Last night Canada’s greatest contribution to global culture, Leonard Cohen rocked the Kremlin Palace.
Rocking the Kremlin Palace would have been no small feat for Mick Jagger much less for Leonard; the place was designed for the 23rd session of the Soviet Communist Party and has all the charm of the 1960s train station. Yet rock it he did. T&B had no idea the bard had so many Russian fans.
We shall spare you any reflections on the profound significance of the author of Manhattan/Berlin, and Suzanne, singing a stone¹s throw from Lenin’s grave. Perhaps there is none.
Moscow is enjoying a wonderful Indian summer the only reliably good time of the year here and girding itself for another cold winter (every Russian grandmother warns that this year will see record cold essentially because this summer saw record heat – that, of course, was due to LAST winter having been bitterly cold, and so on…)
Meanwhile, the continuity of Russia’s resurrection is primarily imperiled by Moscow traffic which has gone from the sublime to the ridiculous. T&B flew in on Aeroflot to the new Terminal D at Sheremyetovo nice, European-style airport, and we were through immigration, baggage claims and customs in 20 minutes flat. Congratulating ourselves, we got into the car … and a mere 3 1/2 hours later we were home to central Moscow! Someday
soon this place is going to stop literally crystallize and they will have to helicopter us out…
Enclosed, our reflections on Russia increasingly like everywhere else: a middle-income, middle-European country gradually slipping into middle-class aspirations. Probably the best possible outcome, but a source of some nostalgia for those of us who enjoyed the madness of the first post-Soviet decade.
T&B will again tilt at our favourite windmills in particular the Western Press, such an excellent contrarian indicator for all things Russian. For those interested primarily in trading calls we recommend you skip to the last pages, where we give our macro views.
In brief, the market is no longer either the world¹s best, nor its worst. Currently, it is a high-beta play on global markets. Given our absolute conviction that QEII is drawing nigh, and our reiterated call for further dollar weakness (after a moment of consolidation) and ‘lower-for-longer’ we continue to see some good trading opportunities.
Having been long-time bond jockeys, we are now forced to look for value in the equity space. Given that the equity market is cheap by almost any measure, with some of the equities offering dividend yields superior to their corresponding bonds, we continue to expect the RTS to close the gap with some of its emerging markets peers. That said, global sentiment is currently not particularly favourable a blessing for fixed-income investors, but not for the equities. Nevertheless, the rouble has just surged back from a still-unexplained bout of weakness, and with oil prices on a slow climb back toward the 3-digits (you read it here first!) perspectives for the equity market are looking very decent.
Happy Sitting in Traffic!