It is hard to see how Russia or China (with sanctions if it invades Taiwan) could maintain existing machinery or build new machinery for all types of production, and for many defense purposes (at least to build the weapons, even if the weapons have no electronics inside them) when they are cut off from
the rest of the world's semiconductors and other electronic components.
Many components are built in exactly one place - not in Russia or China. Electronic designs need a large number of different components, which are highly specific in electrical behaviour and physical package dimensions. Without even one component, the final product can't be made.
The most advanced CPUs do not come from China - and Russia has only a very small, antiquated, semiconductor industry which produces a few exotic parts.
For a country to be productive, it has to be able to access the latest end-products and often the latest components.
This makes the idea of China or Russia actually attacking anyone the rest of the world cares about a really bad idea. Since there is such corruption, malfeasance and ineptitude in politicians, this fact does not mean that such attacks will not proceed. Exhibit 1: Ukraine.
Similar criticism can be applied to the US as well.
One sobering reality of the post-pandemic era is that the global supply chains are breaking down. Every nation is largely in the same boat, and it's headed right over the waterfall.
If the data is from America, then most likely to be manipulated to fit the narrative. Russia has lot of food , American government are killing the farmer and food supply.
Agreed. The Russians have access to cheap food and energy, and that's ultimately what matters at the end of the day. They have endless natural resources, a strong manufacturing sector, and strong ties to China, so they have everything they need. The Russian people are also unified in a way that their American (or Canadian and citizens of other western countries) counterparts are not.
The west is self-destructing. Most western countries consume, but no longer produce. Germany is one of the exceptions but is on the verge of losing access to cheap energy, and the Netherlands, the world's second-largest food exporter in the world is being sabotaged by the WEF's Agenda 2030. Moreover, we trashing our relationships with the countries that provide us what we need; if things go south with China, we are in deep trouble because we currently don't have the skills to produce the medicine and tech (and many other vital products) we rely on from them.
Gazprom's output declined last month mostly due to two reasons: Sanctions-driven technical issues with equipment (a turbine needed servicing in Canada, leading to delays because Canada initially refused to return the equipment to Russia; that’s since been resolved, but Russia has several more turbines that need servicing and is reluctant to send them without first getting written assurances there won’t be any problems getting them back) and continuing to cut off countries that have been refusing to pay for the natural gas in rubles. To put that into context, July 2022 output is only 14% less than July 2021, and natural gas prices have risen three or four times as much in the interim.
Share prices are down, because many western analysts believe that Russian natural gas prices might be capped and/or that Russia will break with its European customer base and be unable to replace it and/or that Russia is losing to Ukraine. I don’t think any of that’s likely.
The decline in the MOEX makes an increase in industrial output highly unlikely. Rising output would push share prices up, not down.
The China narrative has been that China and India would soak up the energy exports Europe is no longer purchasing. Your own commentary confirms this is not happening.
Keep in mind that Russia has been sliding into recession since October, long before the first shot was fired in Ukraine. Russia's economic woes hardly began with the sanctions.
I don't believe that share prices always reflect reality. Case in point: Tesla.
"The China narrative has been that China and India would soak up the energy exports Europe is no longer purchasing. Your own commentary confirms this is not happening."
What I said was that many western analysts believe that Russia will break with its European customer base without being able to replace it. When I said I didn't think that was likely, I should've been more specific. I think there’s a very good chance that Russia will break with Europe, but Russia will have no trouble whatsoever finding buyers for its energy exports.
Russia signed a 30-year contract a few months ago to supply gas to China via a new pipeline that will deliver up to 50 billion cubic metres (1.8 trillion cubic feet) of natural gas a year, its biggest deal with China ever. In the meantime, Gazprom recently set a new record of daily gas export to China.
Before the start of the war, India bought only 1% of Russia’s crude. Since then, Russia has become India's second-biggest crude oil supplier. China increased Russian oil purchases by 55% back in May, making Russia its top oil supplier, overtaking Saudi Arabia.
We'll have to agree to disagree about Russia's economy, which I think is already turning the corner.
Thanks very much for this analysis.
It is hard to see how Russia or China (with sanctions if it invades Taiwan) could maintain existing machinery or build new machinery for all types of production, and for many defense purposes (at least to build the weapons, even if the weapons have no electronics inside them) when they are cut off from
the rest of the world's semiconductors and other electronic components.
Many components are built in exactly one place - not in Russia or China. Electronic designs need a large number of different components, which are highly specific in electrical behaviour and physical package dimensions. Without even one component, the final product can't be made.
