“There are two things that must be rooted OUT in human beings – arrogant opinion and mistrust. Arrogant opinion expects that there is nothing further needed, and mistrust assumes that under the torrent of circumstance there can be no happiness” Epictetus

Morning, It sure has been quite the week – from the “debate” to Trump and the folks in the Rose Garden contracting COVID and continued spike here at home…….

In these times of vagueness, it’s easy for us to default to our own biases and succumb to the feeling apprehensiveness in the middle of all of the confusion and contradictions.

These days, more than most, it’s important for us to focus on our own self-awareness which will help shape our thoughts and our future.

“Your mind will take the shape of what you frequently hold in thought, for the human spirit is coloured by such impressions” Marcus Aurelius

Now, on to the markets…..

Markets were set to finish the week higher until the revelation that U.S. President Donald Trump, and the First Lady Melania Trump, had tested positive for the coronavirus. This development adds yet another source of near-term uncertainty as investors will be left considering the risk of infection to other government officials, the influence this could have on fiscal stimulus negotiations, and the potential impact on the U.S. elections. We are seeing things ease this morning, as the markets are looking GREEN but we all certainly need more clarity over the days and weeks to come. Until then, we expect more questions than answers.

The past week was characterized by ongoing concern on additional waves of the virus which we address below. Meanwhile, we discuss the most plausible U.S. election scenarios and implications for markets.

Coronavirus update

Our attention over the past week has been focused on Canada and the U.S. given the former’s second wave and new signs of resurgence for the latter.

In Canada, the rate of new infections continued its ascent over the past week. The 7 day moving average of new cases is over 1500, close to double the level from a few weeks ago. There have been no signs of reemergence in the Maritimes or the Northern Territories. Quebec and Ontario continue to garner a lot of attention as the absolute case numbers are elevated (averages of over 700 and 500, respectively). But the virus is spreading elsewhere too, with Manitoba and Alberta seeing an uptick and new cases per capita in each province are the second and third highest in the country, respectively. Saskatchewan has seen a relatively stable rate of new infections for a second straight week. Lastly, British Columbia has shown some early signs of stability in its rate of infection growth and according to the province’s Centre for Disease Control, the reproduction rate of the virus in the province may be set to decline below the threshold of 1. This indicates that each new infection is less likely to affect another person.

In the U.S., the rate of infection growth looks to be turning higher yet again after a period of relative stability. The growth in infections over the past week has been widespread. For example, there has been a noticeable increase in new cases across previous hot spots such as Texas and California, while some less severely impacted states such as Wisconsin, Alabama, and Pennsylvania are now seeing an acceleration in new cases. Even the state of New York, which had made significant progress since the earlier days of the pandemic, has seen a noticeable increase.

We remain preoccupied with the health risk and the overall threat this resurgence poses to economic activity should governments have to consider more restrictive measures of containment. The Future

It remains difficult to predict the future, but we are prepared for elevated volatility through the end of the year. While elections matter, the U.S. system is designed to ensure that farreaching policy changes cannot easily be enacted unless there is sufficient support from both parties. Furthermore, there are other drivers that may arguably be more important for the equity markets. These include the economic cycle, corporate earnings growth, monetary policy and the availability of credit for example. This year, another factor has emerged that has arguably become just as if not more important: Covid-19.

“The eye sees only what the mind is prepared to comprehend” Robertson Davies

Let us all be open and aware

Be well & enjoy the moments Derek