Reggie Middleton is an entrepreneurial investor who guides a small team of independent analysts, engineers & developers to usher in the era of peer-to-peer capital markets.
1-212-300-5600
reggie@veritaseum.com
Donald Trump's recent Tweet discusses how Russia has gotten stronger at the behest of President Obama.
For eight years Russia "ran over" President Obama, got stronger and stronger, picked-off Crimea and added missiles. Weak! @foxandfriends
— Donald J. Trump (@realDonaldTrump) March 7, 2017
Let's take an empirical look at that claim.
During the first and second quarter of 2014, the Obama Administration has put significant pressure on Russia in the form of personal, corporate, financial, trade and infrastructure related sanctions and related stress - as stated in the US Treasury web site:
WASHINGTON – In response to Russia’s continued attempts to destabilize eastern Ukraine and its ongoing occupation of Crimea, the U.S. Department of the Treasury today imposed a broad-based package of sanctions on entities in the financial services, energy, and arms or related materiel sectors of Russia, and on those undermining Ukraine’s sovereignty or misappropriating Ukrainian property. More specifically:
Here's an infographic that show's the flow...
On top of these sanctions, Russia's primary export (oil) has been on a startk structural and cyclical decline in price as supply outstrips demand in an uncertain macro environment. I have written extensively on this below:
As a matter of fact, the Russian oil and gas industry didn't start doing better in the equity markets until indications that Trump could win, and eventually did win the election.
The combination of weakening oil prices and punishing sanctions have definitely taken their toll on the Russian economy. While the rest of Europe showed some economic growth, Russia stagnated and fell into negative growth right about the time Obama's sanctions were implemented and then tightened. The Obama admin and the EU have made it illegal for their companies to buy debt with maturity of more than 30 days from key Russian banks. The U.S. sanctions bar American companies from providing goods or services for the deepwater, Arctic and offshore and shale energy projects of five Russian companies: Rosneft, Gazprom, Gazprom Neft, Lukoil and Surgutneftegas.
Russia’s total export revenues have dropped significantly, causing it to cut its imports by half. The oil crunch was strategically tighted by the financial sanctions, which prevent the country from accessing the cash flow to mitigate the drop in export revenue. Normally, Russia is considered quite credit-worthy with a what was a 10% public debt to GDP ratio. The problem with that is if you can't access public credit markets it really doesn't matter, with the result being you are now not creditworthy. On Jan. 9, 2015 Fitch Ratings cut Russia’s credit rating to BBB-, which is the final notch above a junk rating. This is the history of Russia's credit rating from 4 years before the sanctions were implmented to now. Take note, that the latest numbers do not take into consideration the most recent round of Obama administraton punitive measures which are likely clandestine and will resulte in a lag before they show up in economic numbers.
Agency | Rating | Outlook | Date |
---|---|---|---|
Moody's | Ba1 | stable | Feb 17 2017 |
Fitch | BBB- | stable | Oct 14 2016 |
S&P | BB+ | stable | Sep 16 2016 |
Moody's | Ba1 | negative | Apr 22 2016 |
IE | 51 | negative | Apr 16 2016 |
TE | 43 | negative | Apr 16 2016 |
Moody's | Ba1 | negative watch | Mar 04 2016 |
Moody's | Ba1 | stable | Dec 03 2015 |
Moody's | Ba1 | negative | Feb 20 2015 |
S&P | BB+ | negative | Jan 26 2015 |
Moody's | Baa3 | negative watch | Jan 16 2015 |
Fitch | BBB- | negative | Jan 09 2015 |
S&P | BBB- | negative watch | Dec 23 2014 |
Moody's | Baa2 | negative | Oct 17 2014 |
Moody's | Baa1 | negative | Jun 27 2014 |
S&P | BBB- | negative | Apr 25 2014 |
IE | 61 | negative | Apr 22 2014 |
Moody's | Baa1 | negative watch | Mar 28 2014 |
IE | 61 | negative | Mar 21 2014 |
Fitch | BBB | negative | Mar 21 2014 |
S&P | BBB | negative | Mar 20 2014 |
IE | 61 | stable | Oct 15 2013 |
IE | 61 | stable | Jul 18 2013 |
IE | 61 | stable | Jun 10 2013 |
Fitch | BBB | stable | Jan 16 2012 |
IE | 61 | stable | Nov 28 2011 |
IE | 61 | stable | Aug 05 2011 |
IE | 61 | stable | Aug 02 2011 |
IE | 61 | stable | Jul 14 2011 |
IE | 61 | stable | Jul 13 2011 |
IE | 61 | stable | Apr 18 2011 |
Fitch | BBB | positive | Sep 08 2010 |
This all started during the 2nd quarter of 2014 sanction implementations. Take a look at the Russian economy as of that point, keeping in mind that most of the rest of Europe started to grow (albeit with ridiculously drastic NIRP and QE policies).
Long story, short - it is extremely misleading to state that Russia has walked all over the Obama administration. If numbers and math mean anything, it is the Obama administration which has done such to the Russians. It's quite likely this 3rd set of punitive measures and sanctions as the result of Russian's alleged meddling in the US elections will push the country deep into recession as the majority of the US capability is not public. Obama has expelled 35 diplomats and frozen some addition assets, but the US has alleged to have significant control over Russian financial, energy and communications infrastructure as well. The recent Wikileaks #Vault7 data dump gives us a peek into what's possible from a remote location.
Reggie Middleton is an entrepreneurial investor who guides a small team of independent analysts, engineers & developers to usher in the era of peer-to-peer capital markets.
1-212-300-5600
reggie@veritaseum.com