John Hood's Top Picks: February 22, 2022
BNN Bloomberg
John Hood, president and portfolio manager, J.C. Hood Investment Counsel
MARKET OUTLOOK:
Market analysts have been mesmerized in recent weeks by Putin’s aggression against Ukraine and the dynamic between raising interest rates and inflation - and with good reason as both can lead to queasy markets and volatility.
Reading through military analysis, Putin is not going to unleash a shooting war with the U.S. and NATO, nor can he afford to occupy Kiev. However, having amassed many battle groups along the border including artillery, tanks and mechanized infantry, he cannot just pull back without losing face.
To provide context, there are more Russian troops, 190,000, on Ukraine’s border now than allied forces during the Normandy invasion. So the most likely response will be to grasp another portion of Ukraine, likely close to Crimea to further protect access for Russia’s Black Sea fleet to the Mediterranean.
Putin could be more aggressive, attacking Kiev directly, which would affect volatility but geopolitical events do not last long in markets, so any market jitters should be a reason to buy the dips. Energy prices will be impacted.
Regarding interest rates, everyone agrees they need to be raised to smother the inflation spiral, but without raising too hard or too fast to tilt the economy into recession as was the case in the 1980’s.
