Re-Embracing China's "New Normal"
Why the Economy Is Still
on Track
Sunday, 10 May 2015
Saturday, 9 May 2015
Re-Tiens Group Company Chairman Li Jinyuan takes 6,400 staff on holiday to Paris / Cote d'Azur
Re-Chinese billionaire takes 6,400 staff on holiday to Paris and Cote d'Azur - and top it off by making world's longest human chain
http://www.dailymail.co.uk/news/article-3074574/Chinese-billionaire-takes-6-400-staff-holiday-Paris-Cote-d-Azur-making-world-s-longest-human-chain.html#ixzz3ZhlKbDXr
http://www.bloomberg.com/quote/TBV:US/profile
Tiens Group Company TIENS, Initiated Its Business on 1995 Aug 3
http://www.tiens.com/AboutUs.aspx?CMSCODE=HISTORY
1995-8-3
Modelling
男、出生於西元1995-08-03
乙亥-癸未--丙寅
大運2014/23財辛巳比
2015乙未--出生年干月支
2016流年 丙申--流年丙申合刑大運辛巳--寅申巳3刑
2017流年 丁酉--流年 丁酉刑合辛巳
Chinese Bazi Astro hints for some hectic in 2016/7
天津位于华北平原的海河各支流交汇处，东临渤海，
Tianjin China- East is Bohai Sea, (Bohai Gulf)
2016 Flyimg Star Feng Shui-East is trend 6, year 9
not so good for leaders?
All just wild guess to kill time
http://www.dailymail.co.uk/news/article-3074574/Chinese-billionaire-takes-6-400-staff-holiday-Paris-Cote-d-Azur-making-world-s-longest-human-chain.html#ixzz3ZhlKbDXr
http://www.bloomberg.com/quote/TBV:US/profile
Tiens Group Company TIENS, Initiated Its Business on 1995 Aug 3
http://www.tiens.com/AboutUs.aspx?CMSCODE=HISTORY
1995-8-3
Modelling
男、出生於西元1995-08-03
乙亥-癸未--丙寅
大運2014/23財辛巳比
2015乙未--出生年干月支
2016流年 丙申--流年丙申合刑大運辛巳--寅申巳3刑
2017流年 丁酉--流年 丁酉刑合辛巳
Chinese Bazi Astro hints for some hectic in 2016/7
天津位于华北平原的海河各支流交汇处，东临渤海，
Tianjin China- East is Bohai Sea, (Bohai Gulf)
2016 Flyimg Star Feng Shui-East is trend 6, year 9
not so good for leaders?
All just wild guess to kill time
Wednesday, 6 May 2015
Rachel Anne Notley ,the Premier-designate of Alberta vs Jim Prentice
Jim Prentice-born July 20, 1956- outgoing Premier of Alberta
Assumed officeSeptember 15, 2014
Chinese Bai-Zi Astro
丙火申金-乙木未土-戊土子水日
大運2013/22 傷官辛金丑土劫財
2014 七殺甲木午正印-殺印相生
2015 乙木未土=月柱=karma=业力
Rachel Anne Notley
(born April 17, 1964)
Chinese Bai-Zi Astro
甲木辰土-戊土辰土-丙火申金日-
大運 2008/17正官癸水亥水七殺
2015正印乙未傷官
大運 流年天干官印
地支亥未 (乙=卯)合印
2016丙申=日柱
Chinese Bai-Zi Astro can tell why Notley wins and Prentice losses
