What's up guys, it's graham here so as an investing channel, i generally refrain from talking about topics like this, but since it will have an impact in your portfolio and quite a few people don't understand the full context of what's going on. I thought it would be worthwhile to break down the current tensions between russia and ukraine, what this means for you and how this will impact the entire economy moving forward, because i have to say whether or not you've been following along with current events. This is something to be made aware of, and it does have the potential to affect everything from banking stocks, cryptocurrency and even interest rates. Well, the market continues to decline from every twist and turn along the way.

For example, we've already seen the market drop substantially on recent news, causing the s p 500, to enter a correction for the first time in two years. Oil just hit its highest point since 2014, bitcoin plunged below 37 000, and the question absolutely still remains. How much worse could this get, and is this just the very beginning? So let's cover everything that you need to know about the future of the markets, your money and the economy, and don't worry with topics like this. I don't take science and i do my best to remain as neutral as possible, while only talking objectively about the facts.

That's it. So if you appreciate the unbiased information, if you want to support the channel, it does help out tremendously. If you hit the like button or subscribe and with that said, let's begin here, alright, first on the most basic level, here's what's going on between russia and ukraine and why this is so important to understand, even for all of us here in the u.s. Now, for those not aware up until 1991, much of europe was controlled by the communist-run soviet union and at the time of its downfall, ukraine had the third largest atomic arsenal in the world.

As a result, the united states and russia worked with ukraine to disarm and remove the nuclear missiles in exchange for the security that would protect them from a potential russian attack. However, in 2013, the ukrainian president rejected a deal that would integrate their economy with the european union under the suspected pressure of signing a deal with russia. Instead, although that proved very unpopular for ukrainian citizens who began to protest throughout the region, russia saw this and became concerned about the possibility of their neighbor ukraine adopting new western alliances, and so russian troops took over a neighboring peninsula sparking tension that they had violated their Original agreement not to attack enter now the north atlantic treaty organization, otherwise known as nato. This is an alliance and treaty between countries who aim to resolve military and political conflict, build partnerships and uphold the security of the north atlantic.

In order to join, there must be unanimous agreement between all 30 member countries and at the core of the agreement, is what's called article 5, which is a commitment that an attack on any nato country is treated as an attack on the entire alliance or, in other Words if ukraine joined and then russia attacked ukraine, it would force all 30 nato members to get involved and it would become a global issue. In this case, though, russia wants to gain more influence on the region, while ukraine wants to be their own independent country and that's causing a lot of friction, see ukraine previously applied for nato membership in 2008 and were informally promised that eventually they would be given the Opportunity to join, but from the russian perspective ukraine joining nato would mean that their entire western border would be controlled by an alliance that they see as a potential threat. However, that was just the very beginning in an effort to resolve tensions between the us, russia and ukraine. Negotiations went well not so good with russia making demands that the us and most of nato couldn't adhere to like not admitting any new members banning ukraine from joining and prohibiting any military activity throughout eastern europe.

At the same time, russia began increasing their military presence near ukraine, where the u.s says that they've amassed over a hundred thousand troops with the implicit threat that they could use force if their demands are not met. By the end of january, the u.s responded back opening up a dialogue should they choose to accept, although negotiations stalled, tensions grew and throughout the last few weeks, things have only gotten worse now in response to russia, preparing for a potential invasion into ukraine and even moving Further into the region, the u.s sent troops to the ukrainian border as a show of support for the european alliance. They cut off russian funding for u.s owned debt. The uk announced targeted sanctions against banks and wealthy individuals to freeze assets, and potentially many more sanctions could be coming or in other words, if you want this summarized even more simply, there's been a long-standing tension between russia and ukraine and with ukraine aligning more with western Philosophies, russia has threatened to use force to gain control, impacting the alliance of all surrounding nations.

Of course, even though i'm certainly not qualified to give you a deeper understanding into the exact nuances of everything going on. We should talk about this in relation to the market, because there's a lot more going on than meets the eye. First, we have an increase in commodity prices like oil and gas like just yesterday. It was announced that oil is quickly approaching a hundred dollars a barrel, while there's a potential disruption of natural resources.

After all, russia is one of the largest oil producers in the world and when they supply europe, with nearly 40 of its natural gas and 25 of its oil, it's pretty safe to assume that prices could continue going higher. This impact extends even further, though, with reuters, saying that over 90 percent of us semiconductor grade neon supplies come from ukraine, while 35 of us palladium is sourced from russia, meaning computer chip and semiconductor production could be even more strained. After all, these trips are on everything from cars, computers, phones, video games, electronics, solar panels or, basically anything with a computer, and that's been partly to blame for the skyrocketing costs of nearly everything that we use on a day-to-day basis. In fact, a survey more than 150 firms found that supplies had fallen from an average of 40 days worth in 2019 to just five days in late 2021, with the current tension between russia and ukraine that might not go away any time soon.

