But Whose Money Evaporated when JP Morgan, BlackRock, Pimco, Calpers, Others Report Huge Losses on Russian Assets?

OPM = Other People’s Money — namely from American and European retail investors and pension beneficiaries.

By Wolf Richter for WOLF STREET.

Russia’s Central Bank, which had closed the Moscow Stock Exchange on February 25, said over the weekend that the stock exchange would remain closed through March 18 for sure, and that in terms of trading in the following week, the Central Bank would make an announcement “later.”

Stocks of Russian companies that traded in London collapsed before trading was halted, such as Gazprom, which had collapsed by 93% by the time trading was halted on March 2.

Corporate bonds issued by Russian companies in USD, EUR, GBP, etc. are now facing default as these companies are having difficulties making interest payments to bondholders in foreign currency, or may be blocked by the Russian government to do so and may have to make payments in rubles. What companies will do with maturing bonds that need to be paid off in hard currency remains a question mark.

Some debt payments have been made. For example, Norilsk Nickel was cleared by the government to pay the coupon interest of $6.4 million on a $500 million bond, and has now paid that interest in dollars. And it recalled and paid off a different $500 million bond that was due in April. Uncertainty reigns over everything that would have been taken for granted.

Funds with large exposure to Russian stocks, such as the JPMorgan Emerging Europe Equity Fund, were frozen on February 28, after Net Asset Values collapsed.

Of the top 10 holdings of the JPMorgan Emerging Europe Equity Fund, only two (#7 and #8)  are not Russian companies:

Company Country % of holdings
Lukoil, integrated oil & gas company Russia 9.8%
Gazprom, largest natural gas producer Russia 9.7%
Sberbank, largest bank, majority state owned Russia 7.9%
Novatek, 2nd largest natural gas producer Russia 7.6%
Rosneft Oil, integrated oil & gas company Russia 4.8%
Tatneft, oil and gas company Russia 3.5%
Bank Pekao Poland 3.3%
OTP Bank Hungary 3.0%
Magnit, food retailer Russia 3.0%
MMC Norilsk Nickel, nickel & palladium mining, smelting Russia 3.0%

BlackRock, with about $10 trillion in funds under management, said on March 11 through a spokesperson, cited by the Financial Times, that Russian assets in its funds on February 28 were down to about $1 billion, from $18.2 billion a month earlier, and that the $17-billion plunge was from markdowns of asset values, rather than asset sales. BlackRock didn’t provide details as in which funds these losses occurred.

BlackRock’s Ishares Msci Russia ETF [ERUS] collapsed from $41.26 on February 16 to $8.06 on March 3, when trading was halted. The fund’s top holdings were Gazprom (19.7%), Lukoil (14.2%), Sberbank (12.1%), and Norilsk Nickel (5.1%). BlackRock suspended trading of all of its Russian ETFs and of an Emerging Europe fund that is heavily exposed to Russia.

BlackRock CEO Larry Fink said on LinkedIn: “This has been a highly complex and fluid situation, and BlackRock will continue actively consulting with regulators, index providers and other market participants to help ensure our clients can exit their positions in Russian securities, whenever and wherever regulatory and market conditions allow.”

Pimco funds held at least $1.5 billion in Russian government debt in January and $1.1 billion in bets on Russia through credit-default swaps. Other funds are similarly exposed.

But who’s money was it that evaporated?

There is no telling at this point exactly how many billions of dollars evaporated. But we already know whose money it was that has evaporated. And it wasn’t the money of JP Morgan, BlackRock, or Pimco – it was other people’s money (OPM).

Those funds with exposure to Russian assets have been heavily marketed to retail investors not in Russia, but in the US and Europe. “Emerging Europe” funds and Russia funds were supposed to be part of the strategy to increase returns and diversify assets. This is mostly the money of American and European retail investors.

US pension funds too have loaded up with Russian assets, and that’s the money of beneficiaries (OPM).

Now pension funds are trying to unload those assets but trading in those assets has halted and markets are frozen. This includes real estate assets that are now totally illiquid.

For example, the California Public Employees’ Retirement System (Calpers), the largest US pension fund, held $420 million of Russian stocks and $345 million in illiquid real estate assets, according to a letter, seen by Reuters, it sent to Governor Gavin Newsom in response to his call for state pension funds to cut off money to Russia.

In internal discussions, Calpers staff was weighing the costs of a sudden exit from Russian assets (which would require the board’s approval), and “some senior managers reckoned the investments would be worthless if they tagged them for hasty disposal amid stiff sanctions and swooning prices for Russian assets,” according to Bloomberg, citing a source.

And with the Moscow Stock Exchange closed for the third week in a row, there are now previously unthinkably absurd questions cropping up, such as if a stock market can just vanish.

