Russia, Icahn, and Bloomberg
all the hot takes
News abounds
First, the WSJ reports that Russia is preparing to open their stock market after a record shutdown. The Moscow Exchange is expected to open for trading at 9:50am local time tomorrow, March 24th. While this should be heralded as good news, there are going to be many restrictions on trading on the exchange. The top one is the ban on short selling. Also, foreigners will have a tough time as Moscow has blocked them from selling. Foreigner traders made up almost half of equities trading prior to the shutdown. This will most likely lead to very thin volume when the exchange opens. This will be a ripe time for the government to bid up stocks. They’ve dedicated $10 billion from their sovereign wealth fund to buy some of Russia’s most important companies. I have not yet seen word on whether RSX or ERUS will resume trading. Once they do, I will dive into the prospects of ownership of these ETFs once more.
Hedge fund market wizard Carl Icahn was on CNBC yesterday. Typically these hedgie guys relish the opportunity to go on TV and talk their book up. While Carl didn’t shy away from rambling about his funds holdings, this interview took a turn when he began to expand on his outlook for the US economy.
“I think there very well could be a recession or even worse”
“I really don’t know if they can engineer a soft landing. I think there is going to be a rough landing... Inflation is a terrible thing when it gets going.”
Carl is not holding out hope that Powell and company will be able to softly deflate the bubbles that have risen in the economy from their reckless money printing. He is not some perma-bear. Carl takes a long view on his holdings and didn’t leave CNBC before stating that his book was short malls and commercial real estate. Before you walk away thinking Icahn is some hedge fund genius, he also stated that he believes oil prices have already peaked. I find this laughable as none of the fundamentals have changed regarding the oil picture. Nobody is right 100% of the time. That’s why we cut our losses short and let our winners run.
Last bit comes from Bloomberg. Valerie Cerasuolo put out a piece that zerohedge posted about the next inflation shock. She believes that the economic sanctions on Russia have tipped the balance of our world causing it to become multi-polar. This is something that I have written about a few times already. Does Bloomberg news commentators read the Baerlocher Bearing? (If so, Valerie lets do a collab!). Valerie states that,
“The growing emergency that sanctions on Russia have caused over energy supply security will be inflationary for years to come.”
On top of that news, she goes on to the list of countries that are pausing exports.
“The list of countries restricting agriculture exports is growing. It includes Indonesia, Hungary, Argentina, and Turkey. China’s begun stockpiling corn and soybeans while sources mention state refiners are considering pausing exports of gasoline and diesel in April.”
As trade tightens, lack of supply will develop leading to further inflation. Every country that is paying attention to what is happening globally, is taking an inventory of what it produces because it is about to become a bargaining chip for future trade. The end of globalization is here.