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Daily Intelligence Briefing August 12, 2014

 

Ukraine’s currency has been a reliable real-time indicator of regional tensions. Back in February, the hryvnia plunged sharply as Russia’s “little green men” took control of Crimea and Moscow reneged on a loan package made to the prior president who had just fled Kiev. The currency stabilized after the US and EU stepped in with their own loan guarantees.

In April, the currency plunged again as pro-Russian separatists took control of wide swathes of the eastern province, with the apparent participation of Russian operatives and a massive build-up of Russian troops just across the border. The currency stabilized with another funding package put together by the IMF. Now the currency is in free fall again as tensions rise. Nato’s secretary general says there’s a “high probability” of an attack and Ukraine has increased its estimates of Russian troops along the border. Russia is sending 300 trucks on a humanitarian aid mission to eastern Ukraine, although a suspicious Ukraine is threatening to block the convoys. As these events unfold, Ukraine’s currency continues to fall despite repeated interventions by its central bank.

Today’s Issue Cluster: Ukraine

  • Russia’s food ban includes non-EU’s Norwegian fish … a boon for Chile’s fish farms
  • The EU is holding talks with South American countries about sanctions-busting … Brazil is already opening 90 new meat plants
  • Russia says it can offset US/EU sanctions on oil and fracking technology with Asian equipment … analysts are downgrading oil forecasts anyway
  • Russia’s working age population will be decimated in the next decade
  • Russia’s stock market has been trading at discount to the MSCI Emerging Markets Index for the last decade
  • Ukraine’s hyrvnia is at an all-time low: repeated central bank intervention has been less effectual than possible Russian intervention
UKRAINE’S CURRENCY IS PLUNGING TO NEW LOWS Source: Bloomberg, McAlinden Research

 

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EU – OECD Indicators Point to Slowdown in Germany

The OECD leading indicator suggests the German economy may not pick up again soon, a prospect that runs counter to recent German government projections for an improvement … The OECD said its leading indicators for France and Italy continue to point to stronger growth, as they have for a number of months. However, those pickups have yet to materialize, leaving Spain as the only major euro-zone economy to see a significant acceleration in recent quarters.  WSJ https://u1385367.ct.sendgrid.net/wf/click?upn=CvtVxO48PTR0NEGENrINtgJ3el5BFdRqQ-2BtBQXzbMO0ugdlCMhLVnHQhKGPqXyYcc3cjMuqiu2HsRgFrj4H4zbzw68-2FtYALl8u346cpbdyw-2Bz1f8fhk0uVTHlCEbf9iy_k5EI3WpNjbMBX4iycO9IwavRAJKvPOee8poSkeotQrUyHVSrobzxU8rqC88gfMQriFII2iS0Vs984z-2Fh46TJcwj-2F2Kw6Z7Zsde-2B2sw3D7rx3T0cenCHSI7BY7sy-2FCDKZm7eDyenHmZRJDZh6eN-2FUKks9WHIdsdGom5cjNMmQXghneQkucyJfjtqenpMXqYLrQiZcxmu1UaKFj2-2FUDbGjNg-3D-3D  *

EU – Election exposes deep divisions in Sweden

The favourites to win next month’s general election in Sweden are planning to reverse course on the current government’s economic reforms by limiting private equity involvement in the public sector, raising taxes and boosting spending…. With five weeks to go until polling day the opposition parties of the left have a healthy lead over the ruling centre-right coalition…. The centre-right like to point to the fact that Sweden has enjoyed faster economic growth than the US and nearly all European countries, while its employment rate is the highest in the EU. But the centre-left counters that unemployment has remained stubbornly high at 8 per cent ever since the financial crisis while a budget deficit of 1.1 per cent last year – while modest by European standards – is the biggest since 2002 in Sweden.  FT https://u1385367.ct.sendgrid.net/wf/click?upn=t284QXcqLBJhRggLiBgiFFsorJwnBCGXBwe8t9Lwleo-2F9Hgo-2FosFF8nwt0dQJp4f27J-2B3XDPSOZV8PJ8ZNx-2BVOlSqmUuiZ8lO5WPKUlJ9RBdcF6JmHl7qhO6rZ0-2BZmpe_k5EI3WpNjbMBX4iycO9IwavRAJKvPOee8poSkeotQrUyHVSrobzxU8rqC88gfMQriFII2iS0Vs984z-2Fh46TJc-2BuZ-2FrXPcEmbTceJCukwRKlscoPfuk8XFIRZYebWFPsAxKWrUJLBmcM7dqaVhsZAoSAQmmfVRnQllfjsIu7qD4o9Ns0Tw9Yp1PB9cQJ47feOIoeypy342ukC2YkMYyneTA-3D-3D

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McAlinden Research Partners, a division of Catalpa Capital Advisors, provides daily, weekly, and other periodic reports that identify actionable investment themes early. As students of change, we specialize in the identification of critical inflection points for asset classes, industry groups, and other clusters of securities. MRP reports complement the individual investment styles of clients by guiding them to where they can find investment opportunities. MRP clients include pension funds, sovereign wealth funds, private banks, asset managers and wealth advisors from around the world. Disclaimer: The information provided in this presentation (the “Report”) is not to be reproduced or distributed to any other persons. This Report has been prepared solely for informational purposes and is not an offer to buy/sell/endorse or a solicitation of an offer to buy/sell/endorse Interests or any other security or instrument or to participate in any trading or investment strategy. No representation or warranty (express or implied) is made or can be given with respect to the sequence, accuracy, completeness, or timeliness of the information in this Report. Unless otherwise noted, sources for public data include Bloomberg, Trading Economics, and FRED (Federal Reserve Bank of St. Louis Economic Data). McAlinden Research publishes daily, weekly, and other periodic reports on the economy and the markets. Catalpa Capital Advisors, LLC (CCA) is a Registered Investment Advisor which manages client accounts. References to specific securities, asset classes and financial markets discussed herein by McAlinden Research are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Securities discussed in the Report may or may not be held in accounts managed by CCA and/or its associated persons, and changes in those accounts may be made at any time without notice to its subscribers. Neither McAlinden Research nor CCA is under an obligation to inform research recipients if any accounts managed by CCA subsequently purchase or sell securities discussed by McAlinden Research and they do not anticipate providing such information.

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