The giant Russian companies whose stocks are publicly traded are in part state-owned. Those companies won’t be allowed to collapse. But they might default on their bonds, and during a bailout, the state might just take over entirely and wipe out the stake of other stockholders, or dilute other stockholders into meaninglessness.

All this is shrouded in gigantic uncertainty. But Russia understands that this isn’t money from regular Russians in Russia that has evaporated. It’s mostly money from US and European retail investors that bought these mutual funds and ETFs, and money from pension fund beneficiaries, along with some money that Russian oligarchs thought they had. The Russian government and state-controlled companies are not known for pro-shareholder attitudes. So for foreign retail investors and pension funds beneficiaries, this is a tough situation.

But for JP Morgan, BlackRock, and other fund managers it’s not a tough situation. They extracted large amounts of fees for years from these funds that were marketed to retail investors, and they padded their bottom lines with these fees. Now retail investors, after having paid those fees for years, get to eat the losses.

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  123 comments for “But Whose Money Evaporated when JP Morgan, BlackRock, Pimco, Calpers, Others Report Huge Losses on Russian Assets?

  1. andy says:

    As always, it’s the taxpaeyers’ money that evaporated. We just don’t know it yet.

    • Brewski says:


      Remember Greenspan’s bailout of LTC?

      The die has been cast.


      • phleep says:

        LTC bailout was done under William McDonough, NY Fed. It was private money put up by multiple banks. It was not, in my opinion, the typical Greenspan put maneuver (loosening interest rates/credit). They merely needed to hold certain assets until they returned to historic levels. Which was some sizeable part of what was done under Bernanke post-2008: lender of last resort floats debtors and some assets through a temporary panic. But the last decade or so, and yes with the precedent of 1990s-2000s Greenspan, I think it escaped all reason.

        • Joey says:

          But don’t all Bailouts from Gov come from TaxPaying Citizens? .. and Banks got Lot’s of Bailouts .. ? ..

        • joedidee says:

          you all forget so quickly
          socialize losses
          privatize profits
          believe the LTCM bailout made billions for few 1%

    • Augustus Frost says:

      There will be no bailout here, not unless these people end up on welfare. Retail “investors” aren’t too big to fail or systemically important.

      • andy says:

        No one said anything about retail “investors’. Wait till Jeff Bezos can’t afford to fly random people to space in his penis rocket.

    • Wisdom Seeker says:

      I suppose we’ll know our money’s evaporated when a penny – a copper-clad zinc disc that we used to use as a coin – will be worth more than a dollar…

    • historicus says:

      So does the entity that was working hand in hand with the Fed convince Powell not to raise to the degree he should raise?
      asking for a friend
      And what of all the Powell venture capitalists that have flooded the debt market with CLOs? Does this shade Powell’s decision making?

  2. Petunia says:

    Kentucky Teachers Retirement Fund took a hit on Sberbank, a Russian bank, in the last few days. I’m sure there’s more news to come on that front.

    • RM says:

      The very fact that a “Kentucky teacher’s retirement fund” was invested in Russian banks is basically evidence that we live in a clown world financialized economy. What an embarrassment. They should be invested in exclusively American and insanely boring blue-chip securities. The safest of the safest.

      At every level, we are ruled and administered by incompetent parasites and swindlers. We are simply not a serious nation. And we’re about to run face-first into a fully deserved brutal reality.

      Buckle up. This s**tshow is only just getting started.

      • Mud says:

        Won’t bring a large return on invest ment , need 8% to have a decent retirement

      • joe2 says:

        At 0.10 on the dollar, some of that stuff looks pretty attractive. Wish I was smart enough to know which but that’s a big boys game. This emotional frenzy will pass. Oil and wheat will always have value.

        • taxpayer says:

          It might be a smart gamble to buy a few Russian stocks, but how would a U S investor do so? ETF’s are frozen, ADR’s don’t trade… but the companies still exist. I suppose global elites have a workaround to buy these, not available to WS readers.

      • Augustus Frost says:

        Can’t speak to the teacher’s fund specifically but last I knew, Kentucky pensions were (among the) most underfunded of all state retirement funds in the country.

        As with the CALPERS example in the article, the purpose was to obtain higher returns. Problem with this practice is that, in a mania, most everybody only thinks of potential returns while forgetting about the risk.

        • Gattopardo says:

          CALPERS and other pension funds do not fall for the mania. They’ve reached deeper into riskier asset classes for the same reasons others have — the Fed killed yields on everything else. When you need to average X% returns to stay above the funding curve, and fixed income yields next to nothing, you run out of options….

        • Augustus Frost says:

          You’re describing TINA which is an outcome of the mania.

