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from The Great Debate:

In Iraq, U.S. is spending millions to blow up captured American war machines

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Last week was a weird one for American military hardware.

In the United States, Mine-Resistant Ambush Protected vehicles (MRAPs), AR-15s and camouflage body armor all made an appearance on the streets of a suburb in the heartland, helping to give a tense situation the push needed to turn into a week of riots. American citizens in Ferguson, Missouri, feeling they were being occupied by a foreign army, rather than their friendly neighborhood cop on the beat.

Riot police stand guard as demonstrators protest the shooting death of teenager Michael Brown in Ferguson, Missouri

MRAPs didn’t get a better rap overseas, either. In what’s still being called Iraq — at least for the sake of convenience -- the U.S. Air Force has resumed bombing missions in the northern part of the “country.” The aim of the missions is stated as being the defense of a minority group known as the Yazidis, who practice a religion unique to themselves and are under threat by the Islamic State, a jihadi group that controls a large chunk of territory in Syria and Iraq.

The extremist cadre Islamic State -- which has declared itself to be the new caliphate, representing God’s will on earth -- has had an incredible string of military successes over the last few months. They’ve taken a lot of territory. They’ve slaughtered a lot of people, including civilians. They’ve imposed what they say is Islamic law -- though many Islamic scholars would beg to disagree.

And Islamic State’s  captured an enormous amount of U.S. weaponry, originally intended for the rebuilt Iraqi Army. You know — the one that collapsed in terror in front of the Islamic State, back when they were just ISIL? The ones who dropped their uniforms, and rifles and ran away?

from Global Investing:

Sanctions bite Russia but some investors are fishing

By Andrew Winterbottom

Russian stocks are up today, for the fifth day in a row and at the highest level in two weeks. What's going on? As we wrote  here earlier in the week, foreign investors have been fleeing this market.  However it could be that some of them are starting to put aside concerns about the potential for further sanctions on Moscow and are scouring Russia's stock markets for contrarian buying opportunities.

Russian stocks, chronically undervalued, are trading now at a discount of more than 60 percent to broader emerging markets, and to China which by all accounts is the standout beneficiary of the Russian woes. Just how cheap Russian shares are can be gauged from the fact they trade at a discount event to turbulent Pakistan. Here is a link that compares Russian equity valuations with other emerging and developed markets:  http://link.reuters.com/guv77v

from MacroScope:

Euro zone recovery snuffed out

A BMW logo is seen the wheel of a car in Mexico City

A glut of euro zone GDP data is landing confirming a markedly poor second quarter for the currency area.

The mighty German economy has shrunk by 0.2 percent on the quarter, undercutting the Bundesbank’s forecast of stagnation. Foreign trade and investment were notable weak spots and the signs are they may not improve soon.

from MacroScope:

All eyes on Putin

Russia's President Vladimir Putin talks to reporters during a meeting in Brasilia

Russian President Vladimir Putin will meet his top security officials prior to visiting annexed Crimea on Thursday with members of his government.

One way or another, with Ukrainian government forces encircling the main pro-Russian rebel stronghold of Donetsk, matters are coming to a head. Putin must decide whether to up his support for the separatists in east Ukraine or back off.

from Global Markets Forum Dashboard:

U.S. shale revolution continues to upend geopolitics

Dominick Chirichella, president, Energy Management Institute

Dominick Chirichella, president, Energy Management Institute

Oil traders who bet on rising prices were hit with a double whammy on Tuesday in the way of announcements from the top two energy data agencies. The still-nascent U.S. shale energy revolution is upending eons-old geopolitical events and it still seems to be in the early days.

Global energy watchdog the International Energy Agency revised lower its outlook for oil demand this year back to 2012 levels as the U.S. Energy Information Administration (EIA) said July U.S. oil production rose to its highest in more than a quarter century.

from MacroScope:

Moment of truth in Ukraine

A Ukrainian serviceman guards a checkpoint near Donetsk

Financial markets perked up on Monday after Russia called off military exercises near the Ukraine border but was the confidence well founded?

NATO’s chief told Reuters there was a "high probability" Russia could launch an invasion of Ukraine where the government said it was in the "final stages" of recapturing Donetsk, the main city held by pro-Russian rebels, a battle that could be a decisive turning point in the biggest confrontation between Russia and the West since the Cold War.

from The Great Debate:

Putin’s already paying dearly for Ukraine – and looks willing to sacrifice much more

Russia's President Vladimir Putin chairs a government meeting at the Novo-Ogaryovo state residence outside Moscow

Russian President Vladimir Putin has adopted a “go it alone” approach throughout the Ukraine crisis and regularly describes his country as “independent” and nonaligned. But Moscow is not as isolated as Putin makes out. The fact that he cannot see this reality -- or chooses to ignore it -- has produced a series of decisions that has seriously undermined Russia’s global role.

For the past two decades, Moscow has viewed its foray into global institutions as a major success. It has increasingly integrated into the global economy.  Those achievements, however, now present Putin with a major dilemma.

from MacroScope:

End game in east Ukraine?

A Ukrainian serviceman sits on a military armoured vehicle near Donetsk

Ukrainian government forces say they are preparing for the final stage of recapturing the city of Donetsk from pro-Russian separatist rebels after shelling its outskirts and making significant gains over the weekend.

The city faces increasing shortages of food, water and electricity. Vladimir Putin must now decide whether to leave the rebels to their fate or step up his support.  Kiev said on Saturday it had headed off an attempt by Russia to send troops into Ukraine under the guise of peacekeepers accompanying a humanitarian convoy sanctioned by the Red Cross. Moscow dismissed the allegation as a "fairy tale".

from The Great Debate:

Putin’s Ukraine invasion threat is more than a bluff — but not his preference

A Ukrainian serviceman uses a pair of binoculars as he guards a checkpoint near the eastern Ukrainian town of Debaltseve

Ukrainian troops have made huge headway routing the separatists in the east. They are in the process of choking off the cities of Luhansk and Donetsk, to which many of the separatists have retreated. The Ukrainian military appears primed to besiege the cities. As Ukraine has gained, Putin has prepared Russia for invasion: as of Monday, Ukraine says there are 45,000 combat-ready troops are amassed at the border. The chance that Russia invades is certainly going up.

But it’s still Russian President Vladimir Putin’s Plan B. Here’s why that’s the case … and what could change his mind.

from MacroScope:

When Mario met Jean-Claude

European Central Bank President Draghi and Eurogroup President -Juncker talk during a news conference in Nicosia, Cyprus

A day before the European Central Bank’s monthly policy meeting, ECB President Mario Draghi will travel to Luxembourg for talks with incoming European Commission president Jean-Claude Juncker. Oh to be a fly on the wall.

Some in the ECB are concerned that ultra-low sovereign borrowing costs and Draghi’s “whatever it takes” promise has relieved pressure on euro zone governments to carry on with structural economic reforms.
Juncker has signalled he is comfortable with a Franco-Italian drive to focus on growth and job creation rather than cutting debt.

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