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Stocks tank, oil prices surge following Russia鈥檚 attack on Ukraine - YouTube
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[Music]
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russia's invasion of ukraine is hitting
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the stock market hard take a look at the
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big board right now you see the market
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is down 621 points that's a little under
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two percent let's bring in joe saluzi to
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discuss the major impact this attack is
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having uh on the markets he's the
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co-founder of themis trading uh joe
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thanks for joining us um so uh you and
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other uh investors have been watching
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what's been happening
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in ukraine over the last couple of weeks
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last couple of months certainly this is
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no surprise we've heard the president of
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the united states over the last couple
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of weeks saying that this invasion was
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imminent so what are investors saying
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now as they look at the market in the
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days ahead
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and thanks for having me on i think
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exactly right we've seen you know this
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has been leading up for quite some time
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this is not i mean i hate to say it it's
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not a surprise the market was expecting
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this and we've been building into it
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with a sell-off over the past couple of
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weeks uh what we say right now we're
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seeing you know a continuation of that
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sell-off about two percent which when
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you think about it is not that bad
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considering you know what's going on out
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there i do think investors were prepared
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for it um i don't think we're going to
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get that much worse uh the volatility
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index which is a measure of investor
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fear is at 35 which is pretty high you
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know anything north of 40 are you really
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starting to get nervousness out there
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but right now i think it's a relatively
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controlled sell-off i think you know
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things like gold which you would
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normally expect to rally and initially
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rallied but then pulled off so that
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tells me maybe there's not as much fear
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out there right now now if this thing
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continues and get gets worse well then
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we'll have to see but as of right now
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the market is treating it as expected i
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would say joe what is the market
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reacting to is it reacting to the
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sanctions and we're hearing that more
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sanctions severe sanctions are coming is
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it reacting to the uncertainty the
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possible instability moving forward
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yes and certainly the market hates on
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instability it hates volatility it hates
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the unknown right that's the biggest
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problem with the stock market if you
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can't predict things we love to all
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predict earnings and and growth rates
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and things like that when you throw a
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monkey wrench into it like a
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geopolitical concern like this well that
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throws all the models off so you have to
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readjust your risk levels and so on but
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outside of the ukraine situation really
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the market is mostly worried about
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inflation and that's been the story all
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year and you know part of that is
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geopolitical but most of that is due to
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fiscal and monetary policy that's a
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concern that's not going to go away even
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if the ukraine crisis magically was
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solved overnight we still have major
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underlying issues in the stock market
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that we haven't addressed yet and and so
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joe the other question i have is if you
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look at the weakness that we're seeing
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in the market today and over the last
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couple of weeks where we've seen this
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selling off of happening but on the
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other hand for some of the companies
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that you own for example in your
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portfolio the fundamentals are strong
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right i mean you bought those companies
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because you believe in their long-term
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growth projections uh that hasn't
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changed
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right and that actually you know our job
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we're actually agency traders so we
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trade on behalf of institutions like
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hedge funds and mutual funds and pension
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funds i'm working my orders right now
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i'm on the trading desk behind me i've
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got buy orders on the desk to your point
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i've got investors who are seeing values
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saying hey i like this stock i already
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own it in fact i'd like to buy some more
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because i think these levels are good on
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the flip side there might be some
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sellers out there as well but yes to
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when you're looking at stocks you have
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to look at a long term you have to look
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at where's your risk horizon what's your
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parameters of course there's
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geopolitical concerns of course there's
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a federal reserve but what do you think
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of the fundamentals of this stock is
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this something that you like in a year
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or two from now and when you're trading
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on behalf of institutional investors
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they look for longer term so days like
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today do create some values you know you
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don't get to jump all the way in but i
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we do see people dipping their toes back
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hips so you describe joe institutional
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investors you're trading on behalf of
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those institutional uh accounts uh and
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they see
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the uh dip in the market and they see a
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buying opportunity on the flip side
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you've got retail investors i'm gonna
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ask you to put on your analyst hat a
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little bit here retail investors who
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don't think as institutional investors
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they often get emotional when looking at
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the stock market and they turn on their
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tv or they turn on and they get on their
