Thanks for your input. I always like to learn some new info on interesting situation. I was more referring to recent OPEC statement about their opinion on having the oil low priced in long-term. I can't see any other external factors than oil price, and cut of export due to sanctions. East Ukraine crisis is political foundation of problems, but not the direct cause. That's why I think about oil price and cut of export as two major causes. However, there could be also something else I don't see.
It's usually much higher and much faster than most people think; There was a guy spouting off about 70 on here and I'm sure some of us thought he was nuts, especially after we went from 67 back down to 58. But lo and behold, not only did it hit his 70 target, it blew passed it all the way to 80... that could very well be it... I kinda think FOMC disappoints tomorrow btw and the Dollar pullsback against pretty much everything; time will tell.
Don't want to throw anyone under the bus. Let's just leave it at "heard it from the grapevine." I'm not with them. It's a done deal however. You'll hear about it within a few hours or so for sure by email. Their trading desk is saying they're trying to stay in the game to protect their rep as they've been having a bitch of a time trying to hedge their risks.
Just want to give you guys a heads up to give you more time to plan accordingly. By the way, spreads at Forex.com are 18,000 at the moment with no ability to trade positions... I'm sure it's due to "a lack of liquidity." lol
{quote} Don't want to throw anyone under the bus. Let's just leave it at "heard it from the grapevine." I'm not with them. It's a done deal however. You'll hear about it within a few hours or so for sure by email.
Conclusion is it's about psychology and fear at this point.
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But why is this happening right now? What changed on Monday?
What we're seeing in recent days resembles full-blown panic. There's nothing really new. At this point, it's about psychology: Fear has taken over, and there's clearly a rush on the part of traders and investors to get their money out of Russian assets. We're seeing a run on the entire country.
More interesting part to me:
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What’s the best-case scenario for Russians right now?
In an ideal world, Putin would see that his economy is crumbling (the weakening currency and surging interest rates make for a deadly combination of economic contraction and rampant inflation) and take steps to convince Europe and the U.S. to ease the sanctions. That would probably be enough to stem the panic and also offer real economic benefit. To do that, he'd have to dramatically pull back activity in Ukraine; frankly, that's extremely unlikely. Putin's adventures in Ukraine are very...
Interesting observation, although I strongly disagree with the conclusion. I feel quite strongly the East Ukraine situation will be resolved by Spring. Neither Putin, nor Poroshenko, has any desire to fuel the war. Even Ukraine's war party has given up. Ukrainian people don't want to continue the war. Ukrainian soldiers don't want to continue the war. The guys in charge of the separatists are "heavily influenced" by the Kremlin and the Kremlin doesn't want to continue the war. Cooler heads are prevailing. It's becoming more and more clear that for Putin, East Ukraine was never about East Ukraine or building "a land bridge to Crimea" - (or else you'd have a hell of a hard time explaining RF's strategy in Donbass, particularly in late August), but about protecting Russia's position over Crimea by destabilizing East Ukraine.
Now, this is really gets ugly. CBR desperately tries to hold ruble. No fundamental support though. Russia's financial system on the verge of the disaster. I closed my longs - I always respect huge banks moves. And they are liquidating their positions. I'd rather keep my gains I planned to have in few months and happened to have in two days... If ruble turns to WC paper one would never get back their funds / gains...
The Russian stock market has been getting pummeled along with the Ruble; is it just me or does seem like the perfect opportunity to get in (if anyone is able to)? Rubles are dirt cheap right now and you can buy those Russian stocks dirt cheap as well... hypothetically, if one were to convert their Dollars to Rubles and scoop up Russian stocks, when both go up in value the gains will be magnified.
No one wants anything to do with Russian stocks right now, sort of reminds me when the US market bottomed out in early 2009.
The Russian stock market has been getting pummeled along with the Ruble; is it just me or does seem like the perfect opportunity to get in (if anyone is able to)? Rubles are dirt cheap right now and you can buy those Russian stocks dirt cheap as well... hypothetically, if one were to convert their Dollars to Rubles and scoop up Russian stocks, when both go up in value the gains will be magnified. No one wants anything to do with Russian stocks right now, sort of reminds me when the US market bottomed out in early 2009.
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I think you should be very cautious with this and make sure anything you buy doesn't have debt refinance risk. Perhaps focus on companies which export to the west and/or get most of their revenues in non rubles, just have ruble expenses. Regardless of what happens, the Russian economy is in for a rough ride. That much is certain.
Importantly, the legislation doesn't automatically impose any sanctions, but gives Obama the Congressional authority to do so (which would be especially nasty, since it would require Congressional approval to remove - unlike all previous sanctions). As part of the bill, Obama would have the right to impose sanctions on the arms sector, and more importantly, the energy sector.
Taking into consideration the recent cessation of hostilities in East Ukraine with Kremlin's blessing, and the fact Kremlin clearly perceives itself as being down and trying to resolve the crisis in East Ukraine, this is a bit insane and frankly scary. I'm not a fan of nuclear winters, so I'm just hoping this is geopolitics at play for Obama to claim credit for Kremlin backing down in East Ukraine. We'll see soon enough if any sanctions on the energy sector are actually introduced, or if there's another meeting between high-level folks from US/EU/Russia.
