Although Russia’s atrocious war on Ukraine overshadows all other news, the genocide of Ukrainians is not the main risk to financial economic conditions. Unlike Europe, the terrible events in Ukraine impacts the U.S. economy only marginally. The main risk to the U.S. economy and stock market is not what happens in Kyiv. The main risk to the U.S. is inflation, which is running at its highest one-year rate in 40 years.  

Runaway inflation means higher interest rates, and the Federal Reserve just began what is expected to be the first of seven interest rate hikes in the next two years. When bond yields are higher, they become more attractive versus stocks, which draws money from stocks to bonds.