MOLINE, Ill. — The ongoing crisis in Ukraine continues to disrupt the global financial markets, including in the U.S.
Russian President Vladamir Putin's invasion of Ukraine has sent the U.S. stock market into a further decline, said Mark Grywacheski with the Quad Cities Investment Group.
Over the past two months, the S&P 500 has fallen 9.8%, the NASDAQ declined 16.1% and the Dow Jones Industrial Average declined 8.7%, Grywacheski said.
During Good Morning Quad CIties on Monday, March 7, Grywacheski explained his thoughts on the ongoing sell-off in the U.S. stock market.
Grywacheski said the sell-off started in late December 2021 and early January 2022, with the expectation the U.S. Federal Reserve would be much more aggressive in raising interest rates to combat inflation, which currently sits at a 40-year high.
"But the 2nd wave of this sell-off is from the destabilization of Eastern Europe by Putin’s advance into Ukraine," Grywacheski said. "This crisis will impact the US economy, but to what extent is highly dependent on Putin. Is Ukraine the final objective or does he try to bring in other former Soviet satellite countries- Georgia/Moldova- back under Russian control?"
Inflation currently sits at 7.5%. One of the biggest economic concerns, however, is how the crisis in Ukraine will impact the U.S economy and inflation.
"One of the major concerns is on the disruption to our supply of crude oil," Grywacheski said. "On Friday, the price of crude oil reached $115 per barrel, its highest level in 14 years. And this surge in crude oil has some analysts concerned this could push America’s rate of inflation to over 10 percent in the upcoming months."
That surge in crude oil prices is expected to impact Americans, too, Grywacheski said.
"One of the biggest misconceptions is that the crude oil industry exists in some type of singular bubble," Grywacheski said. "That the price of crude oil is somehow the exclusive realm of the energy industry. In reality, a barrel of crude oil is refined into the many products that impact most every facet of our lives. Such as gasoline, diesel fuel, heating oil, lubricants, chemicals and plastics."
Manufacturing costs are also increasing, along with shipping and transportation costs, which, ultimately, will be passed along to the consumer in the form of higher retail prices, Grywacheski said.
As of Monday morning, AAA reports the average price of one gallon of gasoline in Illinois is $4.30. In Iowa, the average price is $3.71, according to that organization.
The American Automobile Association reports, nationally, the average price of one gallon of gas is $4.07, the highest average since 2008. Grywacheski believes those higher prices will be around for quite some time.
"Back in 2018, the US overtook both Russia and Saudi Arabia to become the world’s largest producer of crude oil," Grywacheski said. "But today, U.S. production is well below that record-setting output we once had. We’re now increasingly reliant on Russia and OPEC -- which is led by Saudi Arabia -- to meet our crude oil needs.
With the ongoing crisis in Ukraine, Grywacheski said there is one question the Biden Administration needs to answer, if the U.S were to stop purchasing and using crude oil from Russia.
"If we’re not going to produce that crude oil here in the US, where are we going to get it from?" Grywacheski said.
You can watch our complete conversation with Grywacheski above.
Grywacheski joins "Good Morning Quad Cities" every morning during the 5 a.m. hour to discuss the latest financial news.