          I don’t just blame the central banks (since they don’t fully control interest rates anyway) but the politicians for voting to grant benefits which aren’t affordable longer term.

          In the aggregate longer term, beneficiaries will not receive the payouts they were promised, except in devalued dollars.

          The only reason benefits appear to be affordable to this point is because of the mania. California in particular has benefited from Silicon Valley. Both after the dot.com bust and GFC, their budget went into deep deficit.

          When the mania ends for good, it will be even worse and there will be no recovery.

      • andy says:

        But, but, the US securities are in the biggest bubble. See Hussman.

  3. Bernard says:

    The price of the Russian companies’ shares may have gone to zero in WESTERN markets, but in Russia the company still exists and has actual physical value with real assets.

    I wonder if foreign shareholders will be wiped out and only Russian shareholders will remain.

    Those companies at 1 cent per share or whatever the last price was will make someone a fortune if and when they ever trade normally again.

    • Bobber says:

      There does seem to be an opportunity for foreign investors to hold their Russian shares and capture some value down the road if the Russian government allows it. Yet, nobody in the general media is talking about that prospect. The entire media discussion assumes the investments are worthless and should be sold for pennies on the dollar as soon as possible. Are fund managers really that stupid?

      The real travesty will occur when JP Morgan, BlackRock, and other fund managers decide to permanently close their Russia funds at a huge loss, without consideration of what value the shares could be worth if they kept holding them. This would completely screw the fund holders, especially if they sold the shares for pennies to hedge funds or other investment companies.

      The whole thing is a mechanism for the investment industry to steal value from helpless investors.

      • Bobber says:

        Any fund manager or ETF that disposes of Russian shares for pennies before they have been formally cancelled should be escorted behind the woodshed.

        • sunny129 says:


          That’s a wishful thinking. They can do whatever they want, with little recourse to average retail investor.

        • joe2 says:

          Don’t worry, the fund managers will sell to a shell company with hidden owners who will get more richer later after this blows over.

      • Apple says:

        If anything of value remains of those Russian companies, it will be given to the Oligarchs that showed loyalty to Poutine.

        It will not be given to western investors.

      • LK says:

        “The whole thing is a mechanism for the investment industry to steal value from helpless investors.”

        Investment isn’t a riskless enterprise. I don’t know what you’re arguing for here.

      • Bernard says:

        I’d throw away $100 into a company such as Lukoil to buy shares at 1 cent each if I could……….

        Didn’t they trade at around US$100 a share or so.

      • Moosy says:

        whose money evaporated?

        not mine. (yet).

        Lesson learned is not to invest in a mutual or company with a ‘woke’ management.

        They are to maximize the profit for the investors. Full stop. Call me old fashioned. Fine. I will wear it as a badge of honor.

        When sound investment objectives are meddled with political grand standing, the person to lose is the little investor at the end. Not the person doing the virtue signaling and grand standing.

        So bought some Russian stock with PE <2 . Risk that Vlad will confiscate, sure, but we just have seen that if you donate to the wrong protest group your account can get frozen or taken as well. Or invest in Meta and within 6 months half is gone.

        I take my risk with Vlad. Some say he is a crazy madman, some say he is playing chess and 10 moves ahead of us.

        chess moves so far:
        Vlad: invade Ukraine
        West: freeze FX and shows everyone that holding USD in London is a really bad idea
        West: sells holdings in Russia for pennies on the dollar . West looses, Vlad gains.
        Vlad: trade between Russia, China, India, no longer uses USD but direct currency or gold, the resource all three love to hold. USD no longer dominant outside the US and for trade.
        Powell : check mate

        • Augustus Frost says:

          The outcome described by this article is entirely caused by the USG.

        • CRV says:

          I have a small ($400) position in POLYmetals at the London stock exchange. I’m only permitted to close the position. Which begs the question: “who would buy it from me then?” Some entity is allowed to pick up the pennies.
          I take my chances and hold on to this. Maybe i get wiped out. Maybe not. I can bare this loss if i lose. But pension funds may get into serious trouble.
          Those woke people just don’t realize what genies they let out of the bottles, each time they invoke sanctions of any kind.

        • yossarian says:

          @Augustus Frost, “The outcome described by this article is entirely caused by the USG.“

          and entirely anticipated by vlad

    • Implicit says:

      This might be like a huge reverse stock split for all these Russian companies.
      Outsiders will simply lose their shares through Russian use of a banking sanction/confiscation.

