With Russia’s economy battered by economic sanctions and plunging oil prices, President Vladimir Putin has allowed the central bank to administer strong medicine, sharply raising interest rates even as it freed the rouble to float.
Such tough measures may well help push the country deeper into recession next year, but have so far staved off financial panic, runaway inflation or a currency meltdown like the one that helped catapult Putin into power in the 1990s.
Those who follow the central bank say the hawkish moves are a result of Putin, known for closely managing Russia’s machineryof power, giving the bank’s technocrats free rein.
“There is ongoing criticism of the central bank and of the whole government being Putin’s lap dog,” said a high-ranked government source. “But all things considered, the central bank is now much more autonomous than it is broadly perceived.”
The high interest rates will hurt. The European Bank for Reconstruction and Development says recession is certain, predicting 0.2 percent contraction for the full year of 2015.
Politicians have grumbled. Economy Minister Alexei Ulyukayev sent a letter to the Kremlin in the summer urging greater “cooperation” between the bank and the government, viewed as a plea for looser policy.>> Read More
1. Position adjustments were minor in the Commitment of Traders reporting week ending November 18. There were only two gross positions adjusted by more than 5k contracts.The gross short yen position grew 9.2k contracts to 139.1k. The gross short sterling position rose 12.1k contracts to 65.7k.
2. The net short position in the US 10-year Treasury futures rose to 127k contracts from 112k. This was the result of a small add by the longs (8.3k contracts to 398.9k) and a larger sale by the shorts (+23.2k contracts to 526.2k).
3. Given how closely the capital markets are watching oil, we note that the speculative long position in the futures market eased 21.5k contract to stands to 255.3k. The gross longs were culled by nearly 38.5k contracts to 403.7k. Almost 17k gross short contracts were covered to leave 148.4k.
Two days before the scheduled deadline in the negotiations between the six world powers and Iran over a “framework agreement” for the Islamic republic’s nuclear program, the talks seemed deadlocked, with the two sides unable to bridge their differences.
Western diplomats said Saturday that, in light of the gaps, they will begin discussing on Sunday an extension to the negotiations by a few more months.
One Western diplomat participating in the talks sounded very pessimistic during a press briefing Saturday. Reaching a permanent agreement by Monday is no longer possible, he said. The talks resumed in Vienna’s Palais Coburg on Saturday morning, in a last-ditch attempt to reach an agreement.
U.S. Secretary of State John Kerry, Iranian Foreign Minister Mohammad Javad Zarif and EU representative Catherine Ashton met in a trilateral meeting last night. The three met a number of times during the day.>> Read More
Anyone who looks at central bankers speak can sense the fear behind their absurd bravado, and the dishonesty of their public confidence.
The extraordinary disconnect between soaring stock markets and stagnating real economies has been gleefully embraced by all who benefit from the disconnect:
The financial media, brokerages, investment banks, politicos who have made stocks the barometer of “prosperity” and of course the top 5% who own roughly 3/4 of the financial assets of the nation.
Even more extraordinary is the rise in central bank fear that has unleashed extremes of monetary policy. If the real economy is as great as advertised, then why are central banks dropping monetary neutron bombs on a nearly weekly basis?
What are they so afraid of? And if they’re not afraid of something, then why are they constantly hyping their threadbare commitment to “do whatever it takes,” pushing real interest rates into negative territory and buying stocks and bonds hand over fist?
I’ve prepared a chart depicting central bank fear, the stock market and the real economy. As central bank fear/panic pushes higher, the banks have unleashed a torrent of PR and monetary programs that have dragged stocks higher with every phony pronouncement and every new free money for financiers chumming of the stock market.>> Read More
A strong earthquake with a preliminary magnitude of 6.8 hit Nagano Prefecture and surrounding areas in central Japan on Saturday night, injuring at least several people, the weather agency and police said.
Following the 10:08 p.m. quake, the Nagano prefectural government and fire department said they received “119″ emergency calls from several people who were injured in Nagano City, about 220 kilometers northwest of Tokyo.
Police said three homes collapsed in Nagano’s Hakuba village and four residents are unaccounted for.
The Nagano government said the collapse of a house has been reported in Ogawa village as well as ruptured water pipes in Ogawa and Hakuba villages.
The quake measured lower 6 on the Japanese seismic scale of 7 in northern Nagano, and lower 5 in Niigata Prefecture, the Japan Meteorological Agency said.
An aftershock registered lower 5 in northern Nagano at 10:37 p.m., according to the agency.>> Read More
I have been an independent trader for 23 years, starting at the CBOT in grains and CME in the S&P 500 futures markets long ago while they were auction outcry markets, and have stayed in the alternative investment space ever since, and now run a small fund.
I understand better than most I would think, the “mechanics” of the markets and how they have evolved over time from the auction market to ‘upstairs”. I am a self-taught, top down global macro economist, and historian of “money” and the Fed and all economic and governmental structures in the world. One thing so many managers don’t understand is that the markets take away the most amounts of money from the most amounts of people, and do so non-linearly. Most sophisticated investors know to be successful, one must be a contrarian, and this philosophy is in parallel. Markets will, on all time scales, through exponential decay (fat tails, or black swans, on longer term scales), or exponential growth of price itself. Why was I so bearish on gold at its peak a few years back for instance? Because of the ascent of non-linearity of price, and the massive consensus buildup of bulls. Didier Sornette, author of “Why Stock Markets Crash”, I believe correctly summarizes how Power Law Behavior, or exponential consensus, and how it lead to crashes. The buildup of buyers’ zeal, and the squeezing of shorts, leads to that “complex system” popping. I have traded as a contrarian with these philosophies for some time.>> Read More