Exodus

US investors were subjected to another ludicrous session Tuesday as markets remained hostage to Ukraine headlines.

Equities continue to exhibit precisely the kind of whipsaw price action you’d expect given the setup described here earlier this week. Simply put, stocks aren’t tradable.

“Equities are effectively near peak ‘short Gamma,’ with absolute extremes in ‘short Delta,’ feeding explosive two-way moves” on dealer hedging flows, Nomura’s Charlie McElligott wrote. A day on from its worst session of 2022, the S&P rose nearly 2% at the highs and fell 1% at the lows before ultimately closing squarely in the red.

For the first time… well, ever, as far as I know, Bloomberg explicitly acknowledged that nothing can be divined from the price action when these accelerant flows are in play to the extent they are currently. “Small upward and downward swings — often touched off by erroneous or stale headlines — quickly become big ones as market makers rush to buy and sell stocks to keep their books neutral,” Stephen Kirkland and Vildana Hajric wrote, conceding that dealer hedging flows “can amplify every news item, at times.”

And there it is, folks. A mainstream financial media outlet admits the futility of trying to craft a coherent narrative to explain a given day’s price action. There’s no narrative. Only headline-scanning algos and systematic/mechanistic flows. The irony, of course, is that the same “news items” and “erroneous, stale” headlines referenced by Kirkland and Hajric are predominately produced by Bloomberg itself. During times like these, the Bloomberg news feed is just a volatility amplification machine — every soundbite and bullet point becomes an all-caps “alert.” And there are thousands of them every, single day.

In any event, at least Tuesday’s headlines actually were newsworthy. Although “history” is made every day (all days are, strictly speaking, “historic”) you currently have the pleasure of trading through a second epoch-making event in the space of two years.

In addition to “Big Shot” breaking the LME and the US/UK joint embargo on Russian crude, the corporate exodus from Vladimir Putin’s pariah state crescendoed, as Coca-Cola, Pepsi and Starbucks all suspended operations in the country.

“Our hearts are with the people who are enduring unconscionable effects from these tragic events in Ukraine,” Coke said. “We will continue to monitor and assess the situation as circumstances evolve.”

“We have been operating in Russia for more than 60 years, and we have a place in many Russian homes,” Pepsi wrote, in a statement of its own. “Pepsi-Cola entered the market at the height of the Cold War and helped create common ground between the United States and the Soviet Union,” the company added, before breaking the bad news to Russia’s Pepsi fans: “Given the horrific events occurring in Ukraine we are announcing the suspension of the sale of Pepsi-Cola, and our global beverage brands in Russia.” Pepsi is also suspending all capital investments and all advertising activities.

If you’re in Russia and you want whatever the local equivalent of a white chocolate mocha is (I don’t know if this a “Royale with cheese” type of thing), you’re out of luck. “We condemn the horrific attacks on Ukraine by Russia and our hearts go out to all those affected,” said coffee, in an irritated press release. “We continue to watch the tragic events unfold and, today, we have decided to suspend all business activity in Russia, including shipment of all Starbucks products.”

Speaking of “Royales with cheese,” McDonald’s is out too. The company delivered a lengthy rationale. “In recent days, I have spoken with and heard from many in our System about our operations in Russia,” CEO Chris Kempczinski wrote, in a letter to employees, adding that,

The situation is extraordinarily challenging for a global brand like ours, and there are many considerations. For 66 years, we have operated with the belief that communities are made better when there’s a McDonald’s nearby.

In Russia, we employ 62,000 people who have poured their heart and soul into our McDonald’s brand to serve their communities. We work with hundreds of local, Russian suppliers and partners who produce

the food for our menu and support our brand. And we serve millions of Russian customers each day who count on McDonald’s. In the thirty-plus years that McDonald’s has operated in Russia, we’ve become an essential part of the 850 communities in which we operate.

At the same time, our values mean we cannot ignore the needless human suffering unfolding in Ukraine. Years ago, when confronted with his own difficult decision, Fred Turner explained his approach quite simply: “Do the right thing.” That philosophy is enshrined as one of our five guiding values, and there are countless examples over the years of McDonald’s Corporation living up to Fred’s simple ideal. Today, is also one of those days.

Working closely in consultation with our Chairman, Rick Hernandez, and the rest of McDonald’s Board of Directors over the last week, McDonald’s has decided to temporarily close all our restaurants in Russia and pause all operations in the market. We understand the impact this will have on our Russian colleagues and partners, which is why we are prepared to support all three legs of the stool in Ukraine and Russia. This includes salary continuation for all McDonald’s employees in Russia.

So, no Quarter Pounders for Russians. Or at least not for Russians currently living in Russia.

Finally, Amazon said AWS won’t take any new sign-ups from Russia or Belarus. “Unlike other US technology providers, AWS has no data centers, infrastructure, or offices in Russia, and we have a long-standing policy of not doing business with the Russian government,” the company wrote, in an updated version of a March 4 release. Amazon threatened to suspend any AWS-hosted site found to “threaten, incite, promote, or actively encourage violence, terrorism, or other serious harm.”

This is an absolute debacle. There’s no other way to describe it. Last month, I noted that Putin himself is the existential threat to Russia, not NATO. He’s driven his country to the brink of ruin in the space of just three weeks.

On Wednesday, the ruble will begin trading again in Moscow. The stock market will remain closed.