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 April 30–May 6, 2022.

The week that was

  • The market first rallied on the Federal Reserve’s (Fed’s) guidance that a big, 75-basis-point (bp; 100 bps equal 1.00%) rate hike wasn’t even considered. But the next day, markets tanked with little to no news except the Bank of England’s warning about a possible recession this year. Maybe the relief from a slower- or lower-than-expected path of rate hikes quickly gave way to fears that the world economy is still facing some significant headwinds. There are high food and fuel prices. Supply chains just aren’t healing fast enough, especially with China’s continued struggle with COVID-19. Plus, we may be in for some “pandemic payback” whereby some companies merely enjoyed a profit windfall with COVID-19, not necessarily a permanently higher earnings-growth path.

Russia-Ukraine update:

  • Actions:
    • Ukraine successfully attacked a Russian command center. Russia’s head of the military was wounded in the attack.
    • Russia seems to be focusing on retaining the territory it has already taken rather than continuing to expand westward. It’s working on installing governments and forcing locals to use Russian rubles for transactions.
  • Sanctions:
    • European Union countries are proposing a ban on the purchase of Russian oil. The ban would be phased in over six months.
  • Negotiations:
    • U.S. Speaker of the House Nancy Pelosi met with Ukraine’s President Zelensky in Kyiv, reiterating U.S. support for Ukraine.
    • Peace talks are stalled. Ukraine insists Russia give up territory it has seized, but Russia seems intent on securing for itself the entire Donetsk and Luhansk regions.


  • Earnings reporting season is heating up. 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 87% of companies reporting, earnings have grown at a 9.04% year-over-year rate while sales have grown at a 13.36% pace.


  • Nonfarm payrolls in April increased by 428,000, the unemployment rate held at 3.6%, and wages rose 0.3% month over month. Over the past year, average hourly wages increased 5.5%, which is still slower than the rise in consumer prices.
  • The Federal Open Market Committee hiked its policy rate by 50 bps and announced it will start shrinking its balance sheet in June. Initially, the Fed will let $30 billion per month of Treasury securities roll off the balance sheet, but it will ramp that amount up to $60 billion over three months. It will let $17.5 billion in agency mortgage-backed securities mature, increasing that to $35 billion over three months.
    • The policy statement made it clear that the Fed has one focus and one focus only: inflation. It listed risks to inflation and growth from Russia’s invasion of Ukraine and China’s COVID-19 lockdowns, but it said, “The Committee is highly attentive to inflation risks.” Note: It didn’t say anything about growth risks.
    • During Fed Chair Jerome Powell’s press conference, he said a 75-bp rate hike is not something the committee was actively considering. Markets seemed to love that statement. He said 50-bp hikes will be discussed in the next couple of meetings, but it seems like the Fed is willing to meet, but not exceed, market expectations of rate hikes.
  • China’s economic activity took a nosedive in April. The China Federation of Logistics and Purchasing Manufacturing Purchasing Managers Index dropped to 47.4 while the China Non-Manufacturing Purchasing Managers Index fell to 41.9. These indexes are designed to measure the change in economic activity, not the level of activity, so they suggest things slowed dramatically as the country zealously pursued its zero-COVID-19 policy. It’s no wonder the government was out last week talking about providing broad-based support to hit its growth targets.
  • In the U.S., the Institute for Supply Management Manufacturing Index fell to 55.4. Supplier deliveries rose as transportation bottlenecks continued to cause delays.
  • The Reserve Bank of Australia raised its policy rate by 25 bps. The Reserve Bank of India surprised markets by announcing a 40-bp rate hike at an unscheduled meeting. Brazil’s central bank hiked its policy rate by 100 bps to 12.75%. The Bank of England hiked its policy rate by 25 bps, but it was a split decision with some members preferring a larger hike and some preferring no hike. The Bank of England warned about the possibility of a recession later this year as higher prices drag on spending.


  • There was a leaked draft of a Supreme Court majority opinion that would overturn Roe v. Wade. Politicians across the political spectrum pounced on it, partially to increase voter turnout in the upcoming mid-term elections.
  • North Korea launched a ballistic missile from its capital region into the country’s eastern waters.

The week to come

  • Earnings season begins to wrap up, but there’s a lot of excitement next week with the April inflation numbers coming out on Wednesday. The preliminary reading for May’s consumer sentiment will be released on Friday.
  • Outside the U.S., China releases April’s trade data on Monday and April’s inflation data on Tuesday. On Thursday, the U.K. releases its first-quarter gross domestic product data and its industrial production numbers for March. The eurozone’s industrial production numbers for March come out on Friday.

Thanks for reading, stay informed!

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