US Futures Blast Out Of The Gate On More Empty Promises By The ECB

East Ukraine may be independent in a result which the Kremlin said it "respects" and hopes for a "civilized implementation" of the referendum results, and which assures further military escalation in the proxy war of east versus west, but stocks are happy to ignore it all again.  The reason: a positive close over in Asia (ex-Japan) after China’s State Council pledged to reform markets buoyed demand for risk, although it really is just a follow through to the furious VIX slam in the last hour of US Friday trading, which said otherwise, means buying of US equities was the reason to buy US equities. More importantly and adding to the early spoo euphoria were comments by ECB's Nowotny who said that interest rate cut alone would likely be too little to combat low inflation - suggesting a European QE is coming - also acted as a catalyst for the latest uptick in stocks: when trapped like the ECB and when "guiding" to future activity, if unable to actually execute it, may as well go all the way. End result, Spoos up nearly 0.5% because, well, others are buying spoos.

Expect VIX to plunge to sub 12 today on another late day vicious VIX slam by the NY Fed-Citadel trading complex.

Chinese stocks are receiving a boost this morning on hopes that the government will carry through with market reforms which it’s hoped will increase domestic market liquidity. The Shanghai Composite is up 1.5% this morning. Our Chinese strategists write that the government is interested in pursuing both inward and outward investment programs and relaxing foreign ownership in companies. The government has also proposed opening up the country’s bond and stock markets. This will expedite moves to liberalize the country’s capital account, according to DB’s strategists.

Elsewhere in EM Asia, there’s a lot of focus on elections including in India where the final day of election polling takes place today with the earliest exit polls able to be published this evening local time. Opinion polls indicate the main opposition Bharatiya Janata Party (BJP) will secure the most seats, ending the Congress Party’s decade-long rule. The BJP has campaigned on a platform of economic reform. Official results will be announced by May 16 (Bloomberg Finance LP). India’s NIFTY is up 0.1% today, after rising 3% on Friday. Along a similar theme, in Indonesia reform-minded Joko Widodo has managed to secure a coalition  representing around 35% of parliamentary votes, passing the threshold of 25% needed to nominate a presidential candidate. Foreign investors will be watching the outcome of both elections with interest.

Elsewhere in Asia, the FT reports that Japanese lawmakers are pushing to overhaul the governance structure of the $1.3 trillion Government Pension Investment Fund which will pave the way for the fund to invest in a broader range of assets. According to the article, at present, decisions on asset allocation are taken by one man – President Mitani – after consultation with an external investment committee appointed by the ministry of health, labour and welfare. Under the lawmakers’ plan, a new board of experts would devise a more aggressive approach to investment (FT). The Nikkei is trading slightly lower (-0.15%) and remains near the YTD lows. The USDJPY is trading a little higher (+0.12%).

And yet, in spite of the positive tone this morning, RanSquawk reports that "energy and precious metal prices were supported by the flight to quality as market participants awaited reaction from Western leaders on the developments over in Ukraine." Wait - flight to risk and flight to quality at the same time? Sure, why not.

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