Putin on the Ritz

February 23, 2022 Good morning traders! Welcome back to The Daily Setup. Markets were down yesterday as Russia invaded Ukraine. Here’s what’s on the docket today: - Home Depot beats earnings but falls anyway - The US, EU, and the UK put sanctions on Russia - SoFi buys Technisys Pour yourself a cup of coffee and let’s get through the day. Nick How’d the markets look? Market Outlook 👀 DOW 33,720.46 -1.41% S&P 500 4,304.67 -1.02% NASDAQ 13,381.52 -1.23% BITCOIN $37,935.12 -0.54% ADVERTISEMENT The Golden Age of Psychedelics Ei. VENTURES Nearly a billion people worldwide struggle with mental illness. Of these, 284 million suffer from an anxiety disorder. Rather than relying on expensive pharmaceuticals to solve the problem, nature may already have an answer for us with plant based treatments. [Ei.Ventures]( believes it is the first Psychedelic Medicine company in the world to qualify for a Reg A+ Tier 2 offering and their flagship product '[Psilly](' has the potential to help millions of people who struggle with mental illness. Mycotopia recently announced a merger exploration with Ei.Ventures. This $360M transaction being explored includes the formation of PSLY.COM and plans to apply to list on NASDAQ. Your chance to invest now is[right here](. This is an advertisement by a party that is unaffiliated with Raging Bull. Raging Bull does not in any manner recommend or endorse any stock, investment or service that is the subject of this advertisement. Raging Bull has been or will be paid $2,500 in cash indirectly by the issuer EI. Ventures through publisher Ridge GrowthX to run this advertisement and expects to be paid an additional $2,500 in cash indirectly by the issuer through publisher Ridge Growth X each time it runs the advertisement. Meritor, Home Depot, and Russia BIGGEST MOVER We just didn’t see it Cummins Shares of Meritor Inc. (MTOR) rallied [43.88%]( Tuesday following an announcement that the company has agreed to a buyout by Cummins Inc (CMI). The diesel engine manufacturer will pay $36.50/share for Meritor, which represents a 48% premium over Friday’s closing price. MTOR closed Tuesday’s trading session at $35.48, just 2.8% below the purchase price. However, even though early indicators that investors did not see antitrust issues or a looming bidding war, an investigation was launched into the deal about [possible fiduciary breaches](… - Meritor is a commercial truck and industrial equipment maker that also makes parts for electric trucks. The company’s axles have electric motors integrated into them. - When speaking on the deal, [Cummins CEO Tom Linebarger said](, "Climate change is the existential crisis of our time and this acquisition accelerates our ability to address it." CMI has previously made investments into electric powertrains and hydrogen gas technology. - The current deal, which is expected to close by the end of 2022, gives Meritor a market cap of $2.58B. Since shares of Meritor will cease having a unique identity once (and if) the merger is completed, let’s focus on CMI. The company’s stock has shown strong support in the [$214-$217]( range since the start of 2022, and Tuesday’s low of $213.47 puts the stock in potential buy territory. As the investigation unfolds, Cummins Inc will be on my radar as continued support in this area may set up as a favorable area to take a long. Home Depot Beats Street, Then Gets Beat Down *Investors in HD* Home Depot (HD) announced earnings yesterday that beat analysts’ estimates. Good news for the company’s stock, right? Wrongo, as shares of HD tanked to the tune of [8.85%]( during Tuesday’s trading session. The catalyst for the down move was forward guidance mostly in line with estimates and operating margins that will come in flat YoY. - [Home Depot reported Q4]( EPS of $3.21/share on revenue of $35.72B vs. analysts’ expectations of $3.18/share on revenue of $34.87B. The company’s same store sales outpaced analysts’ forecasts by 3.1%. - The Board also approved a 15% increase in their quarterly dividend, bringing it to $1.90/share. Or, as I would like to put it, not enough to make up for what you lost on the down move. - [CFO Richard McPhail]( stated the company’s goal is to reach $200B in sales, but failed to give any indication of when that would occur, saying it will happen, "as soon as we can in a sustainable and profitable way." Tell me again how these people become executives? With rising mortgage