Equities price out war. Now what?

Here’s the best take I’ve seen on the equities round trip of the past few weeks:

The CoTD (Feb 15thlinkhere) that I’ve had lowest confidence in one or two weeks after publishing (and might have retracted if I could) was the one showing the historical playbook for geopolitical events. But as it turns out, that playbook has worked remarkably well with the S&P 500 now back above levels from the point where the US warned of an imminent Russian invasion of Ukraine late on Friday11th February. This marked the start of the escalations and a geopolitical-induced market sell-off. So hats off to my equity colleagues, Binky Chadha and Parag Thatte, for their analysis on which I based a lot of my last month’s thoughts even if I was prepared to forget I ever highlighted it at the market nadir 2 and a half weeks ago. Basically, the duration and the scale of this sell-off has been almost identical to the median seen through history when we’ve experienced geopolitical or domestic US political events. The bounce back has actually been a few days quicker than normal. It normally takes three weeks to hit a bottom and 3 weeks to fully recover. This event took around 3 weeks and just over 2 weeks respectively to do the same. A reminder that we also highlighted that what happens after the recovery was complete then mostly depends on what conditions were like going into the crisis. Geopolitical events have rarely left a deep scar on markets but even before events escalated around Ukraine, markets were trying to come to terms with inflation and rate hikes. That will continue to be the dominant theme for markets in H1 and beyond.

That is, the real war over equities is about to begin. BofA: