About Me

Retired chief investment officer and former NYSE firm partner with 40 years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Tuesday, August 06, 2013

Trading Russia -- Better Lucky Than Smart

I have done alright trading the Russian stock market via the ETF route and as a higher
beta proxy for the oil price. There was a nice long side trade in early Dec. 2012 on a
stronger oil price and with better late autumn industrial output (See 12/5/12 post in
archive if you're interested).

I have stayed away form Russia this year because of the sharp divergence between the
price action of oil and the RTSI and passed up the recent opportunity to go long with
the exchange's value having dropped down to important support. RTSI Weekly Chart

Russia's industrial economy held up reasonably well in 2012, but the domestic side has
clearly weakened in recent months. The poor price action of the stock market after Jan.
of this year tells me the smarter money surely had the edge as it has been discounting
slippage of the industrial sector into negative territory. Russia Mfg. PMI

Moscow has been having good fun with the Snowden affair, but it is time for Putin and
his boys to tackle a deteriorating domestic economic situation which has damaged the
market after a solid 2012 economic performance in the face of the Eurozone recession.

Relative to the oil price, the RTSI should probably be trading up around the 1600 - 1700
area. But, being half a world away, I plan to stay on the sidelines for now to see how
the domestic economy performs in the shorter run. In the meantime, there is the great
music to enjoy -- No, not Pussy Riot --  but Shostakovich and Prokofiev, two of my
favorites.

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