Reopening Economies

Apr 09, 2020 | Elinesky Schuett Private Wealth Management


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It has been another eventful week with meaningful global developments with respect to the health care crisis. We share our key thoughts in this new blog post.

Business people

Coronavirus

The past week has delivered some confirmation of the positive signs that emerged in Europe last week. Specifically, we’ve seen a slowing rate of new infections across countries such as Italy, Spain and Germany, among others. To be clear, there are still new infections being announced daily. Unfortunately, many people are still losing their lives every day. But the rate of change is improving and this potentially bodes well for the weeks to come. The hope is that North America will also experience this relatively soon. There have been some early signs in the state of New York, the epicenter of the crisis in the U.S., that suggest new cases may no longer be accelerating at the pace of a week ago. More evidence is needed nationally and across Canada to confirm that an improving trend is indeed in place.

Exit strategy

Another important development occurred this week in the Chinese city of Wuhan, the original epicenter of the coronavirus crisis. Officials there lifted the lockdown that had been in place for 76 days. This is a meaningful milestone. But it also represents the beginning of a new chapter in this saga, namely one of recovery. And with it come many questions that are likely to weigh on the minds of most citizens, households, business owners, investors and government officials. What does life look like after a peak in this health crisis? Does everything reopen at once? What restrictions, if any, are still needed? Will people’s behaviour be any different? Does economic activity bounce back sharply or gradually? In some ways, this is a concern for another day as we are still in the middle of a serious crisis, where the welfare of our family, friends and clients are top of mind. But these are questions that equity and bond markets will have to grapple with in the not-too-distant future.

Looking forward

A few weeks ago, volatility was extreme and markets were selling off sharply. More recently, volatility, while still elevated, has moderated and equity markets have retraced some of their losses. This has happened despite terrible economic data that has illustrated the extent of the global shutdown. It has served as a good reminder that markets tend to be forward-looking in nature. While the data is likely to remain poor and even worsen in the weeks to come, investors have grown hopeful that a peak in the healthcare crisis is near and a return of economic activity may be on the horizon by the summer. But much uncertainty remains given the exit strategies discussed above that remain unknown at this point. As a result, we continue to brace for volatility to remain elevated in the months to come.

How the Wealthy Barber manages emotions when it comes to investing

In a recent article posted on the RBC Wealth Management website, author and investor David Chilton offers tips for dealing with market turbulence.

The following is an excerpt from the article that speaks to volatility:

Recognizing that volatility (including major pullbacks) is natural, inevitable and, again, even positive is crucial to dealing with its emotional impact. It brings perspective to your thinking. It makes you focus more on the long term, on your investment plan.

 

You can read the full article online: How the Wealthy Barber manages emotions when it comes to investing.

Business owner resources

Yesterday, there were a number of announcements made regarding support for businesses affected by COVID-19, including updates to the Government of Canada’s 75% Wage Subsidy program and the Canada Summer Jobs program. Here is a link to the press release with the details: Changes to Canada Summer Jobs program to help businesses and young Canadians affected by COVID-19.

The Government of Canada’s website also details all of the programs that are available to business owners during this time, including reduced and deferred payments, access to credit, and the emergency wage subsidy program. Here is the direct link: Canada’s Economic Response Plan - Support for businesses.

If you are interested, RBC has a dedicated webpage with information on how RBC is helping businesses, including details on the RBC Financial Relief Program and RBC Online Business Banking solutions. Here is the direct link to the website: Business Banking Clients. We are also happy to connect you to one of our commercial banking partners if you have any questions.

The latest thoughts from RBC Wealth Management’s Global Portfolio Advisory Committee on how COVID-19 is impacting the economy and financial markets

The economic consequences of COVID-19 are anything but clear-cut. Yet it’s not just the depth and duration of the downturn that matters. The key is how quickly the rebound occurs. And with equity markets bouncing back forcefully even as uncertainties swirl, investors should brace themselves for more volatility—both to the downside and upside.

This link will take you to the full article posted online: A very different kind of crisis.

How to make Canada a more self-reliant country in the aftermath of the coronavirus pandemic

In a recent opinion article posted in the Globe and Mail, RBC's CEO Dave McKay calls for a bold and ambitious economic plan for Canada to prepare for a post-COVID world.

"We’ll need to work together – something Canadians are good at, even under stress. We’ll need to think about offence as well as defence. And we’ll need to see this not only as Canada’s challenge but also Canada’s moment." RBC's CEO Dave McKay calls for a bold and ambitious economic plan for Canada to prepare for a post-COVID world.” – David McKay, RBC CEO

Here is the link to the article posted on the Globe and Mail website: How to make Canada a more self-reliant country in the aftermath of the coronavirus pandemic.

Holiday hours: Easter weekend

Although our team is working from their home offices, our ‘office hours’ have remained the same. Please note that we are closed tomorrow, Easter Friday, April 10, but will be back answering your calls and emails on Monday, April 13.

Our community

Each week, we like to end our blog posts with a few good news stories from in and around the community. We hope that they brighten your day!

We have all grown accustomed to the daily messages from our provincial and federal leaders, but we thought that you might also enjoy this Lego Stop-Animation video created by a Winnipeg father – It features Prime Minister Justin Trudeau’s March 22 speech to children about coronavirus. Here is a link to the news story and video on CBC.ca: Winnipeg family builds Lego video of Trudeau's COVID-19 message to kids.

 

As always, we are here for you. Please don’t hesitate to contact us at 519-822-2024 or elineskyschuett@rbc.com.