These are tense moments… At 1 am in the morning, Russia made a dramatic announcement to raise its base interest rate from 10.5% to 17%. Their ruble was falling fast yesterday. There is capital flight out of Russia. So the rate rise was meant to attract money back into their country. They even raised their deposit rates to 16%. They want money to stay in their banking system.
Since the announcement, the Ruble has stabilized against the dollar.
I tweeted last night that it is almost tempting to invest in Russian bonds. How many investors will actually put their money into Russia now?
US stocks started lower in the morning, then returned to yesterday’s close. The Dow sits at 17,200, where I believe it is in a stable orbit. Yesterday I expected the Dow to stay around that level for a while. And it is still there as of this moment, but the market is waiting and watching what response their will be from the financial authorities.
Update: Stocks are beginning to rise 30 minutes after publishing the above. Is the opinion forming that the Fed will not be able to raise the Fed rate? How would US companies benefit from the troubles in Russia and emerging markets? Is money flowing into the US markets? Would US stocks absorb funds first, then back down afterward?
Update: Ruble is rising since post above written about an hour ago.