    • Harry Houndstooth says:

      Previous Kremlin insiders are telling us that their system does not allow to tell “the boss” bad news, for fear of being killed. It appears Putin has sealed his fate for a massive overstep. Even Trump couldn’t get Germany to spend 2% of GDP on defense. The West should recognize this is an amazing opportunity to destroy (or better yet, capture) the Russian conventional forces on a fool’s errand into a country where there are no longer any humans looking to live under the thumb of Putin’s desire to rebuild the Soviet Union. Russian occupied Georgia and Ukraine’s Russian occupied Donbas are devoid of opportunity and future only holds more poverty. Just look at the Donetsk airport before the Russians took over, and look at it now. The heros of Karkiv said they would rather die then live in Donbas. Russia will never subjugate the Ukrainians.

      The brain drain is happening now. Young intelligent Russians are leaving. It is unlikely that Putin will allow this to continue or all he will have left is a country full of pensioners.

      But the United States needs to have a good relationship with Russia, not just for nuclear deterrence or the space station, but our real challenge is China.

      The minute Putin is taken out, go all in on Russia. Until then, it will be a downhill spiral.

    • Marcus Aurelius says:

      Never underestimate the Russian and Chinese ability to understand Capitalism. They are better at it than us.

      Intentionally crash a market, and then buy when there is blood in the streets.

      Some say 1929 was intentional. A set up. What if this entire “war” is a clever insider market move? Sometimes, a “conspiracy” explains it.

  4. magoomba says:

    I can’t think of a more deserving bunch of losers! Calpers….HAHAHAHA!

    • Steve says:

      Even if the recipient gave 30 years of their life to run into fire.
      You sound jealous.
      What’s your trade?

      • Adam says:

        Magoomba may be laughing at the Calpers institution themselves. Nakedcapitalism has done a lot of work over the years exposing both a board that seems to be totally corrupt, a staff that depends on the board being corrupt and several politicians that could stop it all, but instead side with it.

        Granted, the state workers are the ones who keep voting in these horrible board members.

  5. sunny129 says:

    Who in the right mind woud invest in these mega brokerages of Wall St, other than Pension funds managing OPM? Eversince the ETFs came available, investing in most of MFunds of invest banks like JPM or Black rock, is a reflection of ignorance. NOT that ETFs are risk free but you can sell them during mkt hours, unlike MFunds. I am not including the MFunds/ETFS from major discount online brokerages like Vanguard or SChwab. 90% of my investing is through various global and domestic ETFs.

    With option trading tools one can learn to manage the risks to one’s portfolio. Unfortunately many are unwilling to invest money and time to learn!

    I can see, so much hopium out there! Everyday indexes want go green but beaten down into red (some deep red) by the end of the day. This will be repeated until, reversion to the mean is complete!

    • Wisdom Seeker says:

      I suspect that Private Wealth Management clients often get portfolio’d into those “house funds” (and friends thereof), get some gravy during booms, but are then fleeced over time by high fees and thrown to the wolves during market drops which are deemed “unexpected” events.

      P.S. Enough of the options-trading stuff. That’s a losing game for most people in it. It’s zero-sum at the trading level, becomes negative-sum due to expenses and the time it takes, and favors those with deepest expertise… and most of the public isn’t mathematically qualified to even sit at the table.

      • andy says:

        Right you are. One needs at least a calculator when looking at options. And who has time for calculators.

    • Prophet says:


      Options are for Alter Boys!

    • S.C. Heel says:

      In your expert opinion where will the S and P be in 6 months”?

  6. Mark R says:

    My guess is equity holders are completely screwed, as are most bondholders. The Lehman bankruptcy proceedings are STILL going on 14 years after Lehman’s implosion. Legitimate US bankruptcy courts are still sorting out the pieces. Does anyone have any faith in the Russian legal system? These companies will be fully nationalized, good luck suing Putin.

    • Ted says:

      Putin is the one who’s going to need some luck.

    • Augustus Frost says:

      You’re describing an asset forfeiture, something entirely different. These aren’t foreign owned subsidiaries, but the paper shares owned by non-Russians.

      Considering that the US and NATO have chosen to pursue total economic war, I’d agree it’s the likely outcome, along with the eventual nationalization of US and EU foreign owned Russian business assets.

      No, I don’t have any faith in the Russian legal system. But considering that the US and NATO countries arbitrarily confiscated private citizens property without due process, as a foreigner, I’d think twice about having my assets in these countries too.

  7. The more they stiff their foreign investors the harder it is going to be to get new funding when things are up and running. I am not surprised by this, Russia is a failed nation. Their energy sector has been stripped, and sanctions prevent them from getting the drilling technology they need. They have a record of not meeting their energy deliveries. This war might give them some time to put on a build and make their energy supply system look good when the freeze comes off, for a while. The financial lock down dovetails with the domestic collapse. This is a punitive war waged against civilians by conscripts. Next winter when the Russian people are freezing the media will deflect the shortages onto the war effort. The war deflected the reality from the shortages.

