March 21, 2022

Market Update


Headlines designed to get clicks have produced a panic, shifting from fear of having too much to having too little. There has been panic buying in the market.


  • Oil settled at $115.68 – highest since 2008
  • Biggest weekly gain on record – $24.09 or 26.3%
  • Natural gas up 12.2% for week (to $5.016)
  • April gasoline was up 23.3% for week ($3.544/gallon)
  • April heating oil up 35% for week ($3.776/gallon)


Labor costs are on the rise as wages increase to fill job openings and retain workers. There is no question that Russia’s invasion of Ukraine will push inflation higher (energy, food, and metals). Some inflation expectations are close to double the 2% target while others haven't risen that much relative to their pre-pandemic level.


  • Measured from a year ago, headline PCE inflation is currently 6.1%, and
    core PCE inflation is 5.2%—well in excess of the FOMC’s 2% target.
  • This is the highest inflation in nearly 40 years for both measures.
  • Inflation is especially hard on low- to moderate-income households, as
    wage gains have not kept up with inflation for many workers.

Fed Risks

The Fed moved rates to zero and began Quantitative Easing during the pandemic recession. The Federal Open Market Committee agreed to phase out QE by mid-March and suggests more rate increases than previously anticipated. Market is pricing in that the Fed will raise rates 5 - 6 times in 2022.


  • Low participation rate (62.3%) causes low unemployment rate, and also creates risk of inflation.
  • Inflation is caused by the supply chain, t same time, we have an accommodative Fed.
  • Inflation will run hot with oil prices
  • Fundamentals are still good - If the Fed moves slowly, risk assets can do well.