Export Destinations of RussiaTrade Sanctions Are Totally Not Cool On The Playground

Here’s an idea being kicked around: “In response to Russia’s aggression in Ukraine, Europe could adopt the Magnitsky principle by making life unpleasant for Putin’s oligarch friends, who have turned Europe into their playground.” (e.g. Cyprus is the Cayman Islands of Russia)  But that could be hard, since everyone seems to really like the playground: “Russia is the EU’s third-biggest trading partner after the U.S. and China.  Trade in goods totaled a record 336 billion euros ($462 billion) in 2012, more than 10 times the volume between Russia and the U.S.”, and in case you didn’t know, “Russia is the EU’s single-biggest supplier of energy.”  Some are using that fact to support lifting the export ban on American natural gas: “greater access to U.S. supplies would blunt the ability of Russia to use energy as a weapon.”  “The EU is also Russia’s largest investor, according to the European Commission, which estimates that 75% of all foreign direct investment in the former Communist country comes from EU member states.”  HBR has a great piece on visualizing the economic ties between Russia, Ukraine and Europe: “Ukraine’s economic tug-of-war mirrors the political and cultural balancing act it faces in deciding how to align itself between Russia and Europe.  As an economic matter, it cannot give up access to one without needing much more from the other.”  Meanwhile, “the European Union says it is freezing the financial assets in Europe of 18 people held responsible for misusing state funds in Ukraine.”

Political Tit-For-Tat

“On Tuesday, the Obama administration released an interesting if dead-on-arrival 2015 budget.  The big message is that the White House wants to bolster support for the poor and middle class, paying for such measures with increased taxes on high-income households.”  And while the White House budget proposal calls for shifting “away from harmful short-term deficit reduction by replacing remaining sequestration cuts with smart, balanced long-term deficit reduction…Mr. Obama’s budget assumes that there will be no recession for the next decade — indeed, he sees a moderate but strengthening recovery.  History suggests those might be the most unrealistic numbers in the document.”  The budget also directs the U.S. Treasury to “assess the future of currency,” specifically in regards to the costs/benefit of making pennies and nickels at $0.08 and $0.09 per unit.  “This budget isn’t a serious document, it’s a campaign brochure,” said House Budget Committee Chairman Paul Ryan, a day after releasing a campaign brochure of his own: a 204-page report concluding “that the expansion of anti-poverty programs, which number more than 90 and cost almost $800 billion last year, have done little to achieve President Johnson’s Great Society goals.  The 17.3% poverty rate in 1965 is not much different from today’s 15%.”  Unfortunately for Ryan, the economists/researchers he cites in his brochure don’t seem to remember saying anything like that.  Also, here’s another deficit chart: this one really puts the “The deficit has been shrinking under Obama!” claim in perspective.

Scared Of Heights And The Relentless Bid

Barry Ritholtz argues a somewhat obvious yet necessary point about market highs: “one of the most bullish things that can happen to any market is for it to reach new multi-year highs.”  Meanwhile, Josh Brown has a theory behind the market’s “relentless bid” (i.e. buying equities simply to put money to work coupled with an agnostic attitude towards the news of the day): “The nation’s largest traditional advisory firms have accelerated their push toward fee-based management and away from transactional brokerage.  This has a huge impact on how the money itself is managed and this in turn greatly affects the behavior of the stock market.”  Also, even if you are terrible at timing the market and invest only at market peaks, you would still generate a pretty nice return.

EM: “Growth Is Slowing” Is Not A Valid Reason To Dump Emerging Market Stocks

USA: SEC Can Explain Why It’s So Good At Selling Stocks

I’ve been ignoring this for a few days but it seems to be picking up speed so here goes: a lot of people are talking about this paper titled “Stock Picking Skills of SEC Employees” which concludes that some SEC employees are making a profit by selling stock in companies they are about to investigate (keyword: about).  Here’s a guy who thinks the whole thing is bogus.  I’m moving on.

GOOG: Welcome To Googletown

FB: Facebook Wants In On The Drones Game


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