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THIS WEEK'S UPDATE

| March 07, 2022
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THE WEEK ON WALL STREET

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

Dow Jones Industrial Average fell 1.30%, while the Standard & Poor’s 500 lost 1.27%.

The Nasdaq Composite index slid 2.78% for the week. The MSCI EAFE index,

which tracks developed overseas stock markets, dropped 3.21%.


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.


POWELL TESTIFIES

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.


THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: JOLTS (Job Openings and Labor Turnover Survey)

Thursday: Consumer Price Index. Jobless Claims.

Friday: Consumer Sentiment.


THE WEEK AHEAD: NOTABLE 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).


FINAL THOUGHTS

Make no mistake, the invasion of Ukraine is a travesty, but beware the negative

sentiment the news media is pushing. Remember your longer-term goals and if they

have changed, let us know. If not, don’t let the current market correction shake

you. I expect the market will retest the lows of February 24th. I can’t tell you the

outcome of that test, but bottoming is a process and takes time.


Most of the following appeared in last week’s update, but it is worth repeating.

Market’s do not bottom on good news and A LOT of bad news has been

priced in. War, high inflation, rising interest rates and political jockeying is the

news du jour. It may just turn out the worst of all these situations do not become

reality. Keep in mind a little more than eighty years ago the scenes of families and

neighbors huddling in Subway cars to avoid aerial attacks and rockets were not

occurring in Kyiv and Kharkiv but in London, England. However, the market

bottomed in June 1940 before the Blitz began. British stock markets were able to go

up through all those military defeats and the 8 months of ruinous bombing of their

urban centers.


And remember, this too, shall pass. Have a good week.

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