Short interim update May 18, 2022

[SOL]

The Russell 2000 and many tech stocks are holding up well during today's slide indicating that stocks are looking for any reason to rally. Powell stated the obvious and yet the markets overreacted indicating that at most we have possible two rate hikes before the FED is forced to reverse course. Remember we are in a massive currency war and the US has to maintain its edge via a strong dollar in the race to the bottom. out of all the industrialized nations it is only the country that has the capacity albeit short term to raise rates aggressively and in doing so maintain dollar supremacy. In the end the goal is to keep adding more money to this market

The fact the WMT and TGT are feeling pain so fast indicates the illusory nature of the entire economic recovery cycle since 2009. This market and this economy cannot survive without easy money and easy money will make a comeback

Note that Russian stocks are trending higher but no one can benefit from it, except the big players who can hold these positions for 3X longer than us mere mortals. At some point, they will end the sanctions and banks billions of dollars on profit on these positions. Remember as long as Fiat exists all corrections must viewed as opportunities and bear markets as fantastic buys when taking the long term perspective, which is the only perspective that really matters.

Do not forget to maintain a trading journal. If you have not done so this is one of the best times for it will yield rewards that will surprise you in the future. The battle of the trenches era is not going to end. So if you keep notes now, you will be able to revert to them in the future.

[cristiano7subo]

Sol, do you think we have a MOAB or a FOAB at our hands here?

[SOL]

Sol, do you think we have a MOAB or a FOAB at our hands here?

Getting closer to a MOAB, but not there yet. FOAB is a very, very rare signal. We also have to prepare in advance that the criteria will change as the situation changes. For example, the fact that Bullish sentiment dipped so quickly to 13 means that for a FOAB to be triggered in today's terms, the bullish sentiment would have to drop below 10, or Neutral Readings would have to surge past 60 in addition to several other factors.

[scremonini]

Hi Sol,

you mention that the big players will be able to bring home profits from Russian stocks when the sanctions are lifted. I have positions on a Lyxor ETF on Russia denominated in EUR and on Gazprom also in EUR. Both are currently frozen.

Do you think we will be able to sell the securities one day? Both should be trading much higher due to the RUB jump, as I bought in on March 1st.

Thanks
S

[SOL]

Hi Sol,

you mention that the big players will be able to bring home profits from Russian stocks when the sanctions are lifted. I have positions on a Lyxor ETF on Russia denominated in EUR and on Gazprom also in EUR. Both are currently frozen.

Do you think we will be able to sell the securities one day? Both should be trading much higher due to the RUB jump, as I bought in on March 1st.

Thanks
S

If they don't force you to sell them. Some US customers were forced to close their positions at loss. Assuming you can hold onto them, then the odds of bagging large gains are in the 84 to 90 per cent ranges.

[nicolas]

Do you think we will be able to sell the securities one day? Both should be trading much higher due to the RUB jump, as I bought in on March 1st.

My guess is that they'll need these Russian securities to trade again more or less freely at some point. Otherwise, how are they going to offload all those shares that they stole from investors?

Since most of you probably haven't received these wonderful emails from IB regarding sanctions on Russian banks, I'll let you in on the joke:
- ADRs of Sberbank, like SBER in London, and other banks as well, are not trading because, you know, "sanctions"...
- You may close out any open positions before May 24th; after that, you can't.

Now, if it's not trading, at what price do you "close your position"? And who's on the other side of the trade?

The last quoted price for SBER was $0.0453 on April 27th. Since this ADR represents 4 ordinary shares trading at around 126 RUB on the MOEX, the ADR should trade at around $8.10.

This is speculation on my part --but I believe this is what's happening-- if you caved to the pressure and decided to instruct IB to liquidate your shares of SBER, you'd receive 4 cents while a member of the Big Boyz Club would get your share worth 8 bucks on a free market now... And possibly $30-50 with a little patience.

- Yesterday, IB informed us that we may request this ADR to be converted into ordinary shares, before the deadline of May 24th. But there's no guarantee it'll work since the intermediaries may or may not want to do it. (At least IB is waiving the $500 fee for this operation! Let's see if it actually goes through.)
- Assuming you're able to convert your ADRs into ordinary shares, IB customers are currently not allowed to trade them on the MOEX...

About the PRUS ETF, either it will be allowed to trade again once we move on to the next crisis, or Lyxor will delist it at some point, in which case, they'll either rob us by settling for cash at the last price (not impossible since apparently there is no Rule of Law anymore in the West) or pay the current NAV.

