Investor Agenda

Russia: Risks & Rewards?

Kotick Tick By Tick

It’s time for our weekly market psychology update with Jordan Kotick, Global Head of Technical Strategy at Barclays Capital. Kotick is currently travel through Russia and Eastern Europe.

Q. What is in focus in Russia right now given all the volatility?

A. While they are always aware of events and market moves from abroad, the ruble is never far from focus.

As you can see the chart below the Rubble was tightly correlated with equities, as were most of emerging market currencies. But that changed.

Q. What changed?

A. The credit crisis and the bubble bursting move in Crudeturned the ruble, in many ways, as a proxy for the energy trade. As you can see from the 2nd chart, the rubble has been tracking oil very closely since 2007.

It is almost as if you have to have a crude chart open right beside your rubble chart. Many of the intraday fluctuations and daily moves have been extremely tightly correlated

Q. So equities are not in focus?

A. They are. We are watching the MICEX. As you can see on the third chart, this key Russian equity market is showing signs of a similar base as was formed a few years ago. The risk is choppy and corrective short term but we like the upside medium term. So overall, while the rubble watches equities, its tighter correlation is with energy generally and black gold (crude) specifically

Q. How is the sentiment currently on equities?

A. With the gauges we follow, it is clearly bullish risk and stocks. But nowhere near an extreme that would be a red flag.

Tune in every Wednesday to Kotick’s Tick-By-Tick at 3p ET With Maria Bartiromo for the latest in market psychology and write to us here at



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