NDS Weekly Commentary 5.2.22 – Weak Week

May 2, 2022

The stock market suffered another volatile week with a hard sell-off on Friday. Investors struggled with China’s economic slow-down, the ongoing war in Ukraine, surging inflation, and a hawkish Federal Reserve.

For the week, the Dow Jones Industrial Average (DJIA) slid 2.47%, the S&P 500 lost 3.26%, and the Nasdaq fell 3.92%. Foreign markets were mixed with developed equities (MSCI EAFE) down 2.17%, while emerging markets (MSCI EM) returned 0.09%, Small company stocks, represented by the Russell 2000, finished the week in the red by 3.94%. April was a cruel month for investors as the S & P 500 index lost 8.8%, the worst month since Covid 19 began, and the Nasdaq plunged 13.3%, the most since October 2008. Oil prices (WTI) closed at $104.35 per barrel, up 2.2%, gold declined 1.2%, and the Dollar Index advanced 0.5% to 103.43.

Corporate earnings for the first quarter were stronger than expected with 279 of the S&P 500 companies reporting. Roughly 66% have exceeded sales expectations and about 81% have beat profit projections. Overall, sales growth is tracking to increase 12.8% and earnings should grow 2.6% year over year.

Bond yields, which rise as bond prices fall, continue to increase as inflation has remained stubbornly high. The yield on the U.S. 10 year note closed at 2.89%, roughly the same as the previous week, however, up from 2.32% at the end of March. The Federal Reserve is expected to aggressively lift interest rates to stave off inflation and reduce its bond holdings. Investors and economists are concerned that the Fed’s tightening may come at a difficult time and could dampen economic growth.

On the economic front, the US economy’s overall health gauge, the gross domestic product (GDP), shrank by a 1.4% annual rate in the first quarter. The Fed’s preferred measure of inflation, the personal consumption expenditures index (PCE), gained 6.6% year over year in March, spelling more trouble for the economy.

The highlight of this coming week’s calendar is Wednesday’s Federal Reserve meeting and their policy decisions and commentary. The monthly jobs report is scheduled to be released on Friday.

We look for markets to continue to be volatile and focused on inflationary pressures, the Fed’s response, and the war in Ukraine.

“Spring is the time of year when it is summer in the sun and winter in the shade” – Charles Dickens

ND&S Weekly 4.18.22 – Should I Stay or Should I Go?

April 26, 2022

The US and other major economies face the multiple challenges of global supply chain disruptions, massive increases in oil prices, dramatic increases in inflation rates, central banks pushing interest rates higher, and the potential that COVID could still have significant impacts – as it has in China throughout most of April. While these issues are plenty, the war in Ukraine adds more uncertainty, as it continues to have negative impacts on energy prices, supply chains, food supply and general concerns about geopolitical stability and what Russia might do, if they cannot achieve their objectives by “conventional means”.

For the week, the DJIA declined 2.86% and the S&P 500 dropped 2.75%. The tech-heavy Nasdaq finished even lower, down 3.83%. International markets were also lower with the MSCI EAFE Index down 1.53% and emerging market equities (MSCI EM) gave back 3.35%. Small company stocks, represented by the Russell 2000, decreased 3.21%. Fixed income, represented by the Bloomberg/Barclays Aggregate finished lower by 1.04% for the week. The 10 YR US Treasury closed at a yield of 2.90%, an increase of 7bps last week. Even Gold prices were lower, closing at $1931/oz. – down 0.98%. Oil prices slumped to close at $103.07 per barrel – off 3.76% on the week.

Markets continue to wrestle with this difficult environment and, over the past three weeks, equity and bond investors have shown more eagerness to sell their positions than the new buyers have in taking on those positions. This brings assets prices down and that accelerated during this most recent week.

At the same time, the micro rallies within a generally down trend that began in 2022 across virtually all asset classes reveals the underlying optimism embedded in investors’ psyches in the ability of the US and other economies to fight back and overcome these recent and “temporary” challenges. The amount of time in “temporary” is the major unknown. The lack of conviction in the markets about this is unmistakable. It is clearly the clash of “should I stay, or should I go?”!

Ultimately, equity investors care about earnings and sustainable growth. Q1 22 earnings report have begun. With close to 25% of the S&P 500 companies reported by the end of last week, EPS results were mildly exciting with 76% beating expectation by ~7.2%. Earnings growth estimates also brought positive news: 6.4% overall and 15.4% Ex-Financials. Close to 50% of the S&P 500 will report this week. The Federal Reserve’s upcoming meeting and subsequent members’ comments will have major implications on how long “temporary” might be.

