🛢️ How Russia’s war with Ukraine is impacting global markets

Just as the pandemic was waning... Russia invaded a sovereign nation, launching a war that’s plunged Europe into one of its darkest moments since WWII. After Russia began invading neighboring Ukraine, Western leaders have been piling on harsher sanctions to punish Russian President Putin.

The crisis is rattling the world... and markets. The global economy is so interconnected that turmoil in one area can shake the entire financial system. Stocks have been falling all year as investors stress over inflation and coming interest-rate hikes. The conflict is weighing on what’s already hurting markets. How different markets have been impacted:

• Stocks: US stocks dropped immediately after Russia's invasion on Thursday, but rebounded for the week on expectations that the Fed could go easier on rate hikes (because: global turmoil). Few US companies have operations in Russia or Ukraine, so they’re more shielded. Meanwhile, Russian stocks have lost half their value.
• Bonds: US Treasury bonds spiked as investors sold more volatile assets like stocks and moved into “safe haven” investments like gov’t debt, which the US has always repaid.
• Commodities: Oil and wheat prices soared on concerns of reduced supply from Russia — the world's largest exporter of wheat, and a top three exporter of oil and natural gas. Meanwhile, gold prices are rising as investors seek more stability.
• Paper currency: The USD is appreciating as investors seek security in the world’s reserve currency, which has a stable rep, while Russia’s currency has tanked.
• Crypto: Some believe Bitcoin can act like digital gold — a “safe haven” decentralized currency to retreat to during conflicts. But BTC is down 30% over the past three months.

The state of the union is... anxious. President Biden is set to deliver his first SOTU address Tuesday, at a critical moment when his approval ratings have plunged. While he may talk about the war in Ukraine and his domestic successes (think: $1T infrastructure bill, vaccination rate), inflation is what’s top of mind for many Americans. Biden will likely underscore the strong labor market — a record 6.6M jobs were added since he took office — while acknowledging that high prices are hurting wallets. FYI: We'll get an update on the employment picture with Friday’s jobs report.

Speed bump... Plans to electrify US delivery fleets are stuck in first gear. Last week USPS said it would buy $6B of mostly gas-guzzling mail trucks, ignoring the White House’s call for it to go electric. In the private sector, Amazon, Walmart, FedEx, and UPS have set goals to go all EV by 2040, but the transition has been wobbly (blame supply constraints). Amazon ordered 100K electric vans from Rivian, but their ETA has been delayed to 2030. FedEx also plans to buy 100% EVs, but not until 2030.

The snowball effect... The cloud biz that helped Pizza Hut predict Super Bowl ’za orders is on fire: shares of Snowflake have doubled since its record-breaking 2020 IPO on huge demand for cloud storage, and 40% of Fortune 500 companies now use its software. But Snow shares have thawed 30% from highs on the wider tech selloff, plus competition from upstarts like DataBricks. Snow has yet to turn a profit, but expects annual sales to 18X by 2029. Amazon’s AWS cloud sales soared last quarter. We’ll see if Snowflake follows suit when it reports Wednesday.

One (brand) fits all... Victoria's Secret has been facing an identity crisis, from C-Suite harassment allegations to changing views of what "sexy" means. Last week the lingerie brand debuted its first-ever model with Down syndrome, part of a series of inclusive campaigns aimed at revamping its image. It seems to be making a difference: last quarter its in-store sales jumped 22%, to $920M, but it warned that supply delays would cost it $100M. We'll see if VS’s inclusivity push can restore sales to pre-pandemic highs when it reports Thursday.

• Equity: There were a record 20 Black CFOs at S&P 500 companies last year, but more than 90% of the top 50 most valuable public companies don’t have any Black C-suite execs. Many firms still have a pipeline problem that’s limiting C-suite diversity.
• Hack: After global leaders sanctioned Russia for invading Ukraine, shares of cybersecurity giants Palo Alto Networks, CrowdStrike, Fortinet, and Mandiant spiked on fears of a cyberwar.
• Tuneware: Spotify launched its first physical product, the Car Thing music player for the dash of your ’97 Nissan. Meanwhile, Kanye debuted his new album on a $200 device (that looks like a smoke alarm).

• Swift: The entire G7 — France, Germany, Italy, Japan, US, UK, and Canada — now supports the expulsion of selected Russian banks from Swift, the messaging system that connects 11K banks worldwide. It’s one of the harshest sanctions yet.
• Landlord: Wall Street firms have been quietly snatching up starter homes, turning would-be buyers into renters. A key hotspot: Phoenix, where rent on single-family homes rose 19% during the pandemic.
• RTO: Employers are optimistic about bringing workers back to HQ (for real this time) as Covid cases subside — but don’t expect a full-time return just yet.

• Monday: Earnings expected from: Workday, Lucid, Groupon, HP, and Zoom
• Tuesday: President Biden’s first State of the Union address. Earnings expected from Salesforce, Nordstrom, Target, Wendy's, Baidu, AutoZone, Hormel, Domino's, JM Smucker, SoFi, Kohl's, and Man U
• Wednesday: Earnings expected from: Snowflake, Dollar Tree, Okta, Splunk, Trip.com, Victoria's Secret, ChargePoint, American Eagle Outfitters, Abercrombie & Fitch, and Zuora
• Thursday: Weekly jobless claims. Earnings expected from Costco, Kroger, Broadcom, TD Bank, Best Buy, Brown Forman, Gap, Duolingo, Sweetgreen, and Utz
• Friday: Monthly employment data. Paralympics Opening Ceremony. Earnings expected from Dole

Authors of this Snacks own Bitcoin, and shares of Amazon, Spotify, and Walmart

ID: 2056636