Photo above: the dock at the Gallivan cottage in 2019, photo by Mark
A few topics our newsletter touches on this week:
- Our Thoughts
- Canadian Banking Sector Update
- CRA Extends Filing Deadline for Corps & Trusts
- Listen - RBC Capital Markets on US Equities
- “10 Minute Take” Topics this Week: Consumer Spending & Healthcare
- Distraction Content – Canadian Film & TV
Our Thoughts
There were some welcome developments this week, on top of the surprise heat that made it feel more like July than May! More specifically, the Canadian banks reported results that allowed investors to breathe a collective sigh of relief (more on that below). Beyond the banks, equity markets rallied further, but it was the inner workings of the move that was particularly noteworthy.
One complaint about this recent recovery has been that a good portion of it has been led by a narrow group of large technology and other so called “growth” stocks, who increasingly make up a large part of many regional stock markets. But, within the past few weeks, that trend has been changing with other segments of the market driving a bigger part of the overall stock market gains. We view this as a healthy sign that reflects growing confidence in the economic recovery that is now underway. The degree and sustainability of the recovery, the geopolitical tensions between China and the U.S., and the pandemic remain risks that we will continue to monitor with great interest.
Canadian Banks Update
The good news is that the results reported by the banks were generally fine. To be clear, profits were down substantially and provisions did increase exponentially with banks setting aside billions of dollars to prepare for bankruptcies and defaults. But the amounts set aside were generally lower than what some investors had expected, which provided some reassurance that perhaps the environment may not yet be as bad as some had feared. Nevertheless, it is important to remain vigilant. The risk remains that the banks may have to increase their provisions even more than expected in the future should the economic damage be longer lasting. It is impossible to know. But, we remain comforted by their generally strong balance sheets and ability to pay sustainable dividends.
Corporations and trusts have longer to file tax returns, CRA says – Investment Executive
The CRA is extending tax return filing deadlines for corporations and trusts facing deadlines over the next three months. The CRA is allowing all businesses to defer T2 corporation income tax returns to Sept.1st. The agency is also allowing T3 trust income tax returns to file by Sept. 1. Read article
RBC Capital Markets’ Head of U.S. Equity Strategy offers her perspective on the rebound and beyond.
Lori Calvasina, RBC Capital Markets, LLC Head of U.S. Equity Strategy, joins Janet Engels, Head of the Portfolio Advisory Group – U.S., to discuss the outlook for U.S. stocks following the markets’ rebound from the March lows. Their conversation examines the factors that have contributed to the rebound, the prospects for EPS, and current market valuations. Lori believes markets will remain choppy in the months ahead, and shares her detailed views on sectors and growth stocks. Listen here (approximately 24-minute duration).
The 10 Minute Take – RBC Podcast Series *new episodes*
New episodes will get posted regularly to discuss various issues front and center during the COVID-19 crisis. Recent highlights include episodes that analyze consumer spending trends during the pandemic and a new era in healthcare. Essentially spending patterns reflect the stay at home mindset – what do I need and how can I improve our experience at home. Likewise our summer vacations will be more a boon to the outdoors shops (for camping, cottaging) than exotic travel. Check out the latest episodes here.
Distraction Content
The Canadian Screen Award winners were announced this week from the Academy of Canadian Cinema & Television, winners on the film side included Antigone, The Song of Names, The Body Remembers when the World Broke Open and Goalie. On the TV side, winners included Schitt’s Creek, Cardinal, Anne with an E, Letterkenny and Baroness von Sketch Show. Click here to read through the full list of winners.
Speaking of Canadian film, NOW magazine put together a great list of Canadian films from the last 10 years that are streaming online for free. Check it out here.
Our team is here for you
We are happy to run our next meeting with you by video conference (WebEx Meetings) rather than by phone if you so choose. We also continue to be available if you have friends or family who might be seeking a consult on their portfolio, wealth or estate planning goals.
Regards,
Mark, Peter, Sarah, Corinne & Andrea