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    Russia and economic war by the west #2

    Kiko
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    Post  Kiko Wed Jun 15, 2022 2:25 pm

    How are the Russian consumer prices most recently behaving on the eve of the Fed's meeting?
    caveat emptor
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    Post  caveat emptor Wed Jun 15, 2022 3:42 pm

    Kiko wrote:How are the Russian consumer prices most recently behaving on the eve of the Fed's meeting?
    Inflation mostly stopped to be a threat. Part of it due to ruble strength, but also because imports plunged. 
    If low inflationary environment persists, first order of business will be to further cut interest rate.

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    Kiko
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    Post  Kiko Wed Jun 15, 2022 3:59 pm

    caveat emptor wrote:
    Kiko wrote:How are the Russian consumer prices most recently behaving on the eve of the Fed's meeting?
    Inflation mostly stopped to be a treat. Part of it due to ruble strength, but also because imports plunged. 
    If low inflationary environment persists, first order of business will be to further cut interest rate.

    Then if Russian prices have stabilized, it would be advisable to make them amply published for the Fed's Open Market Committee to sharply raise interest rates today and induce stagflation.
    It's payback time.
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    Post  Kiko Wed Jun 15, 2022 5:29 pm

    Rabobank: The Fed Must Act Because The US Is Losing The Dollar's Power As Global Collateral To Commodities. ZeroHedge. 15.06.2022.

    Fed day - and what a Fed day! In the space of a few trading sessions the market has swung from expectations of a 50bps hike, eyebrow-raising a few weeks ago, to 75bps, a weapon last wheeled out in 1994, with some whispers of 100bps.

    75bps was actually one of the smaller Volcker hikes, the largest being a staggering 525bps in March 1980. In short, the last time US inflation got out of control on the supply and demand side, it dwarfed present volatility.
    True, the US is not seeing a demand boom now even if the rich are in fine fettle, and some see a post-Covid carpe diem, borrow-and-live-now, pay-later attitudes. Yet supply is constrained, and higher oil output is not helped by suggestions of a 21% windfall tax on energy companies; or lower tariffs on Chinese bicycles, which President Biden apparently favours. Our Philip Marey also sees a wage-price spiral in place that will continue if policy is not tightened.

    The irony is that if the Fed ‘only’ goes 50bps, we might get a relief rally. Yet what if we get 75bps and indications of more to come via the dot-plot? Is that already fully priced in?

    As a run-up to today, markets tried to force an equity and bond bounce: both largely failed, as the S&P closed lower, and bond yields went higher. US Treasury 2s are now 3.42% when they stood at 2.82% three days ago; 10s are at 3.47% when they were 3.05%; and 30s at 3.42% versus 3.16%. Needless to say, DXY was higher at 105.2 at time of writing. In Europe, German 2s are 1.22%, up 39bps in three days, and 10s are 1.75%, up 33bps. Italian 2s are 2.12%, up 73bps(!), and 10s 4.17%, up 56bps. Equally needless to say, EUR/USD was lower. These are the kind of bond moves one might normally project over a year or two or three, not the same number of days.

    As I was trying to argue last night, badly, through a head cold, and at the end of a 15-hour day, this is unprecedented for post-Volcker developed markets (DM). However, it’s standard fare for emerging markets (EM), which regularly see pick-ups in demand or supply shocks lead to balance of payments shortfalls, then synchronized sell-offs across asset classes. Is what we are seeing in DM just central-bank over-reaction, or that a deliberately supply-constrained world makes DM look either Volcker-ish or like EM?

    It’s just a view: but if it’s right anyone punching said argument is going to end up like the chap in this Twitter meme picking on a ‘banana man’, not a strawman. Bloomberg are at least running from the on-rushing waters shouting ‘World’s Central Banks Got it Wrong, and Economies Pay the Price,’ over the shoulder.

    DM are DM because they traditionally controlled supply chains. If EM made what they needed, they wouldn’t be EM. Yet if DM now don’t make what they need, how do they expect to stay DM – just by making the economic rules? What if others say no? Ask yourself that as Russia turns off the gas taps to Europe to try to force them to drop sanctions, as the US Freeport LNG terminal says it will be out for 90, not 21 days. So, EU gas prices soar; more inflation; more balance of payments deficits; and less room for ECB policy manoeuvre.

    As a commentator noted this week, the post-1945 global institutions the West created, in all their double-standard glory, are not the source of Western power: Western power is the source of institutions with double-standard glory. Indeed, arguably the real difference between DM and EM is that: “Sovereign is he who decides on the exception,” as the DM UK argues to the EU while ironically doing a great impression of being an EM.

    That concept matters more than markets want to see: why can some act and others not? “Because some markets”? There is open pushback against the global system from those providing key inputs into it. The West either pushes back or gets pushed off the stage.

    The quote just mentioned actually originates from Carl Schmitt, chief jurisprudence source for the Nazis; and Wang Huning, one of the CCP’s most brilliant intellectuals, draws on Schmitt for how China should act. His fellow academic Jiang Shigong also argues:

    “…we are living in an age of chaos, conflict, and massive change in which world empire 1.0 is in decline and trending toward collapse, while we are as yet unable to imagine world empire 2.0… We cannot deny that these ages of historical transition have also created the opportunity for each civilization to construct world empire 2.0… We see the reconstruction of Chinese civilization and the reconstruction of the world order as a mutually re-enforcing whole.”

    https://www.zerohedge.com/markets/rabo-fed-must-act-because-us-losing-power-dollar-global-collateral-commodities

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    Post  Kiko Wed Jun 15, 2022 8:30 pm

    This means that Christine Lagarde's ECB is in a pickle and that the euro is threatened by a deep slump unless it sharply raises interest rates too.

    Fed Hikes Rates By The Most In 28 Years, Signals Volcker-Era Is Back, ZeroHedge. 15.06.2022.

    The Fed hiked rates by a stunning (but expected) 75bps - the biggest hike since 1994. Esther George dissented (preferring 50bps). Fed expresses that is "strongly committed" to fighting inflation.

    The Fed sharply raised its rates outlook (to meet market expectations) and sharply lowered its growth and employment outlooks.

    Since the last FOMC statement on May 4th, all hell has broken loose in global capital markets (and economies).

    US equities have collapsed (Nasdaq -15%) and US Treasury yields have exploded higher. Gold is down around 3% since the last FOMC, mirroring the 3% or so gain the USDollar Index...(NOTE everything shifted after last Friday's CPI).

    https://www.zerohedge.com/markets/fomc-2

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    Post  lancelot Wed Jun 15, 2022 8:58 pm

    Kiko wrote:Then if Russian prices have stabilized, it would be advisable to make them amply published for the Fed's Open Market Committee to sharply raise interest rates today and induce stagflation.
    It's payback time.
    Stagflation is already here. Stagflation is combination of inflation (i.e. overly large money supply) and economic stagnation. The symptoms to the consumer are typically shortages and ballooning price increases. Large amounts of paper money chase too few items in the market. The interest rate hike would be an attempt to fight it by making people save more and spend less. They are basically trying to decrease the overall liquidity and velocity of money.
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    Post  flamming_python Wed Jun 15, 2022 10:28 pm

    Kiko wrote:How are the Russian consumer prices most recently behaving on the eve of the Fed's meeting?

    They dropped recently, 2-3 weeks ago in the shops.

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    Post  ALAMO Wed Jun 15, 2022 10:55 pm

    flamming_python wrote:
    Kiko wrote:How are the Russian consumer prices most recently behaving on the eve of the Fed's meeting?

    They dropped recently, 2-3 weeks ago in the shops.

    Not only that.
    Construction materials seem to be dropping either, as the output is increasing.
    Construction steel -40% the year, right?

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    Post  lancelot Wed Jun 15, 2022 11:46 pm

    Are butter supplies still constrained? That is something Russia could be importing from, like, India or something for sure.
    India dwarves the rest of the world in butter production.

    Much better than depending on Finnish companies.
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    Post  GunshipDemocracy Thu Jun 16, 2022 12:17 am

    https://ria.ru/20220615/inflyatsiya-1795585586.html

    Inflation in Russia in annual terms slowed down to 16.69 percent



    I wonder how long would it take for Russian economy to switch to war effort? it's like in 41 one...aggression and saving industry in Siberia. Then Soviets made it I believe now Russians will be as good in that matter russia russia russia


    ALAMO wrote:
    flamming_python wrote:
    Kiko wrote:How are the Russian consumer prices most recently behaving on the eve of the Fed's meeting?

    They dropped recently, 2-3 weeks ago in the shops.

    Not only that.
    Construction materials seem to be dropping either, as the output is increasing.
    Construction steel -40% the year, right?

