Trail 28 — Ruble to Rubble to Ruble
Editor — Sylvia Lo
Shortly after the Ukraine war began, the ruble’s collapse symbolised Russia’s ambition could be curbed by international sanctions. International sanctions on Putin’s regime did sink the ruble to record lows (~121.5 rubles per dollar), and things looked so dire that U.S. President Joe Biden said the ruble had been reduced to “rubble.”
The ruble has surged back to where it was before the invasion, trading as strong as 74.26 per dollar in Moscow early Thursday.
This rebound is mainly supported by a strong current account surplus of $321bn projected in FY22 despite sanctions as energy exports continue and prices remain high.
Support from trade partners also continues. Russian coal and oil paid for in yuan are about to start flowing into China as the two countries try to maintain their energy trade despite the outrage over the invasion of Ukraine. While Europe is pondering energy sanctions, the dependence on Russia for Gas will limit their options. India’s government is considering a proposal from Russia’s central bank for bilateral payments as they seek to buy oil and weapons from Putin.
So there is strong economic outlook for Russia despite sanctions. If the USD/RUB pair is a proxy of who is winning the economic war, Russia’s made a strong comeback.
Editor’s Corner — What’s happening in the world of business
CEO Pay
Who has the top job in the U.S.? At roughly $247 million, Discovery Inc.’s David Zaslav is currently the highest-paid CEO, followed closely by Amazon’s Andy Jassy at nearly $213 million.
CEO salaries rose a whopping 19% in 2021, but the average hourly wage in the U.S. rose only 4.7%, according to the Labor Department. The meagre pay rise for the average worker is not enough to keep up with inflation which is likely to remain elevated for the remainder of the year.
Companies generally did not increase base salaries for the CEO in 2021. Instead, companies were more likely to increase their Long-Term Incentives (LTI) to align with shareholder value creation.
Editor in Tweet
Nowadays, it’s hard to go a week without reading about Elon in the news. This week, he made headlines by purchasing 9.2% of Twitter, making him their largest shareholder and their newest board member.
Musk, one of the most prominent personalities on Twitter, has amounted a massive following of 80.5m on the social media platform. The announcement drove a 27% increase in their share price as investors anticipated higher returns, believing he could jump-start Twitter’s faltering user growth
(Trump supporters are already pushing for Musk to reinstate the former POTUS). Musk is already making waves this week by asking Twitter users if they wanted to have an edit button in a poll. Last year, he polled Twitter users on whether he should sell 10% of his stake in Tesla, to which the majority agreed (for a follow up, please read last weeks article).
Twitter co-founder Jack Dorsey, who is a friend of Musk’s, said in a tweet that he is “really happy” that Musk is joining the board. Musk’s term on the board is set to expire at Twitter’s 2024 annual meeting.
Until next week.
Financial markets are fascinating, and I see them amalgamating the subjective and objective worlds. They are constantly evolving, follow no predetermined path and much like humans and society in general, their behaviour at most times is irrational. Yet, their day to day functioning is seemingly driven by facts and reasoning. They are filled with plenty of stories of triumph, tragedy and comedy. Every day they are thoroughly analysed and tried to make sense of. Yet, their future steps or directions cannot be predicted based on history. They follow a random walk. Therein lies their beauty.
If enjoying making sense of their randomness is as appealing to you as it is to me, each week, I briefly recap a few stories that captured my interest, with embedded source links available for those who wish to read more.
