Investment Commentary – February 22nd, 2022

Year to Date Market Indices as of February 22nd, 2022
• Dow 33,639 (-7.55%)
• S&P 4,305 (-9.73%)
• NASDAQ 13,369 (-14.58%)
• Barclay Bond Aggregate (-3.90%)
• Fed Funds Rate 0-0.25 (0-0.25) Next decision March 15th,
• Annual Inflation Rate 7.5% (As of Jan 22)

Is Russia going to invade Ukraine and what does Putin want?

An estimated 150,000 Russian troops are positioned close to Ukraine’s borders. What happens next could jeopardize Europe’s entire security structure.

For months the US said it did not think a final decision had been made, but on 18 February President Joe Biden said he believed Mr Putin had decided to attack “in the coming days”. In the words of the Czech prime minister, “Europe is a step away from war”.

Russia is adamant it has no plans to attack Ukraine, a country of 44 million people. But it has before, in 2014, when it seized Crimea and backed a conflict in Ukraine’s eastern Donbas region.
One US defense official said “40 to 50% are in an attack position” but Ukrainian President Volodymyr Zelensky insists there is no need to panic.

HEALTH AND SCIENCE

Covid infections plummet 90% from U.S. pandemic high, states lift mask mandates.

New omicron infections in the U.S. have plummeted 90% from a pandemic high in a little over a month.

The U.S. is reporting about 84,000 new cases per day on average, according to data compiled by Johns Hopkins University, down from a pandemic high of more than 800,000 daily cases on Jan. 15

As the nation emerges from the omicron wave, the states and the federal government are trying to move past the crisis mentality that has gripped the nation for two years ago.

U.S. health officials are optimistic, albeit cautiously, the country has turned the corner on the unprecedented wave of infection caused by the omicron Covid variant as new cases plummet 90% from a pandemic record set just five weeks ago.

As the nation emerges from the omicron wave, U.S. and state leaders are trying to mentally move past the crisis that has gripped everyone since the pandemic began two years ago. Public health leaders have begun rolling out plans to deal with the virus as a persistent but manageable risk in the future.

The U.S. is reporting about 84,000 new cases per day on average, according to data compiled by Johns Hopkins University, down from a pandemic high of more than 800,000 daily cases on Jan. 15. And the decline is widespread across the nation, with average daily cases down by at least 40% in all U.S. regions over the past two weeks, according to a CNBC analysis of Hopkins data.

 

News Around The web:

Earnings streak

With 86% of S&P 500 companies having reported fourth-quarter results as of Friday, earnings season was on track to record year-over-year profit growth exceeding 30.0% for the fourth quarter in a row. Earnings at companies in the S&P 500 were expected to increase 30.9%, based on companies that have reported so far and forecasts for the relatively small number of firms that haven’t yet released earnings, according to FactSet.

Stuck in a rut: For the second week in a row, the major U.S. stock indexes appeared to be on the verge of an overall gain at midweek, only to end up negative after declining on Thursday and Friday. Indexes fell nearly 2%, and military tensions on the Russia-Ukraine border appeared to drive the markets.

Earnings streak: With 86% of S&P 500 companies having reported fourth-quarter results as of Friday, earnings season was on track to record year-over-year profit growth exceeding 30.0% for the fourth quarter in a row. Earnings at companies in the S&P 500 were expected to increase 30.9%, based on companies that have reported so far and forecasts for the relatively small number of firms that haven’t yet released earnings, according to FactSet.

Small-cap outperformance: U.S. small-cap stocks have lagged their large-cap peers year to date, but they’ve outperformed large caps for the past two weeks. A small-cap benchmark, the Russell 2000 Index, has risen about 0.3% over the past two weeks, while its large-cap counterpart has fallen nearly 4%.

Retail comeback: U.S. retail sales rebounded from a decline in December, as a surge in online purchases and increased sales of furniture helped to fuel better-than-expected growth in January. High inflation also helped to boost the latest monthly retail sales total, which was up 3.8%, compared with December’s 2.5% decline.

 

The week ahead: February 21-25
Thursday
Fourth-quarter GDP, second estimate

https://www.jhinvestments.com/weekly-market-recap
https://www.blackrock.com/sg/en/insights/why-rising-rates-wont-derail-stocks
https://www.cnbc.com/2022/01/10/jamie-dimon-sees-the-best-economic-growth-in-decades-more-than-4-fed-rate-hikes-this-year.html
https://www.bbc.com/news/world-europe-56720589
https://www.cnbc.com/ (indices)