Guns, Germs & Stocks
In this week’s stock market update, we will talk about the impact of the ongoing Russia/Ukraine crises on stock prices and the historical impact that Geopolitics has on the longer-term trajectory of risk assets. Additionally, we will also focus on the other irritant to stock prices, which is the prospect of the Federal Reserve raising short-term policy rates and how many rate hikes are already priced in. Lastly, we will wrap up by reviewing trading conditions through investor sentiment and overall market positioning into the back half of February.
- Geopolitical risk is scary but has very little impact on stock prices beyond a month
- Multiple interest rate increases appear to be already priced in and largely represent a return pre-pandemic levels
- The explosive surge in demand for S&P 500 put options is a contrarian buy signal
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