Global concerns over the effects of Russia’s invasion of Ukraine are taking center stage as the U.S. stock market continued to pullback last week. The humanitarian crisis facing the peaceful people of Ukraine is on a historic level. Commodity markets are reeling from the disruption in the flow of oil, natural gas and agricultural goods. Other than providing Ukrainians with military supplies and weapons, closing Russia’s exports to the western world is the main tool our government has.
This comes with a cost…inflation. At the beginning of 2022 the U.S. was already seeing the effects of inflation due to supply-chain issues, an inability of employers finding workers, and a sharp spike in the money supply as measured by M2. All of these forces were difficult enough for the economy to deal with. Adding in the global spike in oil prices and reduced agricultural goods due to the war and we are experiencing extraordinary inflationary pressure. It is estimated that Russia and Ukraine export 29% of the world’s wheat.
Inflation is also on the minds of many U.S. companies. According to FactSet, a record 356 out of 500 companies have cited inflation concerns in their quarterly earnings calls. The previous high was 304 occurred in the first quarter of 2021.
|
With the pullback in U.S. equity markets, it is natural to be concerned. Nobody likes to see the correction we are going through. However, we have been here before. If we take a note from history, we know that the stock market will eventually recover. The U.S. economy is on solid footing. Yes, we have challenges and this situation will not end overnight. Patience is not only a virtue, but an absolute necessity when it comes to investing.
|
|
I expect the markets to continue with the volatility we’ve seen since the invasion, however, I am still bullish on the U.S. stock market. If you have any questions, please contact me.
__________________________________________________________________
|
|
The Markets and Economy
|
Offices in Chicago, Naples & Valparaiso.
The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Consult your financial professional before making any investment decision. You cannot invest directly in an index. Past performance does not guarantee future results.
Note: All figures exclude reinvested dividends (if any). Sources: Bloomberg, Dorsey Wright & Associates, Inc. and The Wall Street Journal. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
Securities offered through Triad Advisors, member FINRA/SIPC. Investment advice offered through Resources Investment Advisors, LLC, an SEC-registered investment adviser. Resources Investment Advisors. LLC and Vertical Financial Group are not affiliated with Triad Advisors.
