America seems always destined to underestimate Russia. It was 65 years ago when Russia first surprised the US.
We had just emerged from World War 2 a dozen years before. Here in this country, it was a time of unrivaled prosperity.
A time with mom and pop and all the kids. When America was second to none. After all, it was America that won the war. And that’s exactly how we felt.
And then it happened.
Russia, that far away place, so beaten down by the War, sent a satellite right over America. A satellite named: Sputnik.
How could that be?
America was preeminent in all science and technology. We had the finest scientists, quite a few who were German it turned out. The best research laboratories. And the Wealth to put it all together.
And yet here Russia, with seeming none of those advantages, had beaten us into space.
As a young boy at the time, I still to this day, remember the impact this event had on the American psyche.
People would rush out into their years to watch it go overhead. Just a small dot in the night sky.
Many were genuinely frightened. Afraid that a bomb or other device might rain down on them.
And although the true technology behind all this was primitive, it marked an epoch change in our history. As the cold war became absolutely frigid.
Years have passed. There are fewer of us, who remember that Russian Triumph. But I remember those days.
And I’m reminded of them, as today I watch Russia triumph again. On the battlefield and in the board room.
This was the week that Mariupol fell. The last major strategic goal of Russia’s initial game plan for Ukraine.
An important seaport, Mariupol was also the base of some of Ukraine’s fiercest soldiers, the Azov Battalion.
Although the battle was long and bloody, in the end, it was Russia who was victorious.
However, Russia’s battles are not just in Ukraine. Their battles extend to the international capitals of commerce and banking.
The first shots in these battles were fired by the United States. The US and Europe slapped severe sanctions on Russia. Preventing Russia from using the most widely used method of international financial transactions: the SWIFT System. In an effort to block oil payments to Russia.
Russia, which incidentally is the world’s third-largest oil producer, behind only the US and Saudi Arabia. Then responded to these sanctions by requiring payment for their oil in Russian Rubles. Thereby going completely around SWIFT.
And one by one, Russia has been victorious here also. One by one the European energy and utility companies have agreed to meet Russian requirements.
They have opened accounts with Gazprom bank, the giant financial agent for the Russian oil companies. Gazprom bank accepts payment in euros and then immediately converts the Euros into Rubles, thus pleasing both parties. All the while side-stepping US Dollar Denominated SWIFT.
Earlier this week, when the European Union once again asked for additional sanctions against Russia, they failed. Most utilities and energy companies, and most especially the country of Hungary would not go along. Sanctions, you see, are unacceptable when you need Russian oil and gas.
Finally, capping off this incredible week for the Russians, came word yesterday, that the Russian economy grew at an incredible 3 1/2% in the first quarter of this year. The fastest growth rate among any in the G20. The largest economies in the world.
If what we’re seeing currently is a proxy war in Ukraine between the Russians and the United States, as President Biden has implied. Then it seems, so far at least, the momentum is clearly on Moscow’s side.
It reminds me of a time, many many years ago, when a small silver sphere, forever etched its memory in the American Mind.
It was Russia that introduced us to the Space Age. And it was Russia that vividly demonstrated it was a power to be reckoned with.
Market action around the world is negative this morning. As once again we see our own index futures here in the US, pointing toward a lower opening.
The notable exception currently is the Russian Federation, which markets it up for the day.
However, this recent market swoon has dropped every major country index in the red for the past 12-months performance. And that includes the Russian Market.
So the question for investors and speculators alike, is just how long will this continue.
And as the moment, there appears to be little relief in sight, as markets from Asia to Europe continue this downward trajectory. With American markets slated to open shortly also pointing to lower prices ahead.
In overnight economic news, Japan, for the ninth month in a row, announced that they had a negative balance of trade. Meaning that Japan, the nation that once leads the world in export, Japan is currently importing more than it exports.
Here in the US, we will get the latest unemployment numbers. Readings on both initial and continuing claims for unemployment insurance today. Wall Street expects to see little change here, and perhaps that’s a blessing. Initial claims are expected to be right around 200k.
Also up today will be a whole host of reports from the Philadelphia Federal Reserve Branch, as they survey business conditions here in the mid-Atlantic.
And then the report that has the potential to have some real impact. Existing home sales up later this morning. And if that rather tepid change in New Home Sales had such an outsized impact on markets.
Look out for this report on existing home sales, as analysts are looking for a drop of as much as 2 1/2% in existing home sales. This is on top of last month’s drop at the same level.
In earnings this morning. Early indications from two more retailers this morning. Kohl’s Department Stores look to be joining the rest of the group, with lower results. While the only one to buck the trend so far looks to be the membership club store, BJ’s, with a higher futures price so far.
Later this afternoon, we will get a whole group of West coast companies reporting. Leading off will be Applied Materials. Then reporting will be Palo Alto Networks and discounter Ross Stores.