rates, inflation, and consumers looking to spend more on travel than DIY projects as compared to even a year ago, it’s not surprising that HD is down [23.83% YTD](. The stock traded in a range from roughly $314-$340 between June 2021 and October 2021, and Tuesday’s low came in at $313.65. Despite the slowing growth ahead, Home Depot will still be profitable moving forward. I am looking for the stock to build some support at the lower end of the previously mentioned range before looking to take a long position. Putin On the Ritz Well it happened folks, Putin put on his big boy track pants and decided it would look really cool to [send troops into Ukraine]( Monday evening, effectively kicking off his much-hyped invasion. Of course that wasn’t going to happen without some bluster from Western governments, so on Tuesday, leadership from the EU, the UK, and our own sleepy president decided to pop-off with the sanctions. It’s a lot of information but we’ve got you covered, so hopefully we can all make sense of this event, which brought the [S&P 500 into correction territory]( for the first time since some "obscure virus" showed up. - The United Kingdom was [the first to announce its sanctions]( on 5 Russian banks: Rossiya, IS Bank, General Bank, Promsvyazbank, and the Black Sea Bank, in addition to three oligarchs (aka Putin’s besties): Gennady Timchenko, Boris Rotenberg, and Igor Rotenberg. - The EU announced a similar series of sanctions, but the biggest announcement was Germany’s decision to halt the [Nord Stream 2 pipeline](. The $11B pipeline was intended to double Russian gas imports, and its hiatus caused Dutch natural gas futures to jump +7% to €79.39 per megawatt-hour. Former Russian president Medvedev responded with [“No You!”](. - The US announced that it will be targeting Russian sovereign debt and its elites. Currently [US sanctions target state banks]( like VEB.RF and Promsvyazbank, which hold about $80B in assets and finance the Russian defense sector. So why did the S&P 500 enter a correction for the first time since 2020? Well it’s relatively simple: the market was already volatile enough with Fed rate hikes on the horizon and big tech starting to lag... add to that the potential for a global event (like, idk, a pandemic or war) and it’s no surprise that investors aren’t the most optimistic. That being said, the sanctions announced today weren’t as intense as expected, so markets weren’t hammered as hard as some had feared. Of course, Western sanctions probably won’t stop if Russian presence in Ukraine persists so we’re far from any kind of closure. Here’s a silver lining though: the S&P 500 has been higher one year later than when the correction started for 70% [of the past 20 corrections](. Securitize the Bag Token Talk The ‘cryptoification’ of the markets seems like an ever-closer reality as tokenized asset firm Securitize announced Tuesday that it [would be acquiring]( Pacific Stock Transfer. PST, a former partner of Securitize, is known for managing investor account balances and certificates of security ownership, and will continue to operate under its current brand. The terms of the deal weren’t disclosed to us mortals but the acquisition makes Securitize a top 10 US stock transfer agent. - Securitize’s model revolves around technology that allows for the [issuing and managing of digital securities.]( - Purchasing Pacific Stock Transfer now gives Securitize access to around [3K clients and 1.2M investor accounts.]( Seems like you really can buy that kind of access after all. - One of Securitize’s reasons for the purchase is that the current system of transfer agents is inefficient and could be [streamlined via blockchain]( digitization. The next time you’re confronted with a crypto-skeptic doubting the use of blockchain technologies, point them to this move by Securitize as a solid use-case. CEO, Carlos Domingo certainly thinks it is, claiming that existing stock transfer agents rely on "inefficiencies" like those that led to the recent [Buzzfeed SNAFU]( in order to make money. Securitize’s strategy of creating shares as unique tokens with visible trading would render those inefficiencies obsolete. It’s not quite a use case that will change the world but definitely will save tons of money for investors. SoFi Updates its Arsenal Deals and Rumors Earlier this month we talked about SoFi buying up [community bank Golden Pacific Bancorp](. Apparently that wasn’t enough to satiate the fintech company as on Tuesday they announced their intent to purchase [banking technology company Technisys](. The all-stock deal is SoFi’s latest move in its transition from its origins in student loan refinancing towards a fully-fledged bank. SoFi executives might think this is a great idea, but the market seems a little skeptical, as SoFi stock was down -9.92% by market close. - The deal is to the tune of $1.1B in stock with Technisys shareholders receiving 84M shares in SoFi after the deal closes in Q2. That number is less than [10% of SoFi’s diluted share count.]