February Market Recap: Ukraine Invasion Fans Volatility | Personal Capital
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February Market Recap: Ukraine Invasion Fans Volatility

Russia’s invasion of Ukraine fanned volatility across asset classes. The situation is sad and unsettling. World order has changed, restoring something akin to the Cold War. It is hard to see meaningful cooperative spirit between Russia and the West anytime soon. Despite the grim realities, as it relates to capital markets, earnings results, inflation trends, central bank policies, and Covid are likely to be more important drivers.

Global stocks declined for a second consecutive month but are flattish since the actual attacks began. While the threat of war has been in the headlines for some time, investors had been largely focused on central banks and monetary policy. The war and resulting sanctions create uncertainties, which are leading the Fed and other central banks to tread more carefully. Some investors welcomed the prospect of slower interest rate hikes, even as commodity prices are spiking and inflation appears to be trending higher.

The war creates several new risks. The odds of armed conflict spreading beyond Ukraine is low but not zero. Sanctions have been more severe and coordinated than expected. It would not be surprising to see credit events bubble up from the shocking decline of Russian asset prices. Commodity prices have spiked, though we expect oil prices to gravitate back toward the rough cost of U.S. shale production over the remainder of the year. While investors should expect higher volatility to persist, emotional decisions driven by fear or greed are likely to prove counterproductive and timing the gyrations is almost impossible. Those invested in a thoughtful, diversified strategy are well positioned to stay the course in an unstable world.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Craig Birk leads the Personal Capital Advisors Investment Committee and serves as Chief Investment Officer. His focus is translating improvements in technology into better financial lives. Craig has been widely quoted in the Wall Street Journal, Bloomberg, CNN Money, the Washington Post and elsewhere. Prior to Personal Capital Advisors, he was a leader within the portfolio management team at Fisher Investments, helping assets under management grow from $1.5 billion to over $40 billion. Craig graduated from the University of California at San Diego and has earned the Certified Financial Planner® designation.
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