War in Ukraine weighed on stocks as investors assessed the economic impact of continued hostilities, expanding economic sanctions, and potentially higher inflation due to rising oil prices and new stresses on the global supply chain.
The Standard & Poor’s 500 lost 1.27%, while the Dow Jones Industrial Average fell 1.30%. The Nasdaq Composite index slid 2.78% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dropped 3.21%.1,2,3
Large Value stocks continue to be the least bad place to be in the US equities stylebox.
Europe Stocks went from outperforming US markets by 4.17% 2 weeks ago to underperforming by 5.94% - entirely due to the war in Ukraine and the coming energy crisis in Europe.
Another Volatile Week
The uncertainty introduced from Russia’s invasion continued to whipsaw the financial markets last week. Intensifying hostilities early in the week sent stocks sharply lower as oil prices surged and a flight to safety drove investors to buy bonds.
Stocks rebounded mid-week following the release of positive economic data and Congressional testimony by Fed Chair Jerome Powell, who said the Fed is likely to move forward on rate hikes, but would proceed cautiously. Investor enthusiasm was short-lived, however, as stocks resumed their decline on Thursday into Friday despite a strong employment report.
Fed Chair Powell told Congress on Wednesday that he would propose a 25 basis point increase in the federal funds rate when the Federal Open Market Committee meets in mid-March. He conceded that the invasion of Ukraine and the economic sanctions against Russia introduced a level of uncertainty and that the Fed would proceed carefully with monetary tightening.
Powell also testified that he would not have the Fed’s strategy to shrink its balance sheet finalized before the mid-March meeting. Alluding to the urgency of fighting inflation, Powell left the door open to more aggressive rate hikes later in the year.4
Energy Stocks continue their run, but...
Higher energy prices and the blindingly obvious folly of depending on Russia for energy supplies will lead Europe to vastly accelerate their conversion to renewables. In the long run, green energy will become an ever greater portion of the economy and fossil fuels will decline. There is no other possible scenario.
I don't take issue with traders playing the energy game now, but long-term investors just need to be patient (which is very hard when your portfolio shrinks!) If you are investing in ESG funds that have little or no fossil fuel exposure, know that you are getting green business on sale that will boost your profits down the road.
This Week: Key Economic Data
Wednesday: JOLTS (Job Openings and Labor Turnover Survey).
Thursday: Consumer Price Index. Jobless Claims.
Friday: Consumer Sentiment.
Source: Econoday, March 4, 2022
This Week: Companies Reporting Earnings
Tuesday: Guidewire Software, Inc. (GWRE).
Wednesday: Asana, Inc. (ASAN).
Thursday: JD.com, Inc. (JD), Ulta Beauty, Inc. (ULTA), DocuSign (DOCU), Rivian Automotive, Inc. (RIVN).
Source: Zacks, March 4, 2022
“Life shrinks or expands according to one's courage.“
– Anaïs Nin
What is the Lifetime Learning Credit?
The Lifetime Learning Credit (LLC) is a tax credit for qualified tuition and related expenses. It can help pay for undergraduate or graduate studies, as well as courses to acquire or improve your job skills. The credit is worth up to $2,000 per tax return.
Another good thing about this tax credit is that it’s available for an unlimited number of tax years, unlike the American opportunity tax credit that is only for the first four years at an eligible institution.
To claim the LLC, you must be paying qualified education expenses for a higher education and be enrolled at an eligible educational institution. Check out the IRS guidelines for more details and whether or not you may qualify.
* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov5
How to Make a Healthy Cup of Joe
We have good news for all you coffee drinkers out there! There are many ways to make your cup of Joe in the morning a little healthier so you can feel good about your morning routine.
Here are some things to remember next time you make a cup of coffee:
Coffee is one of the most popular drinks in the morning and it’s not all bad. Just be aware of what you put in your coffee, how much you’re drinking, and when.
Tip adapted from Healthline6
There is a word (four letters long) that begins with the letter I. If you put the letter A at the front of this four-letter word, it becomes a five-letter word which is pronounced exactly the same. Name both words.
Last week’s riddle: You have a can of soda in your hand and someone tells you to drink the bottom half of it first. How can you do that? Answer: Use a straw.
Three giraffes take shade under an acacia tree, Serengeti, Mara, Tanzania.
Footnotes and Sources
2. The Wall Street Journal, March 4, 2022
3. The Wall Street Journal, March 4, 2022
4. The Wall Street Journal, March 2, 2022
5. IRS.gov, January 26, 2021
6. Healthline.com, September 30, 2021
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Weekly Market Insights: Ukrainian War Stresses Economy
March 07, 2022