War in Ukraine.
The continued conflict in Ukraine remains the dominant headline moving the market. We expect companies in the energy and agricultural sectors to remain in high demand given both Ukraine and Russia’s significant exports in those areas. These companies can also serve as a decent hedge to inflation. The conflict will hopefully resolve soon, and Ukraine can begin rebuilding towards peace and prosperity. Until then, volatility will likely remain, particularly in commodity markets supplied by these two countries.
Interest rates rise.
The Federal Reserve officially began raising interest rates and is expected to pick up the pace moving forward. While rising rates will certainly continue to impact investment markets, they do not necessarily signal the end to markets moving higher. Even the much-feared inverted yield curve is not always a sure-fire signal of difficult times ahead. Don’t forget the economic data shows that businesses and consumers are on solid financial footing with the ability to weather the interest rate increases. The Fed has underscored that inflation is the bigger concern, with the economy in a favorable spot to adjust to higher rates.
Q1 earnings begin.
Earnings will begin to come out this month. Keep an eye on overall earnings trends and conversations to see how companies discuss inflation, interest rates and their impact on future growth.