Chris Verrone: The big question is whether discretionary can get back in gear
Chris Verrone, Strategas chief market strategist and partner, joins CNBC's 'Closing Bell' to discuss market outlooks.
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CNBC
an hour ago
- CNBC
Russia's ruble rockets: The curious case of the world's best-performing currency this year
In the midst of a long-drawn war, declining oil prices, stiff sanctions, and an economy that's on the downhill, Russia's ruble has been rising. In fact, it is the world's best-performing currency so far this year, according to Bank of America, with gains of over 40%. The ruble's stunning rally in 2025 marks a sharp reversal from the past two years when the currency had depreciated dramatically. What's powering the Russian currency? The strength in the ruble has less to do with a sudden jump in foreign investors' confidence than with capital controls and policy tightening, market watchers told CNBC. The weakness in the dollar comes as an added bonus. Brendan McKenna, international economist and foreign exchange strategist at Wells Fargo, lists three reasons for the ruble's rally. "The central bank has opted to keep rates relatively elevated, capital controls and other FX restrictions have tightened a bit, and [there's been] some progress or attempt at progress in finding a peace between Russia and Ukraine." Russia's central bank has maintained a restrictive stance to curtail high inflation, keeping domestic interest rates high at 21% and tightening credit. The steep borrowing costs are deterring local businesses from importing goods, in turn reducing demand for foreign currency among Russian businesses and consumers, said industry watchers. There's been a decline in foreign currency demand from local importers, given weak consumption and the adequate supply of ruble, said Andrei Melaschenko, an economist at Renaissance Capital. That decline has given the ruble a boost as banks don't need to sell rubles to buy the dollar or yuan. Russian exporters need to be paid in rubles, or at least convert dollar payment into rubles, thereby increasing demand. Importers, on the other hand, have stopped purchasing foreign goods, and so do not need to sell rubles to pay in dollars. In the first quarter of 2025, there was an "overstocking" in consumer electronics, cars and trucks which were actively imported in the second half of last year in anticipation of the increase in import duties, said the Moscow-based economist. The consumer activity cooldown was primarily in the durable goods sector, which made up a sizable portion of Russia's imports, Melaschenko said. Another key reason the Russian ruble has strengthened this year is that Russian exporters, in particular the oil industry, have been converting foreign earnings back into rubles, analysts said. The Russian government requires large exporters to bring a portion of their foreign earnings back into the country and exchange them for rubles on the local market, according to the government. Between January and April, the sales of foreign currencies by the largest exporters in Russia totaled $42.5 billion, data from CBR showed. This is almost a 6% jump compared to the four months before January. CBR shrinking money supply is also supporting ruble, said Steve Hanke, professor of applied economics at Johns Hopkins University. In August 2023, the rate of growth in the money created by the CBR was soaring at 23.9% per year, he said. This figure has turned negative since January — currently contracting at a rate of -1.19% per year, said Hanke. Further, hopes for a peace deal between Ukraine and Russia following the election of U.S. President Donald Trump had also sparked some optimism, said Wells Fargo's McKenna. Expectations of Russia's reintegration into the economy had prompted some capital flows back into ruble-denominated assets, in spite of the capital controls, which have supported the currency's strength to some extent. Despite the ruble's current strength, analysts caution that it may not be sustainable. Oil prices—a major pillar of Russia's export economy — have fallen significantly this year, which could weigh on FX inflows. "We believe that the ruble is close to its maximum and may begin to weaken in the near future," Melaschenko said. "Oil prices have fallen significantly, which should be reflected in a decrease in export revenue and the sale of its foreign currency component," he added. While peace talks between Russia and Ukraine recently have not wielded any concrete developments, McKenna also noted that a concrete peace deal could erode ruble's strength as the controls such as the FX restrictions that have supported the currency might be lifted. "Ruble can selloff pretty rapidly going forward, especially if a peace or ceasefire is reached," he said. "In that scenario, capital controls probably get fully lifted and the central bank might cut rates rather quickly," he added. Exporters are also seeing slimmer margins, industry analysts noted, in particular the country's oil sector against the backdrop of declining global oil prices. The government, too, is feeling the squeeze — lower oil prices combined with a stronger ruble are eroding oil and gas revenues. The government's finances are highly sensitive to fluctuations in crude prices, with oil and gas earnings making up around 30% of federal revenues in 2024, according Heli Simola, senior economist at the Bank of Finland. "The Ministry of Finance has been forced to lean more heavily on the National Welfare Fund to cover spending," Melaschenko said. "And there may be further cuts to non-priority expenditures if this trend continues." That said, aside from the oil trade, Russia has been mostly isolated from the global marketplace. "Meaning, a weaker RUB does not add much to Russia's trade competitiveness," said McKenna.
CNBC
2 hours ago
- CNBC
What the Musk-Trump feud could mean for Tesla stock
The spat between U.S. President Donald Trump and Elon Musk, the world's richest person, entered new territory on Thursday — with Tesla getting caught up in the fallout. What began with Musk publicly slamming Trump's spending bill has evolved into a full-blown row between the two, with the president threatening to withdraw billions of dollars' worth of government contracts for Musk's companies. Musk, meanwhile, claimed Trump would never have won a second term in office without his input in the campaign, and said SpaceX would immediately decommission its Dragon spacecraft due to Trump's threats to cut funding. As the pair — who once enjoyed a friendly relationship that landed Musk a job in Trump's administration — publicly traded jibes, Tesla saw $152 billion wiped from its market cap on Thursday. That's the biggest hit to its valuation ever. Shares of the company have shed nearly 30% of their value so far this year, but were last 5% higher in pre-market trade on Friday. Overlook the 'schoolyard spat'? Market watchers said the falling out between Musk and Trump was adding renewed pressure to Tesla , which has already been battling poor car sales and questions over Musk's ability to lead the company given his other ventures, including SpaceX and xAI . Tom Hulick, CEO of Strategy Asset Managers, told CNBC's "Squawk Box Europe" on Friday that there would naturally be concern mounting in markets with "two people going at each other's throats just like Trump and Musk are right now." However, he urged investors to overlook what he labeled the "schoolyard spat" and focus on energy infrastructure developments in the U.S. and beyond, as well as data from the company on earnings, savings and investments. "We're really seeing more positive signs than negative, and whether there's a spat between Trump and Musk or between two different nations, I think people are going to settle down and cooler heads are going to prevail," Hulick, a Tesla bull, told CNBC. Strategy Asset Managers owns Tesla stock. Hulick added on Friday that although the EV giant was under a lot of pressure given the media attention on Musk. "You can't deny [Tesla is] an industry leader in a lot of things." "I think [this is] temporary," he added. "What happens to Tesla beyond this point … is really dependent on what the earnings outlook is for the company. I think down the road there's so much positive in there for the EV industry and for Tesla. We're not going to focus on that near-term stress." Rico Luman, a senior economist specializing in the transport, logistics and automotive sectors at ING Research, told CNBC on Friday that Musk's political career "hasn't done anything good for Tesla" — and the escalation of his row with Trump had only exacerbated the impact. "Tesla's market value is built largely on future growth expectations (unit sales growth but also software autonomous driving and adjacent fields like robotisation)," he explained in an email, noting that the stock price had already come under pressure due to disappointing production and delivery figures. Tesla missed estimates on its top and bottom lines when it reported its first-quarter earnings in April, with auto revenue dropping 20% from a year earlier. However, Luman argued, "slowing global demand for EVs is just part of this story." "The company is suffering headwinds in all three large regional blocks across the globe, including the U.S.," he told CNBC. "In order to deliver on its growth ambition, it requires regulatory accommodation in its home and most important market the US. Soured relations with the government may impact this negatively. Markets seem to price in higher regulatory risk." Tesla shareholders stuck in a 'battle zone' In a note on Thursday, Wedbush's Dan Ives, a longtime fan of Tesla, also likened the deterioration of Musk's relationship with Trump to a "high school friends feud." "This situation … must start to be calmed down on the Musk and Trump fronts and it's not good for either side," he said. "This feud does not change our bullish view of Tesla and the autonomous view but clearly does put a fly in the ointment of the Trump regulatory framework going forward. It's another Twilight Zone moment." Russ Mould, investment director at AJ Bell, noted the boost Tesla's shares got last year as Musk and Trump's relationship blossomed. "Investors thought Musk — and therefore Tesla by default —would get special treatment," he said in a note on Friday morning. However, Trump now seems to be on a mission to make Musk's life difficult, Mould added. "Tesla shareholders are stuck in the middle of the battle zone, as whatever happens to Musk will act as a proxy for the car company's share price." Labeling Musk's outspokenness a "liability" for Tesla shareholders, Mould suggested his position at the head of the firm could ultimately come into question. "[Musk] recently pledged to stay on as CEO for at least another five years, but if he cannot be restrained from stoking fires on the public stage, Tesla's board might have to think long and hard about his future with the business," he said. CNBC has contacted Musk and Tesla for comment.
Business Upturn
2 hours ago
- Business Upturn
ICICI Lombard shares surge 5% as reports suggest a hike in the third party motor premium
ICICI Lombard stock rose 5% after reports emerged that the Ministry of Road Transport and Highways is reviewing a proposal to increase motor third-party (TP) insurance premiums for FY26. As of 1:43 PM, the shares were trading 5.58% higher at Rs 1,982.20. According to a CNBC-TV18 exclusive, the Insurance Regulatory and Development Authority of India (IRDAI) has recommended an average increase of 18% in motor TP premiums, with suggestions of a 20–25% hike for certain vehicle categories. Advertisement Motor third-party insurance is a mandatory policy for all vehicle owners in India. However, premiums have remained unchanged for the past four years despite rising claims and mounting losses for insurers. In FY25, motor TP insurance accounted for nearly 60% of total motor insurance premiums and 19% of the overall general insurance premium base. Sources told CNBC-TV18 that the Road Ministry is expected to take a final decision within the next two to three weeks. A draft circular outlining the revised premiums will be issued once the ministry grants approval. Analysts suggest that a 20% hike in TP premiums could improve insurers' combined ratio by around 4–5%, offering some relief to the sector. Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information.