In the week ahead, as noted, the bulk of earnings announcements will be reported. The Consumer Confidence Index will be reported on Tuesday. Friday is a big day for more inflation numbers with the PCE index and Chicago PMI levels released.

While it is tempting to try to outsmart the market by deciding “when to go and when to come back”, nobody has proved that can be done consistently. The successful long-term investor “stays”. The difference is investors can pull back, without leaving. We are doing that – we are on the low side of allocation targets for both stock and bonds, and we are more cautious/defensive in how we are invested in those asset classes.

“”This is an important fact: people prefer to dance than to fight wars.”.” – Mick Jones, The Clash

ND&S Weekly 4.18.22 – Inflationary Pressures Persist

April 18, 2022

Markets experienced another challenging week as they were hit with several key economic reports confirming the ongoing inflation problem.

For the week, the DJIA declined 0.78% while the S&P 500 dropped 2.11%. The tech-heavy Nasdaq finished 2.62% lower. International markets were also lower with the MSCI EAFE Index down 1.03% while emerging market equities (MSCI EM) gave back 1.23%. On a slightly more positive note, small company stocks, represented by the Russell 2000, increased 0.57%. Fixed income, represented by the Bloomberg/Barclays Aggregate finished lower by 0.70% for the week. The 10 YR US Treasury closed at a yield of 2.83%, an increase of 13bps last week. Gold prices rallied as a flight-to-safety trade to close at $1970/oz. – up 1.51%. Oil prices jumped higher to close at $106.95 per barrel – up 8.84% on the week. It was reported by Baker Hughes that active rig counts climbed by 253 last week so we are starting to see the influence of high oil prices. Let’s hope that we start to see some moderation in oil prices.

There were three key March economic reports released during the holiday-shortened week. The March Consumer Price Index (CPI) and Producer Price Index (PPI) both showed annual increases. The March CPI reading came in at 8.5% (year-over-year), ahead of estimates of 8.4% and the highest since December 1981. Following that report, the March PPI jumped 11.2% (year-over-year) which suggests continued inflation pressures in the months ahead even as oil prices level off. Retail sales in March rose 0.5% as consumers spent more on essentials like gasoline and food. Looking through the report, Gasoline Stations sales soared 37% (Y-o-Y) while sales at grocery stores increased 9.5% (Y-o-Y). There were declines in online shopping and auto sales that held back spending totals.

In the week ahead, there will be a modest number of economic reports as most investor eyes will be on the first full week of Q1’22 earnings announcements. In 2021, companies benefited from easy year-over-year comparisons with Covid-ravaged 2020 results. Expectations for this reporting season are expected to have earnings for the S&P 500 overall grow at less than 5%. As is normally the case, it is expected that companies will at a minimum meet their expectations, but forward guidance will be extremely important in the face of inflation pressures and the moderating economic outlook.

Equity markets seem a bit oversold again after the jump off the mid-March lows while bond yields have soared higher in the face of a more hawkish Fed. It is our hope that we are at or close to peak inflation which should offer some relief for both stocks and bonds. Patience is still warranted as investors should continue to stick close to long-term allocation targets with a slight defensive bias.

“The hardest thing to understand in the world is the income tax.” – Albert Einstein

ND&S Weekly Commentary 4.11.22 – Markets Finish Lower as Uncertainty Continues

April 11, 2022

Equity and bond markets were negative last week as investors fretted about uncertainty surrounding Federal Reserve policy and the continuing war in Ukraine. Despite last week’s setback, the S&P 500 has rebounded 7.6% from its March 8th low.

For the week, the DJIA lost 0.28% while the S&P 500 dropped 1.27%. The tech-heavy Nasdaq finished lower by 3.86%. International markets provided no shelter as the MSCI EAFE Index closed down 1.36% while emerging market equities (MSCI EM) gave back 1.53%. Small company stocks, represented by the Russell 2000, dropped 4.62%. Fixed income, represented by the Bloomberg/Barclays Aggregate, finished lower by 1.82% for the week as yields jumped higher on continued inflation worries. As a result, the 10 YR US Treasury closed at a yield of 2.70%. Gold prices closed at $1,941.60/oz – up 1.17%. Oil prices moved lower from last week’s high and closed at $98.26 per barrel, down 1.02% on the week. A further drop in oil prices will ease the strain on consumers’ pocketbooks.

