The Russian stock market was down 14% today. Following a staggering 650 basis point increase in interest rates, from 10.5% to 17%, the Russian Ruble declined by another 18% this morning. It’s obvious to me that someone is trying to break Russia in two. Over the past decade, Russia has accumulated over $400 billion in cash reserves. I am guessing those reserves are being used to try to stop this rout. But this wave of unremitting panic is too violent for them to arrest.
As a result, global markets have the jitters. We aren’t seeing a panic yet, since western economies are fairly detached from Russia. However, I invite people to remember the ghost of 1998 and how the Thai Baht nearly brought the world to its knees.
Oil is down by another 3.5%– and we are being told this is a good thing. The people on the television are once again alluding to interest rate hikes. Only the family idiot would go on teevee today, seeing interest rates at new lows and panic in the air, and suggest the Fed should tighten. You’ve been mollycoddled all of your lives and now your stupidity has taken on a savage quality to it.
The market has fribbled away any semblance of normalcy in my life. Frankly, I see everything from a cynical perspective, trained in the flames of correction–disciplined to the point of aversion. I see gold taking off and futures spiraling lower. TLT is going to hit new highs and all I can deduce is we are in the midst of a financial panic.
The only sane course of action is coordinated central bank easing, in order to catch this devil by its tail before it’s allowed to manifest and spread its poison to other areas of the global market place.
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Is there any scenario where the markets drop 20% and the Fed doesn’t need to ease? Do you see the inherrent problem in the long run with this sort of thinking?
I agree that we will see interest rate cuts globally, but not here (but they won’t rise).
It will be a race for global currency devaluation just like in the ’30s.
Go with the Russell today (IWM) and in the meantime stay away from those teevee shows which get you all excited.
Switch to Leave it To Beaver- much calmer for the brain.
P.S. I recall 1998 and when the US markets were halted and closed early on a Friday PM because of the route.
MOLLYcoddled good sir…MOLLYcoddled
My humble estimate is the current rate of “reserve burn” gives mother Russia about 25-30 days to live. After that everything is depleted and they the only thing left is to start selling the art and gold they looted from the Nazis in WWII.
That should give you your re-invest time line. The world economy will be miraculously saved after Russia/Putin has been sufficiently disciplined.
All in the plan.
Everything is the worst.
January might be and epic scream higher.
Gold priming itself to get annihilated.
Aminal spirits.
Yes of course, mollycoddled. I didn’t sleep at all last night
understood
Saudis are doing to Iran what 0bama doesn’t want to do (even the Fwench are ticked @ 0) and that is making sure they don’t develop a nuke.
Iran, which depends on oil for their economy, is much closer to collapse than Russia
Interesting hypothesis Caddy, but I haven’t heard any screams of pain from Iran, especially since the sanctions have been eased on them. What makes you believe this?
I found several recent articles that agree.
Here is one.
http://nypost.com/2014/12/14/saudi-arabias-oil-war-against-iran-and-russia-2/
Maybe Putin will call Ivan Drago to challenge us, thus we will be forced to rely on Sly Stallone to learn them dang Ruskies a lesson!
I thought the destruction of Russia was a good thing? Russia can blame this one on Saudi Arabia
Raising rates to 17% was a rank armature play by the Russian Central Bank.
It smelt of panic and speculators are quire rightly attacking it with renewed vigour.
They must drop rates, cut military expenditure to zero, revise the budget , and signal prioritizing the domestic economy and ride out the consequent inflation!
They need to sell the USD down 10%
You have that exactly right, shiek. A strong US dollar is killing us.
The destruction of Russia is INSANITY and serves only to further destabilize the Eastern Hemisphere.
It’s as stupid as our Cuban blockade.
The Cuban blockade in the early ’60s was pretty cool.
When JFK outfoxed Kruschev (when he delivered nukes to Cuber) we got to practice our survival skills in elementary school.
The alarm would ring and we would hide under the desks with our hands covering our head.
And then we were vaporized.
You didn’t really mean Cuber. Right?
yes, he did.
As in JFK “Cuber.”
Ecchymosis knows.
There is no Bernanke.
I love low oil prices. Markets will adjust and eventually oil prices will rise again as speculators return to the market. Don’t worry the consumer will get screwed again.
