Hello, I’m Susan Paolo, Senior Vice President – Investment Officer for the Huffman Mayer Paolo Wealth Management Group of Wells Fargo Advisors. Every once in a while an event comes along that shakes the market to its core. Two years ago it was the Covid-19 Pandemic. Today its Russia’s invasion of Ukraine. In light of the current disruption in the market and around the globe. Let’s hear from our very own, Phil Anderson & Ryan Richards on our 3 key concerns for this February 2022.
Thanks, Susan. Hey, Phil what’s going on in Ukraine?
Well Ryan, according to the key takeaways from Wells Fargo Investment Institute report, Russia’s invasion into Ukrainian territory marks the end of the guessing game on whether an invasion would occur, but opens a new period of uncertainty. In the near term, we expect a negative path for global equity markets and for risk appetite and more generally across capital markets. The uncertainty of the current markets and the difficulty of relying on Russia’s stated intentions makes it too difficult to predict exactly how the incursion will develop. We have made this report available on our website.
Is interest going to go up?
It is widely expected that the Federal Reserve’s Open Markets Committee (FOMC) March meeting will result in the first interest rate increase in 39 months. While most market observers agree that a rate hike is coming, there is some disagreement over whether it will be a “normal” increase of 0.25% or a “double” increase of 0.50%. Interestingly, during the last two year tightening cycle which ended in December, 2018, the Fed raised short-term rates a total of 2.0%, while the 10-year Treasury rose by only 0.23% - equal to about a single rate hike in short-term rates according to FactSet.
What could go wrong, Phil?
According to a recent Natixis survey of 436 global asset managers, rising interest rates are a threat to the U.S. economy, but not the BIGGEST threat. Survey respondents believe that disruptions to the global supply chain pose an even greater threat, followed the by aforementioned rate hikes. Coming in third are COVID variants, then relations between U.S. and China, with weaker Economic Growth placing fifth.
Thanks, Philip, for that update. Since James made me do the weather update last month with a silly puppet, this month James has been demoted. So here is James with the weather update.
Just like the weather in Northeast Ohio in March, the market is behaving the same way. Tomorrow, it could be sunny, raining or a blizzard, what is going to happen in the market tomorrow is the same level of uncertainty, so we are buckling up for this rollercoaster ride.
On a serious note, the current events we are seeing are having a major impact on all of our financial situations, but we want to keep in mind another aspect of life right now. Our team has family members in the service and I’m sure you know someone in the service as well. We are extremely grateful and proud of these individuals serving our country. We have them in our thoughts and wish the best for all.
We always want to talk to you… If someone you know would benefit or enjoy one of these videos please feel free to share them the link.
As always stay happy, safe, and healthy and hopefully we will see you very soon.
Wells Fargo Investment Institute, Inc. is a registered investment adviser and wholly-owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.
The opinions expressed here reflect the judgment of the Huffman Mayer Paolo Wealth Management Group as of the date of the video and are subject to change without notice. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.