This was the year that Russia bankrupted the ruble bonds, causing a “collapse of Moscow” that contaminated markets around the world. A quick recovery: In August 1998, after years of turmoil following the collapse of the Soviet Union, the Russian government went bankrupt and cut the local ruble. The move sparked chaos in Russia, pushing up inflation, causing economic contraction and triggering bank failures. Emerging markets were hit hard and US investors panicked, especially when news came of the impending collapse of the Long-Term Capital Management hedge fund in September. This time it was different. On Monday, global markets barely reacted. Here’s why.

  1. We saw it coming. The news that foreign investors had not been paid about $ 100 million in interest on Russian government bonds was not a shock. In fact, it was widely expected after the freezing of half of Russia’s foreign exchange reserves, and the US Treasury Department ended a split in sanctions that allowed US bondholders to repay from Moscow. The European Union (EU) has also made it harder for Moscow to meet its obligations earlier this month by imposing sanctions on Russia’s representative in the National Settlement Bank for its foreign currency bonds. The market had strengthened, with existing bonds collapsing in value against pennies on the dollar. In the eyes of many investors, a bankruptcy has already taken place. The credit rating agency S&P called “selective bankruptcy” in April because it offered bondholders payments in rubles, not dollars. “Russia probably went bankrupt in March and April,” Timothy Ash, a emerging strategic analyst at BlueBay Asset Management, told me.
  2. Investors are more isolated. Foreign investors have dramatically reduced their exposure to Russia since 1998. The process has accelerated following sanctions over Russia’s annexation of Crimea. “The geopolitical dangers around Russia have been going on since 2014,” Ash said. Global emerging markets have also grown dramatically over the past two decades, and Russia’s relative weight has shrunk. This reduces the fear of transmission from the country’s economic downturn, although it is always a risk.
  3. The disorder occurs in other ways. Global markets may not be shaken by default. But they have responded to the war in Ukraine, which has pushed up food and fuel prices and fueled decades of high inflation. This has forced central banks to withdraw support for the economy more aggressively, creating stress on Wall Street. Traders are now obsessed with how quickly the US Federal Reserve and its counterparts, such as the European Central Bank, will be forced to raise interest rates. The tightening of economic conditions from such policies must be handled carefully and is the main reason why the S&P 500 fell into a bear market, falling more than 20% from its recent peak. CNN’s Business Fear & Greed Index remains deep in the “fear” area, after causing a “extreme fear” reading a week ago.

Robinhood shares fluctuate in the FTX takeover gossip

Robinhood shares have collapsed this year. This creates gossip that eager buyers could circle, feeling the opportunity to close a deal. Most recently: Robinhood shares rallied 14% on Monday, after Bloomberg reported that the FTX cryptocurrency exchange was investigating an acquisition, citing knowledgeable individuals. But FTX CEO Sam Bankman-Fried later withdrew the report. “There are no active merger and acquisition talks with Robinhood,” Bankman-Fried said in a statement to the media. “We are excited about Robinhood’s business prospects and the possible ways in which we could work with it.” Shares of Robinhood fell 4% in early trading on Tuesday. The bubble of my thought: Maybe this is not the end of the story. Bloomberg reports that FTX is discussing internally whether and how to make Robinhood a bid, but has not taken a formal approach. Bankman-Fried revealed a 7.6% stake in Robinhood last month. He said it was intended as a passive investment and that he “currently had no intention of taking action to change or influence Robinhood”. Of course, Tesla CEO Elon Musk also had what appeared to be a passive share on Twitter before changing his mind and concluding a deal to buy the entire company. What is FTX? The stock market is private, isolating it from some of the recent market chaos that has gripped the rest of the industry. It raised new funding earlier this year that valued the company at $ 32 billion. Robinhood is now worth less than $ 8 billion.

July 4th cookouts will cost $ 10 more this year

Getting cheeseburgers, potato salad and ice cream on the picnic table for Independence Day next week will be much more expensive as rising food prices continue to bite. The average cost of a summer kitchen for 10 people is now $ 69.68, an increase of about 17% or $ 10 compared to last year, according to a new survey by the American Federation of Agricultural Offices. Rising prices: The continuing problems of the supply chain are linked to the pandemic, the war in Ukraine and the wider jump in inflation. Rising meat prices are the biggest factor. The research found that two kilos of ground beef now cost $ 11.12, a jump of 36% from last year. Two and a half kilos of homemade potato salad increased by 19%, while hamburger buns are 16% more expensive. Strawberries are one of the few varieties that fall in price. The Farm Bureau attributed this trend to “better weather in some fruit-growing areas”. The package: High gasoline prices and rising food costs are key ways in which Americans tackle inflation, undermining their confidence in the economy. This is starting to hurt demand as buyers decline, although it remains strong. However, investors, economists and policymakers are concerned. As the impact of high prices penetrates, is a greater reduction in costs inevitable?

Next

US consumer confidence data for June reach 10 a.m. ET. Coming Tomorrow: Profits from General Mills (GIS), Bed Bath & Beyond (BBBY) and McCormick (MKC).