At present there does not seem to be much love in the air as we celebrate the feast of St Valentine.
The ongoing struggle between healthy earnings growth during this reporting season and fears over Central Bank monetary policy continue to rage.
There has been a broadly positive earnings backdrop with over 80% of the S&P 500 companies that had reported by Thursday 10th February beating analysts expectations. On the negative side US headline inflation advanced 7.50% over the year ended January 2022. This was the biggest annual gain since February 1982. This led to concerns about how aggressive the Federal Reserve will be with their first interest rate increase scheduled for March.
The UK Economy showed a bounce back in growth of 7.50% over the last year, the fastest pace of growth since 1941 (Source: Office of National Statistics – ONS).
The warnings from US officials last week that a Russian invasion of Ukraine might be imminent undoubtedly contributed to the late-week sell-off we saw in equity markets.
Other than the man in the Kremlin, no-one knows with any degree of certainty what the intentions of Russia with respect to Ukraine are. Diplomatic activity is still ongoing and despite the comments made by Ben Wallace, the UK Secretary of State for Defence, at the weekend, Europe, the US and NATO are still holding the line on facing down Russia if any incursion into Ukraine takes place.
The escalation in the rhetoric and the resultant military tension would lead us to recommend staying on the side-lines with new investment capital at this time. Markets are already volatile and would become even more so if military action did take place. This is one of these times where politics overtakes market fundamentals and suggest a cautious approach until circumstances become clearer.
As has been mentioned in previous communications please contact either Scott or myself if you are looking for specific advice on your own circumstances.
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