Tuesday Sep.20, 2022

🍟 Ukraine’s McRecovery

Golden arches. Blue-and-yellow flags. (Yurii Stefanyak/Getty Images)

Hey Snackers,

Honda just shifted its employee comp into reverse: the carmaker is clawing back some bonuses paid to hundreds of employees after overpayment. Oops.

The major US indexes closed up yesterday, partially recovering from last week's inflation-driven decline. All eyes are now on the Fed, which is expected to announce an interest-rate hike of 75 basis points tomorrow.

McRecovery

McDonald’s reopens some restaurants in Ukraine, helping to kick off recovery talks as war rages on

A tiny taste of normal… Starting today, McDonald’s will begin reopening some of its restaurants in Ukraine. McD’s closed all of its 109 locations there after Russia invaded over six months ago. (Refresher: McD’s sold its Russian stores in May and they reopened in June under new ownership.) Today, war’s still raging in Ukraine, but McDonald’s says it hopes to restore “a small but important sense of normalcy.”

Taking it slow: McD’s plans to open restaurants gradually over the next two months in Kyiv, where Nike and KFC stores are open. For now, Big Macs are delivery only, with in-store dining and drive-thru set to resume next month.
Safety first: McD’s will close during air-raid alerts to allow customers and workers to move to shelters.

The violence is ongoing… but Ukraine's already planning for recovery. Russia’s war on Ukraine has left tens of thousands of people dead, in addition to at least 7M refugees and $100B+ in damage — and it’s not over. But last week, Ukrainian President Zelensky met with BlackRock CEO Larry Fink to discuss a reconstruction fund to attract public and private investment.

Donations won’t do it: So far, countries have pledged $83B+ in aid to Ukraine, but some analysts say rebuilding could cost as much as $750B. To encourage private investment, Ukraine’s offering entrepreneurs grants and no-interest loans.

Recovering from war takes a global effort… and McD’s and BlackRock aim to play a part. Ukraine’s economy is set to fall about 30% this year, but it didn’t collapse as Russia wanted: industry’s rebounding and unemployment’s falling. Plus, the same countries and companies pushing Russia out of the global economy are pulling Ukraine in: creditors including the US government and BlackRock have agreed to freeze billions in debt to kick-start recovery.

GTA

Take-Two suffers one of the biggest leaks in video-game history, as hackers up the pressure

Grand Theft IP... Video-game titan Take-Two Interactive is feeling the heat as it suffers from one of the biggest leaks in gaming history. Over the weekend a hacker posted 90 previously unreleased clips from Take-Two's highly anticipated "Grand Theft Auto VI," including new locations and characters. Yesterday Take-Two's stock dropped 3% before rebounding higher — but is still down almost 30% this year.

Pause: GTA's publisher, Rockstar Games, confirmed the leaked videos are real and is trying to stop their spread on sites like YouTube.
Play: "GTA V" is still one of the best-selling video games ever, despite being released nearly a decade ago.

Ready player none… Take-Two's GTA hack kicks the video-game biz (which is on pace for its first sales decline in seven years) while it's down. Cyberattacks on gaming companies and users have increased 167% over the past year, as hackers look for more ways to exploit the multibillion-dollar industry. Leaks could be just the start: in July hackers posted stolen documents from Roblox in an attempt to extort the biz.

It’s hard to put the IP genie back in the bottle… Gaming companies are famous for keeping releases secret. While leaks can sometimes boost hype, they can also force developers (like Take-Two and Rockstar) to make changes to games and delay releases. And delays = lost $$. "GTA VI" is expected to earn $3.5B in bookings on its 2025 debut, and $2B a year after that.

What else we’re Snackin’

Infloation: The Suez Canal will raise fees for passing ships by up to 15% next year because of inflation — and economists say the hike will further fuel inflation. Turns out rising inflation lifts all prices.
Astronight: Check in for space-tourism liftoff. Hilton says it’ll design hospitality suites and sleep spaces for Starlab, a private space station being crafted by Voyager and Lockheed Martin.
Checkout: Wegmans says it’ll no longer use self-checkout tech. The East Coast supermarket chain says its self-checkout app made shoplifting easier. Meanwhile, rival Amazon is leaning into checkout-free tech.
RTO: Employers are gaining ground on bringing workers back to the office. Now 47.5% of those who worked in an office prepandemic are back at their desks — the highest level of the pandemic so far.
Cold: After Russia cut gas to Europe, high energy prices are forcing European factories to slash output and furlough workers. EU production (think: metal, paper, fertilizer) fell 2%+ in July from a year ago.

Tuesday

Earnings expected from Stitch Fix and Aurora Cannabis

Authors of this Snacks own: shares of Take-Two Interactive and Amazon

ID: 2432963

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Thanks to the success of its diabetes and obesity drugs Ozempic and Wegovy, drugmaker Novo Nordisk is now Europe’s most valuable company. It’s especially having outsized effects on its home country of Denmark, where its market cap of over $570 billion trumps the country’s GDP.

“Without Novo’s contribution, the Danish economy would have stagnated,” Bloomberg reports.

Novo Nordisk therefore is having broad effects on myriad aspects of life in Denmark, from educational priorities to immigration policy to job availability to mortgage rates. As goes Novo Nordisk, so goes the nation. That means if the drugmaker’s finances go south, so will Denmark’s.

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Binance founder CZ’s prison sentence hasn’t stopped an uptick in trading on the exchange

Yesterday, the founder and former chief executive of Binance was finally sentenced to 4 months in prison. The ruling marked the end of a multi-year investigation in which the crypto magnate — Changpeng Zhao, widely known as CZ — pleaded guilty to violating American anti-money laundering requirements.

The crux of the investigation was that Binance had failed to report more than 100K suspicious transactions, including some with obvious ties to terrorist groups. Prosecutors had been seeking a sentence of 3 years for the billionaire, who will retain the bulk of his wealth despite paying $100M in criminal and civil fines.

Founded in 2017, Binance continues to operate under new leadership with little evidence that the investigation into its founder and former CEO has diminished appetite for traders on the Binance exchange. Data from The Block reveals that 40-50% of monthly crypto exchange volumes go through Binance.

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Marijuana has been classified as a Schedule I drug (on par with heroin) since the Controlled Substances Act was first signed in 1970.

This change would make cannabis, which is recreationally legal in 24 states, a Schedule III drug (on par with anabolic steroids). The shift, which isn't finalized, would likely give a significant boost to the $35B legal cannabis industry through changes to its tax status.

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Tesla laid off practically the entire 500-person team that runs the company’s Supercharger network, the Information reported.

The network is considered a “crown jewel” and a competitive advantage compared with other carmakers, which have recently cut deals with Tesla to use the network.

It’s not clear yet where that leaves Tesla’s plans to build a 1,800 mile charging corridor for semi trucks, but it also laid off the public policy team, which had failed to get $100 million in federal funding for the project.

It’s certainly bad news for people trying to take long roadtrips with their Teslas. “We will continue to build out some new Supercharger locations, where critical, and finish those currently under construction,” Musk wrote in a memo on the layoffs.

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That’s meant plowing money into startups that don’t even have products, let alone revenue, fueling concerns of a bubble. That money buys a whole lot of chips.

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