I'm out, closed all shorts in the 67's. Too many brokers are no longer going to allow trading the RUB and/or increasing margin requirements. Small adds with microlots turn into big gains/losses. This is too volatile for me, I'd like to sleep comfortably tonight lol.
Too risky to get caught long or short and be closed out of the position by the broker (not margin called, but just because they decide they no longer want to offer the pair) before the move/profit comes.
I will constantly monitor the RUB as I find all the news fascinating; currency value aside, the real-world implications of a crashing Russian economy could spell disaster for the rest of the world.
I'm out, closed all shorts in the 67's. Too many brokers are no longer going to allow trading the RUB and/or increasing margin requirements. Small adds with microlots turn into big gains/losses. This is too volatile for me, I'd like to sleep comfortably tonight lol. Too risky to get caught long or short and be closed out of the position by the broker (not margin called, but just because they decide they no longer want to offer the pair) before the move/profit comes. I will constantly monitor the RUB as I find all the news fascinating; currency value...
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I can appreciate that and think its a sensible concern. I'm in it for the long haul. I can't describe the current BS as anything other than psychological silliness. I can't imagine RF will let the country collapse without doing something insanely drastic, or that the west would risk the RF going that direction knowing that RFs desperate reactions will probably cause a chain reaction nobody in their right mind wants. Not with Putin at the helm. If I'm miscalculating, then ultimately it'll be a moot point in my opinion.
{quote} I can appreciate that and think its a sensible concern. I'm in it for the long haul.
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Good luck RusCheese, you seem to have a good fundamental understanding of the situation as far as Ukraine and sanctions go; over time, I'm sure you'll profit nicely on this trade.
The Russian stock market has been getting pummeled along with the Ruble; is it just me or does seem like the perfect opportunity to get in (if anyone is able to)? Rubles are dirt cheap right now and you can buy those Russian stocks dirt cheap as well... hypothetically, if one were to convert their Dollars to Rubles and scoop up Russian stocks, when both go up in value the gains will be magnified. No one wants anything to do with Russian stocks right now, sort of reminds me when the US market bottomed out in early 2009.
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We haven't seen anything yet. Back in 1998 the Russian interest rate was *150%* - read that again. No point in getting in until the dust settles and even that's debatable. Who the hell knows what kind of crazy idea will Kremlin pursue to resolve these issues. We're talking major geopolitical risks here, not just economic ones. What we're seeing is complete dismantling of their economy and the real $hit hasn't really hit the fan yet. Gazprom is talking about laying off 1/5 of its workforce (give and take 85,000 people). God only knows what kind of inflation they'll be looking at next year. Even before this crisis broke out they were at 7-8% so I shudder to think what it could be after this latest ruble gangbang. Once all this stuff hits the real economy it'll be a bloodbath. Putin clearly underestimated the possible side effects of his adventures and the concentrated risks of relying on two commodities to pay for all this stuff. This national wealth fund is a complete joke with barely $1000 per person. The guy just squandered 15 years without drawing any conclusions from the past. To do it once is foolish enough, to repeat it is just plain stupid and reckless. That $50 billion he blew on the Olympics would sure come in handy today.
{quote} We haven't seen anything yet. Back in 1998 the Russian interest rate was *150%* - read that again. No point in getting in until the dust settles and even that's debatable. Who the hell knows what kind of crazy idea will Kremlin pursue to resolve these issues. We're talking major geopolitical risks here, not just economic ones. What we're seeing is complete dismantling of their economy and the real $hit hasn't really hit the fan yet. Gazprom is talking about laying off 1/5 of its workforce (give and take 85,000 people). God only knows what...
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Scary times indeed; the move over the last 2 days on USD/RUB and weathering that psychological storm as well as risk management (thank goodness for micro lot adds) make trading all other pairs much more comfortable; I'll be trading exclusively back in my comfort zone now with the good 'ol YEN, GBP, and Commods.
Not sure if anyone is still brave(/foolish?) enough to trade the pair, but thought this was a hell of a good analysis of the situation (especially in relation to potential for a default) by James Rickards: http://www.bloomberg.com/video/ruble...SlmLCVHIQ.html
On a humorous note, the spreads offered by Forex.com are now 52,897 pips (with no open trades available however). You have to admit, that's pretty funny.
Not sure if anyone is still brave(/foolish?) enough to trade the pair, but thought this was a hell of a good analysis of the situation (especially in relation to potential for a default) by James Rickards: http://www.bloomberg.com/video/ruble...SlmLCVHIQ.html On a humorous note, the spreads offered by Forex.com are now 52,897 pips (with no open trades available however). You have to admit, that's pretty funny. {image}
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I just noticed that crazy spread on Forex.com, was taking a peek out of curiosity... I swore off trading this pair for now, but I can't say I won't dip a toe going short if we hit 90 or 100 tonight lol
FYI - for those dealing with market makers: Forex.com is increasing their margin requirements from 20:1 to 5:1 tomorrow at 8:00am. No official statement yet, but expect an email shortly.
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The email from Forex.com about this just came in; this takes effect 8am ET on December 17th.
