By Pam Martens and Russ Martens: March 8, 2022 ~ British Petroleum (BP), Shell, ExxonMobil and Norwegian oil and gas producer, Equinor, have all released statements indicating they are severing business ties with Russia in response to its invasion of Ukraine. But billionaire oil baron Charles Koch, who has sat at the helm of Koch Industries for more than half a century, has been unusually quiet about his plans for his sprawling Russian operations. According to Koch Industries, one of the largest private corporations in the world, three of its companies operate in Russia: Molex, a manufacturer of semi-conductors, printed circuits, fiber optics and a multitude of other electrical components; Koch Engineered Solutions, which makes process and pollution control equipment; and Guardian Industries, a glass and auto parts manufacturer. Another unit of Koch Industries, Koch Supply and Trading, has a history of trading Russian oil. Guardian Industries’ division, Guardian Glass, has … Continue reading →

By Pam Martens and Russ Martens: March 7, 2022 ~ There is a known $41 billion in Credit Default Swaps (CDS) on Russian debt. There is likely many billions more in unknown amounts. There are also billions more in Credit Default Swaps on state-owned Russian corporate debt and non state-owned Russian corporate debt. In addition to Wall Street not knowing which global banks and other financial institutions are on the hook to pay out on the Credit Default Swap protection they sold in case of a Russian sovereign debt default (or Russian corporate debt default), there is also approximately $100 billion of Russian sovereign debt (whose default is looking more and more likely) sitting on the balance sheets of foreign banks. Put it all together and you have the makings of a replay of the 2008 banking crisis when banks backed away from lending to each other because they didn’t know … Continue reading →

By Pam Martens and Russ Martens: March 4, 2022 ~ Last night’s evening news was filled with images of Ukrainian schools, apartment buildings and large sections of towns reduced to rubble by Russian President Vladimir Putin’s unrelenting bombing of civilian areas. While rebuilding those buildings and towns will be costly, it is likely to be far less costly than the financial damage that has been done to the major Russian corporations that, heretofore, were proudly publicly trading on stock exchanges around the world, including the Moscow Stock Exchange. According to an investor presentation by the Moscow Stock Exchange in 2020, stocks traded there had a market cap of $695 billion with 270 companies listed as of December 31, 2020. The majority of that market value has now been wiped out and the Moscow Stock Exchange has been shuttered to stock trading since Monday. The Russian central bank now indicates that the Moscow … Continue reading →

By Pam Martens and Russ Martens: March 3, 2022 ~ Every time crude oil rises by another 10 percent, Russian President Vladimir Putin believes he can continue to finance his bombing of residential neighborhoods in Ukraine. On October 1 of last year, Wall Street Journal reporter, Georgi Kantchev, wrote that “Oil-and-gas sales contribute as much as one-fifth” of Russia’s GDP, “while fuel and energy products make up the majority of Russia’s exports.” While the financial sanctions that the European Commission, U.S., U.K. and Canada have imposed on Russia are having a crippling impact on the stock prices of Russian companies, the Russian Ruble, and major corporations’ willingness to continue doing business with Russia, the soaring price of crude oil and natural gas is giving Putin a feeling of optimism about his “barbaric” invasion of Ukraine. At the beginning of this year, Brent Crude Oil was trading at $78 a barrel. Yesterday … Continue reading →

By Pam Martens and Russ Martens: March 2, 2022 ~ Russian President Vladimir Putin’s invasion of Ukraine, a nation of 44 million people, has been playing out for just seven days. But the losses Putin has suffered on the financial battlefield are already staggering. As a result of sanctions imposed by the European Commission, the U.S., Canada and the U.K., (that many other countries are now following), investing in anything connected to Russia has become a toxic idea to investors around the globe. As a result, the Moscow Stock Exchange has shuttered stock trading for the third day in a row and it’s been left up to investors to attempt to exit their Russian stocks on the London Stock Exchange. As of this morning, some of Russia’s largest companies are trading for pennies in London. As of 11:00 a.m. (London time), Russia’s giant energy company, Gazprom, was trading at 3 cents … Continue reading →

