Russian Economy General News: #2

the British prime minister

GarryB wrote:

the British prime minister

I don't even know who he is at the moment... not that it really matters very much... they are all anti Russian to begin with.

A while back there was an article or thread about the UK wanting closer relations with Russia... ha... that lasted a month at most.

The irony is that Britain has gladly harboured Russian thieves who stole billions from the Russian people and now they dare to judge Russia.

Perhaps Russia should start funding NGOs in Scotland and Northern Ireland and see how the English Prime Minister feels then?  Wouldn't need much... just a few million in Northern Ireland... I would wait till after the referendum in Scotland however because while it might work, it could just as easily backfire and the chance of an independent Scotland is interesting....

medo wrote:Sanction will be far more painful for EU than for Russia. Russia could stop buying products from EU and produce them at home or import from Japan and South Korea. So production in EU will fall, that mean less money in EU. Russia stop oil and gas supplies and considering wars in North Africa and ME, prices for oil and gas will rise 3x in EU and there will be shortage in oil and gas supplies, what means reduction in transportations and this will be another strike on EU industry and economy. EU have very large debts and with fall of production and rice of prices for energy will push many EU countries in final Bankrupt. My country is for sure one of them. We are at the brink of bankrupt, but for now we survive with export. Russian sanctions will finish us and I'm sure we are not the only one. However we look, Euro will not survive Russian sanctions and consequences of Euro crash will be disastrous for EU.

medo wrote:

sepheronx wrote:

medo wrote:Sanction will be far more painful for EU than for Russia. Russia could stop buying products from EU and produce them at home or import from Japan and South Korea. So production in EU will fall, that mean less money in EU. Russia stop oil and gas supplies and considering wars in North Africa and ME, prices for oil and gas will rise 3x in EU and there will be shortage in oil and gas supplies, what means reduction in transportations and this will be another strike on EU industry and economy. EU have very large debts and with fall of production and rice of prices for energy will push many EU countries in final Bankrupt. My country is for sure one of them. We are at the brink of bankrupt, but for now we survive with export. Russian sanctions will finish us and I'm sure we are not the only one. However we look, Euro will not survive Russian sanctions and consequences of Euro crash will be disastrous for EU.

The major product Slovenia and Slovakia sells is robotics, which Russia is a major buyer of for industrial use.  Now they have been slowly moving to domestic developers from Skolkovo, hence the UAC is using.  China is already outpacing japan in tech development as Japan's industrial output has slowed down considerably.  Only thing of theirs still running and making money are the automotive due to the fact that every 5 years, people in Japan buys a new car due to laws, and their software development companies (Nintendo, Sony are examples).  China though has outpaced Japan in terms of automotive and industrial production.  China is the worlds biggest consumer of natural resources and is in dire need of them compared to EU, and same goes for India and South Korea, which all three are either getting a pipeline or are in talks of getting a pipeline from Russia.

Russia is a wild card here.  But ultimately, if they play it smart and use domestic enterprises, they can too be in competition in heavy manufacturing like China and India (maybe not in same extent due to population differences).  There is a growing demand in Russia for these products.  It only really takes competent businessmen to try and take advantage of this.

Slovenia doesn't produce any robotics or industry machinery. Slovenian major exporter in Russia is pharmaceutical industry, than we export paints, white technic (washing machines,...), construction material, in past also electricity components, parts for car industry, etc. Export in Russia is constantly growing and bring important money for companies to survive.

Despite an impressive ramp by USDJPY in the last two hours of trading (thank you Nomura and BOJ) whose purpose was to get the DE Shaw and all other correlation algos to push spoos higher, today's trifecta of the ugly guidance by Visa (which dominated the DJIA), very ugly earnings by Amazon (which dominated the Nasdaq) and the CME ES margin hike just proved too much, and while Friday may have been the new Tuesday following 11 "green" DJIA Fridays in a row, today's 123 point drop stopped the trend before lucky 12 out of 12.

