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Mid-Week Market Update: March 1st 2022 w/ BRIAN MANNING

Hey, What’s up everybody, I can’t even say Happy Friday because this is like a break of my norm. But we have so much going on in the world right now that wait until Friday, it would be really tough to get all this into a Friday update. So I’m just doing a quick Tuesday update right now.

So so much of what’s impacting the financial markets right now is really in between Russia and Ukraine. And certainly, war has this consequences and certainly moving global markets. So let’s just break down real quick, you know, a little bit of overseeing and how it’s impacted the markets and, and mortgage rates as well. So after you had Russia invaded Ukraine, no one likes war. So in the beginning of the week, you have sanctions put against Russia. And with part of the sanctions, you have certain banks removed from Swift, not all the Russian banks were removed from Swift only some of them pretty much the ones that were left in Swift are the ones that process oil payments and transactions. So Swift is the society a Worldwide Interbank Financial Telecommunication. So swift itself is not actually moving money around swift itself just handles the communications in between banks around the world. So when you’re removed from Swift, that basically knocks you out of the international banking system with it, which is certainly impactful to Russia as a result of this. And the sanctions.

You also saw the Russian ruble dropped by 30 to 30 35%, which is a substantial drop in a currency. And with Russian ruble dropping, if you think about this way, if you had a business debt, and you had borrowed, you know, 100 grand for your business $100,000 debt is now 130 to $135,000 debt because of the change in the currency. And then other then, you know, the debt itself going up from 100k, to like, 130 to 135, your debt service coverage payments, you know, so your repayment of this debt on a monthly basis, has been impacted, as well. So the removal of Swift the sanctions, the ruble dropping is all very impactful. And then you had, you know, Russia’s version of a central bank come out on Monday, and they hiked their rates from nine and a half percent to 20%. So you think about this, this is the equivalent of the Federal Reserve rate hike, you know, we’re gonna have a rate hike here in March, and our Federal Reserve right now is grappling with do they hike rates, point two 5%, or point 5%, Russia comes out, and they have to raise the rates from nine and a half percent to 20% to really combat this, the stumbling in their currency right now and the dropping by 30 to 35%.

You also have ATM lines building up there, because people want to get their money out of the banks. Because if your ruble is dropping that fast, you want to get out of the banking system, if you can exchange it into US dollars. So certainly is all having a financial impact there. And we’re probably even seeing some opposite of what Russia expected, because right now you’re seeing Europe really bond together, which is not probably what they anticipated. You’re seeing Sweden and Finland potentially entertaining the thoughts of joining NATO, which they never really had before. So that’s certainly impactful for Russia, you also have Sweden, Germany, pushing weapons over to the Ukraine. That’s kind of never been seen before. And then also you have Switzerland, who is historically the most neutral country of everyone in the world, Switzerland is really looking to impose sanctions on Russia.

So you know, everything that’s happening right now, between Russia and Ukraine is absolutely impacting the world and financial markets. When you look at what’s going on today, you know, you see oil prices rising? Well, you know, this is a challenge for us here in the US, because we’ve already seen oil costs gone up, we’re certainly facing inflation here in the United States. And when you have cost increasing of goods on a monthly basis, you have oil costs increasing on a monthly basis, you know, that’s just adding to the pressure of inflation. But the other thing we’re starting to see is just a slowdown in the US economy. You know, we had a lot of stimulus that came through as a result of COVID. And a lot of people had built up their savings, but people savings are being depleted or have been depleted.

So now we’re starting to see a slowing in the US economy, which could possibly put us into a position of what’s called stagflation. Stagflation is probably one of the worst economic conditions that we could get pushed into, and I’m not a negative person, I’m not a doomsday or I’m not trying to tell you this is going to happen. But if you have a slowing US economy, and if you have increasing inflation, like we’re seeing right now, eventually, that puts you into a position of what’s called stagflation.

So we got to pay close eye on that and just really keep a close watching the economy, what’s happening there, and how it’s going to be impactful. When you have situations like this in the world, and you have global markets that are impacted, you always get a flight to stability. So you have sell offs, and stock markets and you have money moved from stocks to bonds, well, mortgage backed securities are essentially considered a bond. So when you have global tensions like this, you’re seeing money in the stock markets and go to a flight to quality, meaning the moving into bonds and it is having a positive impact on mortgage rates here in the US. So if you haven’t refinanced yet, and you feel like you missed The boat you may not have right now is the time you might have this very small window to take advantage of a small drop of interest rates. Call me text me email me I’d love to talk with you about it. But you might see a small window here where you can capture a refinances. Maybe you thought you had missed the boat on. I’ll do another update on Fridays. You can see there was a lot of stuff to talk about. And certainly going into Friday, there’s going to be even more. Happy Tuesday. Hope you have a great day.

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