    • Sams says:

      There is a catch with dwindling supply of oil and gas from Russia. The prices will rise on the world market and Europe will be short on energy. Russia will lose some on this war, but they will not be the only ones. Just looking at what was not included in the sanction list give a clue where it would hurt if all exports from Russia stopped.

    • phleep says:

      Russian would all be rich of they had any kind of reasonably functional governance. On a map, it is a huge part of the planet’s land mass. Yet they are swamped by oligarchs, their hooligans, and the poor. Any initiative is stolen from too quickly to develop to full potential.

    • pogohere says:

      Nobody goes there anymore. It’s too crowded.

    • RM says:

      Delusional. You have no idea what you are talking about.

    • 2banana says:

      The two things the Russians WON’T be is freezing and hungry.

      They are massive exporters of food and energy.

      Now, maybe, they won’t have FB, McDonald’s or Gucci handbags.

      • David Hall says:

        Russia exported grain, but imported meat.

        There is protein in pulses, but most of them are not vegan.

      • Wolf Richter says:

        “They are massive exporters of food and energy.”

        No, not “food.” They’re exporters of wheat as a commodity. A lot of what people buy at the grocery store is imported.

        • 2banana says:

          Well, I didn’t say it would be a wonderful diverse menu. But Russia won’t starve. Russia also has strong exports in potatoes, milk, eggs, cheese and chicken.

          Now, there are dozens of countries that will starve or have massive food inflation (which is the same thing) without these exports.

        • Sams says:

          All those sanctions on Russia over a long time have probably had the same effect as import tariffs. More commodities have been processed to products locally and less imported.

    • Finster says:

      But is it Russian policy to “strip foreign investors” or is it the result of sanctions imposed from without?

  8. SomethingStinks says:

    The easiest solution is to take away all government pension and have the congress critters retirement in the same vehicles as the average American. If everyone in private sector has to gamble their retirements in the wallstreet casino, so should the leeches in congress that help pass these regulations. Oh and term limits for the parasites please!!

    • Anthony A. says:

      Sounds good, won’t happen. Guess who makes the rules?

      • Wisdom Seeker says:

        Actually the populace (voters) still do make the rules, which is why there’s so much propaganda aimed at fooling, dividing and confusing the voters.

        If the people didn’t have genuine power, there’d be no need for the consent-manufacturing propaganda, which is expensive in both money, effort and credibility.

      • Bead says:

        My betters, the moral giants of Congress. Those who needn’t obey mask rules.

  9. 2banana says:

    Especially when the western bastions of free market capitalism don’t allow Russian shares to be traded on their exchanges (even if the Russian market is closed) and seize assets without a UN declaration or a congressional debate/authorization.

    But…GS and JPM get to buy these assets at pennies on the dollar.

    “So for foreign retail investors and pension funds beneficiaries, this is a tough situation.”

  10. gponym says:

    Those final two sentences are worth repeating. And I could easily see them translating to run-of-the-mill US financial media, masters in their own way at deflection.

  11. H D says:

    I think you’re wrong to single out fund managers as “padding their bottom lines with fees” and leaving retail investors adrift. I’m sure you know these fund managers have *many* funds, not all of them equal in effectiveness or even sanity. BlackRock alone has *hundreds*. It’d be lunacy to assume every single one of their funds is truly worthwhile.

    It’s not the fund manager’s job to give everyone perfection. It’s their job to stay within the confines of the fund’s premise. If that premise is to invest in Russian stuff, then they didn’t do anything wrong. Anyone investing a fund has a personal responsibility to gauge the risks of that premise, and if they gauge wrongly, face the consequences.

    • Wolf Richter says:

      “fund managers” here = companies that manage the funds (BlackRock, etc.), not the person.

      • somethingstinks says:

        Why not the person? At the end its the damn person that drives the greed. After 2nd world war most of the nazi soldiers said they were just following orders. Cops stomp on citizens saying they are just following orders. And these management companies setup the structure, so everyone can say they were just following orders. At the heart of the scam is this mythical organization that seems to give these scumbags orders that they “just follow”. If they get caught, blame it on the organization, keeps the loot and walk away with a stern warning. If they are not caught they just walk away to their yacht while the poor old sucker whose life savings evaporated, signs up for a job as a walmart greeter. friggin disgusting!!

  12. phleep says:

    International trade has supported the world economy and our float on “cheap stuff.” Now the real price appears. Globalization coming undone has nastier surprises ahead. Do you think COVID messed with supply chains? Wait until globalization goes fully into willful rewind. I am buying into some commodities firms that will presumably stay in friendly hands. Real estate, real assets, everybody is demanding more for their tangible chips. I’ll be happy to sell you an NFT of that!

