Brian Jacobsen provides perspective on the Russia-Ukraine conflict and other key topics of the current week—plus, his thoughts about what the week ahead may hold. Here’s his report for the week of March 5–11, 2022.

The week that was

Russia-Ukraine update:

  • Actions:
    • Ukraine’s southern city of Mariupol continues to be attacked.
    • Russia attacked Kyiv with airstrikes as it works to advance on and surround the capital.
    • Russian attacks are no longer just on the eastern side of Ukraine. Airstrikes are spreading to the western part of the country.
  • Sanctions:
    • President Biden imposed a ban on U.S. imports of Russian oil, liquefied natural gas, and coal. In 2021, 3% of U.S.-imported crude oil was from Russia. Russian energy products were approximately 8% of U.S. imported energy products in 2021. Europe imports a lot more energy products from Russia than the U.S. does.
    • Global oil prices dropped (at least temporarily) after the United Arab Emirates said it would support increasing oil production by the Organization of the Petroleum Exporting Countries (OPEC) to make up for any lost oil output from Russia.
    • Big Western brands continued to pull out of Russia out of protest of the Russian government’s attack on Ukraine.
    • The European Union discussed jointly issuing bonds to finance energy and defense spending. Russian imports represent about 27% of European energy imports. The U.K. imposed a similar ban.
    • Western nations are proposing to remove Russia’s “most favored nation” status regarding trade. This move would increase tariffs on imported Russian goods.
    • Russia is banning the export of many items, but it excluded raw materials and energy from the list.
  • Negotiations:
    • Russia and Ukraine negotiated for the establishment of humanitarian corridors so that civilians could evacuate areas of fighting, but Russia regularly violated the agreement by continuing to fight and attack the corridors. Russia also bombed a maternity hospital.
    • A Russian official said Russia does not need to see regime change in Ukraine. Instead, the Russian government wants assurances that Ukraine will stay neutral (in other words, stay out of NATO). An aide to Ukraine President Zelensky said the country is open to being neutral, but it will not cede any territory. Unfortunately, talks between Russian Foreign Minister Lavrov and Ukrainian Foreign Minister Kuleba did not result in any major breakthroughs. Ukraine offered to remain neutral, but Russia didn’t even offer to guarantee access to humanitarian corridors. However, Putin on Friday said, “There are certain positive developments, as far as negotiations from our side informed me.”
    • Negotiations with Iran over its nuclear program are stalled as Russia is involved in the negotiations. Russia is demanding sanctions relief to go along with a deal.


  • At China’s National People’s Congress, the government announced a gross domestic product (GDP) growth target for the country of “about 5.5%” for 2022. In 2021, GDP growth was around 8.1%.
  • Nickel prices skyrocketed after a big nickel producer had some massive short positions move against it.
  • The European Central Bank (ECB) announced it will phase out its asset purchase program in the third quarter of 2022. It said it will reinvest the proceeds of its pandemic emergency purchases through 2024. It also changed its policy statement language about how long it might be between stopping its asset purchases and the first rate hike. Before, it said it would be “shortly after.” Now, it says it will be “some time after.”
    • The ECB is projecting that inflation for 2022 will be 5.1%. Previously, it was forecasting 3.2% inflation. For 2023, the ECB thinks inflation will decline to 2.1%.
    • The forecasts for growth were revised lower. The ECB expected 2022 GDP growth of 3.7%. Previously, it was forecasting 4.2%. It’s also forecasting 2.8% growth for 2023 and 1.6% growth for 2024.
    • The ECB, like the Federal Reserve, is trying to establish credibility but also create flexibility when it comes to adapting policy to prevailing and prospective conditions.
  • Inflation in the U.S. in February came in at 7.9% year over year with a monthly inflation rate of 0.8%. Gasoline, shelter, and food costs drove inflation higher, but the price inflation of goods has slowed considerably since January. The March inflation numbers, to be released on April 12, will likely be even hotter than February’s numbers. Gasoline prices for March are up more than 20% month to date. As gasoline accounts for 3.7% of the consumer prices “basket,” that 20% increase will add 0.7% to the monthly inflation number. Monetary policy can’t bring peace, so there’s little that monetary policy can do about the recent surge in food and energy prices.


  • The U.S. House of Representatives and Senate passed a $1.5 trillion budget. The new budget allows for earmarks (specifically targeted spending to different congressional districts to secure votes), which were disallowed for the past decade.
  • In South Korea, the conservative party candidate, Yoon Seok-youl, won the presidential race. He’s expected to take a hardline stance against North Korea.

The week to come

  • We will be watching ongoing developments in Russia’s attack on Ukraine.
  • From an economic events perspective, the big news will be on Wednesday with the release of the Federal Open Market Committee’s (FOMC’s) statement and projections. The FOMC is set to hike rates. It stopped expanding its balance sheet this past week. The big question is whether it will be a “hawkish hike,” where it signals a fast sequence of rate hikes, or a “dovish hike,” where it says it will be cautious—especially with the unknown fallout from Russia’s invasion of Ukraine and extremely elevated energy and food prices.

Thanks for reading, stay informed!


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