China To Launch Yuan Swap Trading With Russian Rubles On Monday

The world was slow to wake up to the new reality in which China is now the de facto IMF sovereign backstop, as Zero Hedge described two weeks ago in "China Prepares To Bailout Russia" when we noted that a PBOC swap-line was meant to reduce the role of the US dollar if China and Russia need to help each other overcome a liquidity squeeze, something we first noted over two months ago in "China, Russia Sign CNY150 Billion Local-Currency Swap As Plunging Oil Prices Sting Putin."

In fact, it was only this week that Bloomberg reported that "China Offers Russia Help With Currency Swap Suggestion." But in order to fully backstop Russia away from a SWIFT-world in which the dollar reigns supreme, one extra step was necessary: the launching of direct FX trade involving the Russian and Chinese currencies, either spot or forward - a move away from purely theoretical bilateral FX trade agreements - which would not only enable and make direct currency trading more efficient by sidestepping the dollar entirely, but also allow Russian companies to budget in Chinese Yuan terms. It is no surprise then that this is precisely the missing step that was announced overnight, and will be implemented starting Monday.

From Bloomberg:

China will allow trading in forwards and swaps between the yuan and three more currencies in a bid to reduce foreign-exchange risks amid increased volatility in emerging markets.

The China Foreign Exchange Trade System will begin such contracts with Malaysia’s ringgit, Russia’s ruble, and the New Zealand dollar from Dec. 29, it said in a statement on its website today. That will extend the yuan’s swaps trading to 11 currencies on the interbank foreign-exchange market.

A plunge in Russia’s ruble this month to a record low sparked a selloff in developing nations’ assets, leading to a surge in currency volatility. The new contracts come amid efforts by China to increase the international use of the yuan, as the world’s second-largest economy promotes it as an alternative to the U.S. dollar for global trade and finance. Malaysia and Russia are China’s eighth and ninth biggest trading partners, according to data compiled by Bloomberg.

“This will provide companies with better hedging tools, and at the same time, make currency trading more efficient,” said Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong. “China won’t stop yuan globalization or capital-account opening because of the volatility in emerging market currencies.”

The CFETS is an agency under the People’s Bank of China.

So while the US continues to parade with "destroying" the Russian economy, even if it means crushing the shale industry, aka the only bright spot, and high-paying job-creating industry in the US economy over the past 5 years, Russia and China continue to be nudged by the west ever closer monetarily and strategically, until one day, as we have long predicted, China and Russia will announce a joint currency, one backed by both China's "surprising" gold reserves and Russia's commodity hoard. Then things will get interesting.

http://www.zerohedge.com/news/2014-12-26/china-launch-yuan-swap-trading-russian-rubles-monday

China Steps In as World's New Bank

Thanks to China, Christine Lagarde of the International Monetary Fund, Jim Yong Kim of the World Bank and Takehiko Nakao of the Asian Development Bank may no longer have much meaningful work to do.

Beijing's move to bail out Russia, on top of its recent aid for Venezuela and Argentina, signals the death of the post-war Bretton Woods world. It’s also marks the beginning of the end for America's linchpin role in the global economy and Japan's influence in Asia.

What is China's new Asian Infrastructure Investment Bank if not an ADB killer? If Japan, ADB's main benefactor, won't share the presidency with Asian peers, Beijing will just use its deep pockets to overpower it. Lagarde's and Kim’s shops also are looking at a future in which crisis-wracked governments call Beijing before Washington. 

China stepping up its role as lender of last resort upends an economic development game that's been decades in the making. The IMF, World Bank and ADB are bloated, change-adverse institutions.  When Ukraine received a $17 billion IMF-led bailout this year it was about shoring up a geopolitically important economy, not geopolitical blackmail.

Chinese President Xi Jinping's government doesn't care about upgrading economies, the health of tax regimes or central bank reserves. It cares about loyalty. The quid pro quo: For our generous assistance we expect your full support on everything from Taiwan to territorial disputes to deadening the West’s pesky focus on human rights.