The most advanced CPUs do not come from China - and Russia has only a very small, antiquated, semiconductor industry which produces a few exotic parts.
For a country to be productive, it has to be able to access the latest end-products and often the latest components.
This makes the idea of China or Russia actually attacking anyone the rest of the world cares about a really bad idea. Since there is such corruption, malfeasance and ineptitude in politicians, this fact does not mean that such attacks will not proceed. Exhibit 1: Ukraine.
Similar criticism can be applied to the US as well.
One sobering reality of the post-pandemic era is that the global supply chains are breaking down. Every nation is largely in the same boat, and it's headed right over the waterfall.
No one will be spared when the chaos arrives.
If the data is from America, then most likely to be manipulated to fit the narrative. Russia has lot of food , American government are killing the farmer and food supply.
Agreed. The Russians have access to cheap food and energy, and that's ultimately what matters at the end of the day. They have endless natural resources, a strong manufacturing sector, and strong ties to China, so they have everything they need. The Russian people are also unified in a way that their American (or Canadian and citizens of other western countries) counterparts are not.
The west is self-destructing. Most western countries consume, but no longer produce. Germany is one of the exceptions but is on the verge of losing access to cheap energy, and the Netherlands, the world's second-largest food exporter in the world is being sabotaged by the WEF's Agenda 2030. Moreover, we trashing our relationships with the countries that provide us what we need; if things go south with China, we are in deep trouble because we currently don't have the skills to produce the medicine and tech (and many other vital products) we rely on from them.
If the Russian manufacturing sector is strong, why is Russian manufacturing declining?
If their resources are endless why did Gazprom's output decline July? Why are Gazprom, Rosneft, and Lukoil share prices trending down?
The data directly contradicts your thesis.
Depending on the source, Russia’s industrial output either fell 1.8% from a year earlier or increased 3.5% ( https://tradingeconomics.com/russia/industrial-production or https://www.statista.com/statistics/1225575/manufacturing-purchasing-managers-index-russia/ ); in other words, remains relatively unchanged, which is remarkable given the situation with Ukraine and the resulting sanctions.
Gazprom's output declined last month mostly due to two reasons: Sanctions-driven technical issues with equipment (a turbine needed servicing in Canada, leading to delays because Canada initially refused to return the equipment to Russia; that’s since been resolved, but Russia has several more turbines that need servicing and is reluctant to send them without first getting written assurances there won’t be any problems getting them back) and continuing to cut off countries that have been refusing to pay for the natural gas in rubles. To put that into context, July 2022 output is only 14% less than July 2021, and natural gas prices have risen three or four times as much in the interim.
Share prices are down, because many western analysts believe that Russian natural gas prices might be capped and/or that Russia will break with its European customer base and be unable to replace it and/or that Russia is losing to Ukraine. I don’t think any of that’s likely.
The decline in the MOEX makes an increase in industrial output highly unlikely. Rising output would push share prices up, not down.
The China narrative has been that China and India would soak up the energy exports Europe is no longer purchasing. Your own commentary confirms this is not happening.
Keep in mind that Russia has been sliding into recession since October, long before the first shot was fired in Ukraine. Russia's economic woes hardly began with the sanctions.
I don't believe that share prices always reflect reality. Case in point: Tesla.
"The China narrative has been that China and India would soak up the energy exports Europe is no longer purchasing. Your own commentary confirms this is not happening."
What I said was that many western analysts believe that Russia will break with its European customer base without being able to replace it. When I said I didn't think that was likely, I should've been more specific. I think there’s a very good chance that Russia will break with Europe, but Russia will have no trouble whatsoever finding buyers for its energy exports.
Russia signed a 30-year contract a few months ago to supply gas to China via a new pipeline that will deliver up to 50 billion cubic metres (1.8 trillion cubic feet) of natural gas a year, its biggest deal with China ever. In the meantime, Gazprom recently set a new record of daily gas export to China.
Before the start of the war, India bought only 1% of Russia’s crude. Since then, Russia has become India's second-biggest crude oil supplier. China increased Russian oil purchases by 55% back in May, making Russia its top oil supplier, overtaking Saudi Arabia.
We'll have to agree to disagree about Russia's economy, which I think is already turning the corner.
Narrative is rarely a fit substitute for facts.
The inflation numbers are from Rosstat, the RUSSIAN statistics bureau. The markets data is from the Moscow Exchange (MOEX).
The RUSSIAN data is what gives no indication of confidence and health in the Russian economy.
The state of the American economy is not germane to this analysis.