Since last month, here is what we have learned:
Consumer Inflation: January 31 2021-2022 5.1% (a 30 year high).
The Bank of Canada, which correctly predicted this inflation rate to the decimal point, is expecting inflation to fall to 3.2% by the end of 2022 and further decline to 2.2% in 2023. Note these predicted drops in inflation does not mean we will be spending less but just spending more at a slower pace!
Stock Markets have historically reacted positively when inflation declines although short-term volatility is not uncommon.
The Ukraine Situation
I will leave the Geopolitical and humanitarian issues to the media and other sources you rely upon, here are some financial facts:
- This Geopolitical event is currently having a negative effect on the Markets
- Research as far back as Pearl Harbour shows Markets react negatively at the onset of various Geopolitical events usually turning positive within 6 months.
- The GDP value of Ukraine represents 0.14 percent of the world economy (2020 World Bank data)
Throughout history, Economies and Markets have dealt with uncertainty and moved on to achieve greater levels of growth and wealth as the issues work themselves out.
As always, please feel free to contact me if you have any questions about your investments or any other financial issues.
John Shelling CGA, CPA, CFP®