COVID-19 Update
The news remains very positive with global case counts in steady decline. The next milestone would be a break below the levels of mid-January for the daily case counts and as you can see from the chart below, we may do so over the next 1-2 weeks:
Similarly, Canada has seen a sharp drop in cases and is now at its lowest level since October:
~60% of the Canadian population has now received at least one dose of the vaccine, while slightly more than 6% has now been fully vaccinated.
Economic News
The U.S. economy created 559k jobs in May, continuing its gradual recovery from the COVID recession. Leisure and Hospitality were the biggest gainers as the U.S. economy is now close to fully reopened. The unemployment rate in the U.S. now stands at 5.8%, which is ~2% above where it was prior to COVID, showing that there is still significant room left in the recovery. Meanwhile, Canada lost ~68k jobs in May (this followed a loss of 207k jobs in April) as the continued shutdowns across the country weighed on job creation. The unemployment rate rose to 8.2%, which is ~3% above pre-COVID levels.
The jobs data highlights what we have been saying for some time – the Canadian economy remains roughly one-quarter behind the U.S. economy in terms of its recovery. The hope is that with case rates coming down, vaccinations sharply rising, and the economy reopening, we are likely to see sharply higher job creation numbers as we get into the fall.
Market News
While it was an up and down week, the S&P/TSX crossed the 20k barrier for the first time as strong performance from the banks and resource stocks pushed the index above this important psychological level.
Here are some TSX milestones:
- The TSX first passed 5,000 in June of 1995;
- The TSX first passed 10,000 in April of 2000 largely because of the “Nortel effect” as Nortel had become nearly 1/3rd of the total index value;
- The TSX would fall below 10,000 by November of 2000 as Nortel collapsed and would cross back above 10,000 again until June of 2005;
- After peaking at close to 15,000 in 2007, the TSX would once again fall below 10,000 during the Global Financial Crisis;
- The TSX would last trade below 10,000 in May of 2009;
- The TSX first passed 15,000 in June of 2014;
- The TSX was below 15,000 as recently as last April