As I begin this column Ukrainian Foreign Minister, Dmytro Kuleba and Russian Foreign Minister, Sergey V. Lavrov ended their talks in Antalya, Turkey without reaching a cease-fire. Kuleba indicated that he was willing to talk again, while noting that Lavrov said he could not commit to opening a humanitarian corridor in Mariupol, but would take the proposal back to the Kremlin.

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Yesterday markets bounced back, not in small part due to the anticipation of this morning's talks which failed to move the needle toward peace.

The S&P 500 closed at 4,278, up 107 points, the Dow closed at 33,286, up 654 points and the Nasdaq Composite closed at 13,256, up 460 points. That is just about the opposite of Monday's close when the S&P 500 closed down 127 points, the Dow closed down 797 points and the Nasdaq Composite closed down 482 points.  Much of the action Wednesday, was in the Energy sector, where issues once again went against the direction of the market. Compare Wednesday's Top Losers with Monday's Top Gainers for yourself:

Charts: The New York Times

As might be expected with no good news emanating from Turkey market futures are currently in the red. S&P futures are trading down 40 points, Dow futures are trading down 308 points and Nasdaq 100 futures are trading down 185 points.

TalkMarkets contributor Brad Thomas who generally covers the real estate beat, in a TalkMarkets Editor's Choice piece entitled, Positive Spins And Russian Realities makes the following observations in the first part of his column before turning to REIT news:

"There are times when putting a positive spin on things probably won’t be well-received for obvious and understandable reasons.

That was my first (second and third) thought when I saw the Yahoo Finance headline, “Gas Prices Aren’t Really at a Record High,” not to mention its opening paragraphs:

Drivers are squirming as gas prices blast through levels last seen during the oil crunch of 2008. In July of 2008, U.S. oil prices hit $145 per barrel and gas prices peaked at $4.16, according to government data. With average gas prices now around $4.19, we seem to have set a new record high.

But those are nominal prices that don’t account for inflation. If you adjust for overall price changes since 2008, gas prices would have to hit $5.25 per gallon to be a new record high, in real terms.

If that’s meant to be comforting, I think it fails...

Moreover, according to all reports – including direct statements from Biden – gas prices are headed higher still. ABC News tweeted the other day, complete with matching video, how:

Pres. Biden responded to a question on gas prices as he arrived in Fort Worth, Texas, saying, “They’re gonna go up.”

“Can’t do much right now. Russia’s responsible.” Abcn.ws/3sRblan.

Then again, consumers in the U.K. might have it worse. A new report out from Resolution Foundation reads:

Our preliminary estimate is that the conflict in Ukraine could push peak inflation in 2022-23 above [8%]. This could leave the typical real household income for non-pensioners [4%] – or £1,000 – lower than in 2021-22.

The report is quite detailed, but I’ll just highlight two sentences:

• Considering the impact on petrol and energy costs alone leads us to estimate the monthly peak of inflation… could rival the [8.4%] reached in 1991 (in turn the highest inflation since 1982).
• High inflation will make falling real household incomes the defining economic feature of 2022.

Now, British Transport Secretary Grant Shapps did say the country will increase its oil production to make up for the 8% Russian imports it usually relies on. That comes after both the U.K. and the U.S. announced yesterday they’ll no longer be buying the Russian commodity.

Meanwhile, European Commission President Ursula von der Leyen believes its collective countries have enough liquefied natural gas (LNG) to make it through the winter – news that sent many a market up this morning.

Also up, strangely enough, is cryptocurrency right as Biden is set to approve regulations on it. Bitcoin hit $42,245 earlier this morning, a near-8.5% 24-hour rise. And Ethereum climbed 6.5%+ to $2,755.

What’s down, at least as of last month, is mom-and-pop shop sentiment, according to the National Federation of Independent Business. Its Small Business Optimism Index fell 1.4 points in February to 95.7, its lowest reading since January 2021."

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Contributor Erik Ristuben offers his take on current events in Russia And Ukraine: What Investors Might Do And What We Are Actually Doing.

"The primary investment challenge of the humanitarian crisis occurring in Ukraine is that the unending disturbing images coming to us daily strike a deep chord with our fundamental behavioral biases...The broad economic backdrop is that we’re still in the later recovery part of the economic cycle, where we are enjoying significantly above-trend growth."

"At this point, the situation remains largely contained, which is often the case with these types of geopolitical events. In large part, we think this is the most likely course. Some key observations from today:

• The invasion of Russia is evidently not going as planned for President Vladimir Putin, and perhaps indicates a more limited ability to militarily escalate outside of Ukraine.
• An even further increase of cyberattacks by Russia is a primary concern of ours, but highly unpredictable in terms of targets.
• Natural gas continues to flow freely between Russia and Europe, and that level of co-dependency make the stakes of either party calling an end to this flow very high indeed. It’s still very possible but perhaps much less likely."

 Ristuben goes on to ask what investors might do, what he is doing and is there a bottom line that can be drawn at the current time?

"What might investors do?

The problem with doing something is that you need to have fairly specific idea of what is going to happen. And it is important to be right.

• If you are sure that the situation will remain contained and eventually resolved in some way, then the economies of the countries directly involved are not big enough to pose a macroeconomic threat by themselves. In that case, given the current macroeconomic data, you probably should add risk to your portfolio.
• If you are sure one of these escalation paths will manifest themselves and turn this into a true macroeconomic crisis, then you should de-risk your portfolio.

