I was chatting with a good friend and client of mine this weekend and he mentioned something that I spent the weekend thinking about. When we are through these challenging times, and we find ourselves sitting around reminiscing about the start of 2020…..how will we remember this time, and how did we handle the adversity?

Responsibility

Now, with a newborn at home this word can really be quite impactful AND intimidating, but it’s a word that has never been more relevant. Today, much more than being accountable to ourselves and our family– we have a responsibility to our community. It’s encouraging to see our community take on the heavy burden of responsibility

If we dissect the work responsibility – response ability – the ability to choose your response. Looking at it from this lens we can understand that although we cannot change or control the circumstances, we can control how we, as individuals, respond. As I’ve mentioned before, we are surrounded by opportunity amid uncertainty. Today we have the opportunity to be leaders, the opportunity to instill our values onto others and the opportunity of responsibility for our family and our community. Keep up the great work --- responsibility, resilience, and patience will lead to perseverance.

“A hero is someone who understands the responsibility that comes with his freedom” – Bob Dylan

The Times, They Are A-Changin’

We continue to find ways to stay connected with our clients, family, and friends at this time despite the physical isolation that everyone is enduring. There have been meaningful developments recently with respect to the coronavirus, action from governments, and on the economic front and I thought it helpful to provide a brief summary below.

Coronavirus & Glimmers of Hope

After weeks of deteriorating trends, some incrementally positive signs have emerged. More specifically, there is early evidence that Italy, and other European countries such as Spain and Germany, may finally be experiencing a slowing in the rate of new case growth after nearly three weeks of strict lockdown measures. The situation remains very serious in those countries but it provides some hope to Canada and the U.S., which continue to see their new cases rise meaningfully. Both countries implemented their own series of measures to contain the virus a few weeks after some of their European counterparts. As a result, it may take a few more weeks to gauge whether the rate of new infection can slow in North America. Meanwhile in Asia, we continue to watch for any signs of a second wave of infections.

Government response

In addition to the health crisis, governments continue to respond aggressively to the looming economic emergency. More specifically, the actions undertaken by most governments have been sharper, bigger in scale, and more diverse than those undertaken during the great financial crisis over a decade ago. Measures have ranged from wage subsidies, to child benefits, business loans, mortgage support, moratoriums on student loans, and direct payments to consumers, among other initiatives. While it won’t eliminate the hardship that many are likely to face, it has left the impression that policy makers are willing to do whatever it takes in the weeks and months to come to help lessen the blow from an economic shutdown. Meanwhile, central banks have continued to find creative ways to ensure a sound financial system that can offer liquidity and proper functioning of credit markets for those that need to borrow.

A word on Canada

As previously mentioned, the actions undertaken by governments have been significant. Canada has been no exception. To date, it has announced direct support to the economy amounting to $105 billion (nearly 5% of our country’s economic output). Inevitably, whether it is our clients, family, or friends, we are all likely to know people whose job, education, or business has been or will be impacted by the current economic difficulties. The Canadian government has created Canada’s Covid-19 Economic Response Plan, which is a collection of diverse measures undertaken so far to help households, consumers, students, parents, and businesses who are at risk. We suggest forwarding the link to anybody who can benefit.

Implications

Economic data has deteriorated sharply of late. Investors should brace for more of the same in the weeks to come. In Canada for instance, the number of people filing for unemployment insurance has surpassed one million individuals. Meanwhile, in the U.S., jobless claims rose to more than six and a half million this past week, a doubling of the level from a week ago. Interestingly, the equity markets have behaved relatively better of late despite the somber headlines as they had already fallen meaningfully in preceding weeks, reflecting the anticipation of an economic recession.

The important question remains whether the measures that have been taken – and may yet be taken – by governments and central banks are meaningful enough to contain the virus and limit the impact to the global economy to a period of months versus something that extends well into the second half of the year and is deeper in nature.

We continue to expect higher volatility in the near term until there is visibility into the potential peak in new global coronavirus infections. Nevertheless, we remain disciplined in our long-term investment approach, remain active with our ongoing due diligence, and continue to have confidence in your portfolio.

Thank you for entrusting us with that responsibility