"Yesterday is gone. Tomorrow has not yet come. We have only today. Let us begin." Mother Teresa

Morning,

It’s been a busy number of weeks as we are heading into summer and these Monday Morning Memos will be full of some fun insights as we cruise into more beach weather. It’s encouraging that we are all optimistic that the worst of the pandemic is almost behind us, but I am starting to recognize common themes that many of us are seemingly struggling with as the preceding months forced us to live differently, work differently and think differently. One of these themes is the management of our more precious resource…time.

“Time is the coin of life. Only you can determine how it will be spent.” Carl Sandburg

One of life’s greatest challenges is the limit of time, which why our ability to manage our time well, with discipline and intension, is of paramount importance. Of course, we understand the benefits of having more control over our time and our calendars include better habits and greater productivity. Improving our time management can enhance your focus, build confidence and allow you to capture bigger opportunities.

I thought I’d share 10 benefits of being more intentional about our time…

• Less stress
• Better work-life balance
• More time freedom
• Greater focus
• Higher levels of productivity
• Less procrastination
• Things are simpler and easier
• Less distraction
• Increased energy
• Time to reflect

A motivating list for us to shift some focus toward managing our time. It takes consideration and reflection to try to understand where our time is best spent and, once that is understood, directing our energy towards those tasks and moments that are most productive is critical If we remember that our future is created by what we do today, not tomorrow, it may ensure perspective as we discover how we spend our precious moments.

"Time is really the only capital that any human being has, and the only thing he can't afford to lose." Thomas Edison

And now, to the markets…..

This morning S&P futures down 0.1% after US equities finished higher last week with the S&P closing at a new record. It was a busy weekend of headlines but nothing to shift the narrative. G7 agreed to back global minimum tax rate of at least 15% and tax multinationals in countries where they make money, but multiple reports discussed the myriad complications facing implementation, including Congress. Yellen said higher interest rates would be a good thing for the US and noted inflation could reach 3% through the rest of the year but should be transitory. Biden and Capito to hold another round of infrastructure talks today. WSJ said Fed likely to discuss tapering at June meeting but not ready to start formal deliberations. On the data front, China export and import growth missed, but still came in at elevated levels.

It has been an uneventful few weeks, with volatility near the lows for the year. Government bond yields have remained in a tight range for the past few months, which stands in contrast to the larger swings witnessed earlier this year. Inflation concerns have calmed down, for now, but they remain out there, with investors continuing to debate the levels of job growth needed before central banks begin to shift their ultra-accommodative policies. Meanwhile, on the equity front, some markets have continued their slow and steady grind higher. This includes the Canadian stock market, which we discuss below. But first, we start with a brief update on the global Covid situation.

Coronavirus update

The third wave in Canada remains in decline. The country’s 7-day average rate of new daily infections has fallen by over 50% in the past two weeks, and now stands at nearly 2300. Reassuringly, the declines have been across the entire country. Nearly 60% of the country has received a first vaccine dose and provinces have now started to focus on deploying second doses.

Variants of the virus continue to be a concern, with the Delta variant, originally found in India, to be the source of particular worry at the current juncture. It now accounts for much of the new daily case load in the United Kingdom. Elsewhere, Asia is back in the spotlight with countries such as China and Vietnam experiencing an uptick in cases. Even Australia has seen a sudden surge, prompting a lockdown in Melbourne.

Canadian equities leading the way

The Canadian equity market has been one of the best performing this year. In Canadian dollar terms, the market is up by an even bigger margin than many of its global counterparts, driven by the strength of the loonie relative to most currencies. We’ll save the discussion on the Canadian dollar for another day, and focus instead on what’s been driving the market and its outlook going forward.

Most of the strength in Canadian equities can be attributed to the cyclical nature of our market. Nearly 60% of Canada’s stock market is tied to sectors such as financials, industrials, and nonprecious metal commodities, all of whose earnings are heavily influenced by levels of domestic and global economic activity. An accelerating growth outlook acts as a meaningful tailwind, while a decelerating outlook or stagnant one can act as a headwind. Since the second half of 2020, global growth has been on the upswing, fuelling an earnings recovery and higher stock prices, particularly in the cyclical sectors.

The other issue worth mentioning has been the Canadian market’s resilience in the face of higher government bond yields. It has by no means been immune, but it has faced less pressure compared to others. High growth industries such as technology and alternative energy sectors for example have been notably vulnerable to the move higher in bond yields this year. This has presented a meaningful challenge to markets like the U.S. and China, which have substantial exposure. While Canada’s technology sector has grown meaningfully in size in recent years, it is still not big enough to present a headwind for the broader market.

Over the past twenty years, Canadian stocks have traded at a discount to their U.S. counterparts. More specifically, on a price to projected earnings basis, Canadian stocks have traded just below their U.S. peers. There have been periods over the past few decades when Canadian equities have traded meaningfully higher. For example, in the commodity boom of the 2000s and the period immediately following the great financial crisis. But since then, Canadian stocks have seen their premium turn into a discount that reached an extreme late last year. Recently, this has started to reverse, but it still has a long way to go to return to a more normal range.

The backdrop is favorable for Canadian equities, driven by a global economy that should continue to improve in the months to come and a relative valuation that remains reasonable. But, it’s impossible to know exactly what will transpire in the months to come. Moreover, it’s too short-term sighted. Most importantly, the outperformance of Canadian stocks this year after a few years of underperformance relative to global peers serves as a reminder of the need to have a well-diversified asset mix to ensure that a portfolio has exposure to asset classes that can carry the burden of generating returns when other parts of the portfolio inevitably run.

All for now….as we head into another week, make it a priority to review where you are spending your time and explore ways you can improve calendar control and management of your time. It will empower you to focus on your vision and enable you the personal growth you are striving for.

"I must govern the clock, not be governed by it." Golda Meir

Be well & enjoy the moments

Derek