday created a new Financial System, expanding other measures that have been previously taken.
This will destroy the US Dollar as the only Reserve Currency.
Other Nations are in the process of procuring trade items, from Nations other than the US.This will become a major blow to the US – This will not be temporary.
The total Consequences, when they will occur will probably happen within a 24 hour time period.
Thus those Nations that have been prevented from accessing our Financial System will adapt to the newly created system, this will also be embraced by Nations who feel that the US has done damage to their life style.
Other real consequences are too unstable to predict, as the Mayans predicted that after Dec 2012, sufficient Chaos will occur, to prevent predicting future occurrences.
Putin’s exposure of the Rothschild “goons”, was a fine move, exposing an action
long over due. Add to that the that the drive for a so-called NEW WORLD ORDER, by
the Rockefellers yet thoroughly unexsposed 9/11 caper.
WHY AND HOW DID SO MANY LARGE BUILDINGS “ALMOST,” SIMULTANEOUSLY
COLLAPSE AT SIGNAL OF THOSE TWO WORDS: “PULL IT?”
WHY WERE ONLY A FEW HUNDRED TOLD TO “STAY HOME,” THAT DAY, WHILE OTHER THOUSANDS, “THOUSANDS,” WERE NOT WARNED???
A WORLD WIDE COURT OF JUSTICE MUST BE FORMED TO FIND THE “TRUTH!!”
Joe Spenner
It’s fantastic that you are getting ideas from this piece of writing as well as from our dialogue made at this time.