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Market insights and outlook

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January 24, 2022

A FULL EFFECT RUSSIAN INVASION of Ukraine still seems unlikely to us. Border disputes and cyber warfare are possible as this crisis simmers for months to come – but Vladimir Putin faces a major hurdle: the near certainty of fierce resistance from Ukrainian patriots.

REPORTS FROM THE GROUND from Kyiv, particularly by David Ignatius of the Washington Post, are quite revealing. First, the Ukrainian public overwhelmingly rejects Putin’s absurd claim that there is a deep connection between Russia and Ukraine.

THERE MAY BE AN OBLIGATION CENTURIES AGO, but Putin is reviled by the Ukrainian public and even Russian-speaking Ukrainians overwhelmingly oppose him, according to Ignatius. A 1991 independence referendum won 92% of the vote.

SECOND AND MORE IMPORTANT, the heavily armed Ukrainians are ready to resist. Even if the country’s military is overpowered, further guerrilla resistance would inflict heavy casualties on the Russian military. Ukrainians are prepared for thousands of casualties; the Russian public can quickly tire of a war.

AFTER HIS misstep LAST WEEK, President Biden appears willing to impose tough measures, including export bans on computer chips and other technologies needed by Russia’s economy. There is a leak this morning that new export restrictions are coming which could cripple some key Russian sectors – aviation, shipping and high tech.

BIDEN ALSO ENVISAGES a major injection of weapons and even the sending of American troops to Ukraine in the coming weeks. Aggressive sanctions against Russian banks are a virtual certainty.

IS THERE AN EXIT RAMP? We believe the United States can offer carrots – a reduction in Western troops and aircraft in Ukraine, a commitment to limit military exercises and
maybe even private assurances – nothing explicit – that Ukraine won’t be joining NATO anytime soon.

IF NONE OF THESE CARROTS OR STICKS deters Putin, he must prepare for heavy losses, which could loosen his fragile grip on Russian public opinion. The public is already agitated in Moscow and St. Petersburg; a bloody war could turn the Russian public against Putin.

The views expressed in this blog are those of the author and do not necessarily represent the views of AGF, its subsidiaries or any of its affiliates, funds or investment strategies.

The opinions expressed in this blog are provided as a general source of information based on information available at the time of publication and should not be considered personal investment advice or an offer or solicitation to buy and/or sale of securities. Speculations or opinions expressed about future events, such as market or economic conditions, corporate or securities performance, or other projections represent the opinions of the author and do not necessarily represent the point of view of AGF, its subsidiaries or any of its affiliates, funds or investment strategies. Every effort has been made to ensure the accuracy of these comments at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. All financial projections are based on the opinions of the author and should not be considered forecasts. Forward-looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward-looking statements. The information in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to an individual’s situation.

AGF Investments is a group of wholly-owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisers in the United States. AGFI is a registered portfolio manager with Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that make up AGF Investments manage a variety of mandates consisting of equities, fixed income securities and balanced assets.

Founded in 1957, AGF Management Limited (AGF) is an independent, globally diversified asset management company. AGF takes a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and wealth businesses focused on delivering an exceptional client experience. AGF’s portfolio of investment solutions spans a wide range of clients globally, from financial advisors and individual investors to institutional investors, including pension plans, corporate plans, sovereigns, endowments and foundations.

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