Russia, Ukraine, & the stock market - LifeGuide Financial Advisors

February 28, 2022 | Investing

Note: This post was adapted from a recent edition of our monthly client e-newsletter, Guidepost. Given the current events in Ukraine, LifeGuide’s Chief Investment Office, Zak Lutz, sits down to share our thoughts and perspective on what we’re seeing with the stock market.

First and foremost, we pray for peace, comfort, and protection for all those impacted by this conflict.

As far as the potential investing impact, markets don’t like disruption and uncertainty. The main economic concerns are centered on what a possible rise in energy prices will do to the global economy since Russia is a significant energy producer. There are also concerns about what will happen to the price of other commodities due to the sanctions being put on Russia, such as wheat.

Whenever the headlines grab your attention, it’s helpful to take a step back and see the larger perspective on what’s going on with the economy.

And that larger perspective right now is encouraging:

The economy is doing reasonably well. Last year, the GDP number for the United States was the highest GDP number we’ve seen since 1984.
Wage growth has been strong.
Recent unemployment claims were close to a 50-year low.
Although we are experiencing inflation now, leading indicators show it might be coming down.
The PPI, or Producer Price Index, is starting to fall, a leading indicator for the CPI (Consumer Price Index).
COVID-related supply chain issues are beginning to work their way out of the system.

It’s also helpful to remember that many, many different factors are at play in the economy—factors that are constantly adjusting to the dynamics at hand. For example, other oil-producing countries are already discussing stepping up their production or dipping into the reserves to help make up for Russia.

We recently had the privilege of listening to Bob Doll present at the annual Kingdom Advisors conference. He shared that if the Ukrainian situation is contained, it would likely be a non-event and quickly forgotten (in terms of its impact on the stock market). Vanguard recently released a post supporting this view, demonstrating how geopolitical market sell-offs are usually short-lived.

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