I dropped my daughter off at school this week and was struck by the scene around me. Children ages 2 to 13 in masks being guided by their mask wearing teachers into the school. What a year 2020 has been. When I asked my daughter what it has been like being back to school with all these changes, her 13 year old response was that it was normal, regular school. The resiliency our children (and us as adults) have shown through the pandemic is amazing. For my daughter and likely many of the children in your life, September welcomed the start of school and the structure it provides. In September our team was able to return to our offices, albeit with restrictions. We are allowed to have half of our team in the office, so we are rotating everyone in. We are so very thankful to see one another in person! We are still unable to meet clients in person in our office but are happy to be able to see them on our virtual video calls!

 

Market and Economic Update

Some semblance of calm returned over the past week to the markets. This was a welcome reprieve from the commotion that surfaced over a week ago. While the health of U.S. government officials was still in focus, investors were quick to turn their attention. Areas of focus this week were the negotiations on a U.S. aid package, the U.S. elections, the Vice Presidential debate, the ongoing global spread of Covid-19, and monetary policy officials who continued their call for more action to cushion the global economy from the many restrictions that remain in place.

 

Europe continues to grapple with increasing numbers of new infections across most of the region. While France, Spain, and the United Kingdom get much of the attention, many countries through the Eastern part of the region are also struggling to contain the spread. For example, the Czech Republic has one of the highest per capita increases in new infections. Meanwhile, in the United States, a steady rise higher in new infections appeared to pick up steam this week across a range of states.

 

In Canada, the same story is unfolding. The 7 day moving average of new cases is now over 2000, nearly 500 higher than the previous week. Inevitably, we expect these virus trends to limit the economic momentum over the near-term.  

 

2020 has been filled with uncertainty - at some times extreme.  The pandemic has been largely to blame, with the upcoming U.S. elections adding fuel to the fire.  It is easy to get influenced by recent events.  We remain vigilent in monitoring the current environment but we also want to plan for the future.  As we look forward, we see real potential for the high level of uncertainty to subside, at least to some degree. By early 2021, we believe the market will have moved on from the election and the uncertainty it poses. The government will no longer be distracted by the election, and is more likely to take action and respond to the needs of the unemployed, businesses, and state and local governments that are under strain from an economy that remains far from normal. This has led us to move towards a recommended neutral equity exposure from a modest Underweight.  The October edition of the Global Insight features a series of articles that expand on these subjects:

• What’s next? – As the 2020 U.S. election approaches we examine how results could affect the Fed, its policies, and U.S. fixed income markets.
• New normal, new opportunities – A compilation of a series of 15 articles published by a team of analysts at RBC Wealth Management examining long-term secular trends in a post-COVID-19 world.
• Global equity: More to come – For a global portfolio we are using this period of consolidation to move our recommended equity exposure up to a full benchmark weighting from a modest Underweight. While near-term risks are very much in evidence, we expect the economy’s progression from here will be shaped by larger forces at work.

The virus may remain the biggest source of unpredictability. But here too, we see potential for fewer surprises in the year ahead. People are more prepared than they once were, with mask wearing and physical distancing part of our daily habits for now. Governments have measures they can employ, however reluctantly. Health care professionals have more experience with testing and therapeutics that have offered evidence of improving the ability to identify those that are infected and more effectively treat those that have fallen ill. Furthermore, the scientific community remains hard at work, with over a hundred potential vaccine candidates that are now in some form of development or trial. It’s possible we may see one of these approved in the year ahead. All of this suggests that uncertainty with respect to this health crisis could decline from the excessive levels witnessed this year.

Markets have a tendency of moving earlier and faster than investor emotions. And our approach remains long-term focused. As a result, we don’t believe in trying to time the potential improvement in uncertainty but we still look forward to the potential for an improved backdrop in the year ahead.

 

In this week's 10-Minute Take, George Davis, RBC Capital Markets Chief Technical Strategist discusses Why markets will remain volatile (to a degree) through the U.S. election.

 

In our May blog we highlighted a fantastic report talking about 8 Ways COVID will transform the economy and disrupt every business.  John Stackhouse provides an update to this report  in his recent RBC Disruptors podcast series How COVID is Transforming the Economy - and Everything We Do.

 

October is Small Business month.  The pandemic has hit our small businesses particularly hard.  RBC has compiled a six-part video series highlighting how small business owners can navigate today's economy.

 

Team News

Last month the Hayes Vickers team participated in the 2020 Strike-Out Childhood Cancer event in support of McMaster Children’s hospital. In prior years the annual event had been a bowling event, however due to COVID-19, we participated in the virtual Walk-A-Thon. Participants this year included Nicky, Taryn, Natalia, Michelle, Karen and Sarah. Pia was on vacation and Kieron had a client meeting, otherwise they both would have joined us. The team walked a total of 86 kilometers! The fundraiser was a success, the campaign goal was reached and we even got a little exercise!

 

Below is a photo of us walking through a local trail and keeping our distance and a photo of a little friend we met!

 

 

 

September 30, is known as Orange Shirt day. Designed to commemorate the residential school experience, to witness and honour the healing journey of the survivors and their families, and to commit to the ongoing process of reconciliation. Below is a picture from our morning call of those of us wearing orange.

 

A Thanksgiving tradition my family has always enjoyed is the the annual Ball's Falls Thanksgiving Festival. It's such a beautiful area of Niagara especially this time of year. They have decided to make the festival virtual this year in order to keep the 46 year tradition alive but also to keep everyone safe. While day-use visitors are still welcome the historical tours and many activities can be enjoyed safely from the comfort of your home!

 

In a year that has been highly unusual, we are trying to remember that there is a lot to be thankful for. We are thankful for our health and safety, for our many clients, our family, our team members and colleagues, and friends.  We wish you a Happy Thanksgiving and hope that you will be spending it with those you love, even if it is virtually!