Mid-Month Stretch: Stand for Peace

It's a victory when the weapons fall silent and people speak up.

~ Volodymyr Zelensky

It's been a challenging start to the year, if not a challenging two years. The tragic events unfolding in Ukraine and the human suffering we are witnessing make it difficult to write about investment positioning and risks. So, we will briefly touch on our investment thoughts but primarily focus on how we can support those who need it the most.

Life is both predictable and unpredictable. Our lives have a beginning, a middle and an end. But along the way, there are many twists and turns. We're often surprised how these twists and turns are remarkably unpredictable. Case in point is the global pandemic, and now a military conflict that may put Russia and NATO on a collision course.

Twelve months ago, investors' main concerns were higher than expected inflation, a "tantrum" in the bond market followed by the COVID-19 vaccine rollout, according to a Bank of America survey of global fund managers.

Notably not included on this list were a war in Europe, a surge in energy prices that has the potential to stunt economic growth, and surging soft commodity prices that could trigger social unrest.

The near-term uncertainty has us incrementally more cautious and testing our 2022 base assumptions:

• Economic activity will be above trend;
• Earnings growth will decelerate but remain positive;
• Rate increases will be less aggressive than the market was anticipating; and
• Resolution to supply chain issues will allow inflationary pressures to subside.

The pillar that the assumptions stand on is a more subdued inflation outlook. Increasingly, our inflation moderation call is coming down to predicting oil prices.

Oil is the wildcard in our equation, and the commodity is closely tied to the events unfolding in Ukraine. Predicting the military conflict's outcome is impossible, thus clouding the outlook.

But this week, a significant reversal in oil prices is a positive for the economy and equity markets. WTI oil slipped to ~US$100/bbl, down 23% from its intraday high of US$130.50/bbl.

History also supports the idea that the markets can finish the year on a high note. As illustrated below, markets can find a firmer footing after a difficult start to the year and finish with a positive return.

Source: LPL Research

Nonetheless, we remain defensively positioned, which has limited downside during this period of volatility. We continue to evaluate the situation with an eye to putting our significant cash position to work, but we will be measured in our approach.

We will provide more thoughts on the outlook in our April newsletter and reserve the rest of this newsletter to discuss ways we all can help support those in need.

Ways to Help

As the humanitarian crisis in Ukraine continues to escalate, there is no better time to help than now. People around the world are heart-broken and devasted by images of Ukrainians, mostly women and children fleeing their homeland, and individuals and organizations have been inspired to provide humanitarian support.

Here at Raymond James, the RJ Canada Foundation launched an internal donation-matching campaign in support of the Red Cross. The initial goal of raising $50,000 was achieved in less than 24 hours, and collectively, we contributed a total of $215,000 to the Ukraine Humanitarian Crisis Appeal.

Though the humanitarian relief and global support has been astounding to date, the dire need continues. As of Monday, more than 2.8 million people have fled Ukraine for neighbouring countries, according to the International Organization for Migration (IOM), a UN agency.

While not an exhaustive list, below, we share some ways in which you can help Ukrainians displaced by the military conflict.

Monetary Support

Canadian Red Cross
Money raised will enable the Red Cross and Red Crescent Movement to respond to various humanitarian needs. The support could include preparedness, immediate and ongoing relief efforts, long-term recovery, resiliency, and other critical humanitarian activities as needs arise. On March 10, the Government of Canada announced that it would match Canadian individual donations up to a maximum of $30 million. Donations can be made online, at any Scotiabank branch in Canada or by calling 1-800-418-1111.

Doctors Without Borders
Also known as Médecins Sans Frontières (MSF), MSF teams are focusing their efforts on providing health care and medical supplies to the Ukrainian people. They are providing telemedicine, essential staff and medical supplies across Poland, Moldova, Hungary, Romania and Slovakia to reach Ukrainian refugees who have crossed the borders. They are also distributing war-wounded kits to highly affected areas, such as Mariupol.

UNICEF
A donation to UNICEF's Ukraine Emergency Fund will directly impact children and their families in Ukraine. UNICEF's response is focused on safe water and sanitation supplies, child protection (including psychosocial care) and education.

SOS Children's Villages Canada
This registered charity is focused on helping vulnerable children without parental care. The organization helps relocate vulnerable children and families to safe zones while providing health, psychological and food assistance. Their affiliate, SOS Children's Villages International, is also preparing for regional refugee relief in neighbouring countries like Poland, Hungary, Romania and Moldova.

Humanitarian Supplies

Meest
Located in Toronto, Meest is the main sponsor of all humanitarian aid shipments to Ukraine from Canada. Canadian individuals and organizations are welcome to drop off humanitarian aid packages to any Meest location in Canada or the US; these packages will be shipped to Ukraine, free of charge. Shipping from anywhere in Canada to Toronto will be subject to a $5/kg charge. A list of what is needed for humanitarian relief can be found here.

Volunteering and Sponsoring

Ukrainian Canadian Congress (UCC)

The UCC is the voice of Canada's Ukrainian community. With their #StandWithUkraine campaign, Canadians are welcome to provide in-kind services in areas such as employment, housing, immigration sponsorship, legal aid and service donations.

Canada's PSR program

Canada's Private Sponsorship of Refugees Program provides information for Canadians interested in sponsoring refugees. The link provides details about who can apply and submit an application.

Charts of Interest

Ukrainians flee to neighbouring countries.

Tech corporations join the fight against Russia, suspending or blocking access to tech platforms.

Russia is a significant supplier to the global oil market.

Ukrainian violinist joined by 94 fellow musicians as he plays a folk song from a bomb shelter
Listen to their performance here.