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March 14, 2014

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Could the falling market be an impact from war preparations? Either from the state liquidating assets, say to pay soldiers, or businesses thinking that cash on hand is king in turbulent times?

I'd think that if the fear were of interstate warfare and the concomitant disruptions, you'd see impacts far beyond just the RTS and Russian bonds (where we have failed auctions.) e.g. Ukrainian bonds, Polish bonds, big safety bid for USD, money flows into German banks, nat gas futures and LNG freight rates (sure, we're not really set up to ship to Europe in a big way, but I'd expect a panic-bid for what capacity is available), etc. I'm not sensing a more general panic yet, are you?

I think I might have been unclear. I agree with you, there is as I write this no sign of a general panic.

There was, though, something close to panic on Monday, which then subsided. The Russian snap exercise in the Western Military District ended on March 4th. (See http://www.nytimes.com/2014/03/05/world/europe/ukraine.html.)

One interpretation of events is that the markets had a complete freak-out over the weekend, but once President Putin ended the exercise, the panic subsided.

So here's the question. The dollar market is too deep for a one-day panic to show up in big movements. The flow-of-funds data (AFAIK, am I wrong?) won't show up on a daily basis.

But the other markets you cited should move if the panic was about generalized war rather than some sort of spontaneous economic sanction. What happened to those prices on Monday?

Not that that's probative. There are equivalent spikes in Feb, and this is a spot price.

I'm not seeing much of anything on the CME physical delivery HH contracts. http://www.cmegroup.com/trading/energy/natural-gas/natural-gas_quotes_openOutcry.html

Why should Europe care what happens between Ukraine and Russia?there is no connection b.w both.

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