“The true meaning of life is to plant trees, under whose shade you do not expect to sit.” Nelson Henderson

Good Morning & Happy “April Break”,

Another beautiful weekend that allowed us to enjoy the outdoors here in Ontario. I found myself quite inspired on the weekend, when my daughters asked me if they could hold a tree planning fundraiser on Saturday morning!

As we all know, most fundraisers are challenging, raising money for any cause takes planning and strategy. That said, I was reminded that if we but our minds to something, we can make it happen and that this rising generation is full of compassion, creativity and generosity. PresleyMae and Dilynn, along with their neighborhood friends, raised 107$ on Saturday and will be donating to a small business impacted by the pandemic. I’m proud of you ladies!

“If you are whole in your body, in your emotions, in your mind, and in your spirit, you can accomplish anything” Deepak Chopra

And now….to the markets

There has been a sense of calm in global equity and bond markets of late. Gages of broad market volatility now sit near levels not seen since before the pandemic began more than a year ago. This development has been encouraging as it has come in the face of another wave of Covid-19 spreading across the globe. I provide an update on the virus situation below, and discuss the divergent economic paths that countries may experience as we move through the rest of the year.

Coronavirus update

The past few weeks have been characterized by an acceleration of Covid cases across the world. But unlike prior waves, this one is being fueled by variants of the virus that are exponentially more transmissible, infecting younger people and leading to a surge in hospitalizations in some jurisdictions. This is particularly the case in Canada, which has seen its 7-day average rate of new daily infections rise to nearly 6500, versus the 4500 from two weeks ago. Ontario represents close to half this figure, but Alberta and British Columbia have seen cases meaningfully accelerate, while Quebec’s growth rate is not far behind. Most of these provinces have implemented new lockdowns or restrictive measures with the hope that levels could plateau in a few weeks from now. Saskatchewan and Manitoba have also seen increases, though to a lesser degree. Meanwhile, in the Maritimes and northern territories, new daily infections have fortunately not increased much.

In Europe, the news is somewhat mixed. There are some early signs that cases may have peaked in some countries given lockdowns implemented weeks ago, but some continue to report new highs in daily fatality rates. Elsewhere, Japan’s infection rate is on the rise. Brazil’s figures have come off a recent peak but remain elevated, and India recently reported a record high of more than 130,000 new daily infections.

Encouragingly, the U.S., U.K., and Israel continue to see limited acceleration in new infections, suggesting that a combination of vaccinations and previously high infection rates may be limiting the opportunities for the virus to spread. Nevertheless, it may be too early to claim victory as new cases remain elevated, and a handful of U.S. states such as Michigan are experiencing meaningful increases in infections, driven by the same variants that have taken over in Canada.

Divergent paths

The resurgence of the virus around the world in recent weeks may have played a role in curtailing some of the inflation concerns and bond volatility that surfaced earlier this year. The last few weeks have seen some sector rotation in the global equity markets as a result. The strong rally in cyclical parts of the global equity market – energy, mining, banks, and industrial companies for example – has stalled a bit, while areas like technology and other so-called growth stocks have stabilized and seen some gains of late. In turn, this rotation has driven some recent outperformance of the U.S. equity market relative to others.

Investors have acknowledged that a simultaneous re-opening of most economies around the world is unlikely to occur, and instead we are likely to have divergent re-openings and economic trajectories through the course of the year. The U.S. and U.K. may initially lead on the growth front, while other economies falter given renewed measures put in place and slower vaccination rollouts. But, investors are looking past the near-term headwinds, believing that lockdowns and mass inoculations will eventually prevail, allowing regions like Europe, Canada, and Asia to catch up and propel a stronger tailwind for economic and earnings growth towards the end of the year.

I suspect that the volatility in bond yields and concerns around inflation have not completely disappeared, and may resurface when some of the incoming data over the next few months reveal that the economic recovery is gaining steam and global breadth. That may once again reignite an intense debate around whether central banks like the U.S. Federal Reserve will have to tighten monetary policy earlier than they have indicated. The week will certainly be an interesting one, as we look to earnings season and more indications from the economic indicators.

As we head into a week and enjoy the April break at home, remember that wealth is more than just where you stand with your money. Trust wealth envolves your total well-being, encompasses purpose, social, physical, community and financial factors. Here are a few themes to focus on this week:

i) Don't ignore your body, mind and emotions. If you have a healthy body, if you are strong emotionally and if you have a rested rested mind, you will make wise decisions.

ii) Make other people successful, which is the best way to be successful yourself.

“Wealth, like a tree, grows from a tiny seed. The first copper you save is the seed from which your tree of wealth shall grow. The sooner you plant that seed the sooner shall the tree grow. And the more faithfully you nourish and water that tree with consistent savings, the sooner may you bask in contentment beneath its shade.” George Clason

Be well & enjoy the moments

Derek