    Steel, concrete drop will be great for infrastructure projects indeed. But I wouldn't call them "consumer products" . There is inflation for sure. but luckily it slowed down a lot, nevertheless imho you need always also look into "poor people basket" to check consumer mood.

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    Post  GunshipDemocracy Thu Jun 16, 2022 12:23 am

    lancelot wrote:Are butter supplies still constrained? That is something Russia could be importing from, like, India or something for sure.
    India dwarves the rest of the world in butter production.

    Much better than depending on Finnish companies.

    Pharma, milk (kulfi too? :d) , machinery/ car parts or electronics would be nice to import to Russia strengthening mutually beneficial cooperation.

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    sepheronx
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    Post  sepheronx Thu Jun 16, 2022 12:39 am

    GunshipDemocracy wrote:
    lancelot wrote:Are butter supplies still constrained? That is something Russia could be importing from, like, India or something for sure.
    India dwarves the rest of the world in butter production.

    Much better than depending on Finnish companies.

    Pharma, milk (kulfi too? :d)  , machinery/ car parts or electronics would be nice to import to Russia strengthening mutually beneficial cooperation.

    Having experience in Indian economy, no, electronics isn't something they do. Even though they hate China, China has invested tons into their electronics industry by opening up plants in India. Machinery for most part are either ancient or are foreign. Got the chance to visit a few plants that made things such as screws and bolts.  A reason why automation is still very low in India.

    Automotive on other hand they are very strong in. Would be nice if Tata or Mahindra got involved in Russia. Pharma, yeah that's another big one.

    Dairy, believe it or not, is also a Vietnamese special too. They are heavily invested in russias dairy industry. Butter in India is rarely used or produced besides maybe export? Because they mostly produce Ghee which is their clarified butter.

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    Post  GunshipDemocracy Thu Jun 16, 2022 2:24 am

    Kinross sells Russian assets at half the previously agreed price

    https://www.miningweekly.com/article/kinross-sells-russian-assets-at-half-the-previously-agreed-price-2022-06-15

    MOSCOW. June 15 (Interfax) - Kinross Gold has closed its deal to sell all of its Russian assets to Vladislav Sviblovs Highland Gold Mining.

    The Canadian miner said in a press release that the deal was worth $340 million cash: it has already received $300 million and will get a deferred payment of $40 million in a year.

    The previously agreed total consideration for the transaction was $680 million, which included a payment of $100 million upon closing, with the remaining $580 million scheduled to be received in annual payments from 2023 through to 2027. The transaction consideration was adjusted by the parties following review by the recently formed Russian Sub-commission on the Control of Foreign Investments, which approved this transaction for a purchase price not exceeding $340 million.
    https://interfax.com/newsroom/top-stories/80224/



    well well, 340millions $ instead of 680? So Mishustin knows hot to squeeze money lol1 lol1 lol1




    sepheronx wrote:

    Having experience in Indian economy, no, electronics isn't something they do. Even though they hate China, China has invested tons into their electronics industry by opening up plants in India.


    still they could be more interested in cooperation with Russia since they want to develop their own ...




    Machinery for most part are either ancient or are foreign. Got the chance to visit a few plants that made things such as screws and bolts.  A reason why automation is still very low in India.

    automation is too expensive when workforce is cheap. Unless you got state programmes like in the USSR or China now.



    Automotive on other hand they are very strong in. Would be nice if Tata or Mahindra got involved in Russia.  Pharma, yeah that's another big one.

    both industry sectors could compliment each other. China has strong interest in Russia as a partner against US hegemony but depending to much on China is nto good either, thus India could be a good partner in developing relations imho.



    Seph wrote:
    Dairy, believe it or not, is also a Vietnamese special too. They are heavily invested in russias dairy industry.  Butter in India is rarely used or produced besides maybe export? Because they mostly produce Ghee which is their clarified butter.

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    Kiko
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    Post  Kiko Thu Jun 16, 2022 2:40 am

    The US has become not even a burger station with nuclear weapons.

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    Post  flamming_python Thu Jun 16, 2022 3:09 am

    ALAMO wrote:
    flamming_python wrote:
    Kiko wrote:How are the Russian consumer prices most recently behaving on the eve of the Fed's meeting?

    They dropped recently, 2-3 weeks ago in the shops.

    Not only that.
    Construction materials seem to be dropping either, as the output is increasing.
    Construction steel -40% the year, right?