    • Marcus Aurelius says:

      You are so correct.

      For a few years I have been thinking upon the same line.

      How does Globalization un-wind? What is it going to look like? When, of if, we decide to bring manufacturing back, do we expect China and Vietnam to just stand there looking stupid?

      No. There will be hell to pay when we attempt to save our country.

      We fight with currency digits. We fight with Stock prices. That is what is happening now, and the destruction will be like a Neutron Bomb. Everybody wiped out, but the buildings still standing.

  13. Peanut Gallery says:

    Paging ivanislav…..

  14. economicminor says:

    This thing with Russia seemed inevitable.. It was Putin or some other ahole that would be taking advantage of the situational instability that the US government created (or allowed).

    I can not imagine a scenario where Putin allows any American to be paid. I can not imagine a scenario where the sanctions are lifted until Putin is no longer around.

    Russia can not win against Ukraine because the Ukraine people do not want to be a part of Russia. Putin will have to destroy Ukraine to subdue it and then what has he won?

    But I am more worried about the US devolving into some form of depression or civil unrest. I thought that before the insanity of Inflation.. Now things look extremely dismal.

    I have not liked the direction the world has been going for a few decades now. It isn’t just Russia and Putin but the stupidity of the US in tax policies, the middle east, dealing with the changing climate, how the FED has been actively attacking the lower and middle classes with its policies that transfers the wealth to the few from the productive workers, the consolidation of so many industries but especially the media. The US has changed a lot and not for the benefit of most of us.

    All the above has led to a very angry divisive country. Many Americans have become so aggressive and tribal that they would not know a truth if their lives depended upon it.. and it does… So crazy and sad..

    • TheRealMRDyno says:

      Frederik Bastiat generally gets credit for “when goods don’t cross borders, soldiers will”, but it appears that Otto Mallery was closer to saying that. Compare this list to what we are actually doing.

      Economic bargains which are likely to be kept are preferable to political agreements which are likely to be broken.

      If soldiers are not to cross international boundaries on missions of war, goods must cross them on missions of peace.

      Unless shackles can be dropped from trade, bombs will inevitably drop from the sky.

      • Wolfbay says:

        Our nation was founded on “avoiding foreign entanglements and freely trading with all” but the elites had to have their empire.

    • Augustus Frost says:

      Russia “winning” at minimum means preventing NATO membership (legal or defacto) and probably removing the current Ukrainian government, not annexing or occupying the entire country. My prediction is that sanctions won’t prevent either.

      As for annexing Crimea, they were leasing a naval base up to 2014. I presume they did so to prevent the possibility of losing it later. They also have a slice of territory on the Baltic sea for the same reason.

      Losing access to Crimea means losing access to the Mediterranean. It’s absolutely nuts to believe they would voluntary stand for that.

      • SpencerG says:

        I am a retired Naval Officer so let me flesh out a couple of your points… starting from the bottom.

        1) Crimea is not the only access to the Black Sea that Russia has. It is just the best. Novorossiysk is actually a bigger port, but it is 250 miles further from Istanbul and the Bosporus than Sevastopol is. The way that Crimea juts down into the Black Sea if Ukraine had become hostile then ships transiting from Novorossiysk would have been easy targets.

        2) Russia has not been losing access TO the Mediterranean Sea from the Black Sea (they still have to transit the Bosporus and Dardanelles). But you are right that Russia has been losing access IN the Mediterranean though.

        During the Cold War the Soviet Navy could put into any number of Communist ports on the Adriatic Sea as well as friendly ports in Syria, Egypt, Libya, etc. But NATO has cleverly expanded into ALL of the nations on the Adriatic… and Egypt and Libya are no longer friendly. Nor does leaving the Med help much… go North and the only neutral country on the way to the Baltic is Ireland… go South and the only Russian ally is Angola way down the African coast.

        So if you look at a map you realize pretty quickly that Syria is the only place outside the Black Sea that Russia’s navy can be assured of fuel and shipyard services for thousands of miles. Hence their move to bolster the Assad regime in 2015.

  15. Zark Muckerberg says:

    Moscow Stock Exchange would’ve dusted away 💸💸💸 had it been active and I think the ruble hyperinflation will soon set in if it hasn’t already. Imagine everything you worked for gone just like that. Global sanction is scary as hell, the new-age bomb.

    • Sams says:

      Still the fall out may drift over and affect those who set of the bomb.

      • Nathan Dumbrowski says:

        Without a doubt there are repercussions to shutting down an entire country. Didn’t we learn anything from COVID protocols. Just from a textbook exercise it turned out to be VERY bad. It’s almost like we have given the American people a new enemy to hate who happens to be war mongering. There will be impacts and ripple effects across the world

    • Mud says:

      Wait till they seize yours

      • Wolfbay says:

        Just be careful what group you contribute money to. It has to be government and corporate media approved.