This may sound hyperbolic; Russia, Argentina and Venezuela are already at odds with the U.S. and its allies. But what about Europe? In 2011 and 2012, it looked to Beijing to save euro bond markets through massive purchases. Expect more of this dynamic in 2015 should fresh turmoil hit the euro zone, at which time Beijing will expect European leaders to pull their diplomatic punches. What happens if the Federal Reserve’s tapering slams economies from India to Indonesia and governments look to China for help? Why would Cambodia, Laos or Vietnam bother with the IMF’s conditions when China writes big checks with few strings attached?

Beijing’s $24 billion currency swap program to help Russia is a sign of things to come. Russia, it's often said, is too nuclear to fail. As Moscow weathers the worst crisis since the 1998 default, it’s tempting to view China as a good global citizen. But Beijing is just enabling President Vladimir Putin, who’s now under zero pressure to diversify his economy away from oil. The same goes for China’s $2.3 billion currency swap with Argentina and its $4 billion loan to Venezuela. In the Chinese century, bad behavior has its rewards.

If ever there were a time for President Barack Obama to accelerate his "pivot" to Asia it's now. There's plenty to worry about as China tosses money at rogue governments like Sudan and Zimbabwe. But there’s also lots at stake for Asia's budding democracies. The so-called Washington consensus on economic policies isn't perfect, but is Beijing's model of autocratic state capitalism with scant press freedom really a better option? With China becoming Asia's sugar daddy, the temptation in, say, Myanmar might be to avoid the difficult process of creating credible institutions to oversee the economy.

There could be a silver lining to China lavishing its nearly $4 trillion of currency reserves on crisis-plagued nations: It might force the IMF, World Bank and ADB to raise their games. Competition, as Lagarde, Kim and Nakao would agree, is a good thing. But more likely, China's largess will encourage bad policy habits and impede development in ways that leave the global economy worse off.

http://www.bloombergview.com/articles/2014-12-25/china-steps-in-as-worlds-new-bank 

Ruble Rallies 34% After Biggest Russian Intervention In 5 Years

Since the Russian Ruble troughed at almost 80 RUB/USD, it has rallied an impressive 34% erasing most of the dramatic devaluation of December. However, as The CBR just announced, this 'strength' came at a price. Russia burned through $15.7 billion of reserves in the week ending Dec 19th - the biggest percentage weekly drop in reserves since Jan 2009, leaving reserves below $400 billion (still a significant amount) for the first time since Aug 2009. While CBR explained much of this will come back as repo trades mature, Vladimir Putin turned inward, blaming the government for "defects" in restructuring the economy.

The Ruble has soared in the last 2 weeks...

On the heels of the biggest intervention in almost 5 years...

•  
• *RUSSIAN INTERNATIONAL RESERVES FALL $15.7B IN WEEK TO DEC. 19
• *RUSSIAN INTERNATIONAL RESERVES AT $398.9B
• *BANK OF RUSSIA SAYS DROP IN RESERVES MOSTLY DUE TO FX REPO
• *BANK OF RUSSIA: FUNDS USED IN FX REPO WILL RETURN TO RESERVES
• *RUSSIA RESERVES ALSO FELL ON REVALUATION AS USD GAINED VS EURO

But, as Sputnik news reports, it's not just external factors, Putin points his finger internally...

The difficulties in Russia’s economy are not only because of outside factors, including sanctions, but also because the government has not worked out some defects, Russian President Vladimir Putin said Thursday.

“The difficulties that we have run into carry not only an outside factor. They are not solely tied to some sorts of limitations of sanctions or limitations tied with the objective international environment, they are tied to our not working out defects that have accumulated over the years,” Putin said during a government meeting in Moscow.

Putin said the government has taken efforts in order to change the structure of the economy in order to give it a more innovative nature, but said the efforts were below the needed measures.