Last week’s release of the latest FOMC minutes essentially confirmed a 50-basis point move at its May meeting. Fed governors were unanimous in their intent to limit the damage from inflation. As a result, bond yields moved materially higher last week (explaining the hit to tech stocks last week). Last week also saw the release of the Markit ISM Services Purchasing Managers Index (PMI). March’s index registered 58.0, up from 56.5 in February as output quickened amid stronger demand conditions (a reading above 50 indicates that the services sector is expanding). Interestingly, client demand strengthened despite a sharp increase in cost burdens. Backlogs expanded at the fastest rate since 2009 reflecting not only strong demand, but capacity pressures as well.

Economic news this week includes CPI, PPI, retail sales and import prices. Tuesday’s CPI will likely be a bit hot given pricing comments from last week’s PMI reports. Wednesday’s PPI should continue to reflect rising input costs. Thursday’s retail sales report should be decent given last week’s release of Mastercard’s Spending Pulse Report for March that showed total retail sales excluding autos rose 8.4% year-over-year. Markets close this Friday for Good Friday. Next week will be the beginning of earnings season.

Expect ongoing volatility until inflation concerns abate and a resolution in Ukraine is achieved. Diversification, patience, and a bias towards quality will help investors manage through this temporary set-back. As such, we continue to suggest that investors stay close to their long-term target asset allocations with a slight defensive bias.

Best wishes for a Happy Passover and Happy Easter.

“With the new day comes new strength and new thoughts.” – Eleanor Roosevelt

ND&S Weekly Commentary 4.4.22 – Recession Signals

April 4, 2022

Stocks ended the week mixed, as investors struggled with the war in Ukraine, an inverted yield curve and higher inflationary expectations. For the week, the DJIA was down 0.12%, while the S&P 500 ticked up 0.08% and the tech-heavy Nasdaq rose 0.66%. Foreign equities fared well with developed markets (MSCI-EAFE) up 0.83% while emerging markets (MSCI-EM) gained 1.92%. The stock markets have been amazingly resilient, given the convincing evidence that inflation is elevating, which will undoubtedly force the Federal Reserve to act more aggressively to taper bond purchases and hike interest rates.

The Federal Reserve’s preferred inflation metric, the core personal consumption index, rose 5.4% in February, which is well above its target of 2%. Other inflationary data included wages increasing 5.6% year over year in March, the unemployment rate falling 3.6%, and the labor force participation rate climbing to 62.4%. During March, there were 431,000 jobs created in the U.S., the eleventh consecutive month that job gains exceeded 400,000.

The Institute for Supply Management Purchasing Manager Index (PMI), slowed down in March to 57.1% from February’s 58.6% and below expectations of 59.0%. The price of oil dropped below the $100 level for a weekly decline of nearly 13%, largely a result of the Biden Administration announcing a plan to release up to 180 million barrels from strategic reserves over the next several months.

The 2-year and 10-year yields inverted for the first time since 2019. This part of the yield curve is closely watched as a warning signal that a recession could be on the horizon. Last week, the yield on the 2-year U.S. Treasury rose 14 basis points (bps) to 2.44%, the yield on the 10-year note dropped 10 bps to 2.38%, while the 30-year bond rate declined 16 bps to 2.44%. While the yield curve has been a reliable predictor of pending recessions, there has often been a long lag time between the inversion and actual recession.

Important economic data released this week will include the Institute for Supply Management’s non-manufacturing index, the release of the March 15-16 Federal Reserve meeting minutes, and wholesale inventories. We suggest that investors maintain their longer-term focus, well-diversified portfolios, and manage fixed income investment risks by keeping duration short and credit quality strong.

“Avoiding inflation is not an absolute imperative but rather is one of a number of conflicting goals that we must pursue and that we may often have to compromise.”-Paul Samuelson

ND&S Weekly Commentary 3.28.22 – Spring Is Here and Interest Rates Take It Literally

March 28, 2022

Russia’s invasion of Ukraine continues to dominate the world’s attention. The endgame remains unclear and Ukraine’s resilience and resolve in the defense of their country has surprised and impressed us all. Ukraine and other issues contribute to the heightened uncertainty that continues to weigh on the financial markets. We are in a period where numerous rogue factors are bearing on investors and markets simultaneously:
• the effect of the war in Ukraine on supply chains for manufacturing, energy and food
• the possibility of COVID variants surging and disrupting the recovery from the pandemic
• huge increases in oil prices
• the concerns that China may see this period as its best opportunity to invade Taiwan
• substantial, if not rampant, inflation rates in the global economies
• the central banks’ natural response of tightening money supplies to fight the inflation.

