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Mar 23, 2014

RT News March 23, 2014: Russia in Miniature: One-eighth of the World on 800m2 (RT Documentary)

Published on Mar 23, 2014
"Little Russia" is almost an oxymoron. The country's vast territory makes it the largest in the world. Nevertheless, a group of daring Russian designers and engineers managed to portray all of Russia on just 800 square meters. Join RT to look at the incredible model of Russia and to hear the story of its creation.

Al Jazeera English - March 23, 2014: Inside Store: The Mystery of Flight MH370:

Gene Arensberg's Got Gold Report: Hedge funds getting longer in gold: GATA | THE GATA DISPATCH March 23, 2014.

Gene Arensberg's Got Gold Report: Hedge funds getting longer in gold

Submitted by cpowell on 08:19AM ET Sunday, March 23, 2014. Section: Daily Dispatches
11:15p HKT Sunday, March 23, 2014
Dear Friend of GATA and Gold:
Gene Arensberg of the Got Gold Report writes tonight that "managed money" -- hedge funds and the like -- were getting longer in gold early last week:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Zacks Investment Management - March 23, 2014: ZIM Weekly Update.

The Cold War: Part II 

by Mitch Zacks, Senior Portfolio Manager

Tensions between the East and the West are higher than they ever have been since before the fall of the Berlin Wall and the break-up of the U.S.S.R. after Vladimir Putin essentially orchestrated the annexation of Crimea, formerly part of Ukraine. The events have stoked fears of another potential cold war and possible trade sanctions against Russia.

Crimea held a referendum last Sunday in which 96.7% of the vote was pro-Russian and for the region to be reinstated as part of Russia. That number may be suspect with armed military personnel roaming the streets during the vote but certainly the majority of the people in Crimea, who are mainly Russian speaking and still consider themselves part of Russia, were in favor of the eventual outcome. The U.S. and the EU were quick to call this a violation of Ukraine’s sovereignty and international law and quickly issued mostly toothless sanctions with the threat of more to come if Russia doesn’t back down.

A Different World 

Analysts, investors and pundits have been wondering how all of this will affect the global economy and markets. Most believe the heightened tensions would be a huge negative for the markets, but that’s not necessarily the case. The first cold war, which started in 1946 and ended in 1989 was a period of great economic expansion. However, that’s beside the point. This is a different world than it was back then and I just can’t see a scenario in which two super powers, the Unites States and Russia face off in an ideological battle between capitalism and communism. Capitalism has clearly won that battle

The chance of any large-scale armed conflict seems unlikely. Putin has certainly exposed Russia’s aggressive side and maybe his desire to restore his country to its former status in the world. However, what Putin wants and what’s in his country’s best interest might be worlds apart.

Trade War 

Today the discussion is more about an economic war with trade sanctions as the weapon than it is about nuclear annihilation, as was the case in the Cold War. Some are predicting economic catastrophe for both sides should this continue to escalate. The market had no reaction to the referendum vote as the outcome was largely expected, but in situations like this, it’s important to remember who has the most to gain and, more importantly, who has the most to lose.

For its part, Russia doesn’t seem too worried about possible sanctions affecting trade. Russia announced on Monday that they are buying a 50% stake in an Italian holding company. This seems like an unlikely move if you’re expecting any business interest in the EU to be restricted.

(Continued below...)


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Who Has the Most to Lose? 

An all-out trade war with Russia would do the most harm to Russia itself. Approximately 57% of Russia’s exports go to the EU and approximately 3% to the U.S. The EU is responsible for approximately 47% of Russia’s imports. Russia’s losses wouldn’t have a huge impact as its economy makes up only 2.8% of global GDP, but Russia itself could be crushed economically. The U.S. wouldn’t feel too much of an effect since trade between Russia and the U.S. made up less than 1% of total U.S. trade last year.

Additionally, German Chancellor Angela Merkel, who has essentially appointed herself the head of EU-Russia economic relations, has been heavily lobbied to keep any trade restrictions to a minimum. Germany has accumulated a large stake in Russian investments and the last thing Germany wants is for Putin to enact any retaliatory measures. The EU also gets about one-third of its oil, coal and natural gas from Russia and a disruption to that would be in no one’s best interest.

All this isn’t to say there wouldn’t be ripples across the global economy and markets if this continues to escalate. The European economy, which is in the very early stages of recovery, would suffer. Energy prices would probably spike. If Russia’s supply of energy decreases, prices increase. That is simple supply and demand. It could be similar to oil shock of the 1970s in which there was a shortage of energy due to geopolitical conflict in the Middle East. But again, look to see who would get hurt the most. The rest of the world could survive it, Russia and Putin may not.

Putting it All Together 

The situation in Ukraine is still fluid and there could be many outcomes. But, there is more to lose here for Russia than there is to gain. Just like the natural instinct for humans to survive at all costs, Putin has that same instinct regarding the country he leads. The last thing he would want to do is jeopardize his country or his power and influence in it. I don’t see the chances of this escalating to an all-out trade war being very high. In the end, very few would benefit and many would suffer. More likely, I see this ending with a slap on the wrist for Russia and for the global economy to keep humming along at a decent clip.


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-Mitch Zacks

About Mitch Zacks 

Mitch is a Senior Portfolio Manager at Zacks Investment Management. He wrote a weekly column for the Chicago Sun-Times and has published two books on quantitative investment strategies. He has a B.A. in Economics from Yale University and an M.B.A. in Analytic Finance from the University of Chicago.

Mitch also is a Portfolio Manager for the Zacks Small Cap Core Fund ( ZSCCX ).