Second, we got the increasing fear of inflation, see inflation is measured as a year-over-year increase in prices and for inflation to continue. Prices have to continue rising at the same speed. Up until now, it was largely assumed that a portion of inflation would be transitory, meaning prices would go up, but the pace at which they increase in value begins to slow down over time. It would be no different than your grocery items going from 100 to 107 dollars in one year, but then increasing to 109 dollars in the second year effectively, meaning that inflation has slowed down to their target 2, even though prices are still rising.

However, the tension between russia and ukraine has renewed the fears of what happens if prices just keep rising even more after all, gasoline makes up a large part of the consumer price index, and if oil continues going higher because of international attention, that will absolutely be reflected In our numbers, the same applies to the chip shortage coming from both russia and ukraine, with used cars being a perfect example year over year, the price of automobiles has gone up by nearly 40 percent due to labor material and supply chain bottlenecks, but just as they're Beginning to come back down, they could just as well start to go back up depending on how much worse things get the supply chain could be disrupted yet again by a domino effect of one exporter to another to another throughout europe, causing inflation to come in. Worse than expected, again throughout foods, daily items and oil, that of course causes a snowball to number three rising interest rates. I know we've covered this topic before and you've heard it everywhere, but seven and a half percent inflation is a critical situation for the federal reserve, whose mission is to bring down inflation to a reasonable level by increasing interest rates. However, there is a bit of a problem: it's generally thought that the better the economy does, the more people spend their money and the lower the unemployment is the more likely it is that interest rates are going to be increased higher than expected, because it's assumed that Prices will continue rising, but with the current tensions, people worry that prices could see another spike higher.

For the reasons we just mentioned, causing the federal reserve to take even stronger action, which, of course, would begin to depress stock values. In fact, as we could see, as rates rise, a large portion of the market begins to sell off and with tech making up the majority of most indexes, they tend to suffer the most, the faster rates increase and finally for uncertainty. Basically, the one thing the market hates is the unknown, and when inflation comes in higher than expected, combined with an unpredictable movement, the russian troops into an area that has the potential to send ripple effects throughout the economy, stock prices tend to fall. As the worst case scenario tries to price itself in it's very much the once, we know the outcome, we could adjust accordingly and look forward, but this is not the situation where that could be done, even though we're not sure exactly how this is going to play Out what will happen or how easily this could be resolved? I did find it reassuring to know that, historically, during times of political tension, research cited by lpl financial found that, since 1941, the stock market has on average saw a drop of 5 percent with an average recovery time of 47 days.

On top of that, they also mentioned that the swiss finance institute found that the increased likelihood of a war decreased stock values more than the actual war itself. They called it the war puzzle, because there was no clear explanation as to why stocks increase once a war breaks after a prelude, some theorized. That stocks react worse to the possibility of something happening rather than the event itself, and that could really be a perfect explanation. As to what's happening here, for instance, goldman sachs says that the market could fall six percent if tensions get worse and the nasdaq could see a decline of another nine percent.

If this continues, cryptocurrency prices also took a huge hit under the threat of rising inflation and geopolitical tension, not to mention some are beginning to compare its performance to that of a tech stock which typically rallies during times of low interest rates. Of course, if the stock to flow model is correct, this could be a good buying opportunity before a potential rally in 2025.. So if you're interested in buying the dip, the cryptocurrency exchange ftx is a place where you could buy, sell track and trade. A multitude of cryptocurrencies and nfts right from your phone with fees that are up to 85 percent less than the competition, not to mention you could also earn free crypto on every trade over ten dollars and their crypto debit card is accepted at millions of merchants worldwide.

So if you want to sign up and learn more feel free to use my link down below in the description, although overall in terms of the entire market, it does seem as though this is just one piece to an already very delicate puzzle of economics where we Could see a ripple effect from international tensions to rising prices, to increasing rates, all of which can impact your portfolio for myself. I know it's difficult watching your account go down in value, especially if you've only been investing throughout these last few months, but ultimately, if it makes you feel any better, there is always going to be something going on, and rarely is there ever a peaceful time where Stock prices trend upwards without something scaring investors. It's simply just a part of the investing process, and the best thing that you could do is stay educated, keep buying as normal and, most importantly, don't panic and subscribe. So with that said, you guys thank you so much for watching also be sure to add me on instagram or on my second channel.

The gram stefan show because i post there every single day, don't post here. So if you want to see a brand new video for me every single day, make sure to add yourself to that. And lastly, if you want a completely free stock, that's now worth all the way up to a thousand dollars feel free to use my link down below in the description and sign up for public using the code. Graham, you may as well do that it's pretty much like free money.

So thank you guys so much for watching and until next time.