Watching the spread will be critical this week. A move above 500 bps and toward the 650 bps level that triggered a bailout in Portugal and Ireland will kill any lingering hope for a global-market rally into year end. But, as investors went home for the weekend, the prevailing mood was one of resignation that contagion to Italian debt is already underway. Tomorrow's budget vote in the Italian parliament will be crucial.

For Russia investors, it is a case of right-country, bad timing. WTO entry by year end now looks more assured (for more details see our recent report entitled Russia Strategy - WTO: Creating Incentives and Timetables) and further progress should be seen later this week when the Russia-WTO working group meets to resolve remaining technical issues.

The stubbornly high oil price (see below) continues to improve the budget and fiscal position, while macro indicators showed steady improvement in September. The leadership succession, in contrast to most other countries facing elections in 2012, will go smoothly. The one blot - and a major blot for sure - is the continuing capital flight.

The Central Bank estimates that the total this year may reach $70 bln, which definitely raises questions for foreign investors at a time when, on a relative macro basis, Russia looks much better than most other countries. A big part of the "flight concern" is the current migration of several major Russian companies to a full London Stock Exchange listing. Last week, Evraz Group suffered a market penalty for that, as its ADRs fell by almost 30%.