A quick Russia Trade -

  • Russia has lagged EM hot trade this year as oil struggles and sanctions removal not happening… -1.6% YTD v EM which is +9%
  • But was best performer outside of BZ in 2016 for US based investors and most of that was unrelated to Trump
    • But after 44% move in ’16 with 13.5% coming after Trump win, RU has lagged EM badly in 2017 and by 1500 bps since Jan 4
    • $RSX bounced nicely off the 200dma with oil but see ominous bear cross coming…
  • Russia remains cheapest of core EM markets but always cheap with Oil and Gas being such a big part of the weighting and these companies always trading at low P/E multiples
  • IM long Russia on a relative basis to where I was 1 month ago
  • Best thing for Russia with Trump is to have the high political focus go away but don’t need bromance…
  • Russian US diplomatic relations waiting for Putin Trump first summit before anything happens and that prob waits until focus blows over…  Trump Putin bromance only enflamed Russia hawks like McCain even without the impropriety with DC ( or not) and thus was a headwind to sanctions lifting.   Europe will not be going pro-russia anytime soon except that Germany continues to be significantly linked to the Russian economy, especially in the banking sector
  • Most people assume Russians wanted a reset with USA but not sure this is that crucial; Russia will forever be bothered by US interference in region which they believe is their sphere of influence – NATO sensitivities are still a hot button.

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