Russia's RTS Index futures - liquid tradable instrument.

Good morning!

Thing to bear in mind today is annual rebalancing of Russell Investments’ indexes, which takes effect after 4 p.m. New York time. Russell itself estimates that $ 4 trillion is benchmarked to its U.S. stock market measures, which include the Russell 1000 Index of the biggest American companies and the Russell 2000 Index of smaller stocks. That re-balancing may well be exaggerating moves in a summer-season market.

RUSSIA: strongest issues yesterday were VTBR and MTSS. Lukoil made a loan to its sub - LUKOIL MID-EAST LIMITED - of up to $5 bn... some shopping spree there from what we are seeing. LUKOil’s standing with Kremlin makes it look internationally for onward moves. Surgut will pay RUB 1.0488/share dividends on Prefs and RUB 0.45/share on ordinary shares, in line with expectations

Good Friday trading to you!

Good morning!

“China” seems indeed to be the buzzword for justifying market swings up or, equally so, down! Very short positive affect on the market last week after news of Yuan revaluation was completely disregarded by investors that day, now we have falling Asia on the news of Chinese economic growth concern. Probably a wrong day to expect massive upside in Russia with 35 of 38 energy companies in the S&P 500 tanking yesterday and news of E.On off-loading its stake in Gazprom obviously putting negative pressure on the giant – we mentioned that in our yesterday’s comment.

On the grand scale of events statistics show that FTSE’s All-Share Index’s price-to-earnings ratio tends to gain as the government reins back spending. As we all know, Cameron put his career on the line pledging to cut the deficit to 1.1 percent of GDP by 2015-2016 from 11 percent in 2009-2010. Obviously, investors are quite rightly concerned that slower economic growth may hurt returns; however periods of high government borrowing also tend to be periods when stocks trade on lower-than-normal multiples. Not only UK, but also global stocks should be recovering as government borrowing is reduced, according to that statistics. And with the “intrinsic” liquidity (summer “time” value removed) still firmly in the market, this is likely to kick in once that “summer” time component is back in action by the Fall.

RUSSIA: Yesterday we were mostly active in liquid stocks: buyers in ROSN, GAZP in the early going; sellers in RTKMp right after the opening (after negative news); buyers in telecoms; sellers in utilities (distribution).

Good day to you!

Good morning! I would hate the usual barrage of palaver about what the market did yesterday – we all know that. Dismal performance. All about confidence in global recovery. Technically – bearish ‘Head & Shoulders top’ pattern across indices (see attachment – 900-ish target technically speaking) pretty much serving as a billboard on a motorway showing motorists how to get South! Russian equities face to open in the red.

What ahead? 2 very important things in my opinion:

1) On Thursday European banks are set to repay €442bn, money they borrowed at cheap rates a year ago as part of the ECB's attempts to boost liquidity in the market. If this goes smooth, I expect some of the confidence holes to be patched up.

2) On Friday we will be watching Labor Department's monthly employment report as hawks. Companies have indicated that business is getting better, yet there are few signs that they are ready to hire in big numbers. If there is any sign they are – again much confidence will be restored.

My take here is that IF we get SOME confidence boost, “intrinsic” liquidity in the market (seasonal component removed) will quickly fill trading screens with BUY orders. Doubt however this will happen today.

Yesterday we had pretty much activity both in liquid stocks and small caps. After noon we were sellers in SBER, GAZP, LKOH; in small caps sellers were seen across the board (mostly domestic accounts), except telecoms; right before the closing we had aggressive sellers in SNGS, GMKN, SVST, MTS, LKOH from domestic accounts, though strong bids were seen in SNGS, HYDR.

Good day to you!

Good morning! A Safa lad who was watching footie next to me in an Ozzie bar off Fulham Broadway past weekend cracked a witty question: “How come Fab stays in his job when Dunga off he goes even though his humiliation on-field was not even remotely close to Fabio’s AND man in charge of “joga bonito” is surely several times cheaper than England’s coach?”

FA’s handy excuse is Fab’s 10 mil quid “transaction cost” as we’d call it, sort of bro you’d pay switching out of LUKOil and into Petrobras for the sake of an example. But that is hardly the reason – just a technical nuisance rather. Main reason for Fab staying and Dunga going is that Fab is (or perceived to be) irreplaceable at the moment, no matter how hard his squad hit the floor, while Dunga’s successors seem be all over the place.

We mentioned that in the aftermath of BP gaffe, US cannot threaten to start its off-shore drilling any more, and this should be a golden age coming for oil-exporting EMs. Where international money will flow though depends largely on what’s brewing in individual oil-exporting EMs, in particular their tax rebates (or lack thereof). What I am getting at here is that Russian Oil&Gas companies may all be dirt cheap by multiples now (Gazprom’s P/E e.g. is still lower than BP’s after all the slaughter house there), BUT if international money perceives them to be easily replaceable by other EM Oil&Gas exporters of Petrobras variety (for tax reasons e.g.), MONEY MAY FLOW AWAY FROM RUSSIA.

