{"id":125498,"date":"2022-02-20T16:02:06","date_gmt":"2022-02-20T16:02:06","guid":{"rendered":"https:\/\/fin2me.com\/?p=125498"},"modified":"2022-02-20T16:02:06","modified_gmt":"2022-02-20T16:02:06","slug":"threat-of-russian-invasion-grips-us-european-markets-and-ukraines-economy","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/threat-of-russian-invasion-grips-us-european-markets-and-ukraines-economy\/","title":{"rendered":"Threat of Russian invasion grips US, European markets and Ukraine&#39;s economy"},"content":{"rendered":"<p><em>A version of this story first appeared in CNN Business&#8217; Before the Bell newsletter. Not a subscriber? You can sign up\u00a0<\/em><em>right here<\/em><em>. You can listen to an audio version of the newsletter by clicking the same link.<\/em><\/p>\n<p><cite>London (CNN Business)<\/cite>Corporate earnings season was supposed to turn around Wall Street&#8217;s sour mood. In the end, it wasn&#8217;t much of a diversion.<\/p>\n<p>What&#8217;s happening: Most results for the end of 2021 have been posted. On the whole, they looked solid. But that wasn&#8217;t enough to calm nervy investors, who are stressing out about inflation, the Federal Reserve and a potential Russian invasion of Ukraine that could disrupt energy supplies.<br \/>\n&#8220;The market just feels like it wants to go down,&#8221; David Coombs, head of multi-asset investments at Rathbones, told me.<\/p>\n<ul><\/ul>\n<p>The CNN Business Fear &amp; Greed Index, which tracks market sentiment, remains stuck in &#8220;fear&#8221; territory. One month ago, it was producing a &#8220;greed&#8221; reading.<\/p>\n<ul><\/ul>\n<p>Quick rewind: Earnings growth for S&amp;P 500 companies is tracking at 28% for the fourth quarter of 2021 compared with the same period in 2020, according to The Earnings Scout. That&#8217;s well above the three-year average. Almost 85% of companies in the index have reported results.<\/p>\n<p>But investors have largely brushed off these gains and are instead latching on to uncertainty about the future.<br \/>\n&#8220;We&#8217;re strapped in for another two or three months \u2014 right through to next earnings season, to be honest,&#8221; Coombs said.<br \/>\nHis thought bubble: For the moment, it&#8217;s all about the inflation data and the Federal Reserve.<br \/>\nAt this point, most investors agree that the Fed is behind the curve on fighting inflation and expect the central bank to forcefully intervene when it meets next month. But exactly how far policymakers will go remains up for debate.<br \/>\nDavid Bianco, DWS chief investment officer for the Americas, said his biggest concern, now that earnings season is wrapping up, is whether a sell-off in government bonds will gather steam, disrupting the broader market.<br \/>\n&#8220;What I&#8217;m really fearful of is the bond market losing confidence in the Fed&#8217;s ability to tame inflation and bring it down over a reasonable amount of time,&#8221; Bianco said.<br \/>\nBond yields move conversely to prices. So if investors start dumping 10-year US Treasuries and yields spike, it would make stocks look less attractive and ramp up selling pressure.<br \/>\nThen there&#8217;s the situation on the Ukrainian border. While investors have in recent years tended to brush off geopolitics, that&#8217;s changed in recent weeks.<br \/>\nAccording to Coombs, if tensions between Russia and Ukraine had been building &#8220;18 months ago or two years ago, it probably would have been largely ignored.&#8221; Instead, it&#8217;s another reason for pessimism \u2014 especially because of Russia&#8217;s influential role as an oil and gas supplier.<br \/>\nThe run-up in energy prices has been a major contributor to expectations for inflation, which the Fed is watching closely.<br \/>\n&#8220;It complicates their calculus,&#8221; Bianco said.<\/p>\n<h3>Get ready for the Fed&#8217;s favorite measure of inflation<\/h3>\n<p>It&#8217;s clear by now that inflation ran red-hot in January. Consumer prices, as measured by the Consumer Price Index, rose 7.5% year-over-year \u2014 the fastest increase in four decades. Producer prices leaped 9.7%.