The Russian market had been doing well enough since I picked it up at year's end 2010. It
is ahead by 8.3% through Apr., but it did start giving up some ground during the month. Now,
on 4/29, the central bank has boosted short rates in a surprise move to counteract inflation,
which has moved up to about 9.5% yr/yr. The "back" story has it that both Medvedev and Putin
are getting nervous about their low approval ratings as inflation has crept up, and with national
elections slated for 2012, the guys are ready to foster slower growth to diminish inflation potential.
The Russian market is just now starting to diverge from strong friends it has tracked with such as
the SP 500, the oil price and my heavy industry economic indicator. So, Russia joins a list of
emerging economies contending with rising inflation as economic expansion rolls along.
Engineering economic "soft landings" is always and everywhere a tough challenge.
A break of support at 39 on the RSX would not be a good sign. RSX. Note the weakness in the
market prior to the surprise announcement by the CB -- the smarter money knew.
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