Russia has been at the center of attention in the past few months because of its major collapse. It’s no secret, Russia’s economy is centered more than perhaps any other major nation around oil. The recent recession hit hard in Russia as it decreased demand and prices. Recently, Russia has been on the defensive as it defends itself on many fronts. Most recently, US Vice-President Joe Biden spoke very openly about Russia’s demographic problems and about its impact over the next few years. While some countries such as Japan have been acting to improve their long term prospects, it seems as though Russia has so many problems that it does not quite know where to put its energy. You can read very interesting article about Russia’s demographic problems.
Another more short term problem for Russia is that its main customer, Europe is in very bad shape, a lot worse than the US in many respects and this could affect the Russian economy as it still depends on exports (as does Canada) for a major part of its economy.
While I do agree that energy prices will rebound and would fear being short Russia, I think that Canada will profit as well from a bump in natural gas and oil prices and overall has a much better current situation. As well, seeing Russia up almost twice the growth of the Canadian market so far in 2009 gives me a good feeling that this will be a promising trade.
The danger of course is that Russia being in many ways an emerging economy, its stock market might enjoy more growth in a context where the world economy would pick up. But since we still do believe that the recovery will be slow, we expect Canada to fare better.
So there you have it, Long EWC (Ishares Canada), Short RSX (Market Vectors, Russia)
Yahoo(YHOO) is “almost” officially toast..
It is now being reported that a new search deal is almost done. Among other things, this deal would set Bing as the search engine used by Yahoo. My question of course is what Yahoo will be focusing on if it cannot even have its own search engine. Other segments of the company such as dating and stores have also been losing market share to the point where it is unclear what Yahoo will look like one or two years from now. As part of the deal, Yahoo would retain most the sales responsibility for the new merged business. But in a world where Google is by far the dominant player, I doubt a few extra salesman will be what takes Yahoo to the next level.
Yahoo is currently up on the news in after hours trading and it might last for some time but I do think that this deal will hurt Yahoo in the long term, especially since this time around, Yahoo came into the negotiations in a position of weakness, a major difference from the last few times such discussions took place.
Oh and did I meantion that this deal will without any doubt be under scrutiny by the Department of Justice as this deal will take out on of the very few big players in online advertising. It probably will still get done but this will cost money, focus and time.
Does Yahoo look bad for not following Carl Icanh’s advice a few months ago when they could sell their company for over 30$ per share? Amazing isn’t it… Just name one good and promising part of Yahoo right now??? Yes, exactly, I didn’t think you’d come up with one.