Special Extra: Oil’s not well that Ends Well

Has anybody got a spare Viagra for the RTSI?

On Monday, crude oil prices jumped 16%, the largest one-day spike in history.

On Tuesday, the Russian RTS oil and gas index closed down (yes, down) nearly 3.75%, and the overall market was down 2.85% to close at 1272.  The market is down more than 1,100 points — over 45% — since its May record high and down 400 points — nearly 25% — just in the past month alone.

Special Extra: Potemkin Russia, Gone Haywire

It’s hard to say which bit of news is more revolting — that the venal, spineless terrorist who broke into Sarah Palin’s e-mail and published messages from and pictures of her children is the son of an important Democratic politician (and the Obama campaign is silent about the atrocity), or that the horizontal line on the RTS index from Wednesday and Thursday has turned into a vertical line today, as shown in the above chart.

Special Extra: Bye-bye, RTSI

The Kremlin shut down the Russian stock market with the RTSI down 45% in less than a month, as shown above

As we reported Tuesday, the Russian stock market has collapsed.  On Wednesday, at 12:10 Moscow time, the Kremlin made it official.  With the RTS index less than 60 points from crashing through the mind-bending 1,000 point psychological barrier, the Kremlin simply stopped all trading and it did not resume (you can see the graph above begin to flatline at that point).  So much for Russia’s “free” market!  Russia’s financials sector led the way to the bottom, “closing” down over 7.5% after a few hours of trading, and telecoms were close behind.  The overall market was down 6.39% when the final curtain fell.  Already panicked, the marked imploded on fears of widespread banking collapse as the ripple effects of the American market drop were fully felt and realized.  The RTS is down a shocking 57% from its May record high, and its losses are fast approaching one trillion dollars.  Do you dare imagine what would have happened to Russia if the price of oil didn’t happen to be near $100 per barrel, but was instead around $40? Would Russia as we know it any longer exist?

The Russian Market is Doomed

Writing in the Moscow Times, Russian economist Konstantin Sonin says that the Russian stock market is doomed (actually, he said it, before Black Tuesday, making him look pretty sharp indeed):

President Dmitry Medvedev likes to blame Russia’s stock market troubles on the global financial crisis that was triggered by the U.S. housing market bust, while critics of Medvedev and Prime Minister Vladimir Putin see it as the result of the government’s mistakes.

The truth lies somewhere in the middle, but probably closer to Medvedev’s position. Developing markets fluctuate in unison, so most of Russia’s losses can be attributed to investors’ jitters over the worsening global crisis. But the MSCI Emerging Markets Index, which tracks stock markets in developing economies, fell by just 20 percent since May, while Russia’s stock market dropped by more than 40 percent. This suggests that Russia’s leadership played a significant role in the stock market decline.

Special Extra: In Russia, Black Tuesday — the End of Days

The Russian stock market is collapsing just like the USSR itself

Despite aggressive attempts to prevent it by the impotent Kremlin of Vladimir Putin, the Russian stock market has totally collapsed, suffering its worst day since the 1998 economic meltdown, closing down almost 11.5%  at 1131 on the RTS Index, a massive loss of almost 150 points on a base that had already been emasculated into insignificance.  In just the month of September, the RTS ruble index has plunged sickeningly from a high of 1650, a breathtaking drop of more than 500 points or one-third its total value at the start of the month.  The MICEX index, which is measured in dollars, crashed into triple digits, smashing the crucial 1,000 point psychological barrier.  It was down at one point over 15% to below 900, before recovering slightly. Share values in Sberbank, state-owned and dominant in the market, were down more than 20%.

The Kremlin is in full-on panic mode.  Both the MICEX and the RTS were forced to impose the draconian measure of a halt in trading for a full hour, a clear sign of desperate fear that the entire market could implode before gaping eyes.  Had this not occurred, for all we know the current value of the market might be zero. Heaven only knows what duplicitous behavior the Kremlin may right now be engaged in behind the scenes to keep the full nature of the collapse from the world’s prying eyes when the market opens tomorrow morning. Perhaps the Kremlin will simply spend the national rainy-day fund to buy the entire market and decree the prices. That’s what the USSR would have done.

Special Extra — The Russian Economy, Imploding

The Russian stock market has plunged below the 1400 psychological barrier and, as shown above, its key indexes are down nearly 45% since June

The Russian stock market continues its freefall, and the Kremlin is in full-on panic mode.  As the graphic above indicates, the RTS metals index is down 45% from its June position, and the other indexes are hot on its heels.  The Moscow Times reports:  “Hit by the news that second-quarter economic growth fell to 7.5 percent, from 8.5 percent a quarter earlier, and a year-to-date inflation figure of 9.8 percent, the dollar-denominated RTS fell to 1,309.49 points, a two-year low, closing at 1,334.33, a fall of 4.4 percent. The more liquid, ruble-denominated MICEX fell 3.8 percent to 1,114.67 at the close, its lowest level in 27 months.”  And this in a climate of radically higher oil prices! Do you dare imagine what would be happening to this market if oil was still at $60 a barrel?  UPDATE:  The following day, the market crashed through the 1300 psychological barrier to close at 1298.08 on the RTS, ignoring the reassurances given by “president” Medvedev, as described below.  The MICEX was flirting with triple digits, and Russia was warned against artificially inflating the market with a government cash infusion, on pain of a reduced credit rating.

Russian “president” Dima Medvedev’s reaction? Pure gibberish, frighteningly unhinged.