Assumed officeSeptember 15, 2014
Chinese Bai-Zi Astro
丙火申金-乙木未土-戊土子水日
大運2013/22 傷官辛金丑土劫財
2014 七殺甲木午正印-殺印相生
2015 乙木未土=月柱=karma=业力
Rachel Anne Notley
(born April 17, 1964)
Chinese Bai-Zi Astro
甲木辰土-戊土辰土-丙火申金日-
大運 2008/17正官癸水亥水七殺
2015正印乙未傷官
大運 流年天干官印
地支亥未 (乙=卯)合印
2016丙申=日柱
Chinese Bai-Zi Astro can tell why Notley wins and Prentice losses
白崇禧vs 林彪-八字
八
白崇禧八字
1893年3月18日
http://blog.tianya.cn/post-3691162-32996566-1.shtml
"白崇禧的八字，网上说是3月18日，用农历排，觉得有大贵气象，结合生平，应是戌时。
公历：1893年5月3日20时35分 农历：癸巳年[长流水]三月十八日
清明：1893年04月04日22时13分 元亨利贞网四柱八字在线排盘系统
立夏：1893年05月05日16时11分 http://bbs.china95.net
起运：命主于出生后9年8个月8天4小时开始起运
交运：命主于公历1903年1月12日0时交运
伤官 七杀 日主 七杀
乾造： 癸 丙 庚 丙 (辰巳空)
巳 辰 子 戌
十神：正财 偏财 伤官 食神 劫财 比肩 正印 枭神
大运：乙卯 甲寅 癸丑 壬子 辛亥 庚戌 己酉 戊申
10岁 20岁 30岁 40岁 50岁 60岁 70岁 80岁
始于：1903 1913 1923 1933 1943 1953 1963 1973
白氏之命，庚金生于辰月，戊土司令；日主得根于巳、戌，可受戊土印绶之气，力不弱兮；七杀雕琢，伤官发秀，皆得禄于地支，待势而起也！局中无木来克土，反见巳、辰、丙众星生扶，真神无克，至纯之格也！七杀生印，印生身，伤官吐秀兼架杀，星星相生相用！全局相较，伤官力偏弱，当取伤官为用；而大运中年恰逢伤官用神，宜其文武兼资，声闻天下，极品之贵！
聪明不过伤官，伶俐不过七杀，宜其智过千人！伤官七杀，参谋之职，清纯有力，威震边疆而惠于民！印受得力，无愧李白之并称！
癸丑大运分析：民国22年交入癸水伤官运，该年黄绍竑出兵梧州，白氏任其参谋长，黄绍竑联合玉林李宗仁部，至24年年底，仅两年半的时间即平定八桂，白氏名位仅次于李黄，奠定新桂系三首领的地位。其后任北伐军副总参谋长，北伐至淞沪，带数万之兵抵于山海关。方其时，恰李宗仁坐镇两湖，黄绍竑控两广，其兴也勃焉，其势亦盛矣！
27年交入丑运，戊辰年，危机已现。先是广东发生“张黄事变”，武汉用湖北人而抑桂人，内部起离心，继而阎锡山控北京，冯玉祥不许借道归湖广，部队忠诚未测，实已陷于重危之中。因辰乃湿土，子辰半会水局，是年无事。28年己巳，岁运火土，用神受天地之克，而致数万之部众，顷刻间化而为敌，险遭不测之祸，幸赖原局根深，而得只身脱逃返桂；继而攻粤之战，亦以失败告终，终至出走安南，偷生于外而待机！29年庚午，地支与用神相冲，其凶可知；幸天干庚金比肩能生伤官为喜神，故因黄绍竑重掌八桂而能复起，亦得张军到来合势，此得比肩有用之力也！但终因用神逢冲克，张黄合兵，一败于花都，二败于北流，三败于衡阳，桂镜仅有其东北，省会陷于包围，甚可悲叹也！其后克复省会，勉强维持一省之半度日。30年辛未，粤桂相峙，亦艰难谨慎而维持。31年壬申，流年干支皆喜用，该年因时局变化，粤方反蒋，骤然而得复桂南半壁，广西重入掌握之中，并附粤反蒋，得处半独立状态。 32年后交入壬子大运，继而辛亥大运，干支皆用神，故富贵随身，声名显于全国。唯亥运冲巳，己丑忌神临，兵败如山倒！庚寅、辛卯、壬辰流年，于格有悖，贵气至此已矣！"
林彪---1907年12月5日
http://www.cn-boxing.com/info/info_91881.html
命主姓名：林彪。 出生公历：1907年12月5日；农历：丁未年十一月初一日卯时。
印 伤 日 官
丁 辛 戊 乙
未 亥 子 卯
大运
庚戌 己酉 戊申 丁未 丙午 乙巳 甲辰 癸卯
岁数 9 19 29 39 49 59 69 79
年份 1916 1926 1936 1946 1956 1966 1976 1986
日主戊土生于孟冬，亥水当令，地支亥卯未合木，水木相生，日主有从财杀之势；但是年支未土同时 又是日主之本气根，且未土又得年干丁火之生，因此，此格局明显为假从之格局。何谓假从啊？其实就是 或许从、或许不从，那么，什么时候从什么时候不从呢？只能是见风使舵，根据行运状况而定。这，非常 符合林彪的为人及人生。
命局从杀，自然以食伤克制官杀为病，那么，月干伤官辛金自然为病了；因为年干丁火克制月干辛 金，故年干丁火当然就为药了。此外，日主从财杀也是忌讳受生扶的，而丁火虽制了辛金却生了日主之根 未土，因此说，丁火这味药是具有负作用的，而五行火即光也，这就是命主怕光的潜在根源！
