Transcript:
Marie Marinovich:
How does Ukraine Russia situation affect the US economy?
Tom Vaughan:
Okay, so the key here is we there’s a lot going on with Ukraine and Russia besides the financial aspects, right? So it’s always difficult to answer this question. But if we’re going to take a look at how this might affect the stock market, how this might affect the economy, you really have to focus on the basically the goods that are coming out of those countries, and the two big ones are oil, really oil, gas and coal, that energy coming out of Russia, and then wheat, right. And so the object is to lower inflation, the Federal Reserve can back off and their interest rates, the market stabilizes in that environment, and probably does quite well in that environment. But if you have a scenario, like the last week, the European Union agreed, I think, with a couple of exceptions, to stop using Russian oil over the next six months, right. So that probably means that there’s going to be a lot of pressure on the price of oil, because now you got this, they think 35% of their energy needs come from Russian oil as a group across across the European Union. And so when you have to then go somewhere else to get that, and you’re not going to take that oil on, that could rise price. And so if you get prices going up and up and up, and we’re at $110 a barrel right now. And if we go, you know, to the high was back in 2007, Route, $150 a barrel, if you take that $150 A barrel and just kind of added inflation from 2007, to now, probably around $200 A barrel be equivalent, and on an on an inflationary basis, to where we are now.
So got some room, maybe we could still grow and not kill the economy. Because if everybody’s spending money on the gas pie at the gas pump, right, they’re not going to be spending money on travel and going out to eat and you know, those type of things. And a lot of these luxury things can go sideways. And then we’d Of course, so we eat as a food, you know, products and all kinds of different things. And it’s a huge staple. And Ukraine is a very big producer of wheat. They’re still producing wheat, apparently, but they’re having a hard time getting it out of the country, because of the port situation is under attack there. So those, that’s how it impacts because that price of wheat goes up and up and up and hits an all time high like it is now all of a sudden you’ve got a situation where food prices are skyrocketing. And again, people are now spending money on you know, their food, which is important and their gas, which is important. And they don’t it just sucks money out of the other parts that, you know, for Apple. Some people might not be able to afford a new iPhone, and because they’re spending more money on these other areas. Right. So that that’s the impact that Ukraine Russia has, we’ll have to wait and see what happens there. You know, not so much what happens in Ukraine and Russia, because it’s hard to tell what’s gonna go on there could go on for a long time. But just what what, you know, do the oil producing countries outside of Russia step up and produce more to take to basically allow that production with Russia, to you know, disappear from the European Union without massive price increases or not, right. Are we able to find other ways of dealing with the wheat? Can we get some of the wheat out of Ukraine, you know, those type of things we’ll have to see. So that’s the play that we’re all watching right now. We’re going to be watching very closely as things go