“I am a rock, I am an island” Simon & Garfunkel

Good morning, You know you are waking up and working from your home office…. As soon as you enter your “fortress” for the day you feel the Cheerio crumble beneath your bare foot…

As soon as you flick it off and get your balance, you step on a the notorious Janga block!!! I can tell you, this “rock” certainly felt that pain and I quickly realized I’m not “shielded in my armor”. It seems I need to better protect my “fortress deep and mighty”….happy Monday!

In addition to reflecting on some Simon and Garfunkel lyrics this morning, I read a motivating article over the weekend by Laura Barton, one of my facilitators from the Family Enterprise Exchange. Laura’s article Family Enterprise Leadership: Easy Strategies for Rejuvenating Your Physical Energy shares a number of approaches that we can look to help us not only focus on self, but motivate us to protect the important time that we have outside of our home office, time with our family. Here’s a few tips for us all to consider on our path to rejuvenation as we always must change, renew, rejuvenate ourselves; otherwise, we harden like a rock.

Eat the rainbow. Everyday.

i) Eating fruits and vegetables of different colors everyday can uplift you from the inside out. Plants contain different pigments, or phytonutrients, which give them their colour. Different-coloured plants are linked to higher levels of specific nutrients and offer a variety of health benefits. (Phytonutrients: Paint your plate with the colors of the rainbow - Harvard Health Blog)

ii) Add more plants to your plate. Keep meat to a fist size amount.

Make Rest a core part of your Rejuvenation.

i) Set boundaries by saying no to those things that feel like they push you “a little too much.” Incorporate adequate breaks with dedication. Take a moment to stretch, look out a window and let your eyes focus on something in the distance. A few minutes of rest periodically does wonders for your mind and your stress level.

ii) Try to protect your lunch hour: don’t be the one who books meetings with clients or employees over the noon hour. We all need time to eat, move and re-energize.

iii) You may not need 8 hours of sleep to feel rested, but make sure your room is dark (free of light pollution) and your electronic devices are on silent. The body needs time to gear down at least an hour before bed to signal to the brain it’s time to sleep.

Here are some suggestions:

If we can focus on rejuvenation, the more laughter and love we will find outside of the routine that we have found ourselves in during these challenging times.

“To improve is to change, so to be perfect is to have changed often” Winston Churchill

Market update

Global markets were somewhat directionless over the past week, but encouragingly, levels of volatility remained the lowest they have been for some time. Despite the quiet week for the markets, there is much to discuss with respect to Canada. The third wave of the virus remains a near-term headwind. Meanwhile, the Federal Government unveiled its much anticipated budget, while the Bank of Canada announced a subtle but meaningful shift in its monetary policy. We discuss more below.

Coronavirus update

We may have seen the first signs of slowing with respect to the virus spread in Canada. The country’s 7-day average rate of new daily infections was near 8600, relatively flat over the past week. The most problematic provinces were Manitoba, Alberta, Nunavut, and Nova Scotia, with the latter being particularly noteworthy given the situation had been relatively stable in the province until recently. Ontario’s infection trends rose, but the pace was noticeably slower. Quebec, BC, and Saskatchewan saw declines. An ongoing slowing and outright decline over the next week may suggest the country has reached a peak in its third wave.

The United States has continued to experience a relatively stable situation, with new infection trends slowing. Elsewhere, the story remains problematic with a number of countries facing very challenging situations. India may be the most noteworthy as it is dealing with severe strain on its health care infrastructure. After having reported a record of more than 210,000 new daily infections a week ago, India surpassed that level with a tally of 330,000 daily infections over the past week.

Canada’s large two-pronged budget

The federal government unveiled its 2021 budget this past week; its first in two years because of the pandemic. There were two broad takeaways.

First, the budget was two-pronged in nature. On the one end, there were extensions to existing pandemic-related programs, and new ones to help businesses and households deal with ongoing pandemic-driven disruptions. On the other side, there was spending to foster more sustainable growth. This includes an ambitious national early learning and childcare program aimed at boosting women’s labour force participation over time, though it will depend on cooperation from the provinces. There were also wide-ranging measures announced covering everything from employment insurance eligibility, to old age security, infrastructure and transit, affordable housing, and climate mitigation. Ultimately, the budget was very much focused on spending – roughly $100 billion over the next three years - in the hopes of spurring higher economic growth.

The fiscal implications are not surprising. The federal government’s debt-to-GDP ratio (debt to income) is going to remain elevated, at nearly 50% for the foreseeable future. This is meaningfully higher than the 30% level seen before the pandemic. The increase in debt may limit the government’s ability to respond to future crises but it isn’t necessarily a problem right now. The low interest rate environment has made the cost of carrying this debt manageable and other governments around the world have faced increases in their debt burdens over the past year, suggesting Canada is not alone.

Bank of Canada starting to “taper”

The Bank of Canada over the past week became the first major central bank in the world to announce a tapering, or slowing, of its weekly purchases of government bonds. The bank, like many others, had embraced this approach since the onset of the pandemic to increase the money supply, foster an environment of low bond yields, and help stabilize the economy.

The environment today has changed meaningfully from the year ago period despite the challenges that remain. Based on a more resilient economy and the improving outlook, the Bank of Canada raised its forecast for economic growth over the next few years, and in particular for 2021. Moreover, it now expects economic slack – productive capacity that is not being used – to be fully absorbed by the first half of next year, and inflation to reach, if not surpass, its 2% target later next year. As a result, the bank no longer feels the need to stimulate as much and it will start to modestly slow its pace of bond purchases beginning immediately. Investors are now shifting their expectations as to when the Bank of Canada will raise interest rates, with many now seeing late 2022 as a likely timeframe, from the prior expectation of 2023.

Last week’s decision by the Bank of Canada marks a small and seemingly incremental change. But it is meaningful nonetheless as it suggests that the future direction of monetary policy over the next few years is likely to be less, rather than more, accommodative. In some ways it is a good sign as it indicates we may be moving towards a more normal and healthy economic and operating environment. However, as investors, we are mindful of how interest rates play such a fundamental role in the valuations of all assets, as well as opportunities this can uncover.

Have a wonderful week of focus and rejuvenation and remember there are always opportunities amid uncertainty.

People, even more than things, have to be restored, renewed, revived, reclaimed, and redeemed Audrey Hepburn

Be well & enjoy the moments

Derek