“Much has been done in this but the latest events have shown that this is insufficient,” Putin added.

Russia is currently facing an economic slowdown, with dramatic fluctuations seen recently in the value of the Russian ruble against the US dollar and the euro.

The weakening of the Russian national currency is attributed to low oil prices. The sale of oil accounts for a significant part of Russian budget revenues. Economic sanctions imposed on Moscow by the West in the wake of the Ukrainian crisis are also cited among the reasons for the economic slump.

During a December 18 televised press conference, the Russian president said that the country's economic situation could begin to improve in the first quarter of 2015, with Russia's economy recovering completely over the next few years.

*  *  *

Still it's not like $400 billion is going to disappear tomorrow - for those proclaiming Russia's imminent default. (CDS imply a mere 5% probability of default over the next year based on 25% recovery assumptions)

http://www.zerohedge.com/news/2014-12-25/ruble-rallies-34-after-biggest-russian-intervention-5-years

Belarus In Full-Blown Hyperinflation Panic: Blocks News, Online Stores; Bans All FX Trading For 2 Years

"We have to do something with these Belarussian rubles," exclaims one Belarussian as she shops to turn worthless rubles (BYR) into physical assets. As AFP reports, The Belarussian currency was dragged down by the slide of the Russian ruble last week, leading authorities to impose draconian measures, forbid price increases even for imported goods, and warn people against panic. Now, however, in an effort to stem the flood of hyperinflating domestic prices, authorities have blocked online stores and news websites to stop the run on banks and shops as people scramble to secure their savings. One of the blocked news websites noted, it "looks like the authorities want to turn light panic over the fall of the Belarussian ruble into a real one," calling the blockages "December insanity."

And indeed they have stepped up the insanity, extending the halt in FX trading...

Today the Belarus central bank shocked its own population when it also announced full-blown capital controls designed, releasing additional measures to stem the "negative trends of currency and financial markets " including raising mandatory sales of FX revenue to 0%, suspending all OTC FX trading (so pretty much all FX), introducing a 30% fee on all FX purchases, "recommending" that banks halt BYR lending until February, and sending 1-yr interest rates on liquidity operations with banks to a eyewatering 50% in hopes this leads to an increase in BYR deposit rates. It will. What it won't lead to is stabilization in the deposit market as the natives realize they too are next up on the hyperinflation train.

End result:

through 2017...

• BELARUS HALTS OTC TRANSACTIONS IN FX UNTIL 2017: INTERFAX

UPDATE: Belarus Overnight Deposit Rate surges to 49%

As AFP reports,

Belarus blocked online stores and news websites Sunday, in an apparent attempt to stop a run on banks and shops as people rushed to secure their savings. In a statement Sunday, BelaPAN news company, which runs popular independent news websites Belapan.by and Naviny.by, said that the sites were blocked Saturday without any warning.

"Clearly the decision to block the IP addresses could only be taken by the authorities because in Belarus the government has monopoly on providing IPs," it said.

Other websites blocked Sunday were Charter97.by, BelarusPartisan.org, Udf.by and others with an independent news outlook. The blockage started on December 19, when the government announced that purchases of foreign currency will be taxed 30 percent and told all exporters to convert half of their foreign revenues into the local currency.

"Looks like the authorities want to turn light panic over the fall of the Belarussian ruble into a real one," Belarus Partisan website wrote, calling the blockages "December insanity." Internet shopping websites were also blocked en masse. Thirteen online stores were blocked Saturday for raising their prices or showing them in US dollars, deputy trade minister Irina Narkevich said, Interfax reported.

The government announced a moratorium on price increases for consumer goods and ordered domestic producers of appliances to "increase deliveries" and keep prices the same at the risk of their management being sacked. Belarussians lined up for hours to clear out their bank accounts and swept store shelves to secure their savings, stocking up on foreign-made appliances and housewares.