Regarding Gazprom, it's a little more tricky since the Russian government did not allow them to keep their foreign listings. The ADRs are expected to delist on May 31st. No idea what happens then, but you'll probably have to write it off. Unless you have the option to convert them into ordinary shares (if your broker offers trading on the MOEX and if it does go through.)

[SOL]

Do you think we will be able to sell the securities one day? Both should be trading much higher due to the RUB jump, as I bought in on March 1st.

My guess is that they'll need these Russian securities to trade again more or less freely at some point. Otherwise, how are they going to offload all those shares that they stole from investors?

Since most of you probably haven't received these wonderful emails from IB regarding sanctions on Russian banks, I'll let you in on the joke:
- ADRs of Sberbank, like SBER in London, and other banks as well, are not trading because, you know, "sanctions"...
- You may close out any open positions before May 24th; after that, you can't.

Now, if it's not trading, at what price do you "close your position"? And who's on the other side of the trade?

The last quoted price for SBER was $0.0453 on April 27th. Since this ADR represents 4 ordinary shares trading at around 126 RUB on the MOEX, the ADR should trade at around $8.10.

This is speculation on my part --but I believe this is what's happening-- if you caved to the pressure and decided to instruct IB to liquidate your shares of SBER, you'd receive 4 cents while a member of the Big Boyz Club would get your share worth 8 bucks on a free market now... And possibly $30-50 with a little patience.

- Yesterday, IB informed us that we may request this ADR to be converted into ordinary shares, before the deadline of May 24th. But there's no guarantee it'll work since the intermediaries may or may not want to do it. (At least IB is waiving the $500 fee for this operation! Let's see if it actually goes through.)
- Assuming you're able to convert your ADRs into ordinary shares, IB customers are currently not allowed to trade them on the MOEX...

About the PRUS ETF, either it will be allowed to trade again once we move on to the next crisis, or Lyxor will delist it at some point, in which case, they'll either rob us by settling for cash at the last price (not impossible since apparently there is no Rule of Law anymore in the West) or pay the current NAV.

Regarding Gazprom, it's a little more tricky since the Russian government did not allow them to keep their foreign listings. The ADRs are expected to delist on May 31st. No idea what happens then, but you'll probably have to write it off. Unless you have the option to convert them into ordinary shares (if your broker offers trading on the MOEX and if it does go through.)

They keep getting more and more brazen when it comes to stealing from the working man. It almost looks like they have nothing but contempt for regular people like us

[RMSLSP]

I have some Sberbank stock and have been ignoring all Interactive Brokers emails. I didn´t completely understand this last email Nicolas mentioned. What should I do now? It´s best to say I want to convert the shares to ordinary shares?
Thanks!



Dear Client,

As you likely know, the U.S., U.K. and other governments imposed sanctions on several Russian banks related to Russia's continued activity in Ukraine. These sanctions impact trading in securities issued by some of these banks: Sberbank and VTB.

You are receiving this communication because you hold Sberbank or VTB American Depositary Receipts ("ADRs") / Global Depositary Receipts ("GDRs") in account U****0535.

Under the sanctions, IBKR clients can convert their existing Sberbank and VTB ADRs/GDRs to ordinary shares so long as there is no change of beneficial ownership, the depositary receipt issuer can process the conversion request, AND the conversion is completed by May 24, 2022. After that date, your Sberbank and VTB ADRs/GDRs will be fully restricted.

Even though these conversions are still allowed, many of the intermediaries that participate in the cancellation of sanctioned Russian ADRs/GDRs are not processing these requests. IBKR will submit cancellations, upon your request, of Sberbank and VTB ADRs/GDRs but cannot guarantee that the conversions will settle and that you will receive the ordinary shares, as that is out of IBKR's control.

To request a cancellation of your Sberbank or VTB ADR/GDR, please complete a ticket under the topic "Corporate Action" and IBKR will execute your request.

The details on impacted Sberbank and VTB ADRs/GDRs are below:

...

If your Sberbank or VTB ADRs/GDRs are successfully converted to ordinary shares, you are allowed to close the resulting ordinary shares through May 24, 2022. After that date, you will not be able to close or convert the ordinary shares or the ADRs/GDRs.

Please note that your ability to close positions may be limited by exchange or local rules. For example, current restrictions by the Central Bank of Russia prevent IBKR clients from making any trades (opening or closing) on the Moscow Stock Exchange.