Fortunately, economic fundamentals in the US and European economies are strong. GDP growth is good, unemployment rates are low, and consumer balance sheets are strong. While everyone is on the alert for signs of recession, most indicators are not pointing in that direction. However, the equity markets do show a lack of conviction, and we continue to see intraday and intraweek volatility without any clear trends established.

Nearly all Major US and World equity indices were higher over last week. The S&P 500 moved 1.81% higher and the DIJA moved ahead 0.31%. The Nasdaq rallied 1.99%, but the small-cap Russell 2000 dropped 0.38%. MSCI EM added 0.23% and the MSCI EAFE was also up for the week by 0.20%.

Comments from some FOMC members indicate the Fed may move more aggressively and more quickly than previously indicated in its already forecasted plans to raise the discount rate to ~2% over its next six meetings. It raised the rate by 0.25% to the current 0.50% in mid-March. The Fed avoids actions that surprise markets, and such comments are a means of preparing the markets for what seems to be a more hawkish plan for fighting inflation. Bond investors responded by signaling their needs for higher rates of return as they forced bond prices lower, thus increasing the effective yield on bonds’ fixed streams of future payments. The 10-year US Treasury bond saw its yield spring to over 2.5% before ending the week at 2.48%. This is the highest yield for the 10-year since April 2019.

Bond prices were lower across the maturity spectrum. The US 2yr added 13 bps, the 10yr added 34 bps, and the 30yr added 18 bps to their effective yields to close the week at 2.3%, 2.48% and 2.6%, respectively. This steepens the front of the yield curve, and, for the time being at least, indicates a sanguine attitude from the bond market regarding the Fed’s ability to bring inflation under control without undue harm to GDP growth. For the week, the US Aggregate Bond Index dropped 1.82%. Oil moved ~$9 higher to finish at $113.90 per barrel and Gold added ~1% during the week to close at $1,954 per oz.

Patience and conviction bring successful investors through the storms of uncertainty to reach their goals. Investors with a long-term investment thesis are undeterred by momentary setbacks and avoid the temptations to “do something clever” that is in direct conflict with their overarching plan.

” The key to everything is patience. You get the chicken by hatching the egg, not by smashing it.” – Arnold H. Glasow

ND&S Weekly Commentary (3.21.22) – March Madness

March 21, 2022

Equities rebounded hard last week, as the Fed unveiled its monetary policy plans for the balance of 2022. The rally in risk assets came even amid Covid-19 lock-downs in China, data pointing to inflationary pressures, and a worsening situation in Ukraine.

For the week, the DJIA gained 5.53% while the S&P 500 recovered 6.19%. The tech-heavy Nasdaq jumped higher by 8.20%. Small company stocks, represented by the Russell 2000, returned 5.43%. International markets also had a strong week with developed markets (MSCI EAFE) and emerging markets (MSCI EM) up 5.63% and 3.51%, respectively. Fixed income, represented by the Bloomberg/Barclays Aggregate, was down 0.39% during a volatile trading week for bonds. Treasury yields increased across the board with the yield curve narrowing considerable after the Fed’s press release. As a result, the 10 YR US Treasury closed at a yield of 2.14% (up 14 bps from the previous week’s closing yield of ~2.00%). Gold prices closed at $1,936/oz. – down by 2.78% on the week. Oil prices fell last week amid concerns over the impact of widespread lock-downs in China. Oil closed at $104.70 per barrel, down 4.22%.

Last week, the Federal Open Market Committee (FOMC) delivered on a very well communicated 25 bps hike in its Federal Funds rate. The Fed made it clear that it plans to hike rates more quickly than it did in previous cycles to combat the inflation pressures. Accordingly, its members are now signaling a hawkish path ahead with 6 additional hikes expected during the remainder of 2022.

In economic data released last week, the Bureau of Labor Statistics reported that the Producer Price Index (PPI) rose 0.8% in February and 10.0% y/y. Retail sales rose 0.3% in February, below the 0.4% estimate as inflation seemed to impact consumer spending. Online spending pulled back sharply as sales for gasoline soared as prices jumped higher. Other categories of strength were food services, building materials and garden. This week’s economic calendar will include reports on consumer sentiment, durable goods orders, and the Markit manufacturing/services PMIs (Flash).

