Russia’s war economy

Happy Friday, team.?I'm Phil Rosen. This week we've seen a storm of economic data in the US.?

The alphabet soup of readings —?CPI, PPI, and jobless claims?— all point to cooling inflation and a softening labor market.?

In theory, that's good news for the Fed, because it suggests its policy is working.?

Should the central bank opt to make one last rate hike in May, it could be like a?greenlight for bulls.?

The S&P 500 surged 35% after the final rate hike in 1995, and?28% in the year?after the 2018 cycle's last move.

But don't take those figures in a vacuum —?stocks were negative in the 1960s?the year after the Fed's final policy adjustment in that cycle. Other years, like 1981 and 2000, saw downturns too.

Either way, it's probably?best to stay nimble, since anyone can slice up data to tell a story.?

That brings us to today's main story — economists say the official data coming out of Russia isn't painting an accurate picture of?Putin's wartime economy.

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1. Russia's economy is worse than Moscow claims, and much of that stems from juiced-up military spending covering up just how much the?private sector is shrinking.

The Kremlin's official GDP figures?don't exactly tell the full story, and there's reason to be cautious of believing the numbers, according to a report published for the Center for Economic Policy Research.?

The two authors established a?handful of alternative indicators?that add much needed context to the government data.

"This is visible in our?alternative tracker of domestic economic activity: retail sales have been down, a plunge in domestic flight purchases, and stagnation of the housing market," policy economist Hanna Sakhno, one of the co-authors, told me yesterday.

"These are the things that businesses deliver?and consumers purchase in an economy, and they have been absorbing the impact.?Our tracker shows a contraction of the Russian economy?ahead of the official figures release precisely because we use high-frequency indicators from the private economy."

Vehicle sales, imports, credit growth, home prices, and other measures all point to a much less robust regime since Vladimir Putin's war on Ukraine began.

Moscow over recent months has published stable or even improved numbers, but the CEPR report?suggests declines across the board.

Remember, since February 2022?when Putin launched his "special military operation" in Ukraine, Western nations have?sanctioned the Russian financial system, stifled energy flows, and boycotted trade.?

Before then, Russia was the world's 11th largest economy — now its oil supremacy is waning and all signs point to a deterioration in its role as a world power.

These four charts tell the story of how war has reshaped Russia over the last year.

What do you think of these indicators of Russia's economy? What's your outlook for the war in Ukraine? Let us know in the comments.

In other news:

2. Inflation slowed dramatically in March, but Evercore analysts aren't convinced it's an all-clear for stocks.?Top stock-picker Julian Emanuel explained his preferred names in the current landscape —?and how investors can position for upside while minimizing risk.

3. Real-estate investor Anne Curry manages a 311-unit portfolio of properties.?She broke down how she scaled up using the no-money-down strategy and worked her way up to multifamily deals:?"Once you have the deal, the money is super easy."

4. Meet a 37-year-old immigrant who started with 'zero credit' before building a portfolio of real estate.?Investor Atif Afzal said when he first moved to New York he couldn't even secure a mortgage.?He shared how he's since been able to achieve financial independence.

5. Oil markets could see a supply shock of two million barrels a day this year.?With OPEC and Russia slashing production, the global supply of crude could face a steep deficit before the year ends.?At the same time, oil demand is predicted to hit a record high in 2023.

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