( - Technisys specializes in providing back-end technologies that power mobile-banking apps and track customer deposits amongst other banking-related services. Noted clients include [HSBC, Rellevate, and TAB bank](. It’s pretty evident why SoFi wants this deal to happen. If a transformation into a bank is going to occur then they’ll need the kind of back-end infrastructure that Technisys provides to make that a reality. Add to that, Technisys’ batch of existing clients, and the proposed figure of $500M – $800M in additional revenue through 2025 is definitely a possibility. As with any deal like this it’ll take some time to see if it bears fruit (SoFi stock is [down -28%]( YTD), but if you have faith in SoFi’s vision it could be a shrewd time to buy the dip. Link Roundup 📿 Other News Other News Link Roundup - The scale isn’t the only thing that’s seeing gains – Krispy Kreme Rises on Positive Guidance ([link]() - Macy’s Stock Rises, Then Falls When Investors Remember It’s Macy’s – Macy’s Beats Earnings Expectations ([link]() - Global Warming Be Damned! – Teck Resources Seeks $8B Stake Sale in Coal Business ([link]() - Longs in Commodities Love the Threat of War – Gas Prices Rise as Russian-Ukraine Tensions Escalate ([link]() - Millennials Realize They Will Be Renting Indefinitely – Home Price Gain Fastest in 34 Years ([link]() Meme of the day Maybe Vlad doesn’t have good insurance coverage, [via @GRDecter]( Questions or concerns about our products? Call or text us on your mobile: (410)-775-8315 © Copyright 2020, [RagingBull]( - [Refund Policy]( - [Privacy Policy]( - [Terms & Conditions]( DISCLAIMER: To more fully understand any Ragingbull.com, LLC ("RagingBull") subscription, website, application or other service ("Services"), please review our full disclaimer located at [(. FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. Any RagingBull Service offered is for educational and informational purposes only and should NOT be construed as a securities-related offer or solicitation, or be relied upon as personalized investment advice. RagingBull strongly recommends you consult a licensed or registered professional before making any investment decision. RESULTS PRESENTED NOT TYPICAL OR VERIFIED. RagingBull Services may contain information regarding the historical trading performance of RagingBull owners or employees, and/or testimonials of non-employees depicting profitability that are believed to be true based on the representations of the persons voluntarily providing the testimonial. However, subscribers' trading results have NOT been tracked or verified and past performance is not necessarily indicative of future results, and the results presented in this communication are NOT TYPICAL. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, market dynamics and the amount of capital deployed. Investing in securities is speculative and carries a high degree of risk; you may lose some, all, or possibly more than your original investment. RAGINGBULL IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Neither RagingBull nor any of its owners or employees is registered as a securities broker-dealer, broker, investment advisor (IA), or IA representative with the U.S. Securities and Exchange Commission, any state securities regulatory authority, or any self-regulatory organization. Employees, owners, and other service providers of [RagingBull.com](, LLC are paid in whole or in part by commission based on their sales of Services to subscribers. WE MAY HOLD SECURITIES DISCUSSED. RagingBull has not been paid directly or indirectly by the issuer of any security mentioned in the Services. However, Ragingbull.com, LLC, its owners, and its employees may purchase, sell, or hold long or short positions in securities of the companies mentioned in this communication. [Unsubscribe from all RagingBull emails](