Is the Crimean Crisis

Resolved? Are Markets Poised

to Hit New Highs?

with Peter Esho May 16, 2014

Markets had been looking for some certainty over the Crimean situation

over the weekend, and it seems as though vote to join Russia has

progressed in line with expectations. We aren’’t seeing some significant

moves on markets this morning because the market was pricing this in.

What we’ will say about this point before moving on to the rest of the

trading week, is that the market will be looking for any fall out from

economic sanctions imposed by the west on Russia.

There are reports already of in excess of a hundred billion dollars of

capital to have moved outside of the US in anticipation of the sanctions

being imposed on certain Russian individuals. What we do know from

recent history, particularly after 9-11, where certain parts of Middle Eastern

money did move out of the United States, is that this creates some

imbalances. It creates some pockets of trading opportunity, and we�’ll be

monitoring these and updating our clients in terms of our Invast Insights

reports which are published weekly.

Also, on Invast Insights this week, we further touch on the copper price.

Last week, we did make the points that we thought copper at about 3

dollars a pound, looked set for a little bit of a recovery. That has not played

out, but what we have done this week is we’ve published our technical

views, our technical points which we think offer support and resistance for

the copper price. Copper is still languishing, but there’’s a fair bit of

Chinese data to come out this week.

There’ is also news that the Chinese have widened the trading bands

around the Yuan to about two percent. It seems as though the move

towards regulating that currency over a very long period of time is

progressing. What the markets will watch this week, very importantly, will

be the US CPI numbers --- the inflation numbers which are expected to

print at just point 1 percent. We expect there might be a bit of surprise to

the outside, and that plays into the US federal reserve as they do come

out to the market and articulate where they see monetary policy going

forward. So that will be very important. All major currencies will be

watching for that point.

We think that the inflation expectations in the United States, given recent

data around the economy, given the strength of energy prices for example,

and movements in the US currency, are a little bit on the lower side. We

wouldn’t be surprised if we do see somewhat of a fallout from markets if

that inflation rate is pointing higher. That is the most important piece of

macroeconomic data that we are watching this week.

Make sure you register into Vito�’s weekly live market analysis update. He

will go through all major currencies and key industries to give you an

update. We�’re already seeing the gold price ticking up higher in

anticipation of inflation, perhaps flown through into the developed world.

That’’s the way we�’re reading the markets this week.

If you haven’’t already signed up to a four-week free trial of Invast Insights,

you will now see the link to that - www.invast.com.au/resources/invast-insights.aspx

Thank you very much and we hope you have a very successful week.