命主十九岁之前，运行庚戌，大运与时柱天地合，命局转为正格。命主十九岁至三十九岁之间，运行 己酉、戊申，整个命局形成土生金、金生水、不生木，连接相生，且其气息的落脚点在官杀木上，故命主 此间可谓叱咤风云。
命主三十九岁之后运行丁未大运，土临旺地又有源，故有不从之意，因此，土木相战开始。假从财杀 的命局，当日主从财杀时，则财杀为喜用；当日主不从时，则财杀为神忌。由此可见，丁未大运中，命主 以水、木为忌，木又为风象，故命主怕水、怕风。1950年6月，林彪参加中共七届三中全会后，即举家迁到 北京。因其怕光、怕水、怕风的毛病越来越重，开始脱离工作进行诊治；同年10月经中央批准，再次赴苏 联就医。此明显因流年庚寅木旺之故。
一九七一年流年辛亥，大运乙巳，所谓伤官见官，为祸百端，于丁酉月辛丑日庚寅时，林彪命赴黄
泉
四平
戰役--
一九四六年春夏东北四平街大战（国内称四平战役）拉开惨烈序幕。这个战役是国民党白崇禧大胜、共产党林彪军队
白崇禧儿子谈四平之战:林彪狼狈蒋介石全输
http://cul.sohu.com/20071026/n252880571_1.shtml
1949青樹坪戰役 白崇禧指揮桂軍大敗林彪（戰爭經典）
https://www.youtube.com/watch?v=sbLT4qLVZlg
http://zh.wikipedia.org/wiki/%E9%9D%92%E6%A0%91%E5%9D%AA%E6%88%98%E5%BD%B9
衡宝战役--
| 1949年9月13日－10月16日 https://www.youtube.com/watch?v=poqVrdWV05A http://zh.wikipedia.org/wiki/%E8%A1%A1%E5%AE%9D%E6%88%98%E5%BD%B9 1949年9月13日- 丙午日庚子日冲白崇禧-- 己丑土湿 年--丁未大运中，林彪 以水、木为忌, 土湿有用 |
Tuesday, 5 May 2015
Financial System in 2015/16 UK?
received a FB message--
"no body is paying attention on the surging of bond yields since last week.--terestingly, UK treasury is even higher in yield than Spain and Portugal....the EUR QE twisted a lot of things--and once "returns to normal"----(Your)Chinese zi-wei astrology
hints for a loss in QE II's house of property/estate . -> I love this--
it can mean a collapse of UK property mkt (which are collapsing) ---
can affect the stability of their financial system unless UK gov't and BOE are decisive enough to inject sufficient amount of money to prevent that from happening---
otherwise UK banking system won't have their balance sheets shrinking
The current "strength" is only due to a difference in relative speed of shrinking between US and UK. Yet US shrink is healthy: they sold the treasuries they hold, while credits from consumers and industry are expanding. But UK is the other way round
seems the sanction on Russia hurts not only Germany but also UK"
______________________________________________________________________________
This is my comment
(1)Mark J. Carney (born March 16, 1965) is the Governor of the Bank of Canada(wiki)
日 月 年
己 己 乙
巳 卯 巳
大運 2009/18甲 戌
2016 丙申
甲=寅---寅申巳--3刑
正印(丙)3刑--正印=Bank of England (BOE)
Mark Carney's Chinese Bai Zi astrology hints for Bank of England (BOE) in hard square aspects in 2016-a tough time?
