Weekly Market Commentary February 23rd, 2022

The Markets

Volatility was high last week as investors guessed and second-guessed how markets would react if Russia invaded Ukraine and sanctions were imposed on Russia. They also wondered what would happen if Russia pulled back. Adam Samson, Valentina Romei and Matthew Rocco of Financial Times reported:

Heightened geopolitical tension wasn’t the only concern for investors. They also contemplated whether the Federal Reserve (Fed) can tame inflation without hurting economic growth, or whether monetary policy can affect inflation caused by structural supply chain issues. The Fed is expected to continue to tighten monetary policy by raising the Fed funds rate in March, and reducing its balance sheet throughout 2022, reported Davide Barbuscia of Reuters.

Uncertainty caused some investors to favor safe-haven investments. As a result, last week:

• Treasury rates moved lower. Normally, a pending rate increase would push interest rates higher. Last week, however, the yield on benchmark 10-year U.S. Treasury notes dropped below 2 percent, and Government of Canada bonds also finished the week slightly lower, as investors sought safe havens.

• Gold prices moved higher. “After surging in 2020, [the price of gold] has essentially traded sideways for the past 18 months... Now it’s on the move…Gold is often thought of as protection against inflation, but it’s really protection against chaos—and the situation in Ukraine certainly counts as chaos. That has helped push the price of gold up 5.8% in February,” reported Ben Levisohn of Barron’s.

Major North American stock indices moved lower last week and came close to correction territory. Corrections occur when assets, indexes, or markets decline by 10 to 20 percent. When the market corrects it is not a pleasant experience, but corrections are not unusual.

It is likely markets will remain bumpy in the coming weeks. If you have any questions or concerns about your investment portfolio or current market conditions, please don’t hesitate to give us a call.

Source: FactSet

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The great college debates

During the past two decades, pundits have launched all kinds of debates about college and its importance. They have asked:

• Is college a good investment? In 2011, as the economy slowly recovered from the Great Recession, the idea that “college, the perennial hope for the next generation, may not be worth the price of the sheepskin on which it prints its degrees,” gained popularity, reported Daniel Smith of New York Magazine.

• Which college majors are worth the cost? As everyone weighed the value of knowledge against the cost of attaining it, news media began reporting on the highest paying college majors. In general, science, technology, engineering and math majors tend to receive the highest incomes after graduation, according to Payscale’s 2021 College Salary Report.

• Should employers remove college degree requirements from job listings? Today, some are looking at the college picture from a different perspective. “According to data from the U.S. Census Bureau, between 2010 and 2019, 36% of Americans ages 25 and older had a bachelor’s degree or higher. Yet 65% of job listings still require postsecondary education and 61% of HR and business leaders say they throw out resumes without college degrees even if the candidate is qualified,” reported Hunter Johnson in Forbes.

There is evidence that college degrees improve economic outcomes, overall. As with almost anything, though, there are exceptions. In 2021, the Georgetown University Center on Education and the Workforce reported:

“The lifetime earnings of a full-time full-year [American] worker with a high school diploma are $1.6 million, while workers with associate’s degrees earn $2 million. However, at least one quarter of high school graduates earn more than associate’s degree holders. Bachelor’s degree holders earn a median of $2.8 million during their career, 75% more than if they had only a high school diploma. Master’s degree holders earn a median of $3.2 million over their lifetimes, while doctoral degree holders earn $4 million and professional degree holders earn $4.7 million. However, one quarter of workers with a bachelor’s degree earn more than half of workers with a master’s or a doctoral degree.”

The debate about college costs and payoffs continues. However, some companies are deciding that talent and a strong work ethic are just as important as a college degree, and have begun removing degree requirements for job applicants, reported Glassdoor.

Weekly Focus - Think About It

“No thief, however skillful, can rob one of knowledge, and that is why knowledge is the best and safest treasure to acquire.”

—L. Frank Baum, Author

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