Brian Jacobsen provides perspective on the Russia-Ukraine war 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 May 14–20, 2022.

The week that was

  • It was another rough week for markets. Some big retailers said profit margins were being challenged by consumers shifting their purchases from things they bought during the pandemic, like televisions, to things more related to experiences, like luggage. Costs are increasing, and consumers are beginning to push back on higher prices by changing their consumption patterns.
  • Federal Reserve (Fed) Chair Powell spoke at an event hosted by The Wall Street Journal on Wednesday.
    • Chair Powell said he wants to see “clear and convincing evidence inflation is coming down.”
    • He said he believes the economy is well positioned to withstand tightening and financial conditions have already tightened significantly.
    • When asked about mistakes the Fed made in 2021, he said decisions had to be made based on the information available at the time. It looked like inflation might moderate as supply chains improved, but by October it became clearer that inflation was going to reaccelerate as supply-chain shocks continued.
    • In my view, the Fed is no longer going to bank on supply chains improving to help bring inflation down. Instead, the Fed wants to see growth slow.
      • Two indicators of whether growth is slowing enough will be in the number of job vacancies decreasing and the number of people in the labor force increasing.
      • If supply chains improve (which they very well might now that China announced the shutdowns in Shanghai are coming to an end), supply and demand could come back into balance, and we could see material improvement in the inflation outlook by July. The situation in Ukraine will likely keep food and energy prices high, but inflation from other goods could moderate, if not reverse.
  • Earnings reporting season went out with a bang as some big retailers gave rather dour forecasts. Coming into this season, at the index level, companies within the S&P 500 Index were projected to have an average earnings-per-share increase of 4.45% year over year, according to FactSet. Sales were projected to rise 10.81% year over year. With 94% of companies reporting, earnings have grown at a 9.12% year-over-year rate while sales have grown at a 13.59% pace.

Russia-Ukraine update:

  • Actions:
    • Ukraine expelled Russian troops from Kharkiv, a city in northeastern Ukraine. But Ukraine effectively has lost the port city of Mariupol.
    • Senator Mitch McConnell led a delegation of Republicans to Kyiv to meet with President Zelensky. Two weeks before the delegation’s visit, House Speaker Nancy Pelosi led a delegation of Democrats to Kyiv.
    • After Finland announced it will apply to join NATO, Sweden announced it will also apply.
    • The U.S. Senate approved a $40 billion aid package for Ukraine.
  • Sanctions:
    • Russia stopped exporting electricity to Finland, retaliating for Finland’s decision to join NATO.
  • Negotiations:
    • Turkey said it will oppose Finland’s NATO membership. Turkey is a member of NATO, and adding members requires unanimous agreement among existing members.


  • Industrial production and retail sales in China dropped dramatically in April as a result of the country’s zero-COVID-19 lockdowns. Industrial production dropped 2.9% year over year, and retail sales fell 11.1% year over year.
  • In the U.S., industrial production and retail sales both advanced at a healthy pace in April. Industrial production rose 1.1% month over month. Retail sales in the U.S. in April rose 0.9% month over month. March’s increase in retail sales was revised higher to 1.4%. These numbers are not adjusted for inflation, but even after considering price increases, the real volume of sales increased.


  • India banned the export of wheat. A heat wave in March and April has hurt India’s wheat crop, and the government decided to try to hoard its harvest at home. These types of protectionist policies tend to push up prices globally and make food shortages worse rather than better.
  • President Biden invoked the Defense Production Act to direct suppliers to prioritize delivery to baby formula manufacturers.

The week to come

  • U.S. new-home sales for April are released on Tuesday while pending home sales for April come out on Thursday. April’s durable goods orders are released on Wednesday. The Federal Open Market Committee’s minutes from the May meeting will come out on Wednesday. April’s personal consumption expenditures and income come out on Friday.
  • Purchasing managers’ indexes for May published by S&P Global come out on Tuesday. The Bank of Korea has a policy announcement coming out on Wednesday.

Thanks for reading, stay informed!

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