Early clues on how the eventual economic recovery is unfolding

May 08, 2020 | Elinesky Schuett Private Wealth Management


In this blog post, read about the concept of high frequency data and how it may give us early clues as to how the eventual economic recovery is unfolding. Plus, what we’ve learned from social distancing, Mother’s Day best wishes, and community links

Business man holding tablet. The table has blue location icons hovering above the screen.

In this week’s commentary, we provide a regional update on the virus trends and introduce the concept of high frequency data and how it may give us early clues as to how the eventual economic recovery is unfolding. While the data is unlikely to influence our approach to investing, it will be closely watched given the assumption the markets are making of a return to more normal activity this summer.

Coronavirus update

This week can be characterized as mixed, at best. Rest assured, the evidence of stable to slowing new cases has largely continued across much of the developed world. But, the trend has not been steady. We take a look at key regions.

In Canada, the new case count remains frustratingly elevated in Quebec, particularly in Montreal and it has forced the provincial government to postpone the reopening of schools, daycares, and businesses in the province’s largest city by at least a week. In Ontario, there has been incremental improvements in the pace of new daily cases, and the provincial government has moved ahead with a planned reopening of some businesses. Most other provinces have had relatively stable situations in recent weeks and as a result several have moved forward with their phased approaches to reopening their economies.

In the U.S., trends have been less clear. The number of new cases across the country is more than 30% below the peak reported just a few weeks ago. But, a lot of this improvement can be attributed somewhat to New York. More specifically, new case counts in the state of New York are nearly 60% below the daily new cases from a week ago, which is a marked improvement. But, outside New York, it is a mixed picture. States such as Florida, North Carolina, and Minnesota have reported higher new daily cases this week. It is unclear whether it is a result of more testing and is too early to draw any conclusions. But it bears watching, particularly as an increasing number of states are beginning to ease lockdown restrictions.

In Europe, the story is somewhat similar to the U.S. There have been a few countries – Germany, Italy, and the United Kingdom – where new cases have increased in recent days. It is unlikely to be the result of the easing of lockdown measures that only recently have taken place. Nevertheless, it illustrates the fragility of the situation and the dilemma when it comes to reopening economies.

The emerging markets have become the new epicenter of the health crisis. Russia and Brazil are two of the largest countries that are experiencing accelerating new daily case counts. Testing is increasing, which is reassuring, and it may also be contributing to the rising trend. As a result, we expect stability and eventual improvement in these regions to take more time to develop.

How much of a recovery?

Millions of Canadians lost their jobs in April. The same is true elsewhere. But it is important to look forward as stock and bond prices tend to anticipate the future rather than reflect on what has already happened. The easing of lockdown restrictions varies by geography but the gradual reopening of economies has begun. The question that is weighing on the minds of virtually everyone is how much of a recovery can we expect? It is impossible to know. But in today’s digital world, we may get clues on the magnitude of recovery much earlier than we have in the past. A lot of what we do is now tracked digitally. Online search trends, traffic congestion, air pollution, mobility tracing, and restaurant bookings are just a few of the hundreds if not thousands of “high frequency data” that are collected from our cell phones, watches, cars, and computers among other things. This data illustrates in real time the level of activity that is taking place. It has already been used to measure the degree of re-engagement of society and economic recovery in China. We expect it to play an equally important role as investors turn their attention to the pending recoveries in North America and Europe.

As our focus remains on the long-term, we are unlikely to alter our approach to managing portfolios based on traffic congestion trends. Nevertheless, we do want to understand the early trajectory of the economic recovery to appreciate whether the market’s assumption of a return to normal levels by the summer is warranted. And so, we will be monitoring with interest. We will share our insights as we learn more in the weeks to come.

The 10-Minute Take: China’s economic recovery still a long way off, despite official reports

China has touted economic re-opening as the central government’s triumph over the COVID-19 virus. But though firms are back to work and factories are up and running, growth hasn’t recovered. In fact, privately gathered data suggest China’s economy continues to struggle. Can the government do more than reopen factories? And what will it take to get Chinese consumers shopping, travelling, and spending again? Leland Miller, CEO of China Beige Book International, joins us on our podcast to explain what the official numbers don’t.

You can listen to this 10-Minute Take podcast on our website: The 10-Minute Take.

What we’ve learned while social distancing

It’s hard to believe that it has been only a month and a half since they way we work, play, and relax changed dramatically. With a large portion of the population working from home, and restrictions on retail locations only recently beginning to lift, there have been a few interesting lessons learned.

Staying connected: As we all do our part to stay home and help to flatten the curve, staying connected by phone or online has become increasing important.

Facebook messenger, Facetime, and Zoom have all temporarily replaced those much needed face-to-face interactions. If you’ve not used any of these online tools, or have a family member who is unfamiliar with video conferencing, we found this article in the New York Times that lists 5 Ways to Stay in Touch With Less Tech-Savvy Family and Friends that may help when trying the new technology.

Connecting with us: While we are working from home, we are always available to meet with you. Our meetings will be a bit different until we can return to the office and welcome visitors. To connect with you, we are using an online secure video conferencing platform called WebEx. Through Webex, we can see and talk to each other, share documents, and review your portfolio. It’s like a face-to-face meeting in the office, without the need to find parking!

When a meeting is booked, we will send you an email with all of the details - It will include a unique meeting number, password, and link to join the meeting. We’ll also include instructions on how to join the meeting and will be available to provide support if there are any issues.

When we return to the office, we will continue to offer you the choice of an in-person meeting or a video conference.

Online learning: Many members of our team have school-aged children in their lives, and at home learning has been underway for a number of weeks. Not only are the teachers providing high-quality learning opportunities for the children, but parents are also getting a refresher course in early geometry and advanced functions!

There seems to be an unending list of recommendations to help with educating the youth, but some of our staff have found that their children are finding ways to keep occupied that are reminiscent of our childhoods, like fort building, bug hunting, and neighbourhood bike rides.

In addition to worksheets and homework, we found a fantastic list of things to do to keep children (and adults) busy outdoors as the warmer weather arrives. Here is a link to the article: Activities to Keep Kids Busy During Summertime.

Although not all of the 100 listed ideas can be done in our current social-distancing environment, there are a lot of great ideas that can be done together as a family. Some of the ideas that made our must-try list are:

  • Plant a butterfly or hummingbird garden, or create a backyard wildlife habitat.
  • Make a time capsule
  • Build an obstacle course in the backyard
  • Hold a photoshoot

Groceries: Trips to the grocery store have also changed. While there are dedicated times for seniors and line by-pass access for emergency services workers, many people have found themselves waiting outside the store and then following the directions on how to move around once inside. It is amazing that our grocery retailers, both big and small, have been able to adapt so quickly to the public health recommendations.

An alternative to waiting in the queue, is online grocery shopping. A number of us on our team have started to shop this way, using curbside pick-up or choosing home delivery! It’s easy and is very convenient – Most grocery retailers have links to their online shopping carts right from their homepage.

Working from home: As many people have settled into new working from home routines, it’s always good to remember the basics. When working from home, it’s important to consider your technology requirements, environment, business set-up, and your soft-skills. This article from Forbes.com provides insight into each of these considerations in their article Best Practices to Follow When Working From Home.

Happy Mother’s Day

Happy Mother’s Day to all the amazing mothers in our lives. We hope you have a wonderful and restful day, and that you are able to connect with family and friends online or over the phone.

For those of you who are looking to make a homemade Mother’s Day gift this year, we found a website with 52 Easy Mother's Day Crafts that will make Mother’s Day special for any mother, mother-to-be, grandmother, or special aunt or family friend.

Community Links

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


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