You better be right, though. If you’re investing based on such a binary level of certainty and you go either way and are wrong, depending on how far you moved, there will be money lost."

"What are we actually doing?

At Russell Investments, we continue to maintain overall portfolio risk positioning in our strategies, and we are discussing the potential to add risk. At this point, sentiment is negative...With energy pricing increasing uncertainty around the strength of the cycle, the risk-on bar is even higher this week...We are mapping out our strategies around how we will be winding down our holdings in Russia, given the fact that it is not a functioning capital market. Currently, nothing can be done as the markets for these securities are closed."

"The bottom line

Our current view of the most probable outcome is that the global economic cycle will effectively weather this geopolitical storm, although risks to this are mounting and recessionary risks may be rising from unusually low levels to more normal levels. Current asset valuations do not scream out a buy-low opportunity. The economic cycle is strong, but there are increasing risks. And although sentiment is negative, we believe it is not so negative as to be sending a strong-buy signal..."

TM contributors Warren Patterson and Wenyu Yao note that as stocks "corrected" higher yesterday, commodities "corrected" lower. Their article The Commodities Feed: Sell-Off Across The Complex, discusses the action.

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"The market saw yet another big move yesterday, although for a change it was a sell-off. ICE Brent sold off more than 13%, which took it back down towards $111/bbl. This was part of a broader market move, with commodities that are heavily exposed to Russia-Ukraine all trading lower over the day. The key catalyst for the move appears to be comments from the Ukrainian government that they would be willing to compromise in order to end the ongoing war. The move highlights how sensitive the market is to developments related to Russia-Ukraine."

"The USDA’s latest WASDE report was somewhat constructive for grain markets. The USDA revised down global wheat export estimates from 206.7mt to 203.1mt for 2021/22 due to recent developments in Russia-Ukraine...However, export estimates from Australia and India were revised higher by around 1.5mt each to partly offset the impact. The USDA also increased its global wheat production estimate from 776.4mt to 778.5mt due to a bigger crop in Australia. The USDA increased global wheat stock estimates at the end of 2021/22 from 278.2mt to 281.5mt; the market was expecting a number closer to 277.5mt. For corn, the USDA revised down inventory estimates for 2021/22 from 302.2mt to 301mt; again higher than market expectations of around 299.5mt...The USDA report was fairly constructive for soybeans with inventory estimates revised down from 92.8mt to 90mt due to poor crops in South America; although it is still higher than the 88.7mt that the market was expecting."

Contributor Aristofanis Papadatos finds three dividend stocks which he considers safe for the times, in his TalkMarkets exclusive 3 Top Dividend Stocks For Dividend Safety.

Photo by Braňo on Unsplash

"Due to the extremely high uncertainty that prevails right now, income-oriented investors may want to resort to safe dividend stocks. In this article, we will analyze the prospects of three stocks that offer attractive dividends with a wide margin of safety."

"UGI Corporation (UGI)

UGI Corporation is a gas and electric utility that operates in Pennsylvania, in addition to a large energy distribution business that serves the entire U.S. and other parts of the world...While many other companies came under great pressure in the last two years, UGI grew its earnings per share by 17% in 2020 and by another 11% in 2021, to a new all-time high...Management has provided guidance for 6%-10% annual growth of earnings per share in the long run...Moreover, UGI is attractive for income-oriented investors. It is currently offering a 4.0% dividend yield with a wide margin of safety."

"Donaldson (DCI)

Donaldson is a manufacturer and distributor of filtration systems and replacement parts worldwide. The company operates in two segments: Engine Products and Industrial Products...

Donaldson saw its earnings per share slip only 1% in 2020 and recovered strongly from the pandemic last year, with 14% growth of earnings per share, to a new all-time high. Moreover, Donaldson has an exceptional dividend growth record, with 34 consecutive years of dividend growth. The stock is currently offering a 1.7% dividend yield, which may seem uninspiring on the surface. However, thanks to its solid payout ratio of 33%, its essentially debt-free balance sheet and its promising growth prospects, the company can continue raising its dividend for many more years."

"Silgan Holdings (SLGN)

Silgan Holdings manufactures and sells metal and plastic containers, as well as packaging closures. Its containers are found in everyday food consumables, such as pet food, fruits and vegetables, and drinks, while its closures are applied to the beverage, garden, and personal care products. Silgan has exhibited a somewhat volatile and lumpy performance record. Nevertheless, it has grown its earnings per share and its dividend by 12.9% and 9.9% per year, respectively, over the last decade...Silgan has posted record earnings per share in each of the last two years. It nearly doubled its adjusted earnings per share, from $1.75 in 2019 to $3.25 in 2021, and is expected to grow its bottom line by another 20% this year, to a new all-time high...Silgan has a lackluster current dividend yield but is likely to keep raising its dividend at a double-digit rate for years."

"Final Thoughts

The above three stocks are characterized by resilience to downturns and offer attractive dividends, with a wide margin of safety. As a result, they are attractive candidates for risk-averse, income-oriented investors during the ongoing crisis between Russia and Ukraine."

Please see Papadatos' article for further details.

Caveat Emptor.

That's all for today. 

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