The Belarussian ruble has lost about half of its value since the beginning of the year, having been hit hard by the depreciation of the Russian ruble since its economy is heavily dependent on its giant neighbour. With foreign currency swiftly depleted in exchange offices, Belarussians even launched a black market website dollarnash.com where individuals could buy and sell dollars and euros.

This follows the previously noted implementation of a 30% FX transaction tax, which however now that all OTC FX trading is banned for 2 years or longer, will hardly be collected.

$ 460 million will bring to the Belarusian budget introduction of a 30% tax on the purchase of foreign currency in Belarus.This is the TV channel "Belarus 1" said First Deputy Minister of Finance of the country Maxim Ermolovich.

"Given the daily supply and demand in the foreign exchange market budget revenues will amount to about 5 trillion Belarusian rubles, or $ 460 million at the exchange rate of the National Bank", - he said. Recall, December 19 NBB announced the introduction of December 20 temporary levy of 30% on the purchase of foreign currency for individuals and legal entities in connection with the sharply increased demand for foreign currency in the domestic market of Belarus. Legal persons will pay the tax on the stock exchange, and individuals - in the form of bank commission when buying foreign currency.

As a result, expect to see more of this...

Keep in mind that the scenes shown above are what the BOJ, the ECB and the Fed would dub "success."

http://www.zerohedge.com/news/2014-12-22/belarus-full-blown-hyperinflation-panic-blocks-news-online-stores-bans-all-fx-tradin

Swiss National Bank will cut interest rate to minus 0.25%

Switzerland's National Bank (SNB) will bring in a negative interest rate cutting the value of large sums of money left on deposit in the country.

The Bank is imposing a rate of minus 0.25% on "sight deposits" - a form of instant access account - of more than 10m Swiss francs ($9.77m).

It is trying to lower the value of the Swiss franc, which has risen recently.

Russia's market meltdown and a dramatic plunge in the oil price have led investors to seek "safe havens".

The announcement sent the franc lower, and in early trading the euro was buying 1.2095 Swiss francs, fewer than the 1.203 it was worth before the news, just within the target.

Switzerland typically sees money flow in during economic uncertainty.

The new rate will be introduced on 22 January and will only affect banks and large companies who use the "sight account" to transfer funds quickly and without restrictions.

A negative rate means depositors pay to lend the bank their money.

Geoffrey Yu, a currency strategist at UBS, said: "In the short term it gives them some breathing space.

Continue reading the main story

Euro v Swiss Franc

LAST UPDATED AT 19 DEC 2014, 18:56 ET*CHART SHOWS LOCAL TIME

€1 buys	change	%
1.2037	0.00	+0.01

"If you hold Swiss francs right now you do have to bear a cost. New buyers will be forced to think twice."

Reasons

SNB said in a statement: "Over the past few days a number of factors have prompted increased demand for safe investments.

"The introduction of negative interest rates makes it less attractive to hold Swiss franc investments, and thereby supports the minimum exchange rate."

The central bank has a cap of one euro equals 1.20 Swiss francs, above which it tries to prevent the franc rising.

Too high a rate has the effect of making Swiss export products more pricey.

Switzerland is also chary of attracting yet more money into its banking-heavy small country.

The European Central Bank (ECB) also introduced negative interest rates, albeit for very different reasons.

The ECB wants to keep money out of its banks, not because it wants to reduce the value of the euro but because it wants money flowing round the eurozone countries to boost investment and spending.

Germany's Commerzbank also recently introduced negative interest rates for bigger corporate clients, but it said that was linked to the ECB's negative rates policy.

http://www.bbc.com/news/business-30528404

Deadly Fukushima radiation up 50,000% as elevated radiation levels seen across North America

(NaturalNews) Beta radiation levels are off the charts at monitoring sites all across North America, according to new reports. But experts are blaming these radiation spikes on practically everything except for Fukushima.

