Recorded late last week, this recaps the impact that the Russian invasion of Ukraine has had in the stock market and the global economy. This is a continuously evolving global event and with that comes changes very quickly. We talk through what had happened until late last week, what may happen moving forward, and how we can potentially think through all of this.
Recorded late last week, this recaps the impact that the Russian invasion of Ukraine has had in the stock market and the global economy. This is a continuously evolving global event and with that comes changes very quickly. We talk through what had happened until late last week, what may happen moving forward, and how we can potentially think through all of this.
Hey guys, what is going on? Welcome to an episode of The Life finance in between podcast host by myself, Eddie Thomas brought to you by wildland urban management services in Hershey, PA. And today we're talking about Ukraine and Russia, undoubtedly, if you've been paying attention to the news, whether financial or just every nightly news, you've heard about Ukraine, and Russia and the conflict that is going on there with Russia, invading Ukraine, and pretty much trying to take over the country and put in a very Russian backed and Russian minded government there. I'm not going to go through why and the details behind all that. I think there's a lot smarter people and better resources for you to go if you want to see something along those lines. So I won't cover that side of it. But will I will cover is the impact it's had on the stock market and the economy as a whole and kind of what we can expect on that side of it. So right off the bat. As soon as the news came out that Russia was invading Ukraine, we had a massive pullback in the stock market stocks coming out for the futures down 100 points in the Dow. down big in the s&p down big in the NASDAQ. Across the board read immediate panic, immediate fear, where do we turn? Where do we go? There's nothing to do. This is it, then, so that's the Morning markets open. So right around 1231 o'clock, President Biden comes on kind of gives our game plan going forward, we're not putting troops on the ground, we're going to pretty much just sanction Russia, like crazy, try to cut them off from the global economy on that aspect of it, and then the markets kind of had their moment of realization that okay, maybe we're gonna be okay, maybe this is very short term. Yes, it sucks. No one likes war. It's a terrible thing that's happening, but maybe we're going to be okay, at the end of the day. And the markets had a huge comeback. So we started 100 points down, I think we ended a couple, we ended up I think, 90 points or so that that Thursday. And it just kind of shows you the volatility that we're going to see over time because of these actions that are being taken by Russia. Now. There's still a lot to play out. And that's one day. So one day, we had a huge pullback, and then we came back had a huge, huge, huge comeback. And we were up that day, Friday, we were up big again, again, as people kind of assessed what was happening and saw Okay, well, yes, the fighting still happening. But maybe it's not that maybe it's sort of still short term thing, short term thing. We're eating as we can all NATO's aiding Ukraine as we can get any materials, we're not putting any troops in the ground, but the market tend to on Friday, be in a better spot, come into this week here. And we're kind of back down again, for the first two days, nothing crazy. But we are back down. And I think this is exactly what we're going to see. I think day to day, there's going to be New headlines that come out that around two stories, one, what are the new sanctions that we put on Russia and their elites, and to how is NATO helping Ukraine with regards to supplies, not troops, but supplies? Now, with each new sanction that comes out that has pretty much a reaction across the globe, because we're cutting or attempting to cut Russia out of the global economy in some aspects, they can still transport oil and gas and do what they've been doing on that side of it. Because without that Europe would probably freeze, so we can't cut them out of that. But on the other side of importing any tech technology, equipment, importing other goods and materials, that we're kind of cutting them out of that, and they can't export those things as well. So they're kind of on that side of it. They're running on a depleting base of resources, which now in the short term, if they have a stockpile, they're going to be okay, it won't really have that big of an impact on them. But you got to think long term on that side of it. If you're telling them, they can't pull in any other materials and resources, I don't care how much they have stockpiled there. They're going to be running on fumes at some point, which is the goal of US and other NATO countries. That okay, yes, you're taking on this invasion, but our plan is to cut you off at the source. Keep doing you're doing that we're gonna keep sanctioning you but just know nothing's coming in as far as materials and resources to supply what you're doing. Now, the other big, big, especially financial sanction that got put down on Russia, is we cut Russian banks and Russia out of the Swift. So what Swift is, is it's messaging for banks globally. It's just a messaging system for banks globally. That is incredibly secure and how they communicate back and forth. Think if to put it into terms as far as the United States think if someone said, Okay, your banks can no longer really do any business with banks globally, because you're not using this messaging service that we're all using. So because of that, we don't want to do business with you anymore. And we're just not going to get to do hard. It's not secure. Think if someone told us that your banks can't do that, the economy would come crumbling, it would be terrible. And it's something that hopefully we never ever see. But that's what we told Russia, we said, okay, that's very good. You invade Ukraine, we have these other sanctions on you. We're not cutting you out of Swift. So your banks are, in effect, frozen. for all intensive purposes, you can't do business with other banks globally, you can't really do anything. So you're kind of handcuffed and we're cutting you off from the economy. That is, as far as financials are concerned, a massive, massive step that the US and NATO countries took forward. That shows how serious we are and fighting Russia on the sanction front. If it's not true, that's going to be sanctions, that shows how serious we are on that front of it. And going forward, this has some serious impacts on the Russian economy and country as a whole. Now, we have seen a little bit of kickback in our markets, because we don't really our banks are still figuring out, okay, how do we operate if we don't really work with Russian banks? Or if that's led least for the time being stopped? How do we operate? And I think we're seeing a bit of a pullback in the banking sector at the moment because of that. But that's, that's, again, short term. That's something we'll figure out. And, yeah, they're getting beat up today. But I don't think that's a long term thing.
