posted at 04:50
Author Name: Rob Wile
Opening Bell July 30
"1. Russian Stocks Shrug. Russia's MICEX index is up more than 2% despite the announcement of further sanctions against Russian financial institutions. BI's Sam Ro explains why markets are unmoved:"...There's little doubt that Russia's economy is indeed under pressure. Russia's MICEX index is actually down 3.5% since the beginning of the year; compare that with the S&P 500, which is up 7.8% during that period. Europe Gas Cut-Off? Morgan Stanley believes it's possible Vladimir Putin may respond to the new sanctions by cutting off gas through Ukraine and curbing oil exports, although trading in futures for both was subdued Wednesday morning. "Russia has announced that it will not respond in an 'eye-for- eye way' - and in any case, we think that a reciprocal approach would not be effective, given different dependencies," they say. "For instance, few G7 citizens or leaders have assets or family in Russia, and Russian banks are not an important source of finance for G7 countries. In fact, if Russia responds with economic measures, we think the most effective measures are likely to be restrictions on exports of oil and gas." Twitter crushed earnings expectations after trading Tuesday, and shares are up 25% this morning before the bell. Deutsche Bank's Joe LaVorgna, who is predicting 4.2%, has explained why he thinks it could be even higher: "Current data imply that Q1 productivity fell at an astounding -5.8% annualized rate, which would be the largest decline since Q3 1947 when productivity plunged by an all-time record amount of -11.2% in the quarter. Productivity then rebounded an even more remarkable +17.8% in the following quarter. In the context of a sharp downward revision to Q1 productivity, our estimate of just a +0.4% rebound in Q2 is extremely modest. If anything, the payback should be much larger, thereby implying even more economic output than what we project." Reuters reports the advent of IEX, the trading venue favorably portrayed by Michael Lewis in his latest book "Flash Boys," may cause the SEC to relax rules that require the fastest possible execution of securities trades.

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