Data gathered from tracking units in California, Arizona, Illinois and elsewhere reveal radiation levels up to 50,000 percent higher than what was observed at the same time last year, and in some cases compared to levels seen this past summer.

EnviroReporter.com says the impacted sites are scattered throughout the country and aren't just confined to the West Coast. Readings taken near Los Angeles; Chicago; Montgomery, Alabama; and Madison, Wisconsin, reveal total beta counts per minute (CPM) greatly exceeding the 1,000 CPM threshold considered by the government to be problematic.

In Tucson, Arizona, for instance, a 460 CPM reading was recently taken, which is more than 10 times higher than the reading taken last year on November 27. Similarly, Phoenix, Arizona's 735 CPM reading measured more than 21 times higher than last year's reading.

San Diego appears to be one of the hardest-hit areas, with a CPM reading of 650, as of October 1. This figure is 60 times higher than it was last year on the same date, despite the fact that San Diego's normal background radiation rate typically hovers around 20 CPM.

"U.S. Environmental Protection Agency RadNet radiation monitors have detected renewed surges in atmospheric readings of dangerous beta radiation across the country," explains EnviroReporter.com about the seemingly inexplicable phenomenon.

"Over a dozen metropolitan test sites have registered four-month highs in EnviroReporter.com's most recent comprehensive assessment."

Radiation testing site near Chicago records radiation levels thousands of times higher than maximum safety threshold

Commenting on the situation, one EnviroReporter.com reader offered his own assessment that these readings are "astronomically high." He was quick to denounce Fukushima as a possible cause, though, adding that this would only be possible if "something there has changed dramatically."

Either way, the radiation levels being detected are still a major cause for concern. Anything above 100 CPM is considered by the California Highway Patrol (CHP) to be a potential hazardous materials situation requiring the deployment of hazmat protocols.

At a testing site in St. Charles, Illinois, located just west of Chicago, a recent peak reading of 7,298 CPM caught the attention of some environmental activists, who chided the media for remaining silent on the issue.

This reading represents a nearly 7,300 percent radiation increase beyond CHP's safety threshold. This site apparently experienced a series of massive radiation spikes beginning at approximately 1:00 am and lasting for as long as six hours.

California official blames plastic eating utensils for radiation spike, insist it can't be Fukushima

Back in California, county officials in San Mateo recorded radiation levels at a local beach measuring 100 micro-REM per hour, or 1 microsievert per hour, which is five times the normal amount. According to the Half Moon Bay Review, local environmental health director Dean Peterson was quick to denounce that this level poses any risk to human health.

When asked where this radiation might be coming from, Peterson admitted that he is "befuddled," but also denied that Fukushima could possibly be a cause. Instead, he says, it may be due to an excess of disposable eating utensils polluting the area.

"I honestly think the end result of this is that it's just higher levels of background radiation," stated Peterson to the HMB Review, adding that red-painted disposable eating utensils can also contribute to localized radiation spikes.

Sources:

http://beforeitsnews.com

http://netc.com

http://enenews.com

http://enenews.com

http://www.enviroreporter.com

http://www.hmbreview.com

http://science.naturalnews.com

Learn more: http://www.naturalnews.com/047996_radiation_levels_Fukushima_government_denial.html#ixzz3MBdh0Zh5

Russian Stocks Soar 17% - Most Since 2008; Ruble Back Below 62/USD

After falling for 15 of the last 16 days, the RTS (Russian Stocks) are surging 17% today, extending gains post CBR 7 Measures, the most since October 2008.The Ruble is soaring also - back below 62/USD.

RTS biggest gain since Oct 2008...

Juiced by the CBR Measures...

