A few topics our newsletter touches on this week:
- Reminder: Transition to Monthly Newsletters
- Our Thoughts: Earnings Season
- 10 Minute Take podcast: Office Building Post-Pandemic
- RBC Markets in Motion podcast: The Biden Playbook for US Equities
- Interesting Reading: Mulan on D+, Global Insight Monthly
- Distraction Content – Drive-In Bluesfest & Movies
Reminder: Transition to Monthly Newsletters
We have switched to a monthly edition of this newsletter. Thank you so much to everyone for your responses/feedback & for reading along, we hope that you continue to find them insightful and interesting. As always, If you want to discuss the content of any of our newsletters or have any questions about your portfolio – please do not hesitate to reach out to us directly.
Earnings Season – The Glass is More than Half Full
July saw markets post robust gains across the board. The TSX rose 4.5% while the S&P 500 rose 5.6% (4.4% in Canadian dollars) with Europe, Australia & Far East (EAFE) up just 1% partly due to resurgence of COVID concerns. The Canadian bond universe rose 1.3% while its US counterpart rose 0.19% (USD). It was a month, nevertheless, that served to remind investors that improvements may be met with setbacks, both with respect to the coronavirus and the economic recovery.
The second quarter earnings season is roughly half way complete. Thus far, results from companies in Canada, the U.S., and Europe have been in-line to slightly better than expectations on average, helping reassure investors to some extent. The large and growing technology sector has garnered a lot of attention and focus, and deservedly so, as results confirmed what many investors already understood – these companies’ business models are well positioned to deal with an environment that remains far from normal. Yet, revenue and profits from companies across a range of industries also followed the positive trend of being as good as or better than investor expectations.
Despite the positive narrative, significant challenges persist. Many management teams suggested visibility remains limited and difficulties still lie ahead once government aid programs expire. Furthermore, many entrepreneurs with small and medium sized businesses are struggling with restrictions imposed by governments and overall weak demand. Additionally, many don’t get to benefit from the kind of financial flexibility and workforce agility of some public companies. Furthermore, there continue to be signs that suggest the positive economic momentum is wobbling, particularly in the U.S. The number of people filing weekly jobless claims, which had been improving (i.e. declining) for many weeks, has stalled and begun to reverse course over the past two weeks.
Pressure continues to mount on the U.S. government to come up with another round of stimulus. But finding some compromise is clearly proving to be more challenging than expected. Nevertheless, we continue to believe some resolution will surface in the not too distant future. The upcoming U.S. election remains top of mind and is a key area of focus over the next few months. Check out the RBC Market in Motion podcast below for more on that topic.
The 10 Minute Take – Podcast Series
New podcast episodes will get posted regularly to discuss various issues front and center during the COVID-19 crisis. You can jump to a specific episode from the links below, with easy access to past episodes as well.
RBC Market in Motion – Podcast Series
This podcast focuses predominantly on the U.S. equity market, which we know is of interest to many of you. In this edition, Lori discusses her thoughts on the 2020 Presidential Election in the US, and specifically how investors should be positioned for a Biden win. She’s put together a sector playbook based on the policy leanings of the Biden campaign and her July survey of RBC Capital Markets’ research analysts.
- July 29: The Biden Playbook for US Equities
Interesting Reading
- Variety article on the Mulan skipping theatres for a VOD Disney+ Premiere.
- RBC PAG spotlight on Cloud Computing.
- Global Insight Monthly report is out for July – spotlights on auto sector, health care and global equity.
Distraction Content – Drive-In Bluesfest & Movies
Missing Bluesfest this year? Check out #CanadaPerforms at the RBC Bluesfest Drive-In, a summer weekend series of live concerts presented at Place des Festivals – Zibi (Gatineau, QC). Simultaneous broadcast via Facebook Live will also be available. Find our more, including lineup & schedule here. Andrea from our team attended Weekend 1 (last weekend) and really enjoyed it. Weekend 2 is this coming weekend August 7th & 8th.
There are also drive-in movie event at Zibi called Cine-Parc Urbain, which is hosting double features the weekend of Aug 15/16 and Aug 22/23.
Fun Fact –Canadians can cheer on a Canadian success story at this year’s Emmy’s: CBC show Schitt’s Creek was nominated for a whopping 15 Emmy’s. Available for streaming on CBC and Netflix. Bring on The Crows Have Eyes Netflix reunion special!
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