04/09/2026
Does it sometimes feel there is no escaping the news?
The conflict in Iran, the impending expiry of the Canada, U.S., Mexico Free Trade Agreement, the war in Ukraine that is now in its fifth year or the complete unpredictability of what the United States administration will do next, we are living in unpredictable and worrying times.
Sometimes it seems like we can’t catch a break. The pandemic initially drove interest rates to unprecedented lows before rising inflation forced central banks to increase them. The cost of living has risen significantly over the past few years and those facing mortgage renewals are experiencing renewal rates more than double what they were before.
The war in Iran has had a major negative impact on global oil and liquified natural gas supplies, driving up the price of oil and all related products over the past month. The cost of crude oil is now up over 60% year-to-date (was up over 90% before ceasefire announced). We have seen the price of gasoline and all related products jump as well. Gasoline is up over 30% in the past month and the cost-of-living crisis that has made everything more expensive in recent years is poised to get even worse.
Although there is a possibility that the Iran conflict could be nearing an end, there is also a possibility of heightened hostilities that may lead to years of conflict. Even if it ended soon, the damage done to oil and liquified natural gas infrastructure in and around Iran may lead to ongoing fuel shortages that will likely keep the prices higher, leading to negative impacts on the global economy creating upward pressure on inflation.
And then we have the dynamic growth of Artificial Intelligence and the hope that it will make positive changes in our lives; while worrying it may do more damage than good.
I don’t say this to cause any more fear or alarm than we are already feeling, but it is important to provide context to how this has impacted the financial markets, and where we are at year-to-date.
As unsettling as all of this seems, we are not experiencing financial markets full of doom and gloom!
Although we have seen global financial markets decline since the U.S. and Israeli attack on Iran on February 28; a strong start to the year, especially in the Canadian and many European markets, have helped most portfolios weather the storm on a year-to-date basis.
Growth in the Canadian and most developed markets internationally have helped offset declines in U.S. Equities. However, financial markets have been very volatile with news of a truce between the U.S., Israel and Iran sending markets soaring.
Concerns globally about the risk of inflation emerging from the higher oil prices have also impacted bond markets. Rising rates are generally not good for most fixed-income funds. The truce announced April 7, was welcomed by bond markets, leading to a reduction in the recently elevated rates.
The volatility we are experiencing is not unprecedented, much of the reaction is now based on news that can be perceived as either positive or negative coming from President Trump. This creates dramatic daily, or even inter-day swings in the markets, but it is fundamentals that generally drive market growth, and even temporary declines, over the long run.
Economic growth and its impact on corporate profits, current and expected, play a much larger role in stock market results than today’s news. Inflation, economic growth, government fiscal policy and the monetary policy of central banks all play a role in interest rates and bond yields.
There is little doubt that we are living in unusual, unpredictable times, but the principals which we have used to construct and manage your investment portfolio remain relevant.
Diversification in your investment portfolio remains key, across both equity and bond markets. Employing growth, value, and growth at a reasonable value management styles with your equity holdings provides greater resistance to volatility and risk.
Holding a variety of bond and debt-related securities within your fixed income holdings, with a range of terms to maturity, helps diversify this component of your portfolio with the objective to reduce risk and enhance overall performance.
Try not to get too caught up with the daily news and its impact on the stock and bond markets. We design investment portfolios to reflect our clients’ objectives, timelines and tolerance for risk and volatility. At every moment of every trading day, a team of professional fund managers and analysts are doing their best to interpret all factors impacting the markets, and each security held within each of the funds we recommend.
If you are concerned about the economic climate and the impact it is having on your investment portfolio, I would be happy to meet with you in the coming weeks to review your current holdings, and discuss the factors that are currently affecting global markets, and our daily lives.
All the best,
Shawn
