Make you Blush Summer Slush & Market Update week

July 18, 2020 | Rhonda Hymers


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With summer now in full swing, we thought we would share a few favourites, along with a market update. As many of you are familiar with my Saskatchewan roots, I thought I would share my mom’s “Make you Blush Summer Slush”. It is a refreshing treat on a hot sunny day. With the rain we have had in the Okanagan, I haven’t seen this many mosquitoes since I lived in Saskatchewan. Hopefully this heat will scare them away soon.


Saskatchewan “Make you Blush Summer Slush” Recipe 

  • 2 cans frozen orange juice (use only ½ of the suggested amount of water)

  • 2 cans frozen lemonade (use only ½ of the suggested amount of water)

  • One pot of tea with 2 ordinary tea bags (i.e. Earl Grey)

  • Optional 26 ounce of Vodka

  • Mix into an ice cream pale and freeze

  • Scoop out frozen and serve with 7up, tonic water or club soda

  • Sit in the sun and enjoy!


A couple Summer playlists from Apple Music – Great if you are looking for a quick and easy way to enjoy some background music on the patio

Summer Vibes  The Sand bar


Market update

It’s been a tale of two stories the past few weeks. On the one hand, concerning coronavirus trends across key hotspots and new localized outbreaks in some countries. On the other hand, resilient markets which appear to believe that, for now, the worst of the economic damage may be behind us, elevated infections don’t pose as severe a health care challenge as they did months ago, and that solutions in the form of vaccines may be on the horizon. This week also marked the kickoff to the second quarter earnings season. We share some of our key thoughts and takeaways.

A few words on Canada

In Canada, trends remain much more comforting. Provincial and local governments have moved forward with reopening plans. One of the major dilemmas now facing government officials is on the school front. Some provinces have already committed to a full return in the fall, at least for elementary schools, while others are exploring options that include a hybrid approach of in-class, staggered, part-time, and virtual class sessions. These are difficult and complex decisions that have implications for millions of families, parents, and youth across the country. Moreover, they may have major repercussions on productivity, the labour force, and the overall trajectory of our country’s economy in the second half of this year and beyond. Our economy can use all the help it can get. This week, the new Bank of Canada Governor indicated it may take two years to reach the level of economic output we saw in 2019.

On a separate note, the regulator for the Canadian banking industry announced that it would permit the banks to use a new and lower cost structure to raise capital relative to alternatives used in the past. This fueled a rally in preferred shares, a small but important part of the Canadian fixed income market. This decision may continue to act as a positive tailwind for this part of the market given the potential for less issuance going forward.

The earnings season

This week marked the start of a busy period for company earnings releases, with U.S. banks reporting their quarterly results. The second quarter period encapsulates the month of April, when lockdowns were in full force, through until the end of June, when restrictions started to ease and activity recover. Our primary takeaway is the banks continue to expect credit losses to rise in the future, particularly once some of the government aid programs expire. In response, most banks added meaningfully to the large reserves they already set aside last quarter. These reserves, or provisions as they are often called, can be thought of as a cushion of sorts. The results were relatively in-line with investor expectations and as a result, the stocks behaved reasonably well. The Canadian banks don’t report their results any time soon but we suspect they too will be conservative and increase their provisions in anticipation of future credit challenges.

We look forward to hearing from more companies and management teams over the next month, though we suspect few will have the clarity investors are seeking given that the paths of the virus and economy remain uncertain.


Global Insight Weekly 

Click here for pdf

  • The presidency: Just one part of the ensemble – While the occupant of the Oval Office dominates the American stage, when it comes to influence on financial markets, the reality is that the president is less a lead player and more a member of a chorus. Don’t let the roar of the media’s election coverage sway investment strategy. Instead, focus on what matters to markets. (pg 1)

  • U.S. stocks rally on vaccine news, but it’s not all rosy – Encouraging reports from biotech companies boosted the equity market, but the overall pandemic picture included several developments that could negatively impact the U.S. economy. (pg 3)

  • Regional highlights: Canadian policy rate on hold through 2022? European cyclicals rise on vaccine optimism. China looks to cool its equity market. (pgs 3-4)


Bank of Canada adopts 'low for long' forward guidance 

Click here for pdf


10 Minute Take - U.S. oil demand sputters as lockdowns tighten 

 


As always, please feel free to reach out to myself and the team at any time. We are pleased to assist.

Warm Regards,

Rhonda


"In summer, the song sings itself." ~ William Carlos Williams