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 →

By Pam Martens and Russ Martens: February 22, 2022 ~ On October 21 of last year, when the Fed originally announced its list of trading restrictions that it planned to impose on Fed officials, it made no mention of restricting its officials from short-selling (making bets on a decline in price) or preventing Fed officials from trading on margin. But when the Fed announced its finalized rules last Friday, “short sales or purchasing securities on margin” were added to the list of prohibitions. Why do we find that noteworthy? Because it was Wall Street On Parade that asked the Dallas Fed if its President at the time, Robert Kaplan, was shorting the market when he made those “over $1 million” trades in and out of S&P 500 futures contracts in 2020, a year when the S&P 500 dropped by as much as 30 percent between January 2 and March 23. The … Continue reading →

Editor’s Note: Auditors have come under a harsh light over their failure to detect massive frauds over the past two decades. The Big 5 are now the Big 4 as a result of Arthur Andersen’s audit failures with the energy company, Enron. Despite the sagging reputations of the remaining Big 4, conflicts of interest continue to pervade this profession. This is the news beat of Francine McKenna, a CPA, veteran financial reporter and now an independent journalist writing for Substack. In the article below, McKenna provides an overview of where things stand today and profiles three recent cases of Big 4 audit failures: at Theranos, Autonomy-HP, and Carillion. (This was a talk McKenna delivered to a February 15, 2022 gathering of the CFA Society New York under the program title, “What Investors Need to Know about Audits.” It is published here with permission from the author.) ~~~~~ We are here … Continue reading →

By Pam Martens and Russ Martens: February 18, 2022 ~ There are apparently stock-picking analysts across Wall Street pumping out buy recommendations on stocks to the public who have never cast their eyes on those chilling derivative charts published quarterly by the Office of the Comptroller of the Currency. If the analysts had cast their eyes on those charts, the last thing they would be recommending right now are megabank stocks. We’re talking specifically about JPMorgan Chase, Goldman Sachs, Citigroup, Bank of America and Morgan Stanley, which, together, control approximately 90 percent of the hundreds of trillions of dollars (notional/face amount) in derivatives held by all 4,900 banks and bank holding companies in the U.S. We’re also talking about the foreign banks that are significant derivative counterparties to these and other banks — such as Deutsche Bank, Credit Suisse, Nomura and Barclays. The chart above shows how these banks performed yesterday … Continue reading →

By Pam Martens and Russ Martens: February 17, 2022 ~ Yesterday, the Wall Street Journal dropped the bombshell that the Justice Department has been conducting raids on prominent short-sellers, including Muddy Waters’ Carson Block and Andrew Left of Citron Research. The Journal reported that the Justice Department “has seized hardware, trading records and private communications….” Reuters reported yesterday that the Justice Department’s probe is “part of a wide-ranging investigation into short-sellers and hedge funds focused on suspected coordinated manipulative trading, according to two people familiar with the matter.” Reuters also reported that “dozens” of subpoenas have been issued to various firms since early last year. Of particular interest to Wall Street On Parade was a report on December 10 by Reuters which indicated that trading activity in the shares of GSX Techedu was in the cross hairs of the Justice Department because both Muddy Waters and Citron Research had circulated negative … Continue reading →