Lexicon Financial Group Weekly Update

Monday, April 4, 2022

Looking Back

The first quarter of 2022 will officially go into the books as the worst quarter since the start of the Covid-19 pandemic. Uncertainty arising from surging inflation, war in Ukraine and the prospect of more interest rate hikes has roiled the markets. The S&P 500 fell 4.0% in this quarter while the tech-heavy Nasdaq Composite declined 9.1%. (1)

Worse, fixed income and bonds finished their worst performing quarter in decades. Much attention is paid to equity markets – rightly so – but conservative investors who look to bonds to provide stability in their portfolios are disappointed with the results.

The good news? Markets recovered in March, ending the month in positive territory. While it was not enough to recover the losses in January and February, it takes a bit of the sting out.

We continue to monitor and review each investment portfolio, and adjustments have been made to try to help navigate these choppy waters.


Looking Around

Last Thursday the US announced a “historic release” of about 180mn barrels from its Strategic Petroleum Reserve in response to a global supply shortage. This caused a drop in oil prices. Whether or not that drop plays out at the pump (where people see it and feel it the most) remains to be seen.

The geopolitics of the war in Ukraine is getting confusing and, once again, shows how intertwined the global economy has become. These days diplomacy seems to be a series of nods, winks, and back door handshakes as the war in Ukraine grinds on. Russia and Ukraine are talking, yet the fighting and artillery bombardment continues. Numerous meetings have produced little in terms of a proper ceasefire.

According to the Economist, the summit between China and the European Union on April 1st was anything but “business as usual” because China’s response to Russia’s invasion of Ukraine have exposed the limitations of Europe’s established trade-first China policies. China is increasingly facing a balancing act of its allegiance to Russia and its own economic interests. India, praised by Russia for not joining the widespread condemnation of its invasion of Ukraine, faces a similar quandary. It is a major buyer of Russian military hardware and increasingly of Russian oil. Both countries face potentially severe consequences if they help Russia materially in its war in Ukraine.

On top of all this, countries around the world are girding up for the sixth wave of the pandemic driven by the even more transmissible BA.2 Omicron subvariant. This subvariant appears to be better at infecting vaccinated and booster vaccinated people but is no different in terms of hospitalization. (2)


Looking Beyond

Many analysts predict continued uncertainty in the markets. There are too many variables that are impossible to predict.

Sure, stocks staged a solid comeback in the second half of March as the S&P rallied to climb more than 10% off its year-to-date low. How much of this can be attributed to the possibility of peace in Europe? How much is simply the market adjusting to the Fed’s long-awaited move to increase interest rates? Despite the war in Eastern Europe and record-high inflation, corporate earnings have been holding up, and estimates for S&P 500 Index earnings per share over the next four quarters are 1.5% higher than in March. Inflation and possibly gouging are driving these sizable corporate profits as companies enjoy more pricing power as they pass along higher costs to consumers.

April has historically been a strong month for stocks – it has produced a positive return for the S&P 500 in 15 of the last 16 years. But this time, markets are facing a variety of headwinds that may upend this historically positive seasonality. These include the continued concerns around the geopolitical and macroeconomic situation, more snarls in global supply chains that are still struggling to recover from pandemic-era disruptions, and the spike in prices, and especially in oil and energy. All of this has stoked concerns over the resilience of consumers like you and I — the key drivers of the domestic economy — going forward. (3)

This is worth repeating; it is precisely because markets are volatile that we recommend diversified investing. In our view, investors should be diversified across a variety of countries (US, Canada, Europe, Emerging Markets), capitalization (small companies, large companies), and industry sectors. After all, it’s the roller coaster ride of the market that tends to make investors feel queasy. Diversified investing helps smooth overall portfolio volatility over time.


Further Reading

Markets & Investing – Raymond James

What Can Be Made from One Barrel of Oil?

The Chip Challenge: Keeping Western semiconductors out of Russian weapons

Russia and India will find ways to trade despite sanctions, says Lavrov

Rare Earths, Scarce Metals, and the Struggle for Supply Chain Security


The opinions expressed are those of Craig Swistun and not necessarily those of Raymond James Investment Counsel which is a subsidiary of Raymond James Ltd. Statistics and factual data and other information presented are from sources believed to be reliable but their accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James advisors are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax-related matters.



  1. US stocks end quarter with worst performance in two years, Kate Duguid, Naomi Rovnick, George Steer and Neil Home, Financial Times, April 1, 2022
  2. ‘Rise of the BA.2 variant is worrisome’: Quebec urges caution as it warns of ‘possible’ 6th COVID wave, Alessia Simona Maratta, Global News, March 28, 2022
  3. Stocks fall after March jobs report raises bets on more aggressive Fed, Yahoo Finance, Emily McCormick and Alexandra Semenova, Yahoo Financial, April 1, 2022