Charts: bloomberg

http://www.zerohedge.com/news/2014-12-17/russian-stocks-soar-17-most-2008-ruble-back-below-62usd

The Russian Ruble Is Hereby Halted Until Further Notice

Earlier, we reported that various currency brokers such as FXCM and FxPro, would - as a result of the soaring liquidity in the USDRUB pair - suspend trading in the Russian Ruble (while other merely hiked margins to ridiculous levels). It appears things have escalated again, and as FXCM just reported, instead of just politely advising clients not to open new USDRUB position tomorrow, it has advised anyone long, or short, the USDRUB that their positions will be forcibly shut in moments.

So for those curious why there appears to be a collapse in Ruble volatility in the past few hours which in turn has sent both stocks and crude soaring, the answer is simple: nobody is trading it!

And this is what happened following the post: as soon as all those short the RUB (long USDRUB) realized they have to take profits, the USDRUB tumbled some 500 pips (!) in the process sending stocks surging.

http://www.zerohedge.com/news/2014-12-16/russian-ruble-hereby-halted-until-further-notice

Ruble plummets losing more than 20% in a day, hitting new dollar and euro lows

No end seems to be in sight for the plight of the Russian ruble, which slumped to new record lows against hard currencies Tuesday. The EUR traded at 93.5 against the ruble, and the USD at 75.

The Russian stock market also went haywire, dropping more than 15 percent as of 2:30pm Moscow time, after it dropped 11 percent the day before. Sberbank, the country's largest lender, lost 17.77 percent, and VTB, the second biggest bank, fell by 14.29 percent. State-owned oil and gas companies Gazprom, Rosneft, and Surgut also saw shares plummet. 

The emergency interest rate hike to 17 percent has failed to halt the ruble’s landslide tumble against hard currencies. The rate increase only calmed the ruble temporarily.

READ MORE: Slumping ruble should push Russia to ‘live in new reality’ – Bank chief

It has accelerated its descent in November and December along with falling oil prices. Investors have been pulling capital out of Russia over geopolitics since earlier this year, and sanctions levied by the US and EU have essentially cut Russia off from Western lending.

Most analysts agree that Russia will enter recession in the first quarter of 2015, including the Economy Minister Aleksey Ulyukaev, and the Central Bank.

READ MORE: Russian Central Bank hikes key interest rate to 17% to halt ruble roil

Ruble on the run, losing more than 20% against the USD Tuesday, hitting 73.82. Source: Forexlive.com

On Tuesday, the CBR chief Elvira Nabiullina said a higher rate should put an end to investor speculation that has been hitting the ruble.

“We must learn to live in a new reality, to focus more on our own resources to finance projects and give import substitution a chance,” the bank chief said in a televised address Tuesday.

READ MORE: Slumping ruble should push Russia to ‘live in new reality’ – Bank chief

Source: RBK quotes

However, neither the rate increase nor the comments have had a big impact on ruble trading as it continued to slide. Russia’s currency has lost more than 55 percent against the dollar this year, mostly to external factors such as slumping oil and sanctions against Russia.

http://rt.com/business/214779-russia-ruble-drop-record/

EES: Russia raises rates from 10 to 17

EES: Is there ANY REASON why an investor would not want 17% return on their money?  No more comment...

From Zero Hedge:

Following the biggest rout to the Ruble in ages, Russia - unlike Mario Draghi - instead of talking the talk decided to walk the bazooka walk and shocked all those long the USDRUB by unleashing an emergency rate hike (at 1 am in the morning) from the recently raised interest rate of 10.50% to... hold on to your hats... 17.00%, a 650 bps increase!

From the press release:

The Board of Directors of the Bank of Russia has decided to increase from December 16, 2014 the key rate to 17.00% per annum. This decision was driven by the need to limit significantly increased in recent devaluation and inflation risks.

In order to enhance the effectiveness of interest rate policy loans secured by non-marketable assets or guarantees for a period of 2 to 549 days from 16 December 2014 will be granted at a floating interest rate established at the level of the key rate of the Bank of Russia increased by 1.75 percentage points (Previously these loans for a period of 2 to 90 days, provided at a fixed rate).

