Blogs

The Federal Reserve’s Ice Bucket Challenge… 

Remember a few years ago when people raised money for charity by challenging others to pour buckets of icy water over their heads? Last week, the Federal Reserve poured a bucket of ice water over the United States stock market. Randall W. Forsyth of Barron’s explained:  

Here’s a riddle: How can inflation be 8.5 percent and 6.5 percent at the same time? The answer is that it depends on how you measure it.

The first quarter of 2022 was jam-packed with volatility-inducing events: rising inflation, war in Ukraine, rising interest rates, sanctions on Russia, and a new COVID-19 outbreak in China.

Here’s a brief review of what happened during:

Checking in on the Federal Reserve.

Among other things, Congress asks the Federal Reserve to use its tools to promote price stability and maximum employment. Last week, economic data provided information about both.

Inflation continued to increase

Be careful what you ask for, you just might get it.

Markets were reassured by the Federal Open Market Committee (FOMC)’s actions last week.

Investor optimism is quite low.

In just two weeks, the war in Ukraine has changed the status of 1.3 million people – approximately the number of people who live in Philadelphia or Phoenix – from citizen to refugee, reported Rachel Pannett and colleagues at The Washington Post.

The world is adapting to a changing reality.

As the war in Ukraine intensified last week, financial markets grappled with uncertainty. 

Last week, Russia invaded Ukraine.

Russian President Vladimir Putin’s decision ignited the biggest military conflict in Europe since World War II. The war is already exacting a terrible human toll. It has also disrupted global markets and raised questions about the potential economic impact on Russia, Ukraine and the rest of the world.   

Investors’ appetite for risk diminished as the Russian threat to Ukraine intensified.