[Yodean]

My guess is that they'll need these Russian securities to trade again more or less freely at some point. Otherwise, how are they going to offload all those shares that they stole from investors?

It's funny - I have the RSX ETF - frozen as well, but I have not received a single email or notification about it from my brokerage (RBC-quite a terrible brokerage, really, but I've been using it for so long, I'm a bit loathe to change - the whole "devil you know vs. the devil you don't" thing). I'll leave it alone, for years if need me - the asymmetry is there for decent profits.

https://twitter.com/i/status/1521603570990256128

[nicolas]

I have some Sberbank stock and have been ignoring all Interactive Brokers emails. I didn´t completely understand this last email Nicolas mentioned. What should I do now? It´s best to say I want to convert the shares to ordinary shares?
Thanks!

What I did is I sent them a ticket with the category Account Services / Corporate Actions, simply telling them I'd like to convert my Sberbank ADR shares to ordinary shares.

I got the acknowledgment shortly after:

Initial Description: Converting Sberbank ADR to Ordinary Shares
Response from IBCS at 18-May-2022

Dear Mr. ***,

Your request has been received and is being processed. The standard conversion fee is $500 conversion fee, but in this case it will not be charged to customers.

Please wait for the conversion process to complete. We cannot say exactly how long this process will take.

If you have any questions - please contact us! You can also contact us by phone. The numbers are listed here: www.ibkr.com/support.

[Eric]

They keep getting more and more brazen when it comes to stealing from the working man. It almost looks like they have nothing but contempt for regular people like us

Why let only the wealthy get wealthier?

The truly powerful hate you. You are sub-human and they wouldn't stop to piss on you if you were on fire.

[nicolas]

Do you think we will be able to sell the securities one day? Both should be trading much higher due to the RUB jump, as I bought in on March 1st.

My guess is that they'll need these Russian securities to trade again more or less freely at some point. Otherwise, how are they going to offload all those shares that they stole from investors?

Since most of you probably haven't received these wonderful emails from IB regarding sanctions on Russian banks, I'll let you in on the joke:
- ADRs of Sberbank, like SBER in London, and other banks as well, are not trading because, you know, "sanctions"...
- You may close out any open positions before May 24th; after that, you can't.

Now, if it's not trading, at what price do you "close your position"? And who's on the other side of the trade?

The last quoted price for SBER was $0.0453 on April 27th. Since this ADR represents 4 ordinary shares trading at around 126 RUB on the MOEX, the ADR should trade at around $8.10.

This is speculation on my part --but I believe this is what's happening-- if you caved to the pressure and decided to instruct IB to liquidate your shares of SBER, you'd receive 4 cents while a member of the Big Boyz Club would get your share worth 8 bucks on a free market now... And possibly $30-50 with a little patience.

- Yesterday, IB informed us that we may request this ADR to be converted into ordinary shares, before the deadline of May 24th. But there's no guarantee it'll work since the intermediaries may or may not want to do it. (At least IB is waiving the $500 fee for this operation! Let's see if it actually goes through.)
- Assuming you're able to convert your ADRs into ordinary shares, IB customers are currently not allowed to trade them on the MOEX...

[...]

They keep getting more and more brazen when it comes to stealing from the working man. It almost looks like they have nothing but contempt for regular people like us

Top Russian lender clocks up record profits amid Western sanctions
Sber’s net earnings have exceeded $8 billion so far this year
https://www.rt.com/business/579541-sber ... rd-profit/

Russia's largest lender, Sber, collected a record net profit in January-June this year, the bank said in its earnings report on Tuesday.

According to the data, the bank earned 727.8 billion rubles ($8.1 billion) in the first half of 2023. Earnings surged by 22.4% compared to the same period of 2021, which was a record year for the bank.

At least, whoever ended up with these stolen shares is profiting from the crime. Maybe they're even getting the dividends paid to them?

Meanwhile, my Sber shares are locked in a "quarantined account", taunting me with their rising value.

[SOL]

At least, whoever ended up with these stolen shares is profiting from the crime. Maybe they're even getting the dividends paid to them?

Meanwhile, my Sber shares are locked in a "quarantined account", taunting me with their rising value.

Just envision the tremendous surge in Russian shares if the sanctions were to be lifted. It's highly likely that numerous companies would/could tack on 100% in gains within the first week of trading. One could speculate that certain cunning individuals or masterminds may have played a role in advocating for these severe sanctions.

[MarkD]

And now NATO has decided to slow the offer to Kiev for membership until hostilities cease. Could it all have been a ruse?