As we consider the tensions driving recent market movements, a Korean folk saying seems apt:
“When whales 
fight, the shrimp’s 
back is broken.”
The idea is that bystanders get hurt when big folks duke it out.
What are the tensions? Who are the bystanders?
Let’s discuss.
A Russian invasion of Ukraine occurred last night.
Things could get worse before they get better in the short-term, however if you look at historical trends on geopolitical issues on the market, the outlook is promising (see chart).
Fundamentals remain strong, the U.S. economy continues to grow, long-term investors should not let this crisis spook them into drastically changing their strategy. There may however be some tactical moves that could make sense to protect some of the down-side risk.
LPL Financial¹
The Federal Reserve may aggressively raise interest rates to fight inflation.²
With inflation at historic highs, some Fed officials worry that the central bank’s credibility — AKA, their ability to manage inflation and employment — is on the line.
Rate hikes are coming in 2022, but how many and how quickly? That’s up for debate by the Federal Open Market Committee next month.
Fed “hawks” want to raise rates quickly to try to bring inflation under control and increase consumer confidence and trust.
Fed “doves” want to carefully raise rates and watch the data to avoid damaging growth or spooking markets.
These are big decisions with big consequences for us, the economy, and markets.
While FOMC meetings are often dry affairs, the next one looks to have as much drama as an episode of Succession.
We’ll stay tuned.
Bottom line: there are a lot of factors driving market movements, so we can expect to see plenty of volatility in the weeks to come.
Given the Fed and geopolitical tensions at play, a pullback or correction is not surprising.
What can we do when we’re facing major events we can’t control?
Take a deep breath, be grateful for all the good in our lives, and focus on our strategy.
(And reach out to me with questions or concerns.)
Let’s hope for peace and clarity in the weeks to come.
I’m keeping a close watch and will reach out as needed.
Disclosures:
Investment advisory services offered through NewEdge Advisors, LLC, a registered investment advisor. Advisory services are only offered to clients or prospective clients where NewEdge Advisors, LLC doing business as WealthWorth and its representatives are properly licensed or exempt from licensure. The information contained herein is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by NewEdge Advisors, LLC dba WealthWorth unless a client service agreement is in place. For hyperlinks to the Investment Adviser Public Disclosure (IAPD) webpage or the Securities Investor Protection Corporation (SIPC), please refer to the “Contact and Personal Info” section. Third party posts on found on this profile do not reflect the views of NewEdge Advisors, LLC and have not been reviewed by NewEdge Advisors, LLC as the accuracy or completeness.