    • Marcus Aurelius says:

      Allow me:

      “Imagaine everything you worked for gone….but just a few years longer”.

  16. MC says:

    Considering blackrock has 10t under management, 18.2b in exposure is a drop in the buck.

    Let’s say for easy math 5t of that is in the sp500, they’re down 36b on a mildly red market day like today.

    Personally wouldn’t call this newsworthy.

    • economicminor says:

      yeah but Blackrock is exposed to the US debt bubble which is just starting to deflate. The markets are down significantly but sentiment still hasn’t collapsed. Still a lot of day traders with lots of hope and desire. Lots of denial still!

      • Gattopardo says:

        How are they exposed? They do NO prop trading. All their holdings are on behalf of clients, most of which SELECTED those investments. BLK’s only exposure is that ad valorem management fees shrink when asset values tank.

    • andy says:

      That’s what they all say.. just the few months before Blackrock needs $3T bailout.

  17. John says:

    Who will be punished for all of the losses in Russian assets???? Not the banks, hedge funds or board members like CALPERS. These too big to punish experts always get away with their lousy financial advise. They should be sued personally for all the losses. Their families will be just fine unlike the foolish public.

    • Mr. Nancy says:

      With an inflationary recession the only tool left in the feds toolbox is to buy the insider stonks just like BOJ. Don’t think for a minute they won’t do this if this drop continues.

    • economicminor says:

      When does this all start to matter?

      When do the losses actually effect the US consumer’s ability to keep on truckin?

      • Marcus Aurelius says:

        When it does “matter,” it will be so fast and so horrible, there will be no time.

        Please, prepare now. It is best to be too early, than 1 hour late.

        It is like “how much food is on the shelves in an average Grocery Store?” One hears: “3 days”, etc.

        No, try 30 minutes. When the people panic and rush to the stores, it is gone and will be gone for months, like Toilet Paper. It all vanished in one day. One day. No warning. Nobody informed you. Imagine the horror you will feel when virtually EVERYTHING in a grocery store is gone.

        Buy it now. Now. Like get off the computer and go to various stores, now, and buy everything you think you might need for, let’s say 6 months.

        I bought an additional freezer for the family. It costs $799 about 6 months ago. It is now $1,099. I wish I had bought 2. In fact, I am considering buying another. I don’t want to pay $1,599 in a few months, if I can find one.

        I have already bought 2 generators. And those red gas “cans”, etc. (out in the garden shed). I am thinking about buying a 3rd. Why? Cheaper than losing all the stuff in the freezers and refrigerators, etc.

        This is the new normal.

        • Wolf Richter says:

          Marcus Aurelius,

          Thank you for cranking up GDP by buying 2 generators, freezers full of food, and all kinds of other goodies you list. This is GREAT for GDP. That’s why we won’t get a recession — because consumers are out there spending tons of money on stuff they don’t need. Thank you!!!

          Includes my wife who just bought a new iPhone, a bunch of new clothes, and a gazillion gifts, and she paid an arm and a leg for a plane ticket to Japan to see her folks :-]

    • Rubicon says:

      Wolf stated:
      “the California Public Employees’ Retirement System (Calpers), the largest US pension fund, held $420 million of Russian stocks and $345 million in illiquid real estate assets…”

      As retired educators, we have always been very aware that Calpers & Wa State Teacher’s Retirement System has been stacked with Black Rock’s $$ (and others). Goes to show you, the heads of these retirement systems have been in on the game since the git-go. It always made us uneasy, and now even more so.

      • VintageVNvet says:

        There were some articles a while ago re CALPERS problems, and the main one was referred to as ”defined benefits” IIRC.
        That was forcing the managers to seek higher risk investments at that time, and the RU ones would seem to fit that description well.
        And BTW, when I stopped teaching in California in mid 1980s, I received a cash pay out by choice.

      • Steve says:

        Calpers is doing just fine, received a letter. Sounds like you didn’t. Also received a hefty 2022 COLA no complaints.

        • Steve says:

          the California Public Employees’ Retirement System (Calpers), the largest US pension fund, held $420 million of Russian stocks and $345 million in illiquid real estate assets…”

          The paragraph continues, why not included?

          Our investments in Russia represent about 0.17% of CalPERS total investment portfolio.

        • Wolf Richter says:

          “The paragraph continues, why not included?”

          Because it’s completely irrelevant to this topic, just like the % of BlackRock, or the % of JP Morgan would be irrelevant to this topic. This wasn’t about the collapse of Calpers, or whatever, but about who is taking the losses from Russia.

