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Key Takeaways & Insights

  • After weeks of threatening troop buildup at the border, Russia finally made its first wide ranging assault on Ukraine last night…
  • Russian President Putin is saying they are only targeting military installations and are seeking to “demilitarize” the country…
  • US President Biden is conferring today with allies and has promised to announce further consequences on Russia for this incursion.


After weeks of threatening troop buildup at the border, Russia finally made its first wide-ranging assault on Ukraine last night attacking the country on four fronts. Russian President Vladimir Putin is saying they are only targeting military installations and are seeking to “demilitarize” the country although he did warn ominously about the consequences of foreign interference with the operation. U.S. President Joseph Biden is conferring today with allies and is promising to announce further consequences for Russia for this incursion.

While we are all admittedly reduced to speculation at this point, it appears Putin’s political goal is regime change in Ukraine. He is testing the will of the western allies to defend Ukrainian sovereignty. The U.S. has ruled out sending troop support, so the only possible response are economic sanctions. However, questions exist over whether the European allies would favor broader sanctions on Russian energy exports or any restrictions on financial flows both of which could prove too damaging to their own economies.

In a somewhat ironic twist, a muted response from the allies would likely favor the markets as it may allow energy prices to settle back with no likely supply disruptions. Heightened geopolitical risk may also provide the cover needed for the Fed to be more measured in implementing their monetary tightening program. Note that bond yields have declined over the last few days as a reminder of the role of core fixed income in helping to diversify portfolio risk.

We expect little impact on the U.S. economy unless greater escalation and resulting sanctions lead to an even greater spike in energy prices which would greatly hamper consumer spending. As of now, the risk of a near term U.S. recession remains rather low. The Biden agenda may have to pivot in the near term to prioritizing energy security allowing easier U.S. production. The European economy would be much more heavily affected with Germany being the most vulnerable due to its strong reliance on Russian natural gas.

While the situation remains very fluid as we await the response from the U.S. and its allies, the year-to-date market correction is exclusively driven by a contraction in valuation as current and expected earnings growth is comfortably positive. To the extent interest rates only increase gradually in this more uncertain environment, we can expect buyers will be drawn into the markets at what are now more attractive valuations.

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Meet the Author

Ben Pace

Partner & Chief Investment Officer

Ben is the Chief Investment Officer and a Partner in the New York office. He leads the firm’s Investment Committee and is a member of the Executive Committee. He has more than thirty-five years of experience in investment management. Ben has been featured in the Wall Street Journal and Reuters, and is a frequent commentator on Bloomberg TV and radio, Fox TV and CNBC, appearing regularly on network programs such as Power Lunch, The Closing Bell, Squawk Box, and Worldwide Exchange.

Prior to joining Cerity Partners, Ben was Chief Investment Officer and Head of Global Investment Solutions for Deutsche Bank Private Wealth Management in the U.S. In his role as CIO, he sat on the PWM Global Investment Committee, providing input on the U.S. economy and capital markets. He oversaw the investment strategy and asset allocation for PWM clients in the U.S. As Head of Global Investment Solutions, he brought together PWM’s capital markets and investment capabilities in an effort to provide an effective and consistent experience for clients. Prior to joining Deutsche Bank in 1994, he managed equity income funds for two investment organizations. During his tenure with those institutions, he also served as a securities analyst with a particular emphasis on the financial services and healthcare industries.

He earned his Bachelor of Arts in economics from Columbia University and Master of Business Administration in finance from New York University.

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James Lebenthal

Partner & Chief Equity Strategist

Jim is the firm’s Chief Equity Strategist and a Partner in the New York office. He has over twenty-five years of experience managing investment portfolios, and is a regular contributor on CNBC.

Prior to joining Cerity Partners, Jim served as the Chief Executive Officer and Chief Investment Officer of Lebenthal Asset Management LLC, where he developed, advised and served client relationships. Prior to joining Lebenthal Asset Management in 2007, he was a financial advisor for Goldman Sachs and a partner of investment firm Levy Harkins.

Jim currently serves as the Chairman of the Board of Trustees of Mizzentop Day School and as a Director of the Akin Hall Historical Association. He was a Lieutenant of and qualified as a nuclear submarine engineer in the United States Navy where he was awarded 2 Navy Commendation Medals and 4 Navy Achievement Medals.

Jim holds a BA in molecular biology from Princeton University, an MBA from The Wharton School of Business, and a Chartered Financial Analyst designation.

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