Stocks Plunge, Materials Surge in Latest Turmoil: Markets Wrap
Source: Bloomberg
The turmoil on global financial markets intensified Monday as U.S. stocks plunged the most in 17 months and commodity prices relentlessly powering higher as the fallout from war in Ukraine threatened to the global economy.
The S&P 500 sank almost 3% for its worst day since October 2020, while the tech-heavy Nasdaq 100 Index dropped 3.7%. Nickel surged 90% to a record on worry over potential shortages, oil settled at the highest in a decade and wheat approached records after a 7% jump. Earlier, the Euro Stoxx 50 and Germany's DAX index closed in bear markets. The spread between two-year and 10-year Treasuries briefly dropped below 20 basis points, a level not seen since March 2020 and a bearish sign for the economy.
Russia's war on Ukraine and the sanctions from U.S. and European allies on Russian assets have sent a jolt through financial markets that were already unsteady after two years of the pandemic and the threat of central banks pulling back on stimulus. Investors have grown leery of owning riskier assets as surging commodity prices exacerbate inflationary pressures that could force policy makers to tamp down growth.
"The longer oil prices and inflation remain elevated -- and thereby threaten an early demise of this economic expansion and bull market -- the more investors will trim their exposure to equities," wrote Sam Stovall, chief investment strategist at CFRA. "Investor uncertainty should elevate the angst."
Read more: https://www.bloomberg.com/news/articles/2022-03-06/stocks-face-oil-risks-amid-talk-of-russia-embargo-markets-wrap
Not good news would be an understatement.
I'm old and live off a modest amount of savings and investments in the market and this is starting to really frighten me.
It is apparent that a protracted war in Ukraine will lead to tens of thousands of civilian deaths in Ukraine and severe economic consequences for Europe and the US. Half measures to end this conflict are simply not good enough.
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Half measures are just leading to thousands of preventable civilian deaths and economic hardship in Europe and the US.
I think that would be clear at this point.
The first step would be to declare this in western Ukraine around Lviv, currently hundreds of miles away from Russian forces.
We would make clear that this portion of Ukraine is under full NATO protection and it would be extremely unwise for Russia to think otherwise. We would tell them it's under the same level of protection as the small Baltic states that are in NATO already.
We would be taking the same risks of "escalating" a direct conflict as we all ready currently are protecting the Baltic states of Latvia, Estonia and Lithuania.
If you think this proposal is too risky, then the same logic would apply to protecting the small Baltic states, that we would be unwilling to back up our policy of protecting allies.
Right now western Ukraine is hundreds of miles from Russian forces, much farther than the capitals of the Baltic states are from the Russian border.
What's to stop us from signing a treaty now with Ukraine stating that we would protect those western portions of the country? That would be declaring to Russia that total aggression in Ukraine is off the table. It's totally analogous to our promise to protect the Baltic states.
Also, do you think constantly increasing arm supplies and imposing devastating economic sanctions also aren't increasing the risk of WWIII?
It's foolish to think that our current actions are risk free since Putin has already declared that our sanctions alone are akin to declaring war.
A protracted escalating face off using the Ukrainian people as our proxies carries the same risks as what I am proposing and would also lead to tens of thousands of preventable deaths and profound economic consequences over years, possibly longer.
And unlike declaring a no-fly zone, my proposal does not put the US and Nato into immediate conflict with Russia, we don't have to immediately start taking offensive actions to engage Russian forces currently in combat.
By having the US and NATO declare that there are limits to how much aggression we are willing to stomach in Ukraine it will make the Russian military and political leadership factor the consequences into their calculations.
I believe it would be a sobering moment for Russia and, who knows, might even lead to Russia removing Putin from power.
And on a crass domestic political note, I hate to point out that an ongoing war in Ukraine causing an economic recession would mean not only would the Republicans sweep to victory in the 2022 midterm elections but also probably win the White House in 2024. It's not like there's all the time in the world to "slowly bleed" Russia into submission.