Repsol has bought Talisman Energy,up 50%…You may hear about it after they stop talking about the kid with fake $72 mill. trading account
i feel like watching a Bond movie tonight. Golden Eye or From Russia with Love?
From Russia with Love
Why would anyone ever watch “Goldeneye?” It’s better than “Die Another Day” but so is a rectal hernia.
First Bond movie for me as a teenager. F355 at the beginning. Granted, it was the start of Bond movies getting stupid with the special effects. Still, GoldenEye for Nintendo 64 was the greatest game of the millennial’s childhoods.
+1 on all fronts
Natasha was hot too.
I am actually a big fan of the two Dalton Bond flicks. He is the best Bond, followed by Connery, then Craig, Brosnan, Lazenby, and then the ludicrous ROGER MOORE.
Dr. Fly.. To lighten up the mood around here, you should tell us a story of a great trade you had that has banked you some serious coin. I want a good .com story. What percent gain did you make? When you made the money did you build a room onto your house? Buy a fancy watch? We gotta fuckin figure out how to make this game fun again.
Today I am make believing I am Gordon Gecko, trading while listening to the Talking Heads on repeat for the next 6 hrs.
Try Pajama Time. How old are you?
31.
read his posts on FTK.
putin is looking usually daper
Buy them
$FUEL trading higher
Crude is bouncing, therefore the price of rocket fuel for rockets goes up.
XLE,OIH doing pretty good here and Russell 2000 (IWM) wants to be +.
Starter in $RSX. Swinging for fence. Will add more later.
wow, 10% turnaround already. May not get a chance to add more lower.
You see, Russia has finally discovered that it’s cheaper to buy barrels of crude than it is to buy RUB.
going to be another plunge int the close. all bouces to be faded
sitting on shit…stuck…cant sell…no dry powder to buy…essentially Im fooked,
Fly, what do you think of Ford’s evaluation here?
valuation*
If I would give you some money from my wallet would that help ease the pain?
(Ron burgundy)
Fly, if you start the blogapalooza soon, you may hit 10,000 posts by Christmas. You’re almost there!
You’re right: Someone(who could that be?) is trying to “break Russia.”The world can have US doctrine of regime change vs Russia/China or global growth. Not both. The FED, markets and everyone else are simply cannon fodder in the calculus of the lunatics running US foreign policy.
They’re trying to keep Russia from overrunning Ukraine. And so far it seems to be working, without having a war.
Ukraine should be part of Russia. Kiev was a RUSSIAN city.
The West wants to get rid of the Russian pipelines.
It would be nice to have an alternative to the Russian pipelines, but I don’t think they want to be “rid” of them. And Kiev, I think for most residents, would like to be aligned with the west rather than controlled by Putin.
Why do you think anyone in government is smart enough to “break Russia”? Couldn’t it be that malinvestment is finally making itself known?
I hear rumors that buy-money stuy kid is buying CL futures right now…. just a rumor though.
who was it that said” jay carney said to short russia…
fly you panic like a little girly girl
the Stuy. kid is buying RSX
figures the Santa rally starts on the first day of Hanukkah. Bears taking the plunger early than scheduled. Buy em
down we go again. so much for that
We need some good Bolivian coke.
What of the $BABA ??
Need $BABA to clear 108 then to 110-115 relatively quickly I think if we don’t fade
+1
Monsieur Le Fly believes the same malevolent anacephalics who created the problem are smart enough to fix it.
If Vlad were to step down, declare free elections, and pull support from south Ukrainia., or if Sony were to make a movie about him, oil is back to 100 and S&P at new all time highs within 5 minutes. In other words, this “crisis” only exists on TV (FNN). Russians are still dining on barley just as they always did. No need to worry until futures contracts expire.
The real difference between today and 1998 is that in 1998, “we” (i.e., the west and its financial interests) had a vested interest in bailing out the Russians. In 2014, not so much.
once the market goes into plunge mode, it ant be stopped until they ring the bell
I Disagree.
Woke up from my nap; it looked like someone was buying on the European open.
What the markets need right now is liquidity. Margin calls have drained liquidity. Middle Eastern SWFs have likely been selling international equities (US, European, Asian) to make up for less petrodollars, draining liquidity . Russia
selling gold has drained liquidity.
It won’t take much more liquidity to be drained before there are serious problems in the financial markets.
Round trip baby comeon