Reflections on market resiliency

Aug 14, 2020 | Elinesky Schuett Private Wealth Management


In this week’s blog post, our regular commentary features an update on the coronavirus, the implications of the US election, and insight into the recent resilience in the markets.

Six smooth rocks stacked on a pebble beach

In this week’s blog post, our regular commentary features an update on the coronavirus, the implications of the US election, and insight into the recent resilience in the markets. We’ve also included a video from The Wealthy Barber, David Chilton, on how a cottage can complicate estate planning.  Your link to the latest 10-Minute Take podcasts and our Community Corner are also included this week.

Global equity markets crept higher this week despite the lack of progress on a U.S. stimulus package. This week, we address the dichotomy that has emerged on the virus front between the U.S. and much of the rest of the world. We also discuss the implications of the upcoming U.S. elections now that Senator Kamala Harris has been announced as Joe Biden’s running mate on the Democratic ticket. We conclude with some reflections on the market’s resilience of late.

Coronavirus update

Two meaningful trend changes began a few weeks ago and have continued this week.

First, the U.S. has seen its number of new daily infections slow, particularly in states like Florida and Texas. Hospitalization admissions have followed suit and alleviated the pressure on the health care system. Although the figure remains elevated, averaging more than 50,000 new cases daily and there are states seeing increases, the national trend is heading in the right direction and suggests containment measures are working.

The trend elsewhere is arguably worse than it was a few weeks ago. Hotspots, including most of Central and South America, India, South Africa, the Philippines and Indonesia, have yet to see meaningful declines in new daily cases. Meanwhile, countries like Australia and Hong Kong have fortunately seen some stability in their recent outbreaks, though a trend lower has yet to materialize. More worrying is the resurgence of the virus in Japan and European countries, such as Spain and France, where new daily cases are trending higher.

Implications of U.S. elections

The U.S. elections are now just a few months away and the rhetoric will undoubtedly pick up sharply in the weeks to come. This week, Democratic presidential nominee Joe Biden announced that California Senator Kamala Harris will be his running mate. While there may be some incremental impacts at the margin from this week’s news, we don’t expect it to shift the narrative much.

The race for the presidency understandably gets most of the attention, but the legislative branches of the U.S. government will also be elected in November. The U.S. Congress is made up of the Senate (currently controlled by Republicans) and the House of Representatives (currently controlled by Democrats). Within Congress, there are certain rules that require enough bipartisan support for a law to be passed. This important division of power acts as a guardrail of sorts, and ensures that any sweeping policy changes have enough support from both Democrats and Republicans. In other words, there are checks and balances in the U.S. political system that ensure a President alone cannot drive policy.

With respect to election outcomes, we see three plausible scenarios: 1) status quo; 2) Joe Biden as President while the House and Senate stay unchanged; and 3) sweeping victory for the Democrats (President, Senate, and House). This latter scenario may pose the most uncertainty for the market as it could increase the odds of higher taxes and more restrictive regulation in the future, among other things. Nevertheless, we think the elections are unlikely to alter the course of fiscal policy in the intermediate term as both Democrats and Republicans are incentivized to help their constituencies through this period of economic malaise. Furthermore, accommodative monetary policy, which has helped ignite the economic and market recovery, is unlikely to change any time soon regardless of the election results.

Market resilience

Many investors remain concerned about the current backdrop. After all, we remain in the midst of a global pandemic, with an economy that is recovering after a multi-month period of forced shut down. Much uncertainty remains. Nevertheless, global markets have been resilient in recent months. The widely followed S&P 500, an index representing the U.S. equity market, is higher today than it was at the beginning of the year. Elsewhere, markets continue to claw back much of their losses, though they still remain below breakeven on the year. While this may seem incomprehensible, there are some justifiable reasons for the resilience. More specifically:

  • We are learning how to keep an economy functioning with the virus lurking in the background.
  • Containment measures, assuming they are followed – mask wearing and physical distancing – have proven to be an effective way of limiting the spread.
  • Health care providers have learned how to better treat patients.
  • Governments continue to buy time for more healing through substantial aid to businesses and consumers.
  • Central banks have aggressively lowered interest rates, incentivizing borrowers to refinance or borrow for new spending or investment. Moreover, they have ensured the proper functioning of credit markets.
  • The scientific community is closer today to finding a vaccine, though this cannot be guaranteed.
  • Economic momentum is improving, rather than deteriorating.

We have been impressed with the recovery, but remain vigilant given the elevated level of uncertainty. As always, we don’t know what will transpire in the weeks and months to come but will remain focused on ensuring that our investment plan can deliver the required outcomes of our clients.


Video: The Wealthy Barber on how a cottage can complicate estate planning

David Chilton Royal Trust logo

“The last thing you want is for your cottage, a place of great memories, a true family treasure, to end up being a wedge that drives your family apart.”

Myth: My children are mature, caring people who will figure out a fair-to-all approach to sharing the cottage when I’m gone that perfectly preserves family harmony.

Fact: It’s incredible how challenging it is to make everyone happy, or even somewhat happy, or even not bitter, when passing on a cottage to multiple beneficiaries.

Here is your link to the video: The Wealthy Barber on how a cottage can complicate estate planning


10-Minute Take

The 10-Minute Take is a podcast series dedicated to providing insights from RBC Economists and market experts on events unfolding around the globe.

There are two new 10-Minute Take podcasts available on our website.

Why the post-pandemic office building will be greener and costlier

When we (eventually) return to the office, it will look and feel very different. Picture screening technologies, touchless credentials, roomy elevators. Imagine breathing cleaner air. Of course, all of these COVID-prompted upgrades won’t come cheap. To get tenants comfortably back in buildings, landlords will have to make expensive, but necessary, retrofits. Will there still be enough demand for commercial buildings? And could this lead to more ESG investment into the industrial sector? Deane Dray, Multi-Industry and Electrical Equipment Senior Equity Analyst at RBC Capital Markets, walks us through the post-pandemic landscape for office buildings.

How COVID created a supercharged summer housing market

Across Canada, the housing market rebounded as pent-up demand pumped up sales volumes and prices in June and July. Montreal, for example, set a new record – 46% jump in year-over-year sales. The pandemic has also shifted preferences, as more homebuyers venture to the suburbs in favour of space and greenery (putting a damper on the previously-hot urban condo market). Will we see this activity extend into the fall? And has COVID created a fundamental change in buying behaviour? RBC Senior Economist Robert Hogue shares his outlook on the housing market.

You can listen to these 10-Minute Take podcasts online now: The 10-Minute Take.

Managing money: Improve your financial management skills at every life stage

Take a few moments to think about the words “learning” and “education” in the more traditional sense. What initially comes to mind? For many, it may be thoughts of your own school years, or that of your children or grandchildren. Now think specifically about financial education. Is that something you generally associate with younger age groups as well? While many of us may have a tendency to isolate education as something that’s primarily limited to the formal schooling years, with financial education, the reality is that it can and should be an ongoing process, and it’s never too early or too late to start.

Read the full article online: Managing money: Improve your financial management skills at every life stage


Community Corner

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!

Community Event

We are proud to partner with the Children’s Foundation of Guelph and Wellington to present their sold-out event, Patio for a Purpose, August 17, 18, and 19. Visit for more information.


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