Hello. This is Jeremy Richardson from the RBC Global Equity team here with another update.

I would say markets are changing. Up until recently, we’ve had a consensus that U.S. inflationary pressures would peak at some point during the first quarter. And I think that was helped by a view that the consumption patterns of consumers would move away from just being focused on goods, which is too much aggregate demand chasing too little aggregate supply has had upward pressure on prices, and instead, now begin to include services as well, where there’s continued to be a good level of excess capacity within the economy, therefore, relieving that upward pressure on prices.

That consensus, I would say, is now being challenged by the very grim news that we’re hearing out of Ukraine, and in particular, the effect of the sanctions that have been put in place, in effect cutting off the Russian economy from the rest of the global economy, including its raw materials, precious metals, as well as energy.

And that is posing some challenges for businesses who use some of those raw materials or rely upon some of that energy for their business. But is also posing challenges, I think, for investors as well. Because previously, this consensus that U.S. inflation would peak in the near future, I think was partly reliant upon the fact that we knew that—or expected that the pandemic would not be with us forever; that the effects, although profound in the short term, would dissipate with time, as previous pandemics have done, and therefore, that would allow supply chains to be able to respond, limiting the amount of—adjusting sort of some of the supply side pressures we’re seeing in the economy.

Well, those new sanctions that we’re seeing now from China challenges that because it could be the case that some of the supply side issues now are going to be of longer duration. We don’t have a—we can’t say for sure how long these sanctions are going to be a part of the global economy, nor, yet, how profound they’re going to be in terms of some of their secondary effects.

So these are new things for investors to think about. And I think it’s causing some degree of disruption and uncertainty with global equity markets, firstly because there’s less confidence about their outlook for inflation and interest rates needed to tame it, but also, secondly, less confidence too about global economic growth. In effect, the conflict that we’re seeing in Ukraine is likely to have a negative effect on global economic growth, particularly regionally, but maybe a bit broader than that as well.

So what should investors be doing in the face of these increased levels of uncertainty? Well, I think there’s probably two things that investors should continue to be focused—thinking about very carefully.

The first is diversification. Always a good idea, if there’s increasing levels of uncertainty, to make sure that your portfolio is well diversified because it just minimizes the effect of any negative outcomes from any of those things that we just don’t know about.

But the second thing I would suggest is that, by focusing on investments in great businesses, you’re also able, I think, to preserve the value creation opportunity over time. Because the great businesses, not only do they bring with them, hopefully, great management teams who are able to steward those businesses responsibly over time, but also, they bring ingenuity and resiliency. And in the face of uncertainty, such as we’re seeing at the moment, those two key characteristics of ingenuity and resiliency I think are going to be especially valued by investors.

I hope that’s been of interest to you. And I look forward to catching up with you again soon.