As of 3/11/22
Investing moves to make now.
We are dealing with a wide range of volatility in the market and uncertainty in the geo-political world. Below are some changes you can make now to react to what we are seeing in the stock market.
KEY TAKEAWAYS
Portfolios are repositioning intraquarter to adapt to the escalating conflict in Eastern Europe
In our view, the prospect of a protracted conflict and enduring economic sanctions has increased and could have meaningful downstream effects on European growth, global inflation, and global energy prices
Moving underweight non-US developed market stocks, getting ahead of potential upcoming earnings misses and downgrades as financial and economic disruptions visibly concentrate in Europe
Increasing exposure to energy stocks and commodities, expecting continued upside pressure on oil, wheat, fertilizer, and industrial metal prices in response to unprecedented sanctions now levied on Russian exports
TRADE RATIONALE
The breakout of war in Eastern Europe is deeply disturbing from multiple perspectives. In response to these events, we are recalibrating our exposures to reflect the changing macro environment.
While the immediate trajectory of the conflict remains highly uncertain, it is likely to have lasting economic and financial consequences. For our purposes, we expect weaker European industrial production and higher commodity prices to be the primary macro transmission channels – adding fuel to the supply-constraint-driven-inflation phenomenon already impacting global economies.
In Europe, interruptions in trade are interfering with industrial production schedules, and dampening investment, while pronounced energy price increases are depressing consumer disposable spending and causing more cost-push inflation. Globally, while less severe relative to Europe, commodity price increases place net negative pressure on real growth. Based on these impacts, we are cutting European-heavy developed market equities and cutting growth-outlook-sensitive global financial equities to fund increases in US equities and commodities.
This information should not be relied upon as investment advice, research, or a recommendation by BlackRock regarding (i) the funds, (ii) the use or suitability of the model portfolios or (iii) any security in particular. Only an investor and their financial professional know enough about their circumstances to make an investment decision.
For further information check out: https://incline-wealth.com/2022/02/war-in-ukraine-how-to-handle-your-financial-decisions/
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