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app and they get on their apps
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not me
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but they get on their apps and they see
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the market is down two percent and they
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get worried they call they call their
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financial advisors uh what would you
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recommend that people do who wake up
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this morning and they look at their 401k
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it's already been down sharply
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throughout the course of the year it's
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now it's down even more sharply this
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morning
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yeah that's a great question and i do
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think it depends on your level of risk
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certain if you're younger and you're
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trading from an app on a you know robin
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hood style or you're trading crypto like
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the young kids all do that's different
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that's trading that's short term and i
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do think people are flipping in and out
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of positions and they are getting
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nervous quickly if you're a little bit
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older and you're saving like you
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mentioned for a 401k well these are not
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times to panic certainly not i mean i'm
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not concerned in my personal 401k about
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the geopolitical situation i am more
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concerned about the inflation and the
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growth situation here in the us as well
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as in europe and other countries i am
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looking at that considering whether or
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not i want to rebalance so you know
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you're balancing you're not 100 equities
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if you're 100 of your equities in a 401k
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you're probably living a little
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dangerously so maybe you can rebalance
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it and tweak it a little bit just to
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take that risk level down some our
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general thought is if you're going to
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sleep at night and you're worried and
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you can't sleep you have too much risk
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exposure you should be taking that down
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and taking it down soon all right so
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everyone takes your advice and they
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don't bother looking at their 401k for
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now um that's fine but then there's just
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day-to-day living right can you afford
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the groceries can you afford the gas to
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fill up your car can we expect this
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instability to have an impact on just
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the day-to-day prices or i guess that
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was happening already but can you see us
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seeing you know paying more for gas and
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other things
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directly connected to the instability
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we're seeing in eastern europe
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for for energy yes for gas prices i do
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think that will be you will have supply
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issues going on there however i think to
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you to your point there the other way
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inflation was going on already prior to
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this situation we've got the federal
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reserve which is indicating they may go
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anywhere between five and seven rate
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hikes this year to tame that inflation
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which is north of seven percent this is
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very scary inflation is what the market
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really hates and what is one word which
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is even worse than inflation it's called
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stagflation stagflation means you have a
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slowing economy and you still have
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inflation that's the death to the stock
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market that is the worst word you can
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say
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you're kind of heading in that direction
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you have to be very careful here the
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federal reserve is walking a tightrope
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as well as other central banks like the
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ecb do you raise rates if you raise them
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too much you then may squash growth if
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you slow down growth but you don't
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increase you don't slow down inflation
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you've got a major problem on your hands
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so the federal reserve and the other
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central banks put themselves into a box
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over the past decade by doing what
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they've been doing what's called
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quantitative easing we now have to kind
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of come up with some big decisions and i
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think that's also what's worrying the
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market and that will stay here for quite
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some time not just this week or this
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month so so let me just get your take on
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what one uh federal reserve president
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said uh james bullard said that the goal
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of bringing inflation down joe would be
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to target a neutral target rate uh about
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two percent so the fed would have to
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raise rates about a hundred basis points
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before july do you like that move or no
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bullet's a hawk they call me he's one of
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the hawks on the side right there's
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hawks who want to raise things quicker
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there's doves who want to be a little
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bit slower i think it's somewhere in
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between i do think they will raise rates
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i don't think they're going to go 100
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basis points right away they'll probably
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go 25 now you know 50 was kind of priced
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in maybe they'll start with a quarter of
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one percent because of these
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geopolitical concerns and because of
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what i said before if once you press
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your foot on the gas pedal if you go too
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far
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you can't just go backwards
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you then have a problem so the feds get
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the fed's managing what they can do here
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and they're very they are very smart and
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they've been doing this for many years
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so i think that rate breaks rate hikes
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are in the cards for sure i do think
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they might slow it down a little bit
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just because of the fear of if we do it
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too much the economy is going to slow
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too much and then we're going to have a
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bigger problem
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uh joe saluzi thank you very much really
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good conversation appreciate it thanks
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joe
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