Ruble Trouble

Investors' exodus from Russia... Silver Banana goes to... [image]( Market Snapshot Once again, it was all about Russia yesterday. Markets had no idea if the news was good or bad, but that didn’t stop them from trading the day away. Early losses were largely wiped by close, with U.S. indices finishing mixed and confused. The Nasdaq gained 0.41%, while the S&P and the Dow slid, losing 0.24% and 0.49%, respectively. Discover new investment ideas on Commonstock, the social network for smart-money investors. Commonstock built a platform to showcase the verified portfolios, real-time trades and analysis of the best retail investors. [Join our community today.](=) Let’s get into it. [image] Macro Monkey Says Ruble Ruined — I’m sure you and all your friends have been spouting your very own garbage theories about what’s to come next in the Russian invasion of Ukraine, but if you want to really sound smart, maybe take a look at the economics of it all. If that sounds like you, look no further — The Daily Peel presents: A Rundown on Russia & the Ruined Ruble. [image] For lack of a better word, the Russian economy is, well, f*cked. For years now, Russia’s government and elites of society have been attempting to essentially insulate themselves as much as possible from possible Western sanctions. Hate to break it to you, Putin, but it didn’t exactly go as planned, I’d imagine. Starting with the most obvious, it’s pretty tough to avoid economic fallout when you’re fully sanctioned from using the world’s reserve currency, the U.S. dollar. Sure, they have the ruble, but very few outside of Russia have ever cared about it. Now, with respect to the value of the USD, the ruble is at an all-time low. One Robux is worth more than one ruble… and that’s from a damn video game. Russia’s central bank carries loads of foreign currency reserves, but in reality, these “holdings” are simply entries in a database from central bank to central bank that shows who owns what. When one central bank (Russia) holds a bunch of other currencies, those other central banks are simply allowing Russia to hold it. With little more than the flip of a switch, any central bank that issues currency can “freeze” the holdings of that currency held elsewhere. So with practically 0 reserves in effect, Russia’s ability to participate in the global financial market is like Bill Ackman placing a trade and not going on CNBC to hype it up… it just doesn’t happen. But, it doesn’t stop there. An exodus from Russian assets seems well underway, particularly with things like BP divesting its $14bn stake in a Russian oil company. Additionally, if you need a good laugh, check out the stock price of the massive state-owned Russian oil company Gazprom ($OGZPY), which dipped 42.1% yesterday. This comes broadly as a result of many other funds following in BP’s footsteps. The sovereign wealth fund of Norway, holding well over $1tn, has pleaded a divestment of Russian assets and stated they will not purchase any additional holdings. Sure, Gazprom is still pumping gas into Europe, but literally everyone hates it. And that sucks. Even beyond yesterday’s share price collapse, Gazprom is the single largest taxpaying entity in the entire country, footing the bill of an estimated 6% of the nation’s overall tax budget. You can’t exactly survive with a stock price of $0. And while, of course, we investors never want to see our stocks hit $0, it does happen sometimes. That’s why you need to make sure the ideas you find are the best they can be, and what better way to do that than with [Commonstock](=)? Lastly, some countries are getting creative with their sanctions as well. Several, including the U.K. and Canada, have banned Russian aircraft from flying in their airspace, while others are going as far as attempting to seize the most prized possession of every oligarch: their yachts. So, even if traditional economic sanctions don’t work, maybe not being able to hop in their yachts will convince some oligarchs that Putin just is not that guy. One way or another, it’ll be interesting, to say the least. THE SOCIAL NETWORK FOR SMART MONEY INVESTORS [image]( Discover new investment ideas on [Commonstock](=), the social network for smart money investors. Does anyone else feel like capital markets make zero sense these days? From equities and options to crypto and NFTs, markets are changing fast. It’s more important than ever to find trustworthy information. Commonstock built a platform to showcase the portfolios, real-time trades, and analysis of the smartest retail investors, helping you distinguish signal from noise. [Join]( Commonstock’s community of engaged investors today. What's Ripe Tesla ($TSLA) — Europe is going through a lot right now, but apparently, even war can’t stop Tesla. The EV king was up big yesterday, gaining 7.5% on news of the company getting one step closer to full approval for their new Gigafactory outside Berlin. A few more court dates are required, primarily to address environmental concerns, but for now, investors are enjoying the good news. Still, don’t forget the original plan was for production at this factory to begin in mid-2021 — just a bit behind schedule. War Stocks ($LMT, $FTNT, $OXY) — Not just traditional war stocks, but potential “new war” stocks were having a great day yesterday. Lockheed saw a 6.7% boost… for obvious reasons. But other sectors not traditionally considered defense were loving it too. Cybersecurity stocks in particular, such as Fortinet and CrowdStrike, rose at least 6.0% as traders and operators alike realize the newfound importance of cybersecurity in wartime. And again, for obvious reasons, oil stocks had a big green day as well, with Occidental leading the charge up 12.9%. What's Rotten EPAM Systems ($EPAM) — Trading at roughly 11.5x its usual volume, a company you’ve never heard of had a truly miserable day yesterday, all thanks to Mr. Vladimir Putin. EPAM Systems, based out of Pennsylvania, cratered 45.6% yesterday, setting a new 52-week low after management withdrew their previous FY’22 guidance. See, most of the firm’s employees and a dangerous amount of their revenue comes from three countries: Belarus, Russia, and Ukraine. Yeah, exactly. Lordstown Motors ($RIDE) — The EV market continues to dazzle. Tesla zigs, while less seasoned EV stocks like Lordstown do nothing but zag. Down 19.9% yesterday, Lordstown had nothing but disappointment in their latest earnings release. EPS missed… and the company doesn’t actually make any revenue yet, so who even cares? The firm planned to begin vehicle production over a year ago, but as of yesterday, production plans indicated 500 cars this year and 3,000 for next. Assuming an average price tag of $50k, that means $25mn in sales this year and $150mn the next in the best-case scenario. Right now, Lordstown’s market cap sits at $450mn, aka, approximately 18x FY’22 projected sales… best-case scenario. Well, good luck, EV stans! Thought Banana Even More “Sanctions” — In eastern Europe, they use guns, tanks, and bombs. On the internet, we use Tweets, location sharing, and most powerful of all, memes. Ukraine has found a previously unallied partner as it fights off a Russian invasion. Gen Z and millennials have taken to the internet like never before, all in support of the Ukrainian cause. And no, I’m not just talking about the “I stand with Ukraine” Tweets that you cringe at when you scrolls by. Some of our favorite examples include: - [This tweet]() providing the exact locations of several oligarch yachts - These [gems of advice]( on how to win at urban warfare - And of course, this beauty of a meme below [image] So, despite the lack of support troops from NATO countries, Ukraine isn’t fighting alone. Soft power, while it won’t stop an invasion alone, sure can influence a lot of people and tear through processes around the invasion. Oh yeah, almost forgot, but the invasion has an official Wikipedia page now. Be sure to check that out [here](=). Wise Investor Says “Competition makes you better, always, always makes you better, even if the competitor wins.” — Carlos Slim Helu Happy Investing, Patrick & The Daily Peel Team Was this email forwarded to you? Sign up for the WSO Daily Peel [here](. 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