Good afternoon,

 

Apologies for getting this out later than usual—we have been working as hard as we can to provide Leila with entertainment, but she’s clearly getting bored with just her two parents for entertainment.

 

While I cover some important information below on the COVID-19 crisis and the economic and market implications, please see the second half of the note for some parenting resources for keeping the little ones entertained. A good number of these resources would be good alternatives to binging Tiger King on Netflix for people our age, as well.

 

COVID-19

It’s nice to start with some good news: after weeks of deteriorating trends in new COVID-19 cases, as well as disheartening mortality numbers out of places like France and Italy, some incrementally positive signs have emerged. There is now early evidence that Italy, Spain, Germany, and other European hotspots may finally be experiencing a slowing in the rate of new case growth after nearly three weeks of strict lockdown measures. The situation remains very serious in those countries but it provides some hope to Canada and the U.S., which continue to see their new cases rise meaningfully. The message: social distancing works, and we need to do all we can here. Canada is taking a whole-country approach. The U.S. is proceeding with a patchwork of responses by state, something that I worry will delay its effectiveness. Meanwhile in Asia, we continue to watch for any signs of a second wave of infections.

 

Government response

this isn’t just a health crisis, but an economic one. Thankfully, of late, the actions undertaken by most governments have been sharper, bigger in scale, and more diverse than even those undertaken during the 2008 debt crisis. The range of measure is truly staggering, with countries using a mix of wage subsidies, child benefits, business loans, mortgage support, moratoriums on student loans, and direct payments to consumers, among other initiatives. While it won’t eliminate the hardship that many are likely to face, it has left the impression that policymakers are willing to do whatever it takes in the weeks and months to come to help lessen the blow from an economic shutdown. Meanwhile, central banks have continued to find creative ways to ensure a sound financial system that can offer liquidity and proper functioning of credit markets for those that need to borrow.

 

The Canadian response

To date, the Government of Canada has announced direct support to the economy amounting to $105 billion (nearly 5% of our country’s economic output). Inevitably, whether it is our clients, family, or friends, we are all likely to know people whose job, education, or business has been or will be impacted by the current economic difficulties. The Canadian government has created Canada’s Covid-19 Economic Response Plan, which is a collection of diverse measures undertaken so far to help households, consumers, students, parents, and businesses who are at risk. We suggest forwarding the link to anybody who can benefit.

 

What this all means

You can’t turn on the news without seeing how measurably economic data has deteriorated, and investors should brace for more of the same in the weeks to come. In Canada for instance, the number of people filing for unemployment insurance has surpassed one million individuals, and in the U.S., jobless claims rose to more than six and a half million this past week, a doubling of the level from a week ago.

 

In order to understand just how without precedent this all is, take a look at this graphic put together by Len Keifer, the Deputy Chief Economist at Freddie Mac. If the animation doesn’t load in your email, go to his blog post (here) to see it directly. It’s worth a look, if only for some perspective on what we’re dealing with now.

 

Interestingly, if not wholly unsurprisingly, the equity markets have behaved relatively better of late despite the sombre headlines as they had already fallen meaningfully in preceding weeks, reflecting the anticipation of an economic recession. We have mentioned in the past the idea of capitulation, where the bad news stops being as surprising as it was before, investors and economists have had time to update their expectations, and most of it is priced in. If we have reached capitulation, bad news that’s not quite as bad as expected would even counterintuitively be good news. We’re not positive we’ve reached that point yet, but this might be a sign that we’re getting close.

 

That said, we continue to expect higher volatility in the near term until there is visibility into the potential peak in new global COVID-19 infections. Nevertheless, we remain disciplined in our long-term investment approach, remain active with our ongoing due diligence, and continue to have confidence in our clients’ portfolio positioning. We are making active changes to investments to keep current with the latest outlooks, and to position portfolios for “the next stages” of this story.

 

Now on to the actually interesting stuff…

 

Parenting resources

I mentioned how hard it is to keep Leila entertained, and we are equally concerned about keeping her learning up. Prior to social distancing, Leila had a variety of classes and activities that she did every week. She’s two, so it’s not like we’re worried about her keeping her algebra skills up, but keeping her exposure to experiences (other than Frozen, Frozen 2, and the rest of the Disney canon) is important to us. And there are only so many neat things I can make out of Amazon cardboard boxes (though I must say, my ball run and spaceship are both pretty stellar).

 

Here is a list of things that I have found or others have compiled for a range of ages and interests of children:

• Khan Academy is offering free resources to keep everyone learning for students, teachers, and parents and Khan Academy Kids à we’ve been doing this with Leila and it’s excellent
• KiwiCompany has put together a resource hub for activities, including parent toolkits àLeila has a great scavenger hunt that we pull out whenever we run out of things
• Code Break is an interactive webcast to engage all students, even those without computers
• Audible is offering free children's books
• Winnipeg’s institutions are also providing a tonne of resources:
  • The Manitoba Children’s Museum has a blog where they have started curating their own list of children’s activities and resources
  • Winnipeg Art Gallery’s WAG @ Home, and especially Stephen Borys’ “My Daily Art” on his Instagram
  • Manitoba Museum @ Home has virtual visits, kids’ resources, and a YouTube Page that are all excellent
  • The PlugIn Gallery has opened their Online Video Archive, which will be highlighted by curator Narsin Himada in their Instagram over the coming weeks
• Google Arts & Culture provides access to the world’s best galleries and museums
• Free online tours of the British Museum, The Louvre, The Smithsonian and The Vatican
• The Virtual Museum of Canada has a large digital source of stories and experiences shared by Canada’s museums and heritage organizations
• Take online classes with Nonna Live and learn to make classics from an Italian grandma
• Free lessons from Delish.com with daily cooking videos for parents and children, and Kitchen Quarantine, Instagram lessons from Michelin-starred chef Massimo Bottura
• Duolingo helps you to learn a foreign language, in a fun game style. It’s free and there’s even an app for kids
• Visit Ripley's Aquarium of Canada in Toronto to keep an eye on the sharks
• The San Diego Zoo is livestreaming a number of animals on its website, including koalas, pandas, giraffes and polar bears
• Bring exotic animals like snow leopards into your living room with a selection of livestreams from Australian Zoos
• If you want a craft, you can always learn to sew a face mask out of fabric, per the NYT

 

Working at home

Finally, since so many of us are now remote, I had just two items that I came across, both of which I thought were particularly good:

• CBC: How to avoid bad habits during social distancing and isolation
• Fast Company: Got kids? Try these 11 quick tips for working from home while they’re with you

 

As always, we very much appreciate all of the trust and confidence that our clients continue to place in our team. This week I’d also like to thank our clients’ other advisors, many of whom we have been in contact with over these past several weeks. The partnership that we are able to provide our clients-in-common is invaluable during times like this, and the coordination of our actions for those clients ensures that they are receiving the best holistic care.

 

All the very best,

 

Sam