🍟 Russia’s McRebrand

Tuesday, June 14, 2022 by Robinhood Snacks |
Not the Golden Arches (Kirill Kudryavtsev/AFP via Getty Images)

Not the Golden Arches (Kirill Kudryavtsev/AFP via Getty Images)

Not the Golden Arches (Kirill Kudryavtsev/AFP via Getty Images)

Not the Golden Arches (Kirill Kudryavtsev/AFP via Getty Images)

Yesterday’s Market Moves
Dow Jones
30,517 (-2.79%)
S&P 500
3,750 (-3.88%)
Nasdaq
10,809 (-4.68%)
Bitcoin
$22,848 (-13.96%)

Hey Snackers,

School’s out for the summer, but this yearbook will be rock-hard to sign: researchers realized this marble slab is actually an ancient Greek yearbook. HAGS.

The bear market has finally arrived: the S&P 500 index plunged nearly 4% yesterday to a new low for the year, down 22% from its record high in November (read: official bear territory). Investors don’t love that the Fed may be considering a big rate hike this week.

Tasty

1. Rebranded McDonald’s locations reopen in Russia, as a knockoff economy emerges to adapt to sanctions

McDowell’s vibes… but this isn’t a “Coming to America” tale of Big Macs vs. Big Micks. Former McDonald’s locations in Russia are reopening under different owners — with the same ketchup packets. Quick refresher: McDonald’s closed its 840 Russian restaurants in May in response to Russia’s war on Ukraine, and later sold them to a Siberian oil mogul. Last weekend, after a quick-and-dirty rebrand, they began reopening:

  • 15 ex-McD’s opened in Moscow. New name: "Tasty & That's It.” The other 800+ are expected to reopen by summer’s end.
  • Scrap the McBranding: The restaurants sell burgers and fries, but workers reportedly scribbled out McD’s logos on old ketchup packets to avoid violating trademarks.

The Calorie Curtain has some holes… American food behemoths like McDonald’s and Starbucks stopped selling Big Macs and Venti Lattes in Russia months ago (the #CalorieCurtain), joining Western peers like Disney, Apple, and Shell. But Russia’s economy hasn’t been crushed by the corporate exodus:

  • Russian shelves have stayed stocked thanks to Putin’s efforts to reduce reliance on trade. Case in point: Tasty & That’s It gets 98% of ingredients from Russia.
  • Russia’s ruble recovered from an early crash thanks to aggressive central-bank policy, and manufacturing’s on the rebound too.
  • But DIY’s hard: Russia is now manufacturing cars without airbags since auto partner Renault exited, and many juice boxes might be white soon since ink imports dried up.
THE TAKEAWAY

A knockoff economy is emerging… but it’s easier to replace burgers than computer chips. Corporate departures and sanctions haven’t caused Russia’s economy to shut down. Yet they’re forcing Russia to rebuild itself with fewer trade partners and many missing pieces. Long term, sanctions could have a more dire effect: Putin still hasn’t found replacements for key components, like microchips, and Europe’s looming oil ban will likely hit Russia’s coffers.

Coined

Extra-rough Monday… Bitcoin dropped below $24K for the first time since 2020 yesterday, sending ripples through the industry. Celsius, one of the biggest crypto lenders, halted transactions for its nearly 2M customers, citing “extreme market conditions.” Celsius manages ~$12B in assets, and it’s TBD when (and if) customers will get their $$ back.

  • Status quo: Users deposit crypto into Celsius with the promise of earning up to 18% in interest payouts. Celsius then reinvests the assets into crypto-related projects (like: crypto-mining).
  • Problem quo: The value of Celsius' holdings has plunged along with crypto prices. Yesterday, crypto market cap dipped below $1T for the first time since January ’21. Now analysts think Celsius could run out of funds within five weeks.
  • Even if it can repay customers, it would have to pull its money from other crypto investments — which could affect the entire market.

Moving like the market… Some thought crypto could be a hedge against inflation and stock-market moves. That hasn’t panned out so far this year. While stocks tumbled, the crypto market lost $200B in value over the past week — and $2T+ in the past eight months. Celsius isn’t the only crypto company feeling the heat:

  • In the past month, crypto lender BlockFi and exchanges like Crypto.com, Coinbase, and Gemini have cut headcount.
  • Binance, the world's largest crypto exchange, temporarily halted bitcoin withdrawals (it blamed technical reasons).
THE TAKEAWAY

Crypto’s getting a reality check… It’s not just prices: from Stablegains to the Anchor Protocol, promises of big returns have lured investors to the high-flying world of crypto lending. But some of those investments have crashed and burned. Celsius’ freeze puts the spotlight on lawmakers and regulators, who could face more pressure to step in. Meanwhile, a bipartisan bill to regulate digital assets is already in the works.

What else we’re Snackin’

  • Box: Prologis, the world’s largest warehouse operator, is buying rival Duke Realty for $26B. Prologis helps process online orders for Amazon and FedEx, so it’s a show of confidence for the slowing ecomm sector.
  • Werk: Oracle shares popped 9% after the OG enterprise software giant beat earnings expectations. Cloud services have boomed as more companies transition to hybrid work, which could be here to stay.
  • Caniels: Jack-and-Coke took a literal turn: Coke is collabing with Jack Daniel’s distiller Brown-Forman on canned J&Cs. While soda declines, ready-to-drink bevs have been the fastest-growing alcohol segment.
  • Stuck: EV startup Electric Last Mile Solutions plans to file for bankruptcy a year after going public via a SPAC. It’s been unable to get funding since an investigation found its past financials were unreliable.
  • Splits: Tesla's planning a 3-to-1 stock split (needs to be OK’d by investors in August). Tesla hopes to make its stock seem more affordable, but now that fractional shares are a thing, splits are mostly cosmetic.

Snack Fact of the Day

The world’s shortest commercial flight, connecting two islands near Scotland, lasts less than a minute

Tuesday

  • Earnings expected from: Core & Main, Sprinklr, and Planet Labs

Authors of this Snacks own: bitcoin and shares of Amazon, Tesla, Disney, Apple, and Starbucks

Correction: In the story about Celsius we linked to the wrong company. This is the correct company. We regret the error.

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