As can be seen on the chart below, after hitting daily all time highs for several consecutive days, today's drop pushed the S&P back to levels last seen during last week's MH17 scare. A tactical near-term downgrade of stocks by Goldman in the last few hours of trading (following David Kostin's upgrade to his S&P price target two weeks ago) probably didn't help although (actually it helped since stocks rose since the time the Goldman report hit mailboxes) it is amusing that someone still thinks Goldman sellside research still has any sway (as opposed to merely indicating what the Goldman prop desk is not doing).

It's one thing to implicitly admit that there is a physical gold shortage and as a result nations - such as Germany - are unable to repatriate their physical gold held in the safe and trusted confines 90 feet below the NY Fed, gold which may or may not be there and has likely been leased out exponentially to cover paper shorts by virtually every BIS-overseen central bank (and the BIS paper gold selling team itself of course). It is something totally different to corzine, as in vaporize, 87,000 ounces of physical gold, some 2.7 tons, and blame it on a computer upgrade glitch. Which is precisely what Rand, Afrrica's largest refinery and processor of about a third of the world's gold since 1920, has done after it "discovered" that $113 million in precious metal was missing after "adopting a new computer system."

Bloomberg reports that the refinery in Germiston, a town 20 kilometers east of Johannesburg, has 87,000 ounces of physical gold less than the amount present in its accounting records after “implementation difficulties” with the new system, the company said in a statement today. That’s worth about $113 million at today’s price of $1,296 an ounce.

Taking a page out of China's infinite rehypothecation scheme, the South African refiner essentially told its investors, most of whom are gold miners, to step up and replenish the missing metal or else investors may come asking questions about their own reported gold holdings. And, it succeeded.

Rand Refinery’s shareholders, including AngloGold Ashanti Ltd. (ANG), Sibanye Gold Ltd. (SGL) and Harmony Gold Mining Co. (HAR), agreed to lend the company 1.2 billion rand to help make up the difference.
Laughable excuses aside, those curious where the gold may have gone should probably ask the former CEO: "Howard Craig resigned as chief executive officer in May and has been replaced by Mark Lynam, who is being assisted by management consultant Accenture Plc in sorting out the issue."

However, just like in China, it appears nobody has any interest in actually digging deeper:

The miners, customers of the refinery, have received the prices they were expecting, leading them to conclude it’s most likely an accounting problem rather than theft, James Wellsted, a spokesman for Sibanye Gold, said by phone.
Perhaps it is normal when nearly 3 tons of physical gold goes missing for nobody to care. Alternatively, perhaps it means that just like the entire financial Ponzi system, which can sustain the lies only as long as everyone agress not to "defect" and admit Janet Yellen is a "naked (and very much clueless) emperor", the rot within the gold space has now shifted away purely from the commercial and central banks and is now impacting the miners and refiners. If so, anyone who owns gold is encouraged to take physical possession of it asap because if, as this incident suggests, the Chinese rehypothecation experiment has gone global, when everyone does demand their deliverable be, well, delivered, it will be too late.

Think only the US can engage in the farce known as "sanctions" (why theater, because until Obama sanctions Gazprom, yeah right... crickets... it is nothing but populist theater)? Think again. Overnight Russia's consumer protection agency, filed a lawsuit in a Moscow court - which clearly has nothing to do with recent geopolitical bickering between the former Cold War enemies - seeking to ban some of McDonald's Corp's burgers along with its milk shakes and ice cream, a court spokeswoman said on Friday.

The reason for the ban: as Reuters reports, a regional branch of the consumer protection agency Rospotrebnadzor asked the court to declare production and sales of some products illegal due to "inappropriate physical-chemical parameters."

The lawsuit's list of contested products named the fast-food chain's Royal Cheeseburger, Filet-o-Fish, Cheeseburger and Chicken Burger but not its Big Mac burger.

