"If you want to lift yourself up, lift up someone else." Booker T. Washington
Good morning,
I trust everyone had a lovely weekend and found ways to celebrate mother’s day.
It’s been a wild ride for mothers of all ages in this pandemic. It’s important for us all to remember that, as Cardinal Mermillod once said, “A mother is she who can take the place of all others but whose place no one else can take.” Taking time to reflect on what is takes to be a Mother is important for us all…..being a Mother is something you do, it’s a verb that takes immense energy, effort and strength – thank you to my mother, the mother of my children, and to mothers everywhere. You are incredible!
"Alone we can do so little; together we can do so much." Helen Keller
Welcome Aboard
A fun kick start to the week, we’d like to welcome a new team mate and partner to the Henderson Wealth team – welcome aboard Jeff Tervit!
Backed by over a decade of experience in the investment industry, Jeff brings a wealth of experience in portfolio management and investment research to the Henderson Wealth team. Jeff’s in-depth knowledge of Macroeconomics, portfolio analysis and asset allocation provide our team a unique skillset applied to comprehensive portfolio construction and both strategic and tactical asset allocation. Before deciding to join Henderson Wealth, Jeff worked with RBC Global Asset Management as District Vice-President responsible for various investment strategies such as hedge funds, mutual funds and ETF’s. it will be great to introduce everyone to Jeff in the weeks ahead!
Team Work
On the topic of teamwork, in our work with clients and families, we have a unique understanding of the importance of the Human Capital elements within a family dynamic and the importance of relationships play in defining and growing true wealth. Those with strongest relationships have an aligned vision and are always focused on communication, collaboration and coordination. Daniel Webster once said: "There are many objectives of great value to us which cannot be attained by unconnected individuals, but must be attained if at all, by association." While he may not have used the term to describe his thinking, he clearly had teamwork in mind when he said this. With this in mind, I thought it would be valued for me to share a few important elements of teamwork and growth for us to think about this week…
i) Be Vulnerable: Vulnerability, the ability to be honest, forthright, and emotionally available, makes relationships real. The Merriam-Webster dictionary takes this definition a step further, defining vulnerability as when we are “capable of being physically or emotionally wounded”
ii) Build Trust: In his book, The Speed of Trust, Stephen Covey asserts: “Trust is equal parts character and competence.” Trust is the both explicit and implicit understanding among people that is gained over time by being accountable and delivering on your promises. In a family or team, trust is a shared assurance of the members’ individual abilities, strengths and reliability.
iii) Share Experiences: People build relationships through shared experiences. This is true for profound experiences that bring families together, and through continuous smaller interactions (such as sharing meals together) that produce familiarity. These activities can be entertaining, meaningful and educational like going bowling together, volunteering, creative problem solving, personality testing or simply going on a group hike.
iv) Encourage Learning: For a family or group of leaders to be successful over time, there needs to be a fundamental level of knowledge and education. To build this foundation, there should be an intentional and mindful pursuit of knowledge.
Vulnerability, trust, shared experience and education are essential for fostering growth and with proper planning and attention to these elements we can better define and refine the meaning of wealth which leads to growth as individuals, and as families.
And now, to the Markets….
S&P futures little changed this morning after US equities finished mostly higher last week with upside leadership from commodity equities, financials and industrials. After a pause to watch Elon Musk on Saturday Night Live, America continued to scramble to recover from the cyberattack that shut down Colonial Pipeline, its largest artery for refined fuels, on Friday; fuel prices jumped 4% on Sunday.
Looking at the past week, markets continued to consolidate, grappling somewhat with elevated investor expectations. The first quarter earnings season, which is nearly complete, has been strong, but it has been met with a relatively muted response by most stocks, even by many of those that reported better than expected results. It suggests that good earnings may not quite be enough in the current climate. There are other factors at play, including supply chain bottleneck, inflation concerns, and the ongoing pandemic. This week, we provide a brief update on the latter situation, and turn our sights to the one thing, other than the pandemic, that may matter the most: jobs.
Coronavirus update
Canada’s progress over the past week was a bit disappointing. The country’s 7-day average rate of new daily infections stands at 7800, which represents an incremental drop from the week ago period. Only Ontario, Saskatchewan, and British Columbia experienced declines. Quebec had a modest increase in its average new infection rate. Meanwhile, Manitoba, Nova Scotia and Alberta all saw meaningful increases. The northern territories also saw a notable uptick. While Canada’s third wave of the virus appears to have peaked a few weeks ago, a more meaningful decline in new infections will only be driven by a broader drop across more provinces or a larger fall in some of the bigger provinces. Canadians undoubtedly hope to see both in the weeks to come.
Elsewhere, trends have largely remain unchanged. The U.S. continues to see steady declines. Europe is also experiencing declines though to varying degrees. India is garnering the most attention given the sheer volume of new daily cases with the country having recently reported more than 400,000 in a single day.
It’s (almost) all about jobs
In today’s day and age, everybody appreciates data. The same is true for investors, who consistently parse through financial statements, economic releases, and high frequency information such as credit card spending, traffic congestion, and restaurant bookings (when open), among other things to gage the health of consumers, businesses, and economies. And while they all have merit, the one thing that may trump them all is the direction of the job market.
The employment situation in North America has come a long way over the past year. Between February and April 2020, Canada and the U.S. saw meaningful losses, roughly 3 million and 22 million, respectively. From May 2020 onwards, both countries have seen significant gains. Canada has been less consistent from one month to the next given the re-emergence of lockdowns across various provinces. Nevertheless, its gains have amounted to well over 2 million, suggesting it has recouped more than three quarters of the job losses. Meanwhile, the U.S. has seen approximately 14 million jobs created since last April, and it has recouped two thirds of the jobs that were lost.
The positive employment trends should continue going forward, driven by the full reopening of economies later this year. But it’s the pace of job creation that may be more important as it may foreshadow the timing of a larger shift in monetary policy, such as interest rate hikes, from the Bank of Canada and the U.S. Federal Reserve. The latter has indicated repeatedly that it is focused on getting the economy back to “maximum employment”, which is comparable to the level of employment prior to the onset of the pandemic. The U.S. has been averaging over 300,000 new jobs created per month for the past six months. Should that trend continue, the level of “maximum employment” will be reached in about two years. Job growth of nearly 600,000 new jobs per month would translate into a level of full employment by next summer.
In a perverse way, investors may be hoping for good, but not great, job growth. That would give central bankers enough of an excuse to keep policy unchanged for longer and support existing financial conditions, and consequently valuations in the bond and equity markets. A stronger trajectory may suggest that monetary conditions will have to be tightened sooner, forcing investors to more closely scrutinize valuations. At the end of the day, we welcome a backdrop marked by employment growth as opposed to the one we witnessed last spring. But, we are mindful of the unique challenges presented by a much stronger job market, and are prepared to adjust portfolios if need be – remember, there’s always opportunity amid uncertainty.
Enjoy the week and remember that we are always stronger if we surround ourselves with those from which we can learn.
“If I have seen further, it is by standing on the shoulders of giants.” Isaac Newton
Be well & enjoy the moments
Derek