In addition, to enhance the capacity of credit institutions to manage their own currency liquidity was decided to increase the maximum amount of funds to repurchase auctions in foreign currency for a period of 28 days from 1.5 to 5.0 billion. US dollars, as well as on similar operations for a period of 12 months on a weekly basis.

And for the Russian-speakers, the full breakdown of rates.

Few markets are open but the 1month forward Ruble market just dropped (Ruble rallied) over 2.5 handles...

RSX (ETF) is starting to rally after-hours...

Chart: Bloomberg

Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17%

Russia huge appetite for weapons and military gear

EES: While the west imposes sanctions on the former communist, now open market Russia, they are taking notes.  During the Cold War, the US economy was spurred by huge defense spending.  Even a policy was created to 'spend them to destruction.'  But modern technology is far more advanced now than during the 80's.  

In any event, Russia is pivoting into traditionally American policy; spending on defense and trading with friendly countries that have a natural alliance (such as the US has had with its former client states).  

From CNN Money:

Moscow is going on a huge shopping spree for weapons and military equipment.

Russian defense companies boosted sales by more than 20% last year, driven by demand from the country's military, according to new data from the Stockholm International Peace Research Institute.

That compares with a 2% decline in sales globally, largely due to a weaker performance by American companies, which account for more than half of the world's arms trade.

Russia has begun investing heavily in upgrades to its military capabilities. President Vladimir Putin plans to spend more than 20 trillion rubles ($700 billion) bringing equipment up to date by 2025.

The modernization program is continuing despite an economic crisis that has already forced Russia to adopt an austerity budget for next year.

Defense and national security were the only departments to escape cuts of at least 5%. Spending on the military is set to rise by 85% between 2012 and 2017.

Russia's defense budget is now the third largest in the world, behind the U.S. and China.

Airfields, hundreds of fighter jets and a new fleet of battle tanks are in the works. Russia is also developing new long-range missiles, has acquired an advanced nuclear submarine and is working on eight new vessels for the navy, due for delivery by 2020.

Related: Kalashnikovs get new look to boost sales

Russia's relations with the West are the most strained they've been since the end of the Cold War. The U.S. and Europe have imposed sanctions against Russian companies and officials for annexing Crimea and providing support for rebels in eastern Ukraine.

The crisis in Ukraine could provide another boost to Russian arms sales.

"It is too early to say, but the conflict is likely to have an impact on some specific orders -- especially conventional ammunition," said Aude Fleurant, research director at the Stockholm institute.

Sanctions are unlikely to put much of a dent in sales at Russian defense companies, because they largely supply the domestic markets, or countries such as China and India.

But they have killed one $3 billion strategic deal, at least for now. France has halted the delivery of two Mistral warships until further notice.

This is a MAJOR Warning Signal That the Bubble Just Burst

Throughout the last 5 years, the financial markets have moved with high yield bonds (also called Junk Bonds) leading stocks. This makes sense: as the financial system began recovering from the 2008 Crash, money began flowing back into riskier and riskier assets.

You can see this below, with High Yield Bonds outperforming stocks, leading them higher from 2009-2014. With interest rates at 0%, investors were hungry for yield. Stocks only offered 2-3%, so this lead investors into Junk Bonds which typically yield 7% or even more.

Then something happened. Junk Bonds began to collapse… in a BIG WAY.

Indeed, Junk Bonds have been flashing a MAJOR warning signal that something BAD is coming. But stocks have ignored it for all of 2014.

Indeed, if you look at what happened during the October 2014 correction, you see that High Yield Bonds did NOT buy into the bounce AT ALL!

This is a MAJOR warning signal that the great “recovery” in risk assets was ending. The Fed spent over $4 trillion and managed to create another stock market bubble, but that bubble is ending.

http://www.zerohedge.com/news/2014-12-13/major-warning-signal-bubble-just-burst