In order to stem the rout in the Ruble, Russia just hiked rates from 10.5% to 17%. The last time Russia responded to capital outflows like this was in 1998. I’ve told you about 1998 before and it was nothing to remember fondly. Zero bid trading action. Eleven AM margin call liquidations. Sheer panic.
“The decision was driven by the need to limit the risks of devaluation and inflation, which have recently significantly increased,” the central bank said in a statement
This move by the Russian Central Bank is sure to scare the shit out of people and might lead to a treacherous Asian trading session.
Here are your new problems to deal with and consider.
1. Russian capital outflow crisis.
2. Oil crisis.
3. Iron ore price crisis.
4. Dry Bulk Index crisis.
5. Investor sentiment is horrible.
Over at the rumor mill, lads are suggesting that Russia might be selling gold reserves to raise cash. I don’t view this as being unreasonable, which is why gold is uninvestable. Whether this pushes Russia to act harshly in the Ukraine to buoy Putin’s popularity at home remains to be seen. One thing is for certain: if I was an alien viewing the price action in these commodities and subsequent action in global markets, I’d surmise there was a looming economic crisis in the balance.
The Fed needs to respond right away, in order to help reflate markets. Their mandate is to boost inflation rates and right now we are circling down the deflationary toilet bowl. They should’ve never stopped QE.
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One place to get some yield.
the end is near
Are you considering a merger with Z.Hedge?
i did try to do that in 2007.
Seriously? Thank God that didn’t happen.
Because QE isn’t the root cause of all of this in the first place, right? We simply haven’t done enough! Shale wouldn’t exist in anywhere the magnitude it does now if for not idiotic QE. Pretty telling that we now need the whaaambulance because stocks have dropped back to where they were 4 weeks ago. You’ve turned into Krugman’s pre-pubescent shinebox boy.Can you not make money in any environment other than the Fed forcibly pushing your stocks up each and every day?
I remember you used to talk about being bearish to hopefully pick up stocks at cheap prices, and not rooting for the end of the world. Why not look at this possible calamity as a huge opportunity 6 months out instead of wanting the Fed to waste bullets pushing a huge rock uphill?
Putin doesn’t give a shit. He’s out surfing great whites.
Ooooooooooooh Boooooooooooy
Oil – really would be – a BLACK swan
Good one…guys..
When oil goes to 40 we have a big war
Reflate the markets? Aren’t low oil and commodity prices a net positive for the markets?
The Russian rate hike is completely idiotic. The ruble will be decimated.
Russia’s central bank should stop it’s intervention and let the ruble drop and deal with the consequences.
So much sovereign infrastructure was reliant on 80+ 70+ 60+ oil
Net positive??? Not with this plunge speed
Russia has a target on its face man. They are being cornered. And then kicked. Most likely
I also got that itch between the ‘ol shoulder blades today, something ….is….wrong…here. Sold out of most of my equities, have a big position in a junior Mexican silver miner (can you guess which one?) and a small position in some oils…tried to catch that knife a few times, sure I have some minor cuts on my hands no biggie.
Ok I’ll be the goof…just recently started reading your blog, so I don’t know your views.
The last paragraph was sarcasm right?
No, Dr. Fly is completely serious, he has always been against ending QE
Wow…and thanks
We are now in the overshoot mode in oil. WTI should probably be $65 but it has to drop past that by $15-20 to make the point – don’t produce so much oil! We don’t know what to do with it all.
Keep it in the fuckin’ ground.
Doesn’t take any Einstein to figure THAT out!
DRILL DRILL DRILL!
Who has the honor of playing the role of Long Term Capital Management this time around?
Who seems to be ahead of the flow? Pick your viscosity.
Geniuses of the stocktwits!
Just fucking wonderful.
Fucking GPRO.
I wasn’t kidding when I said the last trade I followed you on was VXX.
Tell me your next pick
My root veggie thoughts:
1. Russian capital outflow crisis.
– The bulk of the outflow is out.
2. Oil crisis.
– I don’t own a gazillion ton tankard of the stuff so I don’t really care.
3. Iron ore price crisis.
– No Clue.
4. Dry Bulk Index crisis.
– No Clue.
5. Investor sentiment is horrible.
– Not really but anything that involves sentiment is volatile.
My biggest nemesis’s
Are starting to feel
Pain
Bdi
Iron. Ore.
Copper (extra -opper)
I’m full of blood lust and as susceptible to schadenfreude as the next root veg but I have nothing against the_real_fly. His flog, so far, is yummy food for thought.
Stop panicking .. you know i traded 1998 and not just traded it – I traded Asian markets.. yep.. still here…
and fuck Russia
The US is the only game in town that isn’t a disaster, so everybody and their grandma is jumping into the US dollar and US stock market.
PREPARE YOUR RALLY CAPS!