“When the world wearies and society fails to satisfy, there is always the garden” Minnie Aumonier

Good morning,

As difficult as it is to kick start this week given that we here in Ontario are back into “lock down” mode, it’s an excellent week to start to focus on what it is we want to accomplish in 2021 and beyond.

Here at Henderson Wealth, we are going to be hosting a number of online Roundtable Events and Speaker Series for the remainder of the year, which we’ll certainly keep you up to date on. Also, as a Family Enterprise Advisor working closely with businesses, we will be starting a weekly series called tEnterprise Impact, sharing stories from entrepreneurs and friends about the impact of the current environment on their business and outlook. It’s sure to be interesting, informative and invigorating….stay tuned!

“Life begins the day you start a garden” Chinese proverb

As the weather improves, it’s natural for us to all be searching for something to do outside. As it turns out, the impulse to garden is actually a perfect idea….planning and planting a garden you become a creator and a scientist and it can improve our patience and enhance our sense of hope. It will align you with the rhythm of seasons and connects you with your inner self. It’s one of the healthiest hobbies you can develop and worth considering as we find constructive ways to spend our summer energy.

“If you have a garden in your library, everything will be complete” Marcus Tullius Cicero, Letter to Varro, 1st century AD

I thought I’d share the health benefits of gardening research, some scientific studies about impact of gardening on:

• Outdoor gardening can help your body fight disease
• Gardening builds strength, promotes sleep, and helps you maintain a healthy weight
• Gardening can help protect your memory as you get older
• Gardening is a mood booster
• Gardening calms you after stressful events
• Family and community gardens foster feelings of connection
• Gardening can give you a sense of agency and empowerment
• Help you manage anxiety and lowliness

“A garden is the purest of human pleasures, it is the greatest refreshment to the spirit” Francis Bacon

Market Overview

Volatility was relatively subdued over the past week, helping global equity markets edge higher. The Covid situation remains a near-term headwind but not enough to dissuade investors from the view that a sustainable growth trajectory is around the corner. Meanwhile, the first quarter earnings season is now underway with companies reporting results amidst relatively high expectations. We explain some early takeaways from the banks, and discuss what we’ll be watching as the next few weeks unfold.

Coronavirus update

Discouragingly, the past week saw yet another acceleration in the rate of growth of new Covid cases across Canada. The country’s 7-day average rate of new daily infections rose to over 8500, from 6400 the week before, representing a new record high. Manitoba led the way, after having enjoyed a few months of relative stability, and the increase has sparked a new round of restrictive measures in the province. Ontario also saw a sharp increase despite the fact it had already recorded rapid growth in infections for well over a month. Quebec, Alberta, BC, and Saskatchewan also saw notable increases though not as severe. The situation in Atlantic Canada and the northern territories remains relatively stable.

The story is similarly frustrating in many other jurisdictions. India reported a record of more than 210,000 new daily cases, surpassing the 130,000 record reported in the prior week. Chile, Japan, Germany, and Turkey are just a few of the other countries facing an accelerating spread at this point. The U.S. has witnessed a rise in its daily trends over recent weeks, but not at the pace of others.

Israel represents the best example of what hopefully lies ahead for most countries. After having witnessed a record high of more than 10,000 new daily cases in late January, it has seen its figures fall below 200 recently, driven by an aggressive and efficient vaccination campaign that has seen more than half of its population of 9 million people receive their jabs.

Strong growth expected

The first quarter earnings season, measuring business results between the months of January to March, has officially kicked off. Expectations are high, with consensus calling for 25% year over year growth for companies within the S&P 500 index, the most popular benchmark for the U.S. equity market. Moreover, the earnings growth rate for the second quarter (April to June) is expected to rise by more than 50%, reflecting the fact that much of the world’s economy was shuttered in the spring of 2020. For the full year, the average estimate is for nearly 26% year over year growth. This stands in stark contrast to the decline of almost 13% that was witnessed last year.

Many U.S. banks reported results over the past week. Unsurprisingly, many are releasing some of their credit provisions, after having built them up significantly nearly a year ago in preparation for loan losses. Meanwhile, revenues across capital markets businesses and wealth management franchises were strong, driven by a positive market backdrop. One source of potential disappointment may have been net interest margins, which measure the difference between interest paid to depositors, and interest earned from borrowers. Investors expect this important source of profitability to improve this year along with the rise in bond yields witnessed year-todate. But, management teams highlighted that any improvement will take time. U.S. consumers are not yet ready to re-lever, as many have accumulated savings from the significant government stimulus deployed over the past year. These reserves may need to be spent before demand for loans re-emerges and drives an uptick in margins. Overall, the results were in-line with high expectations and served as confirmation that the economic backdrop, at least in the U.S., is improving.

Management teams from a range of sectors will be commenting on their own company results over the next few weeks. We look forward to any insight they can provide with respect to the outlook on costs and inflation. Everything from lumber, to coffee, skilled labour for certain industries, and semiconductor “chips” are all seemingly in short supply. Any sustained supply issues could present cost and profit margin headwinds to companies across a number of industries. It may be premature to be overly concerned at this juncture, but it is something worth monitoring.

Enjoy the week and think about that project you’ve always wanted to begin, there is no better time than now. It’s been said that procrastination is the delaying or postponing of an action or decision to someday. Achievers accept the transitions of change, while procrastinators never step into the action phase of dreams. Today is the day to begin – and if you need a project, plant a garden and allow it to grow alongside you and your wealth.

“Few goals are impossible for the one who will devote time to lifelong learning and continual self-mastery.” John Soforic, The Wealthy Gardener

Be well & enjoy the moments

Derek