The ruble is back. Russia's currency rebounded this week to roughly its pre-invasion value — but that doesn't mean everything's fine and dandy in the Russian economy, Emily writes.

Why it matters: Even if the West doesn't impose stricter sanctions, Russia's GDP is expected to contract by as much as 15% over the next year as the country enters a steep recession, according to a projection from the Institute of International Finance, which is tracking the country's economy.

• This is due in part to an expected sharp "demand contraction." In other words, in a sanctioned economy people have both less money and less stuff to buy.
• That means the Russian people are suffering economically, even if the ruble is stable.

Perversely, the demand contraction helps stabilize the Russian currency and bulk up its current account balance — especially if Russia is allowed to keep selling oil and gas.

• If Russia imports less and exports more, it gets to hold on to more cash (a lot of it in dollars) — that's called a current account surplus.
• Russia's surplus is projected to hit a record $200+ billion this year, according to IIF, thanks to rising oil prices. The country is using that money to prop up the ruble (more below).

State of play: The currency's rise from the grave is putting political pressure on the White House to enact more sanctions. Some options...

• Cut more Russian banks off from SWIFT, the messaging system that underpins international banking. Seven banks (out of around 300 in the country) lost access in March. Two of the biggest did not.
• EU countries could stop buying Russian oil and gas (the U.S. already has), and use secondary sanctions to prevent others from doing so.
• Plus, there are other, harsher financial measures the U.S. and its allies could deploy, said Eddie Fishman, former Russia and Europe sanctions lead in the Obama administration's State Department.

"A lot of these measures haven't been taken because there's some level of satisfaction with the current level of sanctions on Russia," said Fishman. "Plus, you know, self-harm," he added, referring to the pain that an all-out energy embargo would inflict on the global economy.

• Germany has warned that an energy embargo would crater its economy.
• The U.S. is already struggling to deal with rising energy prices, with President Biden announcing yesterday unprecedented measures to bring oil prices down (more on that later).

The bottom line: Yesterday, Matt explained that the stock market isn't the economy. Likewise, the ruble isn't Russia's economy, which is in rough shape. Still, the war rages on — and there is more that can be done on the economic front. Stay tuned.

Just last week, President Biden said the ruble was "reduced to rubble," helping cement the Russian currency's status as a key measure of the success of the West's economic war, Emily writes.

What's happening: Welp. The chart above tells the story. The Russian government is doing a few things, as Matt explained recently, to ensure the ruble has value inside the country even if no one in the world digs it...

• Forcing Russian companies to exchange most of their foreign earnings for rubles. (All that oil and gas money is propping up the currency.)
• Restricting currency trading (so you have to hang on to your rubles).
• Raising interest rates to 20% (!) to fight inflation.

What's next: In a less autocratic country, those kinds of maneuvers would get a government booted out of power, said Elina Ribakova, deputy chief economist at the Institute of International Finance. (Can you imagine if Biden forced American companies to change their dollars for bitcoin or something?)

• But in Putin's Russia, "It's not like anyone's going to protest," said Ribakova. "People will start at some point taking to the street, but we're not there yet."

💲 Eurozone inflation surged 7.5% in March. (Reuters)

✂ GameStop announced a stock split. (CNBC)

📉 Bonds just closed out their worst quarter in decades. (WSJ)

President Biden brought out the bazooka yesterday, in an effort to address high energy prices driven by both the war in Ukraine and already high inflation, Matt writes.

Why it matters: It reflects the political difficulty the White House faces on inflation. The need to be perceived as doing something bumps up against its limited ability to influence the supply/demand dynamics that ultimately drive prices.

Driving the news: The administration announced the largest-ever release of crude oil from the Strategic Petroleum Reserve, promising to put 1 million barrels of additional crude on the market each day for the next six months.

• U.S. benchmark crude fell 7% to close the day at $100.28 a barrel.

State of play: While the release of the oil is dramatic, it's but a fraction of the roughly 20 million barrels of crude oil the U.S. consumes each day.

• "We don’t see today’s decision as resolving oil’s structural deficit, now years in the making," wrote Damien Courvalin, a commodities analyst covering energy markets at Goldman Sachs, in a note to clients.
• Only two things can resolve that deficit: more production — or less demand, effectively a weaker economy.

The backstory: Despite oil prices climbing more than 40% this year, producers haven't ramped production to pre-pandemic levels. This is thanks to investor demands for capital discipline and a slew of labor and supply chain issues, as we've reported.

What to watch: The U.S. wants more oil, now — and at lower prices — following the reserve release.

• The administration telegraphed that it has a few tricks up its sleeve that it could use to spur more production. It's proposing a "use it or lose it" policy, in which it would charge fees to companies that aren't using their oil and gas leases on federal lands.
• Biden seems to think that appealing to the patriotism of oil producers might produce more action, too. In a press conference yesterday he said: It's "not the time to sit on record profits. It's time to step up for the good of your country."

Investors are dumping shares of companies with international supply chains.

Why it matters: It's yet another sign of a mass rethinking of the assumptions that underpinned the post-Cold War era of globalization.

State of play: Since supply chain issues emerged in the middle of last year, Goldman Sachs’ thematic "offshore" basket of stocks started to drastically underperform an "onshore" basket.

• The offshore basket includes companies like Whirlpool, Cisco Systems and Apple, which are reliant on a global manufacturing system.
• The onshore basket includes companies like steelmaker Cleveland Cliffs, chipmaker Intel and equipment maker Caterpillar, which have significant or growing manufacturing bases in the U.S.

The bottom line: Since Russia invaded Ukraine, that underperformance has worsened sharply, suggesting that it's not just Larry Fink who thinks globalization as we know it is over.