(2) UK is in the North East part of Europe
Bad feng shui Fly-star 5will be in NE in 2016
(3)Canary Wharf. --Rives Thames is in the West--Fengshui fly-star 5 (jinx) on the west in 2015-bad business in Canary Wharf in 2015
(4)'the City' or 'the Square Mile' -River Thames is in the south-Fengshui fly-star 7 (money loss) in the south in 2015--new tax policy means money loss to financial institutions in the City in 2015
Seems 2015/2016 could mean hard times for financial institutions in London
"no body is paying attention on the surging of bond yields since last week.--terestingly, UK treasury is even higher in yield than Spain and Portugal....the EUR QE twisted a lot of things--and once "returns to normal"----(Your)Chinese zi-wei astrology
hints for a loss in QE II's house of property/estate . -> I love this--
it can mean a collapse of UK property mkt (which are collapsing) ---
can affect the stability of their financial system unless UK gov't and BOE are decisive enough to inject sufficient amount of money to prevent that from happening---
otherwise UK banking system won't have their balance sheets shrinking
The current "strength" is only due to a difference in relative speed of shrinking between US and UK. Yet US shrink is healthy: they sold the treasuries they hold, while credits from consumers and industry are expanding. But UK is the other way round
seems the sanction on Russia hurts not only Germany but also UK"
______________________________________________________________________________
This is my comment
(1)Mark J. Carney (born March 16, 1965) is the Governor of the Bank of Canada(wiki)
日 月 年
己 己 乙
巳 卯 巳
大運 2009/18甲 戌
2016 丙申
甲=寅---寅申巳--3刑
正印(丙)3刑--正印=Bank of England (BOE)
Mark Carney's Chinese Bai Zi astrology hints for Bank of England (BOE) in hard square aspects in 2016-a tough time?
(2) UK is in the North East part of Europe
Bad feng shui Fly-star 5will be in NE in 2016
(3)Canary Wharf. --Rives Thames is in the West--Fengshui fly-star 5 (jinx) on the west in 2015-bad business in Canary Wharf in 2015
(4)'the City' or 'the Square Mile' -River Thames is in the south-Fengshui fly-star 7 (money loss) in the south in 2015--new tax policy means money loss to financial institutions in the City in 2015
Seems 2015/2016 could mean hard times for financial institutions in London
Re-British Pound 2015
.gif)
GBPAUD weekly Chart
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GBPJPY Weekly Chart
.gif)
GBPEUR Weekly Chart.gif)
Received a request to update financial astrology on British Pound- My early article on cable were-
http://ding-fire-168.blogspot.hk/2012/01/re-british-pound.html
http://ding-fire-168.blogspot.hk/2008/02/british-pound-comeback-by-2010-q2.html
Here is my update-
(1)Monday, August 3, 2009
British Pound Long Term Cycle: Chart
http://www.marketfolly.com/2009/08/british-pound-long-term-cycle-chart.html
1993-mid /late 1998=5 3/4 yrs
2001-late 2007=6 3/4 yrs
2009 +6 yrs=2015
An extropolation of the chart can tell a weaker pound by 2015
(2)British Pound-ERM Since 8 October 1990
Withdrawn 16 September 1992 (Black Wednesday)
年柱 正印 壬(水) 申(金) 正官
月柱 偏財 己(土) 酉(金) 七殺
日柱 日主 乙(木) 未(土) 偏財
Note 2015 is a 乙(木) 未(土) yr, a chinese bai zi astrology notation same as the Black Wednesday-
Synchronicity
?-- the occurrence of two or more events that appear to be meaningfully related but not causally related.