Looks like that the Russian market will open in the green following some momentum intraday rebound of Chinese indices and Japan trading higher, also relatively strong commodities. Nevertheless we expect low activity today with US shop shut

Good start to the week to you!

Good morning! 2 things here – one technical, one regarding sentiment.

1. A “death cross” is on the way. A “death cross” is when the 50-day moving average crosses below the 200-day moving average. This juicy buzzword which sounds like it was concocted in the times of Edward I and Eleanor of Castile is viewed to be a deadly technical signal by many. It may, and probably will occur soon on the S&P 500’s chart. Let us re-visit the history though. The “death cross” formation historically has resulted in a 0.4% drop in the S&P the month after, but the market traditionally gains nearly 5% in the ensuing six months! A 5% gain in six months is hardly “deadly”. Brightest example – 2004 when the “death cross” on S&P was followed by a 3-year long bull market!

2. More importantly – funny thing is that at this juncture it is nearly impossible to find a bull among the growing sloth of bears. Which is a good indicator markets will reverse northbound. It will be easy for them to do so given massive “intrinsic” liquidity in the market (seasonal “summer” value removed).

Important milestone in this summer-dead market will be next week when European banks will reveal how well they passed (or otherwise) the stress-test. They are NOT obliged to do so, however chances are noone will be hiding – just for the sake of not BEING SEEN hiding!

RUSSIA: Yesterday we had extremely low volumes due to closed US market, most liquid shares traded flat. No surprise that activity in small cap names was almost zero - we had only sellers in DIXY, buyers in BANP prefs, some buyers in TGKs, sellers in discos.

Good morning! The question we are REALLY asking ourselves is whether all the bad news is already priced into the market. From the technical point of view, I have rarely seen such a clear-chiseled and ill-ominous Head & Shoulders Pattern hanging over all major indices. Obviously, we can hardly blame some wizard doodling on the screens for those technical patterns – they are just manifestations of price-volume dynamics unfolding in the markets – and those manifestations are hardly any good now.

What I found interesting when “the rally in the valley” was sweeping the European floors yesterday was that risk-sensitive stocks - such as banks and commodities - were the primary drivers behind the FTSE's partial revival, with BP also proving popular with bargain-hunting purchasers (we all remember that these days BP is a highly risk-sensitive stock!). Money (which as we have been mentioning all along, is abundant on the sidelines) seems to start coming out of its hiding, targeting risky issues. Which – in my humble opinion – makes me think that we may indeed be close to full price-in of bad news into current price tags.

RUSSIA: market was buoyant all day yesterday – and across the board. We had good buying orders in SBER, VTBR, TRNFP and CHMF. Activity in 2nd tiers was feeble though, people are pretty much still playing old worn-out stories if you ask me.

Good trading to you!

Good morning! Tempting to drum up the fact that FTSE and Wall Street regained 5K and 10K marks respectively, but that is none of my merit Plus we all know that

What I think is important though is that as we have been mentioning for some time now – no matter how gloomy the indices might look technically – there are 2 very important positive things in the markets:

1. Loads of cash sitting round – aka liquidity; and (partly as a direct result):
2. Industry getting good order tickets for products that you’d hardly spend your last twoppny bit on – e.g. chips and gadgets of Apple variety.

In this environment it comes as little surprise that banks were able to report good performance at the beginning of corporate-earnings season. Barclays’ ability to sells EU1.5 Billion 6% Bonds Due 2021 came to the market at the right time – mending the MAIN NEGATIVE ISSUE in current markets – lack of confidence in the backbone of the global economy.

RUSSIA: This will sound a bit contrary to my upbeat tone above. Collapse of MezhPromBank note (something unheard of since late 1990-ies) means one nasty thing – corporates in Russia will NOT be able to borrow monies at any remotely good terms in the near future – at least.

On a separate note, we all know that developers are just HIGH BETA RECOVERY BET. PIK Group’s numbers (see note attached) mean that the company is indeed sitting on a pile of cash now. And with the price mauled over the past 2 months, PIK starts looking dirt cheap. We’ll re-visit PIK in more detail separately.

Yesterday all day long the market traded flat; right before the closing bell we saw big bargain-hunters in blue chips and telecoms.

Good morning! I will hardly deliver breaking news here saying that IMF’s upgrade of global growth prospects boosted sentiment, while UK prospects were downgraded. The mere fact of FTSE joining the flying league shows how much liquidity there is in the market – and what wonders it can work.

There will be much window dressing in the dying days of July. Cameron’s show on the 20th, hopefully BP’s – on the 27th. We all remember Winston Churchill for many things, one of them being the History of English-Speaking People. Fantastic book if you ask me. We’ll see how the English-Speaking people deliver in the last decade of July. In thin summer markets, if there is more confidence coming our way, we will probably fly.

RUSSIA: Yesterday we had another day in a row of a very low activity, although more trades came from small caps sector...and we turned sellers in blue chips close to the bell. We kept on selling electricity distribution shares, had buyers in wholesale & territorial generation; kept on buying regional telecoms.