    No idea, not my trade

    But I can tell you that all the construction projects in Moscow, certainly of all the skyscrapers and highrises, which were under construction before the war - are still progressing as usual. That's about 45 buildings over 150m in height u/c. And some new ones have started after the war began too

    Don't know how it is in the regions though, Moscow certainly has money regardless and the construction industry has not been hit there so far.

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    Post  GarryB Thu Jun 16, 2022 7:46 am

    Was reading on a news website that Russian inflation is over and the lending rate is down to 9.5... the same as it was before the conflict started...

    Can't find it now but did read about how because Kiev has cut gas supplies to the EU that go through the Donbass that Gazprom is going to reduce gas flows because it sent some turbines to the west to be repaired and Seimens sent them to Canada who wont return them because of western sanctions so gas flow to Germany is being reduced... absolutely hilarious... the Germans are complaining.

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    Post  kvs Thu Jun 16, 2022 12:08 pm

    lancelot wrote:
    Kiko wrote:Then if Russian prices have stabilized, it would be advisable to make them amply published for the Fed's Open Market Committee to sharply raise interest rates today and induce stagflation.
    It's payback time.
    Stagflation is already here. Stagflation is combination of inflation (i.e. overly large money supply) and economic stagnation. The symptoms to the consumer are typically shortages and ballooning price increases. Large amounts of paper money chase too few items in the market. The interest rate hike would be an attempt to fight it by making people save more and spend less. They are basically trying to decrease the overall liquidity and velocity of money.

    But this approach is an instant fail since their GDP operates on cheap debt generation. Decreasing consumer spending through borrowing automatically means
    that the economic activity goes down. The central banks of the US, EU and Turkey all know this and that is why they have been avoiding any rate hike.

    It is also moronic to print money (which is what QE is) and fight the ensuing inflation through interest rates. Stop printing the money.

    It is breathtaking how clueless many "experts" are that they had no problem with the massive M2 growth in the US since 2019. This the
    root source of the US inflation and not "Putin's price hike" (aka blowback from moronic sanctions).

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    Post  kvs Thu Jun 16, 2022 12:10 pm

    GarryB wrote:Was reading on a news website that Russian inflation is over and the lending rate is down to 9.5... the same as it was before the conflict started...

    Can't find it now but did read about how because Kiev has cut gas supplies to the EU that go through the Donbass that Gazprom is going to reduce gas flows because it sent some turbines to the west to be repaired and Seimens sent them to Canada who wont return them because of western sanctions so gas flow to Germany is being reduced... absolutely hilarious... the Germans are complaining.

    Russia is actually in a state of deflation (negative CPI) right now. This is not going to last but it means that the interest set by CBR
    is way too high. Nabiullina really believes that Russia has inflationary instability. She is not living in this reality. Russia does not
    print money like the US and the EU. A lot of its inflation was imported from the "non-inflationary" west.

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    Post  lancelot Thu Jun 16, 2022 1:07 pm

    That is correct. The price hikes in Russia seem similar to the ones in the West with minor differences.
    This looks to be imported inflation.

    But I still think it was important at the time to hike rates to stop the stupid bank runs and people converting rubles into dollars in the main cities.

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    Post  GarryB Thu Jun 16, 2022 2:36 pm

    It is also moronic to print money (which is what QE is) and fight the ensuing inflation through interest rates. Stop printing the money.

    It is breathtaking how clueless many "experts" are that they had no problem with the massive M2 growth in the US since 2019. This the
    root source of the US inflation and not "Putin's price hike" (aka blowback from moronic sanctions).

    The problem in the west is they believe their own BS so sanctions work... they just need to be harder and more sanctions and Putin will fold like a deck chair on the deck of the titanic... the problem with lack of money is to print more money... it hasn't worked in the past but if we keep doing it long enough it might start to work a treat and then our problems will all be solved...

    Except most of our real problems we created for ourselves and blaming Russia and Putin for them was the excuse to avoid taking responsibility so even if they do cut Russia and Putin off from the west, the problems of the west are still there and now the foreign debt is 30 trillion...

    Watch it live at https://www.usdebtclock.org/

    There is even an app you can download...

    But I still think it was important at the time to hike rates to stop the stupid bank runs and people converting rubles into dollars in the main cities.

