Monday, February 14, 2022
It’s Valentine’s Day today, and market activity will be looking to couple with positive trading sentiment, following a week that ended disappointingly in the red Friday afternoon. The Dow is -80 points at this hour, though off the -300-point lows earlier, while the Nasdaq is -50 points and the S&P 500 -12. Over the pas two trading days, the Nasdaq is -4.8%, the S&P 500 is -3.7% and the Dow -2.9%.
The situation on Ukraine’s border is the latest concerning unknown that is hitting investors’ decision-making, and the geopolitical risk is difficult to calculate. While Russian Foreign Minister Sergey Lavrov is urging President Vladimir Putin to continue talks with the West before invading its neighboring country (and former Soviet Union comrade), the specter of a land war looks to become tragic and messy — without a particular end in sight.
Germany is a key player in this, due to their reliance on Russian natural gas. While all of NATO, including the U.S. and Europe, is profoundly against Russian’s aggression — and does have tools at their disposal to crack down on Putin’s leadership — whether the preservation of the Ukraine is a hill worth fighting on is very much an open discussion among high-level diplomats here and abroad.
St. Louis Fed President James Bullard has made headlines of his own this morning, talking openly about a 100 basis-point rise in interest rates being desirable to stem the tide of broadening inflation. This is not to say the Fed is now expected to yank up rates from 0% to 1% a month from now when the next Fed meeting commences, but that quick and decisive action is necessary, according to Bullard.
Bullard does believe the Fed can take this decisive action without disrupting markets, which indicates a more gradual climb toward 1% is more likely. Even without Bullard’s comments this morning, the market had already been pricing in four or five quarter-point hikes in 2022. The bigger question at this stage is whether 50 basis points is in the offing by mid-March, or whether voting Fed members would be satisfied with a quarter-point raise to start with, and see how the economy reacts.
Pre-market futures continue to improve as the opening bell gets closer: we’re not roughly break-even on the Dow, Nasdaq and S&P at this hour. Will a peaceful resolution to the Russia/Ukraine standoff continue to stoke a new narrative? Students of world history will acknowledge it’s not easy to take a Russian diplomat at his word, but when that’s the best option — perhaps it's worth trying?
Questions or comments about this article and/or its author? Click here>>
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Pre-Markets Flatten on Cooler Talk from Russia on Valentine's Day
Monday, February 14, 2022
It’s Valentine’s Day today, and market activity will be looking to couple with positive trading sentiment, following a week that ended disappointingly in the red Friday afternoon. The Dow is -80 points at this hour, though off the -300-point lows earlier, while the Nasdaq is -50 points and the S&P 500 -12. Over the pas two trading days, the Nasdaq is -4.8%, the S&P 500 is -3.7% and the Dow -2.9%.
The situation on Ukraine’s border is the latest concerning unknown that is hitting investors’ decision-making, and the geopolitical risk is difficult to calculate. While Russian Foreign Minister Sergey Lavrov is urging President Vladimir Putin to continue talks with the West before invading its neighboring country (and former Soviet Union comrade), the specter of a land war looks to become tragic and messy — without a particular end in sight.
Germany is a key player in this, due to their reliance on Russian natural gas. While all of NATO, including the U.S. and Europe, is profoundly against Russian’s aggression — and does have tools at their disposal to crack down on Putin’s leadership — whether the preservation of the Ukraine is a hill worth fighting on is very much an open discussion among high-level diplomats here and abroad.
St. Louis Fed President James Bullard has made headlines of his own this morning, talking openly about a 100 basis-point rise in interest rates being desirable to stem the tide of broadening inflation. This is not to say the Fed is now expected to yank up rates from 0% to 1% a month from now when the next Fed meeting commences, but that quick and decisive action is necessary, according to Bullard.
Bullard does believe the Fed can take this decisive action without disrupting markets, which indicates a more gradual climb toward 1% is more likely. Even without Bullard’s comments this morning, the market had already been pricing in four or five quarter-point hikes in 2022. The bigger question at this stage is whether 50 basis points is in the offing by mid-March, or whether voting Fed members would be satisfied with a quarter-point raise to start with, and see how the economy reacts.
Pre-market futures continue to improve as the opening bell gets closer: we’re not roughly break-even on the Dow, Nasdaq and S&P at this hour. Will a peaceful resolution to the Russia/Ukraine standoff continue to stoke a new narrative? Students of world history will acknowledge it’s not easy to take a Russian diplomat at his word, but when that’s the best option — perhaps it's worth trying?
Questions or comments about this article and/or its author? Click here>>