(3) Note GBPCNY weeklychart-
British Pound/Chinese Yuan (CURRENCY)
(4) NoteGBPEUR weekly chart-
British Pound/Euro (CURRENCY)
(5) Note GBPJPY weekly chart-British Pound/Yen (CURRENCY)
(6) Note GBPAUD weekly chart-British Pound/Aussie Dollar (CURRENCY)
(7) Natal astrology of Queen Elizabeth the Second( 1926-Apr-21 2:40)
陽女、
陽曆：1926年4月21日丑時生 [時區：GMT +8]
陰曆：丙寅年3月10日丑時生 [換日：0時]
紫微-10年運勢至：乙未 事業 83~92(1)2015
流年 田宅(戊戌)--太陰運化忌流年化忌, 地空 ,
(2)2016
流年田宅(己亥)--廉貞化忌流年化忌 ,貪狼
(3)2017
流年田宅(庚子)-- 巨門流年化忌 ,
地劫
Chinese zi-wei astrology hints for a loss in QE II's house of property/estate .
(8)Mundane Astrology
Feb 19/20-Mars/Venus enters Aries--Aries could stand for UK-Venus is fortune in adversity with Mars
Re-Russian Economic Outlook: Light at End of Tunnel-May 05, 2015 @WellFargo
Received-
"WELLS FARGO SECURITIES, LLC
ECONOMICS GROUP
Jay H. Bryson, Global Economist
jay.bryson@wellsfargo.com ● (704) 410-3274
Russian Economic Outlook: Light at End of Tunnel-May 05, 2015
Executive Summary
Most indicators suggest that the Russian economy is contracting at present, and further weakness
seems likely in the near term. However, the seeds of an eventual recovery are being sown. The
inflation rate appears to be topping out now that the currency, which came under significant
selling pressure last year, has stabilized. Consequently, the central bank is beginning to ease
monetary policy. Lower inflation will also be good news for real income growth, which should
help to put a floor under consumer spending. The depreciation of the ruble has also improved the
price competitiveness of Russia’s non-energy exports.
Although the Russian economy likely will start growing again next year, the country faces some
significant downside risks related to the global economic outlook and the situation vis-à-vis
Ukraine. Moreover, the economy will struggle to grow at the same robust growth rates that it
enjoyed during the past decade.
Easing of Inflation Gives Central Bank Scope to Ease Policy
The Central Bank of the Russian Federation (CBRF) announced on April 30 that it was reducing
its “key rate,” the interest rate at which it provides liquidity to the banking system, from
14.00 percent to 12.50 percent (Figure 1). The central bank jacked up rates sharply last year as a
number of negative shocks caused the Russian ruble to go into freefall (Figure 2). First, sanctions
imposed by western economies in response to the Russian-Ukrainian crisis led to downward
pressure on the currency. The nosedive in the price of oil, the country’s most important export, in
the second half of last year added to the selling pressure on the ruble
Oil prices have largely stabilized this year, and the ruble has bounced about 30 percent vis-à-vis
the U.S. dollar since hitting bottom in December. This rally in the value of the ruble has given the
CBRF scope to reverse some of its previous tightening. Although the key rate remains high
relative to its level last spring, the central bank has slashed it by 450 bps over the past three
months and most analysts look for further rate cuts in the months ahead.
In its press release announcing the April 30 rate cut, the CBRF cited “lower inflation risks” and
prospects of weak economic growth as reasons to ease monetary policy at this time. Russian CPI
inflation soared in late 2014/early 2015, due largely to the collapse of the ruble, but the rate of
inflation’s increase has slowed significantly during the past two months as the currency has
stabilized (Figure 3). Looking forward, CPI inflation should recede in coming months due to the
combination of currency appreciation and economic weakness, a topic to which we now turn.
The central bank recently cut its main policy rate
Inflation should recede in coming months
Real income had been eroded by the sharp increase in inflation.
Economic Weakness Has Further to Run
The sharp increase in CPI inflation that we discussed above led to an erosion in consumer
purchasing power. Although nominal wages rose at a solid year-over-year rate of 6.5 percent in
the first quarter of 2015, the significant jump in inflation caused real (i.e., inflation adjusted)
wages to fall more than 8 percent. This sharp drop in purchasing power has weighed on growth in
consumer spending. As shown in Figure 4, real retail sales tumbled 8.7 percent on a year-ago
basis in March, the deepest rate of contraction since the global financial crisis in 2008-2009.