As we prepare for higher interest rates, we continue to utilize a flexible approach to fixed income with below market-weight duration. In terms of equities, we continue to focus on valuations and quality stocks with durable profits. The path ahead will continue to be filled with uncertainty with regards to geopolitical risks, elevated inflation, and supply chain disruptions. As such, we continue to stick close to asset allocation targets with a slight defensive bias.

Congratulations to the Providence College Friars, who have reached the Sweet Sixteen for the first time in 25 years. They will try to keep a dream season alive as they take on the Kansas Jayhawks on Friday night.

“… Providence is in the damn building.”  –  Ed Cooley

Weekly Commentary (3/14/22) – Markets Finish Lower as the War in Ukraine Intensifies

March 14, 2022

Equity markets were negative last week as a cornucopia of headwinds weighed on investor sentiment. The war in Ukraine, rising inflation, negative real wage growth, declining consumer confidence and decelerating GDP growth are all weighing heavily on investors’ minds. We suspect most of these concerns are reflected in current market levels.

For the week, the DJIA lost 1.99% while the S&P 500 dropped 2.88%. The tech-heavy Nasdaq finished lower by 3.53%. On a slightly more positive note, the MSCI EAFE Index closed up by 0.57% while emerging market equities (MSCI EM) sunk 5.17%. Small company stocks, represented by the Russell 2000, dropped 1.06%. Fixed income, represented by the Bloomberg/Barclays Aggregate, finished lower by 1.76% for the week as yields jumped higher on continued inflation worries. As a result, the 10 YR US Treasury closed at a yield of 2.00%. Gold prices closed at $1,982.70/oz – up 0.90%. Oil prices moved lower from last week’s high and closed at $109.33 per barrel, down 5.49% on the week. Despite the drop in oil prices, the national gas price average rocketed higher by almost 13% week-over-week to $4.33 per gallon … another tax on consumers and businesses.

The big economic focus of last week was on the release of the February Consumer Price Index – both headline and core figures matched expectations of 7.9% and 6.4%, respectively. Consumer inflation is now running at the fastest pace in 40 years and calls into question future consumer spending power. The University of Michigan Consumer Sentiment Index fell to 59.7 for the early weeks of March, its lowest level since 2011. On a more positive note, the Department of Labor reported last week that non-farm payroll employment rose by 678,000 in February (ahead of consensus). The unemployment rate fell to 3.8% even with more people entering the labor force and looking for employment. Normally such a strong employment figure would be well received by Wall Street, but investors are rightfully concerned about the war in Ukraine and rising inflation.

All eyes will be on the Fed this week as it wraps up its two-day meeting on Wednesday. It is widely expected that the Fed will raise the fed funds rate by 0.25% as it embarks on what is expected to be a series of seven rate hikes over the next 12 months. Other economic news this week includes Retail Sales, Import Prices and the Producer Price Index.

Expect ongoing volatility until a resolution in Ukraine is achieved. Diversification, patience and a bias towards quality will help investors manage through this temporary set-back. As such, we continue to suggest that investors stay close to their long-term target asset allocations with a slight defensive bias.

Happy Pi Day!

“Ask five economists and you’ll get five different answers – six if one went to Harvard.” – Edgar Fiedler

ND&S Weekly Commentary 3/7/22 – The Markets Loathe Uncertainty

March 7, 2022

Investors are processing the reality of a sovereign nation being invaded by its neighbor in style reminiscent of 1939. Many people had believed that such war mongering by a global power was a relic of the past. Putin’s provocations had planted doubts and worries in the minds of market participants, around the world, over recent months. So, Russia’s invasion of Ukraine on February 24th triggered a decline in stock prices and a rally in less volatile investments.

The Russian invasion has increased the probabilities of a set of dire possibilities. Asset prices gyrating, signals the lack of conviction about how this conflict will affect business around the globe and whether Putin’s ambitions will expand beyond Ukraine.

The human tragedy in Ukraine defies description. We join the billions of others who share sincere care and concern for the sufferings of the Ukrainian people, and we are hoping for a sharp decline in Russia’s unprovoked hostilities with Ukraine’s sovereignty intact.

