Good Thursday AM,
Russia has now invaded Ukraine. First and foremost, our hearts and prayers are with those unnecessarily stuck in the middle of this. The loss of life and horrifying reality of war is unnecessary. The market reaction thus far is as you would expect . Flight to safety, bonds are up with the 10-yr at 1.92% (may fall below 1.90) and mortgage bonds +40bps. I love the result but hate the reason why stocks are caving in (Dow down almost 700), and frankly this could persist in the equity markets for a while. Equities are already in correction territory and I would think there could be another 10% to the downside left. This is not the place to be buying (unless you’re buying puts), that is until the volatility drops and we see a bottom forming. Kind of where we were in bonds the last week. Oil over $100/barrel today (first time since 2014). A super easy fix to that would be if President Biden would allow for fracking. We could be an oil producing nation. Why aren’t we? We could be exporting oil to Europe which would make them less dependent on Russia, stripping Russia of power in the region. Not looking to be political at all, but this is just common sense to me. Graph below shows how much oil Europe buys from well, everyone.
How many people in Kyiv and the rest of Ukraine are going to suffer over this? Tomorrow is a critical news day with the release of the PCE numbers. If those come in hot it will be a toss up whether the market will prove to be more concerned about inflation growing than they are with the war. If inflation takes center stage, we will likely witness strong selling. Be careful with all investments at this point. There is elevated volatility across the board.
Article in the WSJ today with this headline: How Should Real-Estate Agents Be Paid? Many researchers and consumer advocates believe it’s time to change the commissions that home sellers pay. But how? Three researchers discuss some alternatives. The DOJ is currently investigating with NAR opposing. If you are not active in NAR, this may be the right time to become active. Here is the link to the article How Should Real-Estate Agents Be Paid? – WSJ.
How about this for a stat… More than half of unemployed men in their 30s have a criminal record. “We estimate 64% of unemployed men have been arrested, and 46% have been convicted. Unexpectedly, these rates vary only slightly by race and ethnicity. Further investigation of other outcomes such as marriage, education, household net worth, and earnings shows large differences between unemployed men who have a criminal history record and those who do not.
Please remain safe and healthy.