February was a challenging month for stocks as the volatility that arrived in January continued with the S&P 500 finishing the month down 3.14%.  Investors were focused on the potential impact of uncertainty in the markets; primarily, the Russia-Ukraine conflict, Federal Reserve policy, and inflation. 

The recent invasion of Ukraine has led to a lot of questions about what investors should do right now.  This invasion is clearly a major geo-political event and a humanitarian crisis for the people of Ukraine.  Moving forward our job is to think about how this event may impact the economy and markets and position portfolios accordingly.  With that in mind we’re going to review a few key things to consider:

• What is the impact to the economy?  Historically, if a geo-political event does not lead to a recession, markets tend to recover and perform well over the next 12 months. 

• Risks: One of the biggest economic risks is for an energy shock (a sharp jump in energy prices) as Russia is a big supplier of energy to Europe.  This could exacerbate inflationary pressures and is something we’ll be monitoring.

• Outlook: Currently, we believe that the Ukrainian conflict is unlikely to lead to a recession in the US. Here are a few reasons why:
  • The US economy remains strong, and our economic dashboard continues to suggest that a recession is unlikely.  Recent economic data includes:
    • US GDP Growth of 7% in Q4, 2021
    • Strong corporate earnings (30% growth for S&P 500 in Q4, 2021)
    • Strong consumer and retail data

Though headlines today are focused on Ukraine, perhaps the most notable event for markets in March is the Fed meeting on March 15-16^th when the Fed is expected to begin raising rates.

While we navigate what may feel like a challenging environment our economic dashboard continues to guide us, and shows little chance of a recession in the near term.  As such, we continue to have portfolios positioned for growth, but we’ll be keeping an eye out moving forward and will be ready to make changes as needed.

Sincerely,

Your Team at TLWM

* Investment advice offered through TLWM, LLC., a registered investment advisor.

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