Conflicts Continue
Despite Russia’s invasion of Ukraine, the S&P 500 finished the week up 0.8%, after some wild intraday swings. Forward volatility markets are priced for 100+ point intraday moves in the S&P500. Not fun and untradeable for anyone except computers or the shortest-term traders. Even with last week’s rally the S&P500 sits down 8% on the year. Defensives led on the week, while banks and consumer stocks lagged. The Nasdaq finish up 1.1%.
It’s been a difficult weekend. The fighting in Ukraine intensified. More sanctions were introduced on Russia, and steps were taken by Europe to remove Russia from the SWIFT network. This is prompting long lineups of Russian citizens to withdraw their money from ATMs. There are about 144 million Russians. About 15% are over the age of 65. How many citizens are truly backing these aggressions? Overnight, the Ruble plunged 30% to as low as 117.93, prompting the central bank to raise rates from 9.5% to a record high 20%, citing “external conditions for the Russian economy have drastically changed“.
Asia ended the day modestly higher with KOSPI up 0.8%, Nikkei and CSI 300 up 0.2%, but the Hang Seng down 0.2%. The primary concerns are on Europe and that is being reflected in the selloff the morning. The CAC 40’s 3% drop is leading the declines. Banks are taking the biggest hit. Bonds are rallying as safe havens (which in addition to income is why investors own them). Oil is up about 3.5% but well off its weekend highs. The dollar is stronger but off its highs.
If there is one lesson from looking at past geopolitical conflicts together as a group (and they are all different) it is that they usually prove to be noise in the bigger picture that is ultimately shaped by the economic and monetary policy cycles. This week’s podcasts will address many of these historical time periods and the subsequent results for markets.
Both James and Chris joined the panel discussion for Oak Harvest’s 2022 Market Outlook Summit last week! The video of the even can be found here:
https://www.youtube.com/watch?v=_3tsnvMJfpE
Oak Harvest YouTube Channel
https://www.youtube.com/channel/UCkLvOm9F5iC01-hHxRmUXpQ
Stock Talk Podcast (Weekly Market News and Opinion from Oak Harvest):
https://oakharvestfg.com/stock-talk-podcast/
The Investor Mindset Podcast (Introduction to Critical Concepts for Investors):
https://oakharvestfg.com/investor-mindset/
First Half 2022 Outlook – Curb Your Enthusiasm Yield a Bull Market Buy.
https://www.youtube.com/watch?v=Ybk6bjjkILQ
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