Sanctions on Russia, Oil Rises, & Talks Begin
Markets are uneasy this morning as sanctions on Russia and Vladmir Putin's personal assets are causing doubts about future global economic growth.
Due to the European dependence on Russian Oil & Natural Gas, the Euro and European equities are under pressure. There's a lot going on and talks between Ukrainian and Russian diplomats began earlier today. We look for another volatile week in equity trading.
It's unlikely that sanctions on Russia will have any meaningful impact on the country or on President Putin personally.
As we have mentioned before, the amount of foreign currency and gold amassed by the country over the last couple of decades allows the country and Putin to trade assets around the globe. The more likely scenario is that sanctions hurt global trade and increase commodity prices further. Most commodity prices are higher this morning, including oil, a major component of inflation.
On the bright side, implied futures on the Fed hiking rates in a couple of weeks are strongly in the 25 basis point camp. Just a couple of weeks ago, futures were nearly 90% that a 50 basis point hike was in order, now the futures have swung to a more muted hike.
This is one of the reasons markets reversed late last week as the Ukraine crisis hit a peak. Corporate insiders were buying shares of their own stock last week and according to Goldman Sachs, they look to continue doing so during this volatile patch in the markets.
The economic data was largely positive last week. Manufacturing, unemployment claims, Personal Spending, and GDP data were squarely in the positive column. This week, investors will be anxiously waiting the jobs data on Friday. Not only will the employment data be eyed, but the wage information. Wages have not been keeping pace with inflation, which has caused the market to view the Fed as behind the curve on battling inflation.