Although spending on services by consumers may not have been quite as weak as spending on
goods, overall personal consumption expenditures undoubtedly contracted sharply in the first
quarter.1
The near-term economic outlook is rather dismal. Although real retail spending was off
8.7 percent in March, industrial production was down only 0.6 percent (Figure 4). Unless
investment spending strengthened considerably in the first quarter, which seems highly unlikely
due to the uncertainties at present that surround the economic outlook in Russia, this divergence
between consumer spending and industrial production implies that inventories probably rose
significantly. Therefore, growth in industrial production likely will weaken further in coming
months as manufacturers attempt to pare excess stocks. As shown in Table 1, we look for the yearover-
year rate of real GDP growth, which was 0.4 percent in Q4 2014, to have turned negative in
the first quarter and to remain there throughout the remainder of this year.
Table 1: Russian Forecasts (Year-over-Year Rates)
Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
-3.0 -3.8 -3.5 -3.6 -0.1 0.4 0.7 1.3 GDP Growth
16.2 15.8 15.3 13.1 6.5 5.4 5.4 5.5 CPI Inflation
Source: Wells Fargo Securities, LLC
The good news is that the seeds of an eventual economic recovery in Russia are slowly being sown. The central bank has already slashed its main policy rate by 450 bps so far this year, and further easing appears likely if our forecast of receding CPI inflation comes to pass (Table 1). Lower interest rates should begin to put a floor under interest rate-sensitive spending in Russia. Real income should also stabilize if inflation continues to recede, thereby helping to shore up growth in consumer spending. The real effective value of the Russian ruble dropped 30 percent between July and February. Although the ruble has bounced back a bit recently, the significant increase in the price competitiveness of Russian goods and services should help to bolster growth in the country’s non-energy exports.2 In our view, real GDP growth should return to positive territory early in 2016.
That said, the Russian economy is hardly out of the woods at present, and there are a number of downside risks to keep in mind. First, the Russian economy in its weakened state is susceptible to foreign economic developments at present. Although we look for global GDP to grow roughly 3 percent in 2015, which is equivalent to the global GDP growth rate that was registered last year, the Russian economic outlook would deteriorate if global growth were to stumble for some reason. Not only would slower global growth weigh directly on Russian export growth, but oil prices likely would head lower if global growth were to falter. A renewed decline in petroleum prices could cause the Russian ruble to weaken again. Further monetary easing by the central bank may be delayed, if not reversed, if the ruble were to come under renewed selling pressure.
Second, the Russian-Ukrainian crisis may be largely out of the headlines at present, but the situation is hardly “fixed.” Open hostilities between Ukraine and Russia could lead western countries to slap more sanctions on Russia that could weaken economic growth even further. Until the political situation between Russia and Ukraine improves, the threat of further western sanctions will continue to loom as a downside risk to the Russian economic outlook
Conclusion
Most indicators suggest that economic activity in Russia has weakened in recent months, and the country appears to be staring at its deepest downturn since the 2008-2009 global financial crisis. Not only have western sanctions hurt growth, but the sharp depreciation of the Russian ruble that occurred last year caused inflation to shoot higher, thereby weakening purchasing power and consumer spending. The central bank was forced to raise interest rates significantly in a bid to stabilize the currency and keep inflationary expectations in check. Higher interest rates undoubtedly have weighed on domestic spending and likely will continue to do so, at least in the near term.
Although the economy likely will contract further, the seeds are being sown for an eventual recovery. The central bank is easing policy now that the exchange rate has stabilized and inflation appears to be topping out. Receding inflation and lower interest rates should eventually lead to an upturn in domestic spending, and the depreciation of the ruble has improved the price competitiveness of Russian non-energy exports.
