Hi it’s Ed Butowsky with Making Sense and each week we take three headlines that you might have missed or not amplified enough in the media and explain what you should do with your investment portfolio as a result, so here we go.
Good news the omicron variant is not gonna be that terrible in terms of shutting down the overall market and you’ve seen a rally in the stock market recently as a result of that and you see that vaccines and antiviral pills are actually going to be able to be used against the omicron variant which is a real big positive for keeping things from being shut down. At the same time the markets are very expensive so you have to be very very careful but this is really good news and if you were over allocated in the equity markets pullback but don’t get completely out of the equity market because you might miss a rally.
The FED is meeting next week to talk about tapering bond purchases. This is very inflationary and this will push interest rates higher and this is something we have to be careful with, your equities and bonds you need to protect yourself by investing in senior rate floating notes and business development companies. These go up there they should go up when interest rates go higher. So when the FED stops tapering that means that they stop buying bonds and that relatively higher interest rates will occur as a result of that and that is a very negative thing for the equity markets but it has to happen to slow inflation down. So be very careful about your equities and bonds.
President Biden met with President Putin to discuss Ukraine. Biden said the US would impose sanctions if Russia invaded Ukraine. These sanctions would put additional pressure on oil prices. This would be a real negative for emerging market funds and would also disrupt the entire balance of trade in the world, this would also send energy prices much higher if in fact Russia invaded Ukraine. These sanctions probably are going to have a lot of impact but if they do invade Ukraine we’re going to see energy prices skyrocket, you’re going to see emerging market funds go down and the rest of the overall market go down, so this is a headline you have to watch and stay really on top of.
This has been Ed Butowsky with Making Sense. If you want a complimentary portfolio evaluation please visit www.edbutowsky.com or www.chapwoodinvestments.com, We do a very good job analyzing existing holdings and telling you if what you have is what you need.