In other words as Gazprom is to Western sanctions of Russia, so the Big Mac is to Russian countersactions of the US. Impair Russian gas flows to Europe (something which Europe would clearly never allow but indulge us in a thought experiment), and Le Big Mac gets it. And yes, Russia is important to very important for MCD's whose recent earnings have already been disappointing even without having to worry about a Russian embargo: The fast-food company operates about 400 restaurants in Russia and sees the country as one of its top seven major markets outside the United States and Canada, according to its 2013 annual report.

The ongoing transition of gold price manipulation from conspiracy theory to conspiracy fact just escalated as Bloomberg reports, Peter Hambro, chairman of Russia's 2nd largest gold producer Petropavlovsk Plc, said he was "horrified" by the manipulation of the London fix given its importance to the industry. One wonders just how many of these individuals, involved in the manipulation, Hambro is dinner-party friends with?



As Bloomberg reports,

“When I read the reports on what people had been doing to it, I was horrified,”Hambro said in an interview today. “It is something that is really important to people in the industry. It’s something that we use in a big way as we deliver our gold, that’s how we price.”

Barclays Plc was fined $44 million earlier this year after a trader sought to influence the gold fix in 2012. The gold fixing takes place twice a day by phone and is used by mining companies to central banks to trade or value the metal.

The banks conducting the century-old London gold fixing and the London Gold Market Fixing Ltd., which runs the procedure, are seeking to revamp the process. Deutsche Bank AG’s exit from the process this year as it scales back its commodities business left Societe Generale SA, Bank of Nova Scotia, HSBC Holdings Plc and Barclays to conduct fixings.

“To have something that we can rely on is vitally important,” said Hambro, who previously traded bullion at Marc Rich Group and Mocatta & Goldsmid Ltd. “I look forward to its continuing existence.”

Japanese CPI printed 3.6% in June, modestly down from May's 3.7% YoY, but hotter than the expected 3.5% YoY analysts predicted. If you don't eat food or use energy then inflation merely bit 2.3% of your income this year but if you did then you may have noticed that energy costs are 9.1% higher YoY, TVs +8.0%, and Food +4.1% (both showing no signs of making Japan's Misery Index any less, well, miserable). PPI also printed at 3.6% (23 year highs). So when the Japanese politicians say "Abenomics is well on its way to achieving its goals..." they must mean 'of lowering living standards for all Japanese people'.

NEW YORK, July 26. /ITAR-TASS/. International rating agency Fitch Ratings has affirmed a long-term sovereign credit rating for Russia at BBB, Fitch Ratings said in an official statement on Friday.
Russia’s rating has a negative outlook. Fitch experts explained this decision by current events in Ukraine and complicated relations between Russia and the European Union and the United States.

Credit rating agencies such as Fitch Ratings have been subject to criticism in the wake of large losses in the collateralized debt obligation (CDO) market that occurred despite being assigned top ratings by the CRAs. For instance, losses on $340.7 million worth of collateralized debt obligations (CDO) issued by Credit Suisse Group added up to about $125 million, despite being rated AAA by Fitch.[9] However, differently from the other agencies, Fitch has been warning the market on the constant proportion debt obligations (CPDO) with an early and pre-crisis report highlighting the dangers of CPDO's.[10]

Along with Incrementum's 94-page extravaganza on gold, this infographic, the final in our 2014 Gold Series (part 1, part 2, part 3, & part 4 here) looks to the future, covering gold trends that investors should be watching through the rest of the year and beyond. With input from some of the most important names in gold such as Brent Cook, Doug Casey, Frank Holmes, Bob Moriarty, and James Fraser, we aim to cover the broadest and most important signals for investors to watch. Those include Chinese wealth, Indian demographics, money printing, debt, and a lack of significant gold discoveries.

Austin wrote:With Europe joining 3rd round of sanction I see serious problem for Russian Economy.

Dwindling foxes reserves , low investement and bad business climate.

Not sure how things will recover from here.