Even after the economy begins to recover, however, Russia probably will struggle to reach the growth rates it achieved in the past decade. The Bloomberg consensus forecast looks for 0.50 percent real GDP growth in 2016 and 1.30 percent in 2017, far below the 7.5 percent per annum rate that the economy averaged between 2003 and 2007. Strained relations with the West will likely hurt foreign direct investment in Russia. In addition, depressed petroleum prices will probably restrain new investment in the country’s oilfields
Non-energy goods account for only one-third of Russia’s total exports, so the boost to real GDP growth from the depreciation of the currency will not be large"
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My comment-
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Given such great insights from Well Fargo, the HK-listed Russia ETF 3027 price pattern could be self-explanatory. Note also the RUBCNY Russian Ruble/Chinese Yuan (CURRENCY) chart
"WELLS FARGO SECURITIES, LLC
ECONOMICS GROUP
Jay H. Bryson, Global Economist
jay.bryson@wellsfargo.com ● (704) 410-3274
Russian Economic Outlook: Light at End of Tunnel-May 05, 2015
Executive Summary
Most indicators suggest that the Russian economy is contracting at present, and further weakness
seems likely in the near term. However, the seeds of an eventual recovery are being sown. The
inflation rate appears to be topping out now that the currency, which came under significant
selling pressure last year, has stabilized. Consequently, the central bank is beginning to ease
monetary policy. Lower inflation will also be good news for real income growth, which should
help to put a floor under consumer spending. The depreciation of the ruble has also improved the
price competitiveness of Russia’s non-energy exports.
Although the Russian economy likely will start growing again next year, the country faces some
significant downside risks related to the global economic outlook and the situation vis-à-vis
Ukraine. Moreover, the economy will struggle to grow at the same robust growth rates that it
enjoyed during the past decade.
Easing of Inflation Gives Central Bank Scope to Ease Policy
The Central Bank of the Russian Federation (CBRF) announced on April 30 that it was reducing
its “key rate,” the interest rate at which it provides liquidity to the banking system, from
14.00 percent to 12.50 percent (Figure 1). The central bank jacked up rates sharply last year as a
number of negative shocks caused the Russian ruble to go into freefall (Figure 2). First, sanctions
imposed by western economies in response to the Russian-Ukrainian crisis led to downward
pressure on the currency. The nosedive in the price of oil, the country’s most important export, in
the second half of last year added to the selling pressure on the ruble
Oil prices have largely stabilized this year, and the ruble has bounced about 30 percent vis-à-vis
the U.S. dollar since hitting bottom in December. This rally in the value of the ruble has given the
CBRF scope to reverse some of its previous tightening. Although the key rate remains high
relative to its level last spring, the central bank has slashed it by 450 bps over the past three
months and most analysts look for further rate cuts in the months ahead.
In its press release announcing the April 30 rate cut, the CBRF cited “lower inflation risks” and
prospects of weak economic growth as reasons to ease monetary policy at this time. Russian CPI
inflation soared in late 2014/early 2015, due largely to the collapse of the ruble, but the rate of
inflation’s increase has slowed significantly during the past two months as the currency has
stabilized (Figure 3). Looking forward, CPI inflation should recede in coming months due to the
combination of currency appreciation and economic weakness, a topic to which we now turn.
The central bank recently cut its main policy rate
Inflation should recede in coming months
Real income had been eroded by the sharp increase in inflation.
Economic Weakness Has Further to Run
The sharp increase in CPI inflation that we discussed above led to an erosion in consumer
purchasing power. Although nominal wages rose at a solid year-over-year rate of 6.5 percent in
the first quarter of 2015, the significant jump in inflation caused real (i.e., inflation adjusted)
wages to fall more than 8 percent. This sharp drop in purchasing power has weighed on growth in
consumer spending. As shown in Figure 4, real retail sales tumbled 8.7 percent on a year-ago
basis in March, the deepest rate of contraction since the global financial crisis in 2008-2009.
Although spending on services by consumers may not have been quite as weak as spending on
goods, overall personal consumption expenditures undoubtedly contracted sharply in the first
quarter.1
The near-term economic outlook is rather dismal. Although real retail spending was off
8.7 percent in March, industrial production was down only 0.6 percent (Figure 4). Unless
investment spending strengthened considerably in the first quarter, which seems highly unlikely
due to the uncertainties at present that surround the economic outlook in Russia, this divergence
between consumer spending and industrial production implies that inventories probably rose
significantly. Therefore, growth in industrial production likely will weaken further in coming
months as manufacturers attempt to pare excess stocks. As shown in Table 1, we look for the yearover-
year rate of real GDP growth, which was 0.4 percent in Q4 2014, to have turned negative in
the first quarter and to remain there throughout the remainder of this year.
