March 21, 2022

Market Update


Volatility in markets has become the norm this month as investors struggle to forecast economic growth and corporate profitability amid high inflation, rising interest rates from central banks around the world, Russia’s invasion of Ukraine, and ongoing lockdowns to combat Covid-19 in China.

There’s a tremendous amount of uncertainty, but bad situations are not getingg worse so we can count that as good news!


  • Oil settled at $115.68 – highest since 2008
  • Fed raised rates by 25 bps; at least it wasn’t 50 bps
  • Russia and Ukraine slogged on, but not worse
    • Stocks have returned to pre-invasion levels
    • Do sanctions matter
    • Does the Fed’s more hawkish policy doesn’t matter
  • Oil back down to $104

The FOMC Meeting

It will be hard to fight inflation as price pressures are shifting from goods to services. To bring annual inflation down from 6.1% (in a timely manner) may require more than six additional rate hikes. The stock market reacted favorably to the Fed’s plan to raise rates to that extent but Larry Summers fears that the FOMC’s economic projections are wishful thinking.


  • The only way to bring down inflation from supply-chain problems and soaring
    commodity prices is to crush demand
    • DB says the probability of a 2023 recession is 44%; up from 29% a month
  • Fed is tightening into a shooting war, a pandemic, a weak and wobbly stock
    market, and an incredibly flat yield curve
  • Powell characterized the labor market as incredibly strong