Investors again hopeful of more policy initiatives. But, as this week starts, the pendulum has swung back to optimism thanks to positive JPMorgan Chase results and resurfacing hopes that poor economic data may only hasten the anticipated next phase of stimulus in China, the US and the EU. China's prime minister said over the weekend that the government will continue its policy of "fine tuning" to try and sustain growth in the economy. This has been met with a mixed reaction across Asian and European markets this morning. Today's US retail sales report is one of those that usually impacts investor sentiment, but with the prevailing mood now one of hope, especially after the Fed's FOMC minutes indicated support for further action if required, investors are more likely to follow the lead from China last Friday and assume imminent Fed action will follow a bad number. A recovering number trend would, in any case, sustain Friday's optimism. Sentiment of course remains very fickle and a majority of investors continue to remain on the sidelines rather than participate in such a volatile game.

Russia slowly improving, but with uncertain global context. Against the still volatile and generally negative global backdrop, the Russia story is making positive progress. Last week's macro data showed both a budget surplus for 1H12 and a GDP growth trend consistent with our forecast of 4.0% or more growth for the calendar year. This is a good backdrop when compared with most of the rest of the world, especially as valuations imply a much worse situation. The budget now balances around $110/bbl Urals thanks to the benefit of a weaker ruble. Russia finally passed legislation to join the WTO, and while it is more of a long-term story, it nevertheless establishes a reform catalyst that cannot be ignored. The other positive development is the fact that a Russian company, Globaltrans, raised $520 mln via an SPO last week. Russia-phobia has been greatly exaggerated - if the story is good and the price is right, investors' cash is available.