🥺🤷♀️ Can't We All Just Get Along?
Happy Hump Day everyone!
It’s been rough in the markets lately but we’re here to get you over the Hump! We’ll get through this together :)
This week, tensions are high on the other side of the Atlantic where Russia has stationed more than >100,000 troops along Ukraine’s border. A relationship already muddled with conflict and geopolitical aggression, which peaked in 2014 when Russia invaded and subsequently annexed the Crimean Peninsula.
With how high tensions are rising - not only between Russia and NATO/Europe, but U.S. and China as well - a microscope has to be placed on how we, in the developed world, use economic interdependence to deescalate conflict and now, how that same concept can be manipulated for geopolitical gain.
The overwhelming belief was that economic interdependence globally would mean that conflicts were less likely - and that was true for the last decade or so. If everyone suffered from large scale conflict because everyone was economically tied, countries would be cautious of starting conflicts in fear of ticking everyone off. However, Russia seems to have taken global economic interdependence and is using it to push their own agenda.
It is hard to believe Russia’s claim that the movement of >100,000 troops to the border of Ukraine is purely a military exercise once the facts of the matter are taken into account. An invasion, and subsequent military response from NATO members could mean that many European countries that largely rely on Russian oil and gas, would be cut off in the dead of winter.
The U.S., the rest of NATO and the U.K. have threatened harsh sanctions on Russia, the details of which are unclear, however semiconductors seems to be a big component. This is the conventional economic remedy to most geopolitical aggression, but if invading and annexing Ukraine is important enough to Russia, they may be more accepting to pay the economic price of pushing their agenda than the West is to stop them.
While globalization and economic interdependence has done a lot of good in terms of deescalating conflict in the past as well as provided access to goods to countries who would otherwise not have access to, the way that Russia is taking advantage of it has the world at the edge of its seat. We now rely on our political leaders to find resolutions that hopefully end peacefully.
Enjoy this week’s Hump Days!
-Humphrey & Rickie
In the Markets
RH: Markets got hit hard the last week but the last two days they seem to be making a rebound.
HY: Markets will be keeping an eye on the FOMC meeting that is set to conclude later this afternoon. It is not expected that Feds raise rates today.
Weekly News Roundup
Inflation Surge Could Push Fed Into >4 Rate Hikes This Year, Goldman Sachs Says (CNBC)
Accelerating inflation could cause the Fed to get more aggressive than economists expect. Goldman Sachs still expects the Fed to enact four interest rate hikes but thinks that more may be possible due to the surge in inflation.
HY: I’ll be making a video on some of the best investments you can make against inflation coming up next week, so keep an eye out for that ;)
Biden Believes Putin Will Order Invasion of Ukraine, Vows ‘Disaster for Russia’ (CNBC)
When asked about the >100,000 Russian troops positioned along Ukraine’s border, President Biden said that he expects Putin to order an invasion and warned that “a disaster” awaits Russia should that happen. The Kremlin has defended the troop movement as a military exercise and denied an incoming attack on Ukraine.
Peleton Gains After CEO Vows to Cut Costs at Ailing Company (BBG)
Peloton stock plummeted on the back of news reporting that the company would be pausing bike and tread machine production due to lack of demand and consumer price sensitivity. The stock is down >83% from all time highs. The stock rallied a little before tailing off following CEO John Foley’s announcement of cost cutting measures including job cuts.
RH: My way around Peloton’s price increases: taping an iPad to a stationary bike.
HY: The stock was especially down because Peloton executives and insiders sold nearly $500 million worth of their stock before its big decline!