<br \/>\nNo matter. More data is on the way, and the Federal Reserve will be watching closely.<br \/>\nThe latest Personal Consumption Expenditures Price Index arrives on Friday. As the Fed&#8217;s favorite measure of inflation, it could jolt stocks if it&#8217;s higher than expected, indicating the central bank may need to be more aggressive as it hikes interest rates for the first time in years.<br \/>\nWhat comes next: Erik Lundh, principal economist at The Conference Board, wrote in a column for CNN Business last week that inflation &#8220;should begin to drop soon.&#8221;<br \/>\nHe thinks year-over-year data will &#8220;start to tick down&#8221; come March, as supply chain problems ease, the effects of the Omicron variant fade and US shoppers start spending more money on services and less on goods.<br \/>\n&#8220;Consumers can take some solace knowing that large price increases won&#8217;t go on forever,&#8221; he said. &#8220;The pandemic seems to be easing, and high inflation will, too.&#8221;<br \/>\nThat said: According to economists at Citi, a &#8220;picture is emerging of inflation that is becoming embedded at levels well-above target.&#8221; Although the Fed aims for 2% inflation, the bank expects the PCE price index to remain at 5.1% for the year to March and near 3.8% around the end of 2022.<br \/>\nThat could force the Fed to roll back its crisis-era stimulus even faster.<br \/>\n&#8220;As early as this summer the Fed may consider still-more-aggressive interest rate paths to more substantially slow the US economy if monthly inflation is not returning toward target,&#8221; Citi&#8217;s team said.<\/p>\n<h3>Up next<\/h3>\n<p><strong>Monday:<\/strong> US markets closed<br \/>\n<strong>Tuesday:<\/strong> S&amp;P Case-Shiller Home Price Index; US consumer confidence; Earnings from <span>Home Depot<\/span> <span>(<span>HD<\/span>)<\/span>, <span>Macy&#8217;s<\/span> <span>(<span>M<\/span>)<\/span>, <span>Toll Brothers<\/span> <span>(<span>TOL<\/span>)<\/span> and <span>Virgin Galactic<\/span> <span>(<span>SPCE<\/span>)<\/span><br \/>\n<strong>Wednesday:<\/strong> Earnings from <span>TJX<\/span> <span>(<span>TJX<\/span>)<\/span>, Allbirds, Bath &amp; Body Works, Booking Holdings, <span>Hertz<\/span> <span>(<span>HTZ<\/span>)<\/span> and <span>Live Nation<\/span> <span>(<span>LYV<\/span>)<\/span><\/p>\n<ul><\/ul>\n<p><strong>Thursday:<\/strong> Initial US jobless claims; new US home sales; Earnings from <span>Alibaba<\/span> <span>(<span>BABA<\/span>)<\/span>, <span>Anheuser-Busch InBev<\/span> <span>(<span>BUD<\/span>)<\/span>, Cars.com, <span>Moderna<\/span> <span>(<span>MRNA<\/span>)<\/span>, Nikola, <span>Papa John&#8217;s<\/span> <span>(<span>PZZA<\/span>)<\/span>, <span>Planet Fitness<\/span> <span>(<span>PLNT<\/span>)<\/span>, <span>Beyond Meat<\/span> <span>(<span>BYND<\/span>)<\/span>, <span>Etsy<\/span> <span>(<span>ETSY<\/span>)<\/span> and <span>Monster Beverage<\/span> <span>(<span>MNST<\/span>)<\/span><br \/>\n<strong>Friday:<\/strong> US personal income and spending data; PCE index; Earnings from <span>Cinemark<\/span> <span>(<span>CNK<\/span>)<\/span> and <span>Foot Locker<\/span> <span>(<span>FL<\/span>)<\/span><br \/>\nSource: <a href=\"https:\/\/edition.cnn.com\/2022\/02\/20\/investing\/stocks-week-ahead\/index.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A version of this story first appeared in CNN Business&#8217; Before the Bell newsletter. Not a subscriber? You can sign up\u00a0right here. You can listen [&#8230;]<\/p>\n","protected":false},"author":3,"featured_media":125497,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Threat of Russian invasion grips US, European markets and Ukraine&#039;s economy - Fin2me<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fin2me.com\/markets\/threat-of-russian-invasion-grips-us-european-markets-and-ukraines-economy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Threat of Russian invasion grips US, European markets and Ukraine&#039;s economy - Fin2me\" \/>\n<meta property=\"og:description\" content=\"A version of this story first appeared in CNN Business&#8217; Before the Bell newsletter. 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