Investors’ appetite for risk diminished as the Russian threat to Ukraine intensified.
Volatility was high last week as investors guessed and second-guessed how markets would react if Russia invaded Ukraine and sanctions were imposed on Russia. They also wondered what would happen if Russia pulled back.The questions are difficult to answer.Adam Samson, Valentina Romei and Matthew Rocco of Financial Times reported:
“Economists can at least attempt to predict the outcome of central bank decisions by building models based on data, commentary from officials and historical precedent. But the outcome of the stand-off between Russia and the west is a type of so-called tail risk that could have major implications for the global economy, yet cannot be easily or accurately modelled. The sense of uncertainty has begun creeping into financial markets.”
Heightened geopolitical tension wasn’t the only concern for investors. They also contemplated whether the Federal Reserve (Fed) can tame inflation without hurting economic growth. The Fed is expected to continue to tighten monetary policy by raising the Fed funds rate in March, and reducing its balance sheet throughout 2022, reported Davide Barbuscia of Reuters.
Uncertainty about how markets would react if Russia invaded Ukraine caused some investors to favor safe-haven investments. As a result, last week:
Major U.S. stock indices moved lower last week and came close to correction territory, reported Barron’s. Corrections occur when assets, indexes, or markets decline by 10 to 20 percent. When the market corrects it is not a pleasant experience, but corrections are not unusual. It’s likely markets will remain bumpy in the coming weeks.
Data as of 2/18/22
|Standard & Poor's 500 Index||-1.6%||-8.8%||11.1%||16.1%||13.0%||12.3%|
|Dow Jones Global ex-U.S. Index||-1.6||-3.4||-3.5||6.9||5.4||3.5|
|10-year Treasury Note (yield only)||1.9||N/A||1.3||2.7||2.4||2.1|
|Gold (per ounce)||3.4||4.0||6.8||12.6||8.8||0.9|
|Bloomberg Commodity Index||1.6||12.6||31.0||11.2||4.9||-2.7|
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
the great college debates. During the past two decades, pundits across the United States have launched all kinds of debates about college and its importance. They have asked:
There is evidence that college degrees improve economic outcomes, overall. As with almost anything, though, there are exceptions. In 2021, the Georgetown University Center on Education and the Workforce reported:
“The lifetime earnings of a full-time full-year worker with a high school diploma are $1.6 million, while workers with associates degree earn $2 million. However, at least one quarter of high school graduates earn more than associates degree holders. Bachelor’s degree holders earn a median of $2.8 million during their career, 75% more than if they had only a high school diploma. Master’s degree holders earn a median of $3.2 million over their lifetimes, while doctoral degree holders earn $4 million and professional degree holders earn $4.7 million. However, one quarter of workers with a bachelor’s degree earn more than half of workers with a master’s or a doctoral degree.”
The debate about college costs and payoffs continues. However, some companies are deciding that talent and a strong work ethic are just as important as a college degree, and have begun removing degree requirements for job applicants, reported Glassdoor.
Weekly Focus – Think About It
“No thief, however skillful, can rob one of knowledge, and that is why knowledge is the best and safest treasure to acquire.”
—L. Frank Baum, Author
https://www.barrons.com/articles/stocks-war-ukraine-russia-51645234452?mod=hp_LEAD_2 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/02-21-22_Barrons_What%20Will%20Stocks%20Do%20if%20War%20or%20Peace%20Erupts%20in%20Ukraine_1.pdf)
https://www.ft.com/content/6f198784-c938-4674-af6f-d760b18fcb2d (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/02-21-22_Financial%20Times_How%20Will%20Geopolitical%20Tensions%20Affect%20Markets_2.pdf)
https://www.barrons.com/articles/the-gold-rush-is-on-its-not-too-late-to-get-in-51645232932?mod=hp_LEAD_1 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/02-21-22_Barrons_The%20Gold%20Rush%20is%20On_5.pdf)
https://www.barrons.com/articles/stock-markets-next-move-is-lower-its-not-just-russia-and-the-fed-51645232031?refsec=the-trader (or go to https://www.barrons.com/articles/stock-markets-next-move-is-lower-its-not-just-russia-and-the-fed-51645232031?refsec=the-trader)