Coronavirus update

We continue to see a mostly positive or declining trend in new global case counts this week. In Europe, trends are lower except for Germany and northern Italy. In Canada, most provinces continue to move in the right direction, with the exception being Quebec, and Montreal in particular, whose levels have not seen as much of a decline. In the U.S., the state of New York continues to improve. But, there have been other states – Illinois, Massachusetts, Michigan, and Louisiana for example - whose numbers have increased and driven the country’s daily new case count higher. Lastly, in the emerging world, new cases continue to be elevated in countries such as Russia and Brazil, though they have not necessarily accelerated. Overall, the gradual reopening of the global economy – Europe, Canada, and the United States – has progressed with more districts, including parts of the state of New York, easing some restrictions. Ontario has also announced plans to reopen golf courses, marinas, and public boat launches in time for the May long weekend.

 

Will it go away?

This week, officials at the World Health Organization warned that Covid-19, as it’s often called, may never go away. While alarming, the organization did go on to say the virus may continue to exist in our communities for years, just as other viruses do. At the same time, the global population builds natural immunity to it over time. Moreover, they indicated that treatments might also be developed in the future to allow people to manage the disease more effectively. There are also many scientists around the world currently working on a vaccine.

 

Implications for investing

Government restrictions are getting lifted around the world, and the healing of economies has begun. But, it is hard to imagine our lives returning to normal any time soon. We expect economic activity, personal income, and company earnings to experience a rebound in the near-term as more restrictions get eased, and people finally leave their homes. It may still be some time before economies are running at full capacity. Our firm’s economists expect the output gap, measuring the difference between the potential and actual output of an economy, to last well more than a year.

 

We continue to monitor the portfolios and proactively look for opportunities to improve the quality of the investments. The earnings of most well-run companies will tend to gravitate back to their long-term trajectories after this period of crisis, even if it takes a few years to do so. The resilience of humankind to adapt and innovate is impressive and should not be underestimated. We believe these longer-term perspectives will continue to help guide us through the near-term, which remains undeniably uncertain.

 

As always, should you have any questions or concerns, please feel free to reach out anytime.

 

Tim & Carol