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Are Markets "Punishing" Russia? ... Or All Emerging Markets?

Tyler Durden's picture




 

Much has been made of the "costs" imposed on Russia - by the West - thanks to the sanctions... and how this has crushed the economy, tumbled the Ruble, and created huge outflows (even as the Russian stock market outperforms the US since sanctions began). However, this 'party line' propaganda that Obama and his followers would like the world to believe about the efficacy of sanctions is simply false. As the following charts show, outflows started considerably earlier and are much more serious for the rest of the Emerging Markets... and as Constantin Gurdgiev notes, Russia has actually seen inflows recently...

 

The "Market" does not seem to be punishing Russia...

 

But it's really all about the outflows...

Via True Economics blog,

An interesting analysis from the BBVA Research on capital flows to EMs… while much can be discussed, one thing is of interest from my point of view (not covered by the BBVA): Russian inflows.
 
We've heard about alleged markets punishment and investors flight from Russia. And there has been some for sure. Except, the theory that this flight is tied to naughty kremlin behaviour in Ukraine is a little… how shall we put it… a stretch may be?
 
Ok, let's look at how net capital flows look in the EMs: 
 
Emerging markets are some 14% below trend - big outflows starting with non-Ukraine Fed tapering:
 

 

 
 
So Asia is even worse off than the general EMs... And Asia is Ukraine-free and Fed-tied.
 
Yes, Russia is down… 24% below trend by estimates of the BBVA

 

And guess what: decline started in the same 'tapering-on' period and well before Ukraine and accelerated similarly to the rest of EMs. 
 
And worse… look at what happened in Brazil:
 
 
Brazil's 'troubles with Ukraine' started earlier on than rest of EMs, but accelerate with Fed tapering.
 
Heard of Indonesia? It seems also to be in a conflict with Ukraine:
 
 
So how about that thesis alleging that Russia is being punished for Ukraine crisis by those investors?
 
And here is BBVA's guide to controlling thos outflows...
 

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Sun, 05/18/2014 - 23:02 | 4772655 Peanut Butter E...
Peanut Butter Engineer's picture

Let the sanction begin!! It will take off any minute now.

Sun, 05/18/2014 - 23:16 | 4772678 Newsboy
Newsboy's picture

"Punishing" Russia is extremely costly, according to history.

Sun, 05/18/2014 - 23:24 | 4772700 linniepar
linniepar's picture

Ameriiiicca,  fuck yeah!  Glad we're elected sheriff of the world.

Mon, 05/19/2014 - 09:32 | 4773298 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

The MSM propaganda rolls on! Thanks ZH for pointing out the truth.

Mon, 05/19/2014 - 09:34 | 4772666 CaptainSpaulding
CaptainSpaulding's picture

" It's complicated"

   -  Euphemism for Bartender, I'll have another scotch and soda

Sun, 05/18/2014 - 23:09 | 4772671 intric8
intric8's picture

The powers that be wanted world domination through economic globalization. Cant have your cake and eat it too

Sun, 05/18/2014 - 23:53 | 4772734 JR
JR's picture

The biggest battle of the 21st century, according to the "superclass," is shaping up to be globalism (USA-led) vs. nationalism (Putin-led).

Lest anyone miss the point, Michael Piper, explaining why Israel and the West see Russia as a threat to world governance, writes:

“American Jewish writer David Rothkopf, an associate of longtime intriguer Henry Kissinger, published his book Superclass: The Global Power Elite and the World They are Making, declaring the ‘political fault line’ for the 21st century to be the battle of ‘globalists vs. nationalists,’ and that an emerging ‘global network of anti-globalists’ stood opposed to the ‘superclass’—that is, the New World Order elite (of whom Rothkopf approves).

“Rothkopf wrote: ‘At the core of the “anti-network” is a small group of leaders…[who] might be characterized as “nationalists,” or opponents of the United States, or critics of Western-led globalization… Whether you characterize it as nationalist vs. internationalist, populist vs. globalist or anti-neo-imperialist vs. pro-American globalization, the fact is [the] battle lines are drawn.’

“Rothkopf specifically cited Putin…”

Isn’t it interesting that the American people no longer are involved in whether or not they want to be folded into the globalization soup; it’s only a matter for the “superclass.”

Mon, 05/19/2014 - 00:19 | 4772768 Totentänzerlied
Totentänzerlied's picture

Another silly distraction "theory" with absolutely no supporting evidence whatsoever.

Reality:

http://lmgtfy.com/?q=putin+imf

http://philosophyofmetrics.com/?s=imf

You almost got it here: "opponents of the United States, or critics of Western-led globalization" but that's the full extent of any purported "opposition".

