💸 Under pressure

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💸 Under pressure

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Tonight: Biden announces sanctions against Russia, calling Putin's latest moves the beginning of an invasion of Ukraine. And Wall Street, already on edge, is clearly not happy with all the geopolitical uncertainties. Let's get into it.

By Allison Morrow

💸 NEW SANCTIONS

The Russia-Ukraine situation is evolving by the hour, with observers around the world on edge over a potential ground war that could destabilize the global economy and create a humanitarian crisis.

Key developments:

President Joe Biden announced a new round of sanctions aimed at punishing Russia for deploying troops into eastern Ukraine, hours after Germany halted certification of a Baltic Sea pipeline that is vital to Russia's energy industry.
Biden laid out what he called a "first tranche" of US sanctions, including on two financial institutions, Russian sovereign debt and on Russian elites and their family members.
"We've cut off Russia's government from Western financing. It can no longer raise money from the West and cannot trade in its new debt on our markets or European markets either," Biden said Tuesday.
Stocks tumbled Tuesday, with the S&P 500 falling into a correction, and prices of crude oil shot up to $99 a barrel.
Biden pledged his administration was using "every tool at our disposal" to limit the effect of sanctions on domestic gas prices, acknowledging that Americans will likely see rising prices at the pump in the coming months.

(For the latest news on Russia and Ukraine, follow CNN's live updates.)

BIG PICTURE

The US and its allies are trying to pressure Russia financially and economically to back down from Ukraine, a former Soviet state that Putin has long sought to reclaim.

Russia is already paying a hefty financial price for the aggression that led up to this point.

Moscow's MOEX stock index dropped 1.5% on Tuesday after shedding more than 10% on Monday, bringing losses so far this year to about 20%. More than $30 billion has been wiped off the value of Russian stocks this week alone.
"We expect further declines near-term in the Russian stock market," analysts at JPMorgan Chase wrote in a note to clients on Tuesday. The bank downgraded Russian equities to "neutral" from "overweight."

But leaders in the West aren't going full tilt on sanctions just yet – they're keeping some harsher options on the back burner so that they can escalate the punishment when Putin inevitably escalates the invasion.

Here are some of the heavier-handed options in the West's economic and financial arsenal.

Export controls

Restricting Russia's ability to import smartphones and key aircraft and automobile components would hobble its manufacturing industries.

Squeezing Russian expats

Powerful Russian citizens with ties to Putin have flocked to London over the past three decades, and the UK government could move to strip some of them of their visas.
"These oligarchs and high-ranking people in Russia, they don't want to spend all their time in Moscow," says Tyler Kustra, an assistant professor of politics and international relations at the University of Nottingham. "They enjoy being able to fly to Heathrow, to get out and live in their townhouses in Belgravia, Chelsea and Kensington, and to shop at Harrods."

The "nuclear option"

The European Union's trump card could be SWIFT, a Belgium-based global transaction ledger used by banks and financial institutions.
Removing Russia from SWIFT would make it much harder for financial institutions to send money in or out of the country, terminate all international transactions and spark huge capital outflows.
By one estimate, this option alone would cause Russia's economy to shrink by 5%.

#️⃣ NUMBER OF THE DAY

$15 billion

The 750-mile Nord Stream 2 pipeline may be quite literally dead in the water. The pipeline, which was completed in September, was meant to ferry Russian natural gas to Western Europe. But Germany's refusal to certify it — a retaliatory measure in response to Russia's deployment of troops in eastern Ukraine — throws the project's future into question. Without it, Russia's state-run oil giant Gazprom could be losing out on as much as $15 billion a year.

🏡 HOT HOUSING

If the world were fair, prospective homebuyers who are getting hopelessly priced out of the market would at least be able to catch a deal on a decent rental while they ride out the pandemic-era price surges.

Turns out, the world is incredibly unfair, and renting is more expensive than ever.

The news: The national median rental price jumped nearly 20% in January from a year earlier, marking the eighth straight month of double-digit increases, according to a report from Realtor.com. Some eye-popping findings from that report:

The national median rent was a whopping $1,789 last month.
Rents are now up 21% since just before the pandemic hit. Although there were some pandemic deals to be had when people fled big cities in 2020, the market is back (and then some).
It's now cheaper to buy a home in some areas than it is to rent. Just to underscore how banana-pants all of this is.

Let's dig into that last point a bit more...

The report found that the monthly cost of buying a starter home (if you can find one, of course) was more affordable than renting a similar-sized unit in more than half of the 50 biggest US cities.

In those markets, buyers are spending an average of 20.6% — or $323 — less than renters every month, according to Realtor.com. Buyers could get especially good deals in Birmingham, Alabama, where the cost of buying a

Other notable deals could be found in Cleveland, Pittsburgh, and St. Louis.

Of course, buying is a lot easier said than done. Home inventories are still at record lows, mortgage rates are climbing, and home prices are, to use a technical term, bonkers.

Last year, US home prices rose 18.8% — the biggest jump on record and well ahead of 2020's 10.4% gain — according to the S&P CoreLogic Case-Shiller US National Home Price Index.

WHAT ELSE IS GOING ON?

🔥 A cargo ship carrying roughly 4,000 cars that caught fire last week continued burning over the weekend, adrift in the North Atlantic, and may soon extinguish because there's nothing left to burn.

#️⃣ Slack went down for many users Tuesday morning, throwing off companies that rely on the popular communication platform just as workers returned from an extended holiday weekend.

🔌 Tesla CEO Elon Musk is escalating his battle with the Securities and Exchange Commission, accusing a staff member of illegally leaking the results of an investigation.

🛍️ Activist investors are circling Macy's and Kohl's. The department store chains are fighting back.