          BTW, Russia’s economy is small. It’s half the size of California’s economy and smaller than Texas’ and New York’s. But it still matters, as we can see.

    • Augustus Frost says:

      Sued for what? Under what legal standard are they possibly liable for something caused by the USG?

  18. unamused says:

    Putin has been a very bad man for a very long time. He’s pulled this sort of invasion before. A proper risk assessment should have encouraged investors to be much more wary, but I suppose proper risk assessment simply isn’t fashionable these days, particularly in view of the sort of irrational exuberance that seems to have become SOP in some quarters.

    • Marcus Aurelius says:

      The invasion caught everybody off guard.

      There was really no way of knowing if Russia would, or could, invade a neighboring country.

      There was no warning. It was a surprise attack. Had there been advanced warning(s) Ukraine could have set up a devastating “surprise” at their borders with thousands of anti-tank weapons, land mines, etc., but they had no warning!!!

      • unamused says:

        “There was really no way of knowing if Russia would, or could, invade a neighboring country.”

        For years Putin has repeatedly stated he intended to restore the Soviet Union, and to that end he’s invaded Chechnya and Georgia and intervened in Syria, and he had already invaded Ukraine before and taken over the Crimea.

        So I knew. So did a lot of people. When somebody piles up an invasion force and says they’re going to do it, that’s usually a pretty good indication.

      • Bernard says:

        You really think that the Ukraine had “thousands of anti-tank weapons, land mines” and ” no warning”?

        What was Biden bleating about for weeks before the invasion happened? Eating ice cream?

        The Stinger is no longer produced in the US. And with regard to the Javelin there have only been a little over 2000 bought in the past three years.

  19. carlos leiro says:

    china is happy? Investing in Russia oil for them

  20. historicus says:

    Globalists financiers trusting foreign governments won’t turn out well

    Watch for Fed to bail these international gunslingers..

  21. SpencerG says:

    I am not sure this really matters. Who loses money when ANY investment goes South? The money managers… or the investors? Until four months ago these investments inside Russia looked both relatively safe and routine.

    • Zark Muckerberg says:

      Yep, show how things could go south real quick.

      RIP to any pensions and funds that has a stake in Russia. And indirectly like Germany and Brazil who heavily import natural gas and fertilizer. We gonna see a fall out.

  22. Ben says:

    VXX Barclays Short Squeeze
    Barclays apparently stopped trading VXX trying to recapitalization of the index and when reopened this product has spiked 20 to 40 percent today.
    I don’t understand these products and have no idea what the exposure is for Banks for these crazy products.

    • Fascinating. The VXX tracks the VIX, but since most buyers prefer to be short it is in permanent downtrend. They suspended new issuance, and looks as though the sell bias has been removed. VXX had a benefit for those who want to be LONG volatility, it is a way for the average guy to ‘squeeze’ the shorts. The VIX is down only slightly today. VIX reflects options premium which in turn moves according to interest rates and tomorrow is a big day. Wolf says we should get 100 bps, we might get 50, and consensus is 25 and change.

  23. Island Teal says:

    Fisher Investments. Never hear much about them except for the stupid ads with the byline that “we do better when you do better”. And the top clown who was removed from public view. Any insight?

  24. unamused says:

    Financiers don’t get high on their own supply.

  25. Absur Ditty says:

    We can always count on the US Government to do the right thing. We are absolutely certain that no US Government insiders (Members of congress, exec branch officials; and employees, friends, family and others connected to them, banking lobbyists who drafted or reviewed the documents) would have profited by selling or shorting these securities before the sanctions were announced.

    We can rest assured that if the people suffer losses on these investments, those at the top are also suffering their losses.

  26. unamused says:

    Technically, US currency is the property of the Fed. You can tell because they all say “Federal Reserve Note” in large print you just can’t miss. They have their name on them.

    One supposes they let the rest of us use them mostly so we can get in trouble with them and make the Fed some money.

    • Wolf Richter says:

      Technically speaking, the Federal Reserve Notes are money that the Fed borrowed from you and carries on its balance sheet as a liability (money it owes), called “currency in circulation.” And they’re an asset for you, called “petty cash” or “cash in fist” or similar, though the notes pay no interest.

  27. Cookdoggie says:

    “ Of the top 10 holdings of the JPMorgan Emerging Europe Equity Fund, only two (#7 and #8) are not Russian companies”

    I always learn something new here. Today I learned Russia is part of Europe. I feel the same way I did when I learned a tomato is a fruit.

    I need some exposure to precious metals so I’m looking into the JPMorgan Yellow Snow Fund.

    • Cookdoggie says:

      Dang Wolf, really need that Edit button. It’s the JPMorgan Golden Shower Fund. My bad.

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