Table 1: Russian Forecasts (Year-over-Year Rates)
Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
-3.0 -3.8 -3.5 -3.6 -0.1 0.4 0.7 1.3 GDP Growth
16.2 15.8 15.3 13.1 6.5 5.4 5.4 5.5 CPI Inflation
Source: Wells Fargo Securities, LLC
The good news is that the seeds of an eventual economic recovery in Russia are slowly being sown. The central bank has already slashed its main policy rate by 450 bps so far this year, and further easing appears likely if our forecast of receding CPI inflation comes to pass (Table 1). Lower interest rates should begin to put a floor under interest rate-sensitive spending in Russia. Real income should also stabilize if inflation continues to recede, thereby helping to shore up growth in consumer spending. The real effective value of the Russian ruble dropped 30 percent between July and February. Although the ruble has bounced back a bit recently, the significant increase in the price competitiveness of Russian goods and services should help to bolster growth in the country’s non-energy exports.2 In our view, real GDP growth should return to positive territory early in 2016.
That said, the Russian economy is hardly out of the woods at present, and there are a number of downside risks to keep in mind. First, the Russian economy in its weakened state is susceptible to foreign economic developments at present. Although we look for global GDP to grow roughly 3 percent in 2015, which is equivalent to the global GDP growth rate that was registered last year, the Russian economic outlook would deteriorate if global growth were to stumble for some reason. Not only would slower global growth weigh directly on Russian export growth, but oil prices likely would head lower if global growth were to falter. A renewed decline in petroleum prices could cause the Russian ruble to weaken again. Further monetary easing by the central bank may be delayed, if not reversed, if the ruble were to come under renewed selling pressure.
Second, the Russian-Ukrainian crisis may be largely out of the headlines at present, but the situation is hardly “fixed.” Open hostilities between Ukraine and Russia could lead western countries to slap more sanctions on Russia that could weaken economic growth even further. Until the political situation between Russia and Ukraine improves, the threat of further western sanctions will continue to loom as a downside risk to the Russian economic outlook
Conclusion
Most indicators suggest that economic activity in Russia has weakened in recent months, and the country appears to be staring at its deepest downturn since the 2008-2009 global financial crisis. Not only have western sanctions hurt growth, but the sharp depreciation of the Russian ruble that occurred last year caused inflation to shoot higher, thereby weakening purchasing power and consumer spending. The central bank was forced to raise interest rates significantly in a bid to stabilize the currency and keep inflationary expectations in check. Higher interest rates undoubtedly have weighed on domestic spending and likely will continue to do so, at least in the near term.
Although the economy likely will contract further, the seeds are being sown for an eventual recovery. The central bank is easing policy now that the exchange rate has stabilized and inflation appears to be topping out. Receding inflation and lower interest rates should eventually lead to an upturn in domestic spending, and the depreciation of the ruble has improved the price competitiveness of Russian non-energy exports.
Even after the economy begins to recover, however, Russia probably will struggle to reach the growth rates it achieved in the past decade. The Bloomberg consensus forecast looks for 0.50 percent real GDP growth in 2016 and 1.30 percent in 2017, far below the 7.5 percent per annum rate that the economy averaged between 2003 and 2007. Strained relations with the West will likely hurt foreign direct investment in Russia. In addition, depressed petroleum prices will probably restrain new investment in the country’s oilfields
Non-energy goods account for only one-third of Russia’s total exports, so the boost to real GDP growth from the depreciation of the currency will not be large"
---------------------------------------------------------------------------------------------------------------------
My comment-
Given such great insights from Well Fargo, the HK-listed Russia ETF 3027 price pattern could be self-explanatory. Note also the RUBCNY Russian Ruble/Chinese Yuan (CURRENCY) chart
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