SYDNEY, July 19 (RIA Novosti) - Turkey suggested using national currencies in trade with Russia, Russia’s Ministry of Economic Development said Saturday.
"Turkey is offering Russia to switch to national currencies in mutual payments," the ministry's press service announced after the meeting between Russia's Economic Development Minister Alexei Ulyukayev and his Turkish counterpart Nihat Zeybekçi in Australia.
The ministers met at the B20 (Business-20) forum, which gathers business leaders of the Group of 20 (G20) members.
The trade volume between Russia and Turkey amounted to $32.7 billion in 2013. Russia is Turkey's second-largest trade partner after the European Union. Turkey ranks eighth among Russia's foreign trade partners.
Russian authorities considered renewing the talks on switching to national currencies in order to decrease the dependence on the US dollar amid tense relations with the West due to the Ukrainian crisis.
The trade volume between the two nations fell 4.5 percent last year but recovered 0.6 percent in the first five months of 2014 due to the growth of Russian export, Ulyukayev said.
"[The fall] is largely explained by the unfavorable global economic environment. Our task is to put maximum effort to preserve the positive dynamics of the bilateral trade," the Russian minister said.
The issue is currently under the revision of the bilateral working group on cooperation in banking and finance.
The Turkish side has also expressed interest in building a transport and logistics hub in Russia with links to sea ports, airports, railways and highways, Zeybekçi said. The ministers plan to discuss the issue in Istanbul in September, according to the Russian ministry.

MOSCOW, July 29. /ITAR-TASS/. New trade missions in Latin America, Asia and Africa will help Russian entrepreneurs enter new markets, chairman of the Chamber of Commerce and Industry Sergei Katyrin said on Tuesday.
“The development of economic relations, investment cooperation and support for export operations are our priority tasks we are solving together with other organizations” working on all tracks such as BRICS (Brazil, Russia, India, China, South Africa), the Shanghai Cooperation Organisation (SCO) Business Council, the Boao Forum for Asia, and business councils. At present, the Chamber has 12 offices in 40 countries.
At its latest meeting, attended by the officials from more than 60 Russian companies, the BRICS Business Forum determined the sectors where the member states can work together, including the development of railway service in Africa, Katyrin said.
The Council of the SCO Heads of State and the BRICS summit will be held in Ufa, Russia’s Volga Region, in 2015. The Chamber will represent the interests of Russian business at the meetings. Russia is preparing more than 30 new projects for the occasion.

NOVO-OGARYOVO, July 30. /ITAR-TASS/. Russia’s new offshore taxation rules will yield about $1 billion in tax revenues for state coffers annually, Finance Minister Anton Siluanov said on Wednesday.
The document, which has been elaborated by the Finance Ministry and will be submitted to parliament after its discussion in the Russian government in August, will oblige Russian tax residents to pay taxes on all of their revenues in Russia instead of hiding them in offshore jurisdictions. The finance minister said this at a meeting of the Russian president with the government.
Up to $50 billion is channeled annually from Russia into Cyprus and the Netherlands alone, of which Russian tax residents’ revenues account for about a half of this amount,” the finance minister said.

More blowback... UK Foreign Secretary Philip Hammond suggests imposing sanctions on Russia are a shared sacrifice that European nations must make. While the sanctions were "designed to maximize the impact on Russia and minimize the impact on EU economies," he warns his fellow Britons that, "It will affect our economy..." As RT notes, London will likely be hit hardest among the EU powers because of its intimate financial relationship with Moscow and we are already seeing UK home prices fall as oligarch flows slow.

As RT reports,

Foreign Secretary Philip Hammond said the measures had been “designed to maximize the impact on Russia and minimize the impact on EU economies.”

“It will affect our economy... but you can't make an omelet without breaking eggs, and if we want to impose economic pain on Russia in order to try to encourage it to behave properly in eastern Ukraine and to give access to the crash site, then we have to be prepared to take these measures,” he told Sky.

“We have spent a lot of time making sure the package is balanced so the pain is fairly shared across the big EU economies, but we can't expect to be able to do this without any impact at all on our own economies."
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One wonders just how UK will cope when Putin really gets going...