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Comments From the Polish Government Stating Russia is on the Verge of Invading Ukraine Spooked Stocks.

Comments from the Polish government stating Russia is on the verge of invading Ukraine spooked stocks.  Putin is showing no sign of backing down since last week’s tightened sanctions as Russia is massing even more troops on its neighbor’s border.

Equities were already down following the strongest reading for the ISM non-manufacturing since Decembers 2005, strength suggesting the Fed might change monetary policy as early as mid-2015.  I rhetorically ask is good now bad?

Perhaps the issue at hand is that no one knows when or how much the FOMC must increase interest rates.  Markets hate uncertainty and any potential change from the status quo is typically met with selling.

This uncertainty might be amplified by the simple fact that never ever has any central bank attempted to change monetary policy or unwind positions from today’s massively accommodative stance.  Mistakes will be made for there are no benchmarks as to follow.

Markets were also unnerved by a decline in China’s non-manufacturing index to the lowest level on record.

I must write yesterday’s decline was on extremely light volume and lacking of conviction, similar to the advance the day before.

What will occur today?  How will the trade data be interpreted?

Last night the foreign markets were down.  London was down 1.22%,  Paris down 1.27% and Frankfurt down 1.52%.  Japan was down 10.5% and Hang Seng down 0.26%.

The Dow should open moderately lower on concerns that sanctions over Ukraine will intensify, an intensification that will hurt global growth. The 10-year is up 10/32 to yield 2.49%.


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Ken Engelke

Chief Economic Strategist Managing Director

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.