🐕💰 Dogecoin or the Russian Ruble? You Decide
Happy Hump Day everyone,
What a week it’s been. Oil is through the roof, the ship that was carrying $330M in luxury cars sank, crypto is rallying, the Russian Ruble is worth less than a Robux, and a series of harsh sanctions is further isolating Russia from the rest of the world. With no time to waste, let’s recap you on everything you need to know.
After Russia decided to invade Ukraine, the global stage was thrown into a frenzy. Is this the beginning of WWIII? Is China going to get involved? Is the U.S. going to step in? Is there going to be a draft? What transpired instead was a series of the most severe package of sanctions ever considered. Among a long list include:
Unilateral sanctions targeting Russia’s largest banks including Sberbank and VTB Bank
Germany abandoning the Nord Stream 2 Baltic Sea gas pipeline project
Freezing the assets and restricting the travel of President Vladimir Putin and other Russian oligarchs & government officials
Closing certain airspace to Russian aircrafts
Effectively every U.S. company halting/limiting operations in Russia including Disney, Warner Bros, Apple, Nike and Google
One of the most significant sanctions is cutting Russia’s major banks out of the SWIFT financial messaging system which moves countless billions of dollars around 11,000+ banks around the world daily. By kicking 80% of Russian banks out of SWIFT, it stops them from conducting business globally and effectively blocks Russian imports and exports.
These sweeping sanctions have had a particular impact on Russia’s largest bank Sberbank which, as recently as Feb. 28, had subsidiaries in Austria, Croatia and Slovenia deemed as failing or likely to fail by the European Central Bank. This comes as their liquidity situations deteriorated as customers withdrew deposits. The rush for foreign currency is real as Russians came out in droves to line up at cash machines to buy dollars which plummeted the Russian ruble well past the psychologically important level of 100 rubles per U.S. dollar. In fact, one Ruble is now worth less than one Robux which is the currency for the Roblox online game. Dogecoin seems like a better store of value currently than the Ruble.
To shield Russia’s $1.5T economy from western sanctions, the central bank more than doubled its key interest rate to 20%. In the face of a bank run, which is a rapid sell-off in assets and the steepest depreciation in the ruble since 1998, Russian policy makers halted stock trading in Moscow and brokers were banned from selling securities held by foreigners.
So much has happened in the past couple days that it’s felt like weeks since Russia officially invaded Ukraine. At the time of last week’s newsletter, we were still wondering if Russia was going to invade which shows how much has happened and how quickly the west was to respond. The situation changes by the hour and we’ll be doing our best to keep you up to date. We at Hump Days are hoping for a quick and swift resolution - it’s very sad to see countless innocent lives being lost for no good reason.
Enjoy this week’s Hump Days.
- Humphrey & Rickie
In the Markets
Weekly News Roundup
Russia Erects Financial Defences as Curbs Hit Banks, Markets (BBG)
The Bank of Russia was quick to respond to shield the nation’s $1.5T economy from sweeping sanctions that targeted key banks and pushed the ruble to a record low. The central bank more than doubled its key interest rate to 20%.
HY: Sanctions will take time to take effect, more will be known about how badly they are hurting the RU Economy in the next few weeks. We’ll be keeping you up to date on what happens.
IEA Will Deploy Emergency Oil Stocks to Ease Soaring Prices (BBG)
The U.S. and other major economies have agreed to a coordinated release of oil stockpiles following the Russian invasion of Ukraine which pushed crude to over $105 a barrel. The International Energy Agency will deploy 60M barrels from around the word however, that equates to less than two-thirds of the global daily consumption of 100M barrels.
RH: The price of oil went from negative to the highest since 2011 all in the span of 2 years
HY: When Oil goes up, prices of gas goes up as well. Unfortunately Russia is a big supplier of natural gas and oil so until the conflict is resolved we may see higher gas prices.
TikTok Expands Max Video Length to 10 Minutes, Up From 3 Minutes (TC)
After recently overtaking YouTube in average U.S. watch time, TikTok is starting to roll out the ability for users to upload videos up to 10 minutes in length. TikTok is now in direct competition with YouTube for long-form content and will be vying for a slice of YouTube’s $28.8B in ad revenue in 2021.
RH: IGTV walked so 10 minute TikTok videos could run.
HY: Don’t love it, vertical videos…10 minutes, hard to keep my attention span on Tik Tok already as is. I don’t see a scenario where Tik Tok beats out YouTube in terms of long form content.