The Russian invasion of Ukraine has completely changed the market dynamics. In his podcast, Peter talked about the impact the situation is having on the markets and the global economy. He also looked ahead, saying Russia can now serve as a convenient excuse for the Fed to back off its planned monetary tightening. Of course, that will have consequences of its own.
Last week, there was optimism in the markets that the economic fallout from Russia’s invasion of Ukraine wouldn’t be too bad. The trends that were in place before the invasion remained in place. But that shifted over the weekend with the US imposing far more harsh sanctions, including cutting off select Russian banks from the SWIFT system.
Of course, this has had a significant impact on the Russian economy. But it is also rippling through the global economy, hurting any company with any relationship with Russia.
Before the invasion, there was a rotation in the stock market. Investors were moving out of speculative momentum stocks and into value-oriented businesses that generate earnings and pay dividends. This was due to high inflation and the rising interest rate environment. Peter said what we’re seeing now is a correction in that trend. But he doesn’t think the trend is over.
While stock prices have gotten hammered. Commodity prices continue to rise. Oil rose above $101 a barrel on Tuesday.
Gold has inched higher but hasn’t broken out. That led to some criticism of the yellow metal. Critics say the fact that it hasn’t gone much higher proves that gold is losing relevance. It’s no longer a safe haven or an inflation hedge. Peter called this “a gift-horse gold-buying...