I previously posited that we were undergoing a regime change of sorts in which market liquidity could be tighter, real interest rates higher, inflation higher and more persistent, and the rotation from growth assets to their value counterparts more enduring. Little did I (or probably anyone) know that today I would be writing about war and its likely economic and market fallouts.
First and foremost, I’d be very remiss if I didn’t say that we are witnessing an unfolding tragedy of epic proportions. The extent of the human suffering that will inevitably result from Russia’s unprovoked invasion of Ukraine (indeed, that already has) is deeply saddening, to say the least. And the global impact of the crisis does not end there—far from it, in fact.
Needless to say, the fluidity and frenetic pace of the newsflow are extremely important here and create an ever-changing, highly uncertain backdrop—from developments on the conflict itself, to further sanctions and financial restrictions being imposed on Russia by the West. Acknowledging that these types of risks are very difficult to analyze, I want to highlight five things that I think investors should watch closely over the coming weeks based on my observations as of this writing: