Three Things to Know & Watch – 07 March, 2022

By Bill Hornbarger, Chief Investment Officer

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Three Things to Watch

  • The completely unpredictable effects of the Russian invasion of Ukraine, particularly on the commodity markets will be the major focus of the markets this week. Energy, grains, and metals have all been strong in the wake of the Russian invasion.
  • Consumer prices (CPI) for February will be released on Wednesday. CPI is expected up 7.9% year-over-year and core CPI (ex food and energy) is expected up 6.4%. Both readings would be new cycle highs and the highest readings in almost 40 years. Gains in prices have been relatively broad based in recent months and that is expected to continue as the Omicron variant recedes.
  • The University of Michigan consumer sentiment reading will be released on Friday and is expected to be lower for the fourth consecutive month. Sentiment has been trending down since last April and higher gas prices, volatile equity markets, and headlines from Russia should overshadow the strong job market.

Three Things to Know

  • U.S. crude oil traded above $125/barrel and spiked as high as $130/barrel on Sunday evening, the highest price since mid-2008. Oil has been trending higher since the start of the pandemic, a trend that has accelerated as Russia has attacked Ukraine and the prospects of an embargo of Russian oil increase. (Source: CNBC)
  • According to the most recent data, the top five oil-producing nations are the U.S., Saudi Arabia, Russia, Canada, and China. The United States became the world’s top petroleum liquids producer in 2013 and the world’s top crude producer in 2018. Russia accounts for 11% of global oil production. (Source: Investopedia)
  • The U.S. average of gas prices is up 47 cents since Russia invaded Ukraine, a record 10-day move. They are above $4 for the first time since 2008. The American Automobile Association estimates the average driver uses 600 gallons per year. The last 10-day move added $282 to this cost. (Source: Bianco Research)

 

The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.