Investing in times of war and volatility

Financial markets remain volatile and present investors with several “what-ifs” to consider. The Russia Ukraine war, the possibility the Fed will continue to raise interest rates and persistent inflation contribute to the uncertainty. In this bonus episode of The Yield, Peter Kerr, CFA, sits down with Richard Excell, instructor of finance at the University of Illinois Gies College of Business, for a hard look at the current market landscape and the impact of global events on investors.

Key takeaways

[1:40] The impact of the Russia-Ukraine conflict on the global financial and food market.

[11:34] Equity markets and risk assets in a dovish policy.

[13:48] Explaining market dips and rises throughout each day.

[18:50] What inflation could look like over the next six to nine months.

[22:15] Growth versus value stocks and risk parity.

[34:20] High growth tech and other investments and raising dividends.

Listen here

The sanctions imposed on Russia, specifically blocking Russia from the SWIFT banking system, have deeper implications than have been widely discussed. The $600 billion in foreign exchange reserves that are now sloshing around somewhere in the foreign exchange swaps market has to be replaced by somebody, and that lack of liquidity has the potential to cause the global economy to seize up.

In some ways, the uncertainty coming out of Russia and Ukraine has the potential to bring some clarity on the Central Bank front. The Fed funds rate is likely to trend higher as we learned after the most recent meeting of the FOMC. What does that mean for the market? According to Excell, there is a strong possibility that the Fed is not going to be as aggressive in hiking rates as was expected earlier this year.

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Excell walks listeners through the average dips and gains that the market experiences each day, and how investors might want to react. He also highlights some of the key drivers behind the market, and what each means for the short-, mid-, and long-term investment strategies.

Inflation also is at the forefront of investor concerns, especially in light of the global repercussions of the Russia-Ukraine war, but the war is just one factor in the increase of inflation. Excell shares insights into the impact of energy markets, changing regulations, and labor force participation as they impact the rate of inflation.

In a world that has only focused on growth, rather than inflation, for the better part of the last 30 years, it can be easy to misunderstand the difference between value and growth stocks, risk parity, and down days in both the bond and stock markets. Excell walks listeners through the true meaning behind each and what they potentially mean for investors. For more information about investment opportunities in any environment, visit www.yieldstreet.com

Help Ukraine

You can do something right now! Yieldstreet is partnering with United Hatzalah to respond to the tragedy unfolding in Ukraine. Thousands more refugees are on the way, and you can help make a difference. United Hatzalah is one of the largest volunteer emergency medical services providers in the world and helps everyone regardless of race, religion, or national origin.  The Yieldstreet match, every dollar up to $250,000, will be donated to United Hatzalah. There are no fees or hidden costs, and the money you donate will be matched dollar for dollar and used to assist the people who desperately need your help.

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