All Major US and World equity indices were down for the week. The S&P 500 moved 1.24% lower but did avoid revisiting the “technical correction” level of 10% off its January 3 high, that it had reached in the previous week. The DJIA was off 1.23% while the Nasdaq slid even further and was down 2.76%. MSCI EM was off 2.29% and the MSCI EAFE had a significant retreat as it moved 6.5% lower. The small company stocks of the Russell 2000 dropped 1.92%.

As investors traded out of equities, bonds had a small rally. The US Aggregate Bond Index gained 0.95% and the 10 YR US Treasury yield dropped to 1.74% at the end of stock trading on Friday, signifying a rise in its price, for the week. Commodity prices in general were higher as Oil surged higher to $115.68 per barrel, up over 26%(!!) and Gold was higher at $1,945 per oz., up another 3.2%.

During his testimony on Capitol Hill this past week, US Federal Reserve Chairman, Jerome Powell, shared his inclination to propose that the FOMC raise the federal funds target rate by 0.25% at its March 15-16 meetings. This is in line with most investors’ expectations and typical of the Fed’s efforts to not surprise the markets with changes in its Monetary Policy. The Fed is working to combat the highest levels of inflation in 40 years. However, Powell also added that the FOMC was prepared to move more aggressively at future 2022 meetings, if inflation remains high.

The US Consumer Confidence numbers are down from recent peaks in mid-2021 but are still strong through February. Consumer Spending remains solid and job growth is still strong. A slow-down in growth is the Fed’s objective. The delicate balance is not provoking a recession. Despite the heightened level of uncertainty, markets are not discounting a recession and the prospects for a “soft landing” from the COVID stimulus growth rates are still good.

Over longer periods, investors’ asset allocation strategies have proved to be the major determinant in their investment results. Volatility is a function of how often prices are observed. Modern investors constantly face the temptation to constantly observe prices. Short term volatility is a distraction for investors with long-term objectives.

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” — Warren Buffett

ND&S Weekly Commentary 2.28.22 – “Russian Roulette”

February 28, 2022

To say the least, it was a turbulent week for the stock market, as Russia followed through with their threats and invaded Ukraine. Investors feared that Russia’s invasion will push up inflation, especially energy prices, and that the Federal Reserve will begin increasing interest rates at the wrong time. Although Russia and Ukraine together account for only 2% of global market-based GDP, Russia produces 11% of the world’s oil and 17% of its natural gas. Ukraine and Russia account for roughly 25% global wheat exports.

Despite the geopolitical headwinds, the S&P 500 index was up 0.8% for the week, and Nasdaq gained 1.1%. The Dow Jones Industrial Average (DJIA) fell 0.1%. As expected, foreign markets were under pressure, with Developed (MSCI-EAFE) sliding -2.5% and emerging markets (MSCI-EM) down -4.8%.

Corporate earnings for the fourth quarter of 2021 have been solid. With 470 (94%) of the S&P 500 companies reporting an overall increase in Q4 earnings of 30.2% year over year and 16% revenue growth.

According to the ADP Employment Change Report, there were 467,000 jobs added to payrolls in January, well above consensus, and 400,000 new jobs are expected in February. The core personal consumption expenditures (PCE) price index rose 5.2% over the year ended in January, in line with estimates. With historically low inventory and rising mortgage rates, pending home sales slid to a nine-month low.

The bond market was also volatile with investors at first rushing into safe assets and then back into stocks on Friday. The U.S. 10 year Treasury note rose above 2.00% only to fall to 1.98% for the week. Gold prices declined 0.7% to $1,886/oz. Oil prices rose above $100 per barrel on Thursday for the first time since 2014. The price of oil settled back to $91.59 on Friday, up 1.9% for the week.

On Wednesday, Federal Reserve Chair Jerome Powell will give his semi-annual monetary policy update to the U.S. House Financial Services Committee. He will appear before the Senate Banking Committee on Thursday. Investors are hoping for clarifications on the Federal Reserves position on tapering and raising interest rates. President Biden will deliver his first State of the Union Address on Tuesday. He is expected to discuss the U.S. response to Russia’s invasion of Ukraine. Economic data this week will include reports on construction, factory orders, and employment.

We anticipate volatility will continue until the Ukranian war ends and there is more clarity about the direction of interest rates. Again, we recommend re-visiting investment objectives, risk tolerance and asset allocation goals. Our thoughts and prayers go out to the Ukranian people.

“Older men declare war. But its youth that must fight and die.”–Herbert Hoover