Sun, 05/18/2014 - 23:20 | 4772693 SAT 800
SAT 800's picture

I liked the part about Jim Rogers buying Russian Stocks. I think he better stay in Singapore. Obama must really love that guy.

Mon, 05/19/2014 - 00:00 | 4772743 Hongcha
Hongcha's picture

Before Jim Rogers, Barrons, Forbes and Jim Grant and Motley Fool recommended Russian stocks on this swing,

Hongcha was here on ZH pounding the desk.

Mon, 05/19/2014 - 02:48 | 4772833 SAT 800
SAT 800's picture

Good on ya, Mate. I didn't pay any attention. Not much of a stock guy, anyway, tho. Definetly "Rootin for Putin".

Mon, 05/19/2014 - 06:05 | 4772932 Jano
Jano's picture

only a m0r0n gambles on the "free" market.

or he is not a mor0n, but insider and is frontrunning the cattle.

the rules are set by banksters, so let us guess, who wins.

I judge him to be a heavy insider.

Sun, 05/18/2014 - 23:28 | 4772702 LIBERATUS
LIBERATUS's picture

Can you guys help to spread this petition?

Sign Petition Now!!! Designate US as "State sponsor of terrorism" https://t.co/u6O9OTef8u

Sun, 05/18/2014 - 23:54 | 4772735 Real Estate Geek
Real Estate Geek's picture

LIBERATUS.  A member for two years who just started posting TODAY, and all posts are the same.  Odd, isn't it.

Mon, 05/19/2014 - 05:56 | 4772925 aminorex
aminorex's picture

It is cheap to buy russian fascist astroturfers.  The whole country is full of serfs.  Two kinds of russians: oligarchs and slaves.

Mon, 05/19/2014 - 00:42 | 4772788 Kirk2NCC1701
Kirk2NCC1701's picture

Halfway through the one-month time window, only 650 people signed toward the 100,000 goal.  Some "balls" 'Mericans have.

All guns, no balls.  All hat, no cattle.

Sun, 05/18/2014 - 23:47 | 4772727 power_shift
power_shift's picture

Good luck "punishing" a resource rich country when just about everyone in the fucking world is trying to raise their standard of living. Yeah, good luck with that.

Mon, 05/19/2014 - 00:09 | 4772760 weburke
weburke's picture

too easy to punish them, if you are mighty, weather can defeat them, but, weather also makes them strong, as homes are warmed using russian energy.

Mon, 05/19/2014 - 00:02 | 4772739 yogibear
yogibear's picture

Exactly, the IMF world banksters vs Putin's nationalism.

Guess Putin wanted out of the Globalist bankster scheme and now their punishing him. 

One thing these greedy sociopaths forget is not to pick a fight  with Russia.

 

Mon, 05/19/2014 - 00:01 | 4772744 Schmuck Raker
Schmuck Raker's picture

Pardon my ignorance, what's a "market"?

Mon, 05/19/2014 - 03:18 | 4772844 Bohm Squad
Bohm Squad's picture

It's where dreams go to die.

Mon, 05/19/2014 - 02:32 | 4772828 Debugas
Debugas's picture

most of the world debts are in USD and have to be repaid in USD

this was one of the US demands to local elites in various countries - they must stop printing national currencies (tie them to USD or its proxy EUR) thus preventing local banks and businesses getting cheap credit in national currencies and forcing them to borrow from abroad in USD or EUR (european banks borrowing from the Fed in USD anyway so ultimately the debts are in USD)

Mon, 05/19/2014 - 05:51 | 4772922 aminorex
aminorex's picture

Agreed. Sanctions are ineffective.  Next step: biological agents released in Moscow subways.  Lets hope that is effective because the failover is nuclear.

Mon, 05/19/2014 - 05:58 | 4772927 gatorengineer
gatorengineer's picture

look at the chart for eem.... bears no resemblence to the above.

Mon, 05/19/2014 - 07:07 | 4772968 Chuck Knoblauch
Chuck Knoblauch's picture

US GDP

 

Q1 2014 - NEGATIVE

Q2 2014 - NEGATIVE

Mon, 05/19/2014 - 07:19 | 4772989 no1wonder
no1wonder's picture

Putin talking to Chinese media ahead of his historic(?) visit to Beijing:

We must also strengthen financial cooperation and protect ourselves from exchange-rate fluctuations among the world's major currencies. Therefore, we are now considering how to increase mutual settlements in national currencies.

source: Russia-China ties at highest level in history – Putin

 

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