📉 Russia’s financial crisis
![A man in Moscow passes by a display of foreign exchange rates [Anton Novoderezhkin/Getty Images]](https://cdn.robinhood.com/static_content/mwphzyq69oso/en-US/assets/files/47J5NMh62BnSOXmGeaRxRz_1_GettyImages-1238836533.jpg)
Hey Snackers,
Russia and Ukraine failed to agree on a ceasefire during a first round of talks yesterday, while Moscow intensified its push toward Ukraine’s capital. Half a million Ukrainians have fled the country since Russia’s invasion. President Biden will likely address the crisis tonight in his first State of the Union.
Stocks ticked down as investors turned to “safe haven” assets like US gov’t bonds and gold, which had its best month since last May. Bitcoin rebounded, surging 14% to cross $40K for the first time in weeks.
From plunging stocks to sinking currency, Russia’s economy is in crisis mode
Weaponized finance... Over the weekend, Western countries piled unprecedented financial sanctions on Russia. The goal: disrupt Russia’s ability to finance its war in Ukraine by cutting it off from critical financial resources. The fallout in Russia: plunging stocks, a crashing currency, and panic.
- Sinking stocks: Russia closed its stock market yesterday and today to prevent a crash after it plummeted 30%.
- Sinking currency: The ruble lost more than 30% of its value against the US dollar, trading as low as 119 rubles per $1.
- Soaring interest: To prop up its currency, Russia's central bank (think: its Fed) more than doubled its key interest rate, to a record 20%.
- Run on banks: Russians lined up at banks and ATMs to withdraw cash, rushing to spend or convert their savings before they lost even more value.
Uncharted territory… The West’s latest sanctions have made it hard for Russia to (a) tap it into its rainy-day fund of foreign currency (think: USDs, euros) and (b) stabilize the plunging ruble. Two financial strikes explain why:
- Strike #1: Western countries kicked some Russian banks out of Swift, the key global banking network for international transactions. That severely limits Russian banks’ ability to trade and convert rubles into other currencies, which is necessary to pay for imports.
- Strike #2: The US froze the Russian central bank’s access to its foreign currency held at American banks — read: a large chunk of Russia’s $640B reserves. Normally, Russia’s central bank would buy rubles to stabilize the currency from falling. Problem: it needs foreign currency to do that.
“Fortress Russia” is showing cracks… Moscow has spent years trying to “sanction-proof” its economy by bulking up on foreign currency (among other things). But these sanctions block Russia from a big part of the global economy, and the damage is already showing. Still: the sanctions let the West keep buying oil and gas from Russia — aka: Russia’s biggest source of revenue.
Clean energy gets a windfall after a record-breaking auction for US offshore wind farms
It’s not just hot air… Energy giants are finally investing in US offshore wind farms. Last year, wind produced a record 9% of domestic energy, but virtually all that power was generated inland on huge farms in Texas, Oklahoma, and Iowa. Now the global energy sector is looking offshore and starting to see a path to profits in those huge coastal turbines:
- The news: The rights to develop wind farms off the coast of New York and New Jersey sold for a record $4.37B this week, to joint ventures involving companies like Shell (Dutch), RWE (German), and National Grid (UK).
- The goal: Biden wants offshore wind to power 10M homes by 2030. US wind farms are already on track to exceed that, but they’re unlikely to be operational by the deadline.
The US has some wind in its sails… But still lags behind the EU and China in offshore wind production. Today the US has just two operational offshore wind farms, with only a handful of working turbines. Europe and China are dominating, accounting for nearly all offshore wind-generating capacity. Part of the reason for the lag is red tape: the US permitting process for offshore wind projects can take years because it often involves several states and overlapping regulators.
Urgency can be a powerful tailwind... Every dollar the federal government commits to renewables is another reason for companies to invest in US clean energy, even in heavily regulated industries like offshore wind. Wind and solar are expected to account for the majority of new energy capacity built in the US this year — and power from these kinds of renewables are already cheaper than fossil fuels in many places. But even though wind can generate more clean power than solar, the solar industry is growing faster.
What else we’re Snackin’
- Roof: Airbnb is offering free short-term housing for up to 100K refugees fleeing Ukraine into neighboring countries like Poland and Romania. Airbnb had announced a similar initiative for Afghan refugees last year.
- Birds: Ukraine’s digital minister confirmed the arrival of a shipment of Starlink internet satellites, days after he tweeted at Elon for help.
- Brake: Lucid shares fell 13% after the EV maker slashed its 2022 production forecast to between 12K and 14K deliveries, from 20K, blaming #supplychain. Lucid's also building its first plant outside the US, in Saudi Arabia.
- Truckin’: Real-estate investor Alterra Property and self-driving-truck startup Embark are partnering to build hubs near major cities, where autonomous trucks would switch to human drivers for the final stretch of their routes.
- Avo: Whole Foods opened its first cashier-less store in DC using Amazon’s “Just Walk Out” tech. Shoppers can scan their hands or a QR code to charge groceries to their Amazon accounts.
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
- First day of Women’s History Month
- Mardi Gras
Authors of this Snacks own: Bitcoin and shares of AirBnB, and Amazon
ID: 2058675