By Pam Martens and Russ Martens: March 1, 2022 ~ There is now an international competition for who can land the biggest insult to Russian President Vladimir Putin by severing business, financial, cultural and sports ties to Russia. Add Mickey Mouse to the growing list. Yesterday, the Walt Disney Company Tweeted this: “Given the unprovoked invasion of Ukraine and the tragic humanitarian crisis, we are pausing the release of theatrical films in Russia, including the upcoming Turning Red from Pixar. We will make future business decisions based on the evolving situation. In the meantime, given the scale of the emerging refugee crisis, we are working with our NGO partners to provide urgent aid and other humanitarian assistance to refugees.” As tens of thousands of outraged protesters take to the streets in cities around the world, some calling Putin a “war criminal,” and news photos spread of innocent Ukrainian children dying in an invasion … Continue reading →

By Pam Martens and Russ Martens: February 28, 2022 ~ Putin started an unprovoked war in Ukraine and now finds himself losing a serious financial battle at home. Anything connected to Putin is now toxic: that includes his country’s currency, its stock exchange, its banks, its major corporations, and its central bank. Even Russia’s vodka is being removed from shelves in Canada and the U.S. The central bank of Russia (Bank of Russia) first announced earlier today that the Moscow Stock Exchange would open at 10 a.m. Moscow time (2 a.m. New York time) but there would be no stock trading, just trading in the foreign exchange, currency and repo markets. A further decision on opening up the stock exchange for stock trading was set for 1 p.m. Moscow time (5 a.m. New York time). Stock trading has still not opened on the Moscow Stock Exchange and even the website of … Continue reading →

By Pam Martens and Russ Martens: February 25, 2022 ~ While Ukrainian children sleep with their pets in the subways, living in terror of the bombs raining down on them from their Russian invaders, wealthy Russian oligarchs are being comforted by “relationship managers” at banks owned by the very nations that say they are going to hold Russia accountable for its invasion of Ukraine. Noticeably missing from President Biden’s press conference yesterday on expanded sanctions against Russia for its invasion of Ukraine was any mention of how the U.S. and its allies were going to deal with the big foreign global banks that conduct banking business for thousands of Russian corporations and millions of Russian individuals. Biden only mentioned sanctions on Russian banks. That sent a loud message to the MOEX Index at the Moscow Stock Exchange, which as of 2:49 p.m. today in Moscow (6:49 a.m. in New York) had … Continue reading →

By Pam Martens and Russ Martens: February 24, 2022 ~ Donald Trump may think Russian President Vladimir Putin is a “genius” for his Ukraine strategy, but the shareholders of the largest publicly traded companies in Russia may have a different assessment today. After Putin ordered a wide scale invasion of Ukraine overnight, the Moscow Stock Exchange (MOEX) posted a notice that “it had suspended trading on all its markets until further notice.” The Russian oligarchs must have howled because a subsequent notice indicated it would restore trading at 10:00 a.m. Moscow time. Shortly after the exchange opened, however, the U.S. dollar denominated RTS Index plunged by 50 percent and the MOEX Index had tanked by 45 percent. You can see where the indices are currently trading at this link. The stock market pain spread across the largest publicly traded companies in Russia. Gazprom, one of the largest natural gas companies in … Continue reading →

By Pam Martens and Russ Martens: February 23, 2022 ~ Yesterday, President Biden announced a roster of sanctions against Russia over its aggression against Ukraine. (A much broader set of sanctions is planned against Russia by the U.S. and its allies if there is a full-scale invasion of Ukraine by Russia, according to U.S. government officials.) One of the entities sanctioned yesterday was state-owned Russian bank Vnesheconombank (VEB). In a related statement on the sanctions by the U.S. Treasury, it describes VEB as follows: “VEB’s $53 billion asset portfolio makes it large enough to be among Russia’s top five financial institutions. VEB occupies a unique role in Russia’s financial system as the servicer of Russia’s sovereign debt, financier for exports, and a funding source for investment projects with a loan portfolio of over $20 billion. VEB finances Russia’s national economic development, including large-scale projects to develop domestic infrastructure and other industries … Continue reading →