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Eddie Thomas:does, and continues to do is cut Russia off at the very foundation of what they do. We can't like I said, we can't cut them out of the oil industry. And there's supply that the EU that we just can't, but those countries are now going to put more of an effect on okay, how do we rely less on Russia? I think we have seen Germany and those countries realize, okay, we rely far too heavily on a country that is a bit of a loose cannon from I mean, pretty much always. So how do we rely less on them. And it that is not a short term fix, but long term, I think we'll see that they become more efficient on their own. And they just find better practices, whether that's just going green, and not relying on Russia's export of oil and gas to them, or whatever that process looks like. I think that will take years to play out. But it's a step in that direction. And I think Russia sees this too, they have a very short time frame where people still rely on them for their exports. If Russia doesn't complete that whatever mission they want to complete in Ukraine, and the rest of the Europe says okay, we don't need you as much, they're in a very bad spot, because without the export of that energy, they're really not too much of anything, their GDP isn't anything tight, you're gonna write home about their stock markets are closed. Now the rubles down huge. Since all this has happened. On the beginning, it took about 30 rubles to to one US dollar. And now it's well over 100 rubles to one US dollar, so you're seeing their currency just crash. And those sorts of terrible side effects of what they're doing invasion wise, are gonna continue to do so. So in in Russia, I'm sure to panic. And I know with a panic to get all the money out of all their money out of their banks, because at some point, it's going to dry up and it won't be there for them to get, which is the bank runs and the lines you're seeing at these places are insane. But I think we're going to continue to see these, we're going to continue to sanction them as much as we can, we will not put troops on the ground. But the markets are going to react because of this. Potentially, what we see in the short term is a spike in inflation. And the reason being, I know inflation is already a 7.5% of the last reading of the CPI. The reason being is with Russia supplying so much oil and gas to US and Europe. If that gets stopped, or at least lessened, we're going to see and we're already seeing the price of oil, go over to over $100 a barrel. I get that a seven year high today. And we might still see that so we're gonna feel that at the pump. However, Biden has mentioned that we're going to use our reserves if we need to global reserves if we need to. And part of me is leaning towards the fact that we're going to start producing oil again domestically in the United States, like at a capacity we were in the past so we don't have to rely as much on imports of oil and gas. And we that would help drive down costs at the pump and in turn, will help inflation get driven down as well, because oil energy, energy prices have a huge impact on inflation. If it costs more to get product from point A to point B, then it's going to cost more from from store to your pocket, you're just going to spend more because it costs more to get it there. Once those prices come down, because either we start producing more oil, we're using more reserves, whatever it may be. We're gonna see inflation less and because of that, and then long term, we'll be in a good healthy spot, I think just short term, we're gonna have to go through the waves of what that is. And we might see a little short spike here. But I think a lot of it is short term and long term, we're going to be just fine. So if I did, if we took away anything, I tell you to take away anything, it's we're going to continue to shrink sanction them as much as possible. And will those effects won't be a short term as they are midterm and long term, you're going to see the impacts of those sanctions. And I know Russia knows that as well. Secondly, we're going to continue to see market volatility depending on headlines day to day depending on the progression of these actions, and that's okay. It's okay just kind of sit tight, which is wait to see how it kind of plays out on that side of it. Because again, it's it's short term, the bark is worse than the bite and we're gonna be okay long term. And then yeah, we'll see what happens to inflation in the short term with regards to gas prices, but hopefully, hopefully, we could put some practices in order to lessen that to the, to the most degree that we can. So alright, guys, that's it for today. I'm sure we'll have another another update at some point regarding this kind of ongoing situation globally. So until then, stay happy, stay healthy, and I'll catch you on the next one, right. Securities offered through securities America Inc. Member FINRA slash SIPC. advisory services offered through securities America advisors Inc. Wealth Management Services and securities America are separate entities. The opinions and forecasts expressed are those of the author and may not actually come to pass. This information is subject to change at any time based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.