    I think seeing Russian Oligarchs in the west getting money and assets seized by the west makes most Russians realise their own government is not their enemy and when cutting yourself off from the west it does not make sense to gamble your money on their currency instead of your own that you can use in your own country now. Before the US dollar could be great on the black market accepted by everyone... now not so much.

    Still have not found the news report but I have read that they dropped the rate from the original 20 percent down about three times and most recently it was 11 percent but because there is prices going down they reduced it to the pre war level of 9 percent.

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    Post  Kiko Thu Jun 16, 2022 9:09 pm

    Present-day global inflation is not an issue of monetary demand but rather has a geopolitical source caused by a short-sighted and obtuse sanctions warfare. So raising interest rates will not ultimately solve the problem of rising consumer prices, but will instead lead to generate stagflation. SPIEF might well issue a warning:

    Europe's central banks raise interest rates to fight inflation

    Switzerland and Hungary surprised the market with highs, while the UK raised interest rates for the fifth time in a row.

    Central banks across Europe raised interest rates on Thursday, some by figures that shocked markets, and suggested even higher borrowing costs to control rising inflation that is eroding savings and squeezing corporate profits.

    Fueled initially by rising oil prices after Russia's invasion of Ukraine, inflation has widened for everything from food to services, with double-digit readings in parts of the continent.
    Such levels have not been seen in some places since the aftermath of the oil crisis of the 1970s.

    Such levels have not been seen in some places since the aftermath of the oil crisis of the 1970s.

    The Swiss National Bank and Hungary's National Bank caught markets off guard with big upward moves, just hours after their U.S. counterpart, the Federal Reserve, raised rates by the largest amount in nearly three decades.

    Meanwhile, the Bank of England raised borrowing costs by a quarter of a point expected by markets.

    The measures come just a day after the European Central Bank agreed plans at an emergency meeting to rein in borrowing costs in the bloc's south so it can move forward with rate hikes in July and September.

    Yandex Translate from Portuguese

    https://www.brasil247.com/economia/bancos-centrais-da-europa-elevam-taxas-de-juros-para-combater-inflacao

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    Post  sepheronx Thu Jun 16, 2022 9:36 pm



    iEarlGrey (Mike) lives in St. Petersburg Russia.

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    Post  Kiko Thu Jun 16, 2022 11:46 pm

    The price/quality ratio should be such as to have export potential and foreign market penetration as well.

    The media called the drinks that will replace Coca-Cola and Fanta in Russia, 16.06.2022.

    In Russia, instead of Coca-Cola and Fanta, Funky Monkey Cola and Orange drinks will be produced, said the participants of the meeting, at which the Coca-Cola company held a presentation of the new soda.

    It is noted that the taste will be identical to the classic Coca-Cola and Fanta, but lemonade will be poured into packaging with a new design. On cans and bottles with a volume of 0.33, 0.5 and 1.5 liters, a monkey will be placed in headphones and a cap. The design and slogan of the products is “Live at your own pace, ” Fontanka.ru reports.

    So far, the terms of Funky Monkey hitting the shelves of Russian stores, as well as the exact cost of drinks, have not been reported, but they were presented as products in the mainstream segment.

    Recall that Coca-Cola HBC (Coca-Cola Hellenic), which is the distributor of Coca-Cola in Russia, announced on June 16 that it would no longer produce and sell Coca-Cola and other brand drinks in Russia.

    https://vz.ru/news/2022/6/16/1163370.html

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    Post  GarryB Fri Jun 17, 2022 7:31 am

    So they are making new separate brands to sell specifically in Russia?

    Are they trying to avoid a western boycott of Coke in the west if they find out they still sell it in Russia to Russians?

    Or are they thinking the Russian swing away from the west might include a Russian boycott of US products so they are creating what appear to be local versions that are the same presumably with existing resources and people... but with new branding and logos?
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    Post  sepheronx Fri Jun 17, 2022 7:46 am

    GarryB wrote:So they are making new separate brands to sell specifically in Russia?

    Are they trying to avoid a western boycott of Coke in the west if they find out they still sell it in Russia to Russians?

    Or are they thinking the Russian swing away from the west might include a Russian boycott of US products so they are creating what appear to be local versions that are the same presumably with existing resources and people... but with new branding and logos?

    Maybe, or it's their partners taking over the production lines of the syrup. But this isn't first time that coca cola bypassed such sanctions to still operate in a market.

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    Russia and economic war by the west #2 - Page 2 Empty Re: Russia and economic war by the west #2

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