REUTERS/Jonathan Ernst
Former White House press secretary Jay Carney (R).
At first, it looked like an awful call as Russian stock prices surged into the summer.
But as Jesse Livermore notes, now it looks smart.
Here's Carney's March 18 call on Russian stocks, via the White House:
Q: The Russian stock market is soaring the last couple days. Is this a sign that the sanctions that we've taken are ineffective if they're not really paying a cost? In reality, it's up about 8, 9 percent in the last couple days, their main stock exchange.
MR. CARNEY: I think it's down for the year and I think the ruble has lost value. And I think that the long-term effect of actions taken by the Russian government... will have an impact on their economy all by themselves. They will also incur costs because of the sanctions that we and the EU have imposed, and there will be more actions taken under the authorities that exist with the two executive orders that the President has signed. So I wouldn't, if I were you, invest in Russian equities right now -- unless you're going short."
Carney made this "call" just after the US had announced another round of sanctions against Russia.
It was oddly specific investing advice for a member of the White House, and in June, we noted that to that point, Carney had essentially unwittingly called the bottom in the Russian stock market. In other words, the "Carney trade" of going short Russian stocks in March was a disaster.
But now, another six months later, guess what? It's in the money!
Since Carney's March 18 call, the RSX ETF that tracks the Russian stock market is down more than 18%. At the time of our June post, the RSX was up about 11% from Carney's short call.
Over the last several months, as the price of oil has collapsed and the value of the Russian ruble has tumbled, the economic situation in Russia has grown pretty bleak.
And Russian stocks have followed suit.
And now Jay Carney looks smart.
Yahoo Finance