Welcome to March! After a rocky start to the year, it looks like this month may continue the bumpy road we’ve been on as markets digest the Russia-Ukraine conflict, the expected interest rate hike, and the possibility of more inflation.
Russia invaded Ukraine. Russia invaded neighboring Ukraine in late February. The attack sparked a global outpouring of support for the Ukrainian people and harsh economic sanctions on Russia. What’s next is hard to say, given how fluid the situation is on the ground. As Russia finds itself more isolated – geopolitically and economically – we’ll see what impact that has on global markets.
All eyes on the Fed. The Federal Reserve is expected to increase interest rates later this month. Higher interest rates impact all corners of the economy, from mortgages to credit cards to business loans, and they can also be one of the ways to potentially reduce inflation. The anticipated increase in interest rates means some investors are hedging, moving away from growth-oriented investments in favor of more stable, cash-flowing one, which tends to be less sensitive to changes in interest rates. The continuation of this trend may contribute to elevated volatility in the coming month, but remember: market fluctuations are expected, and historically, markets always recover.
What’s next for inflation? The leading contributors to inflation are food and energy-related costs, including gas, used cars and trucks, and food staples. February’s year-to-year Consumer Price Index (CPI), the most-often cited measure of inflation, came in at 7.9%, an increase of .40%. There are some concerns that economic sanctions levied against Russia – including the banning of all oil imports – will contribute to immediate-term inflationary pressures at home. We’ll be closely watching CPI over the next few months to see what impact sanctions and likely higher interest rates may have on inflation’s momentum.
On a less serious note:
End of an era. Legendary Duke basketball coach Mike Krzyzewski – aka “Coach K” – is retiring at the end of this season. In his 42-year career at Duke, he led the ZBlue Devils to five national titles, 12 Final Four appearances, 15 Atlantic Coast Conference tournament championships, and 13 ACC regular season titles. Coach K also served as head coach for the US Men’s Olympic team, leading them to three gold medals. He stapes away from the game as the winningest coach in NCAA men’s basketball history, with more than 1,100 games won. Every great performer needs a great coach, and Coach K’s retirement marks the end of one of the most remarkable careers in sports, let alone men’s college basketball.
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