BY DREW FINERTY
It has now been over 1/3 of the year 2020 that we have been slowed down by COVID, so I hope you are all doing okay adapting to the new normal and have had a chance to get out some and enjoy the summer. It has been almost 2 months since the re-opening started and I am so proud British Columbians have shown compliance and tempered their need to gather and socialize in large groups. We are so fortunate to not only live in the most beautiful place on the planet, but to have a healthy environment that allows us to stay safe but still take advantage of all that is Vancouver Island.
OPEN for Business…two months later:
What a difference time makes. I have had the opportunity to widen our net with our kids and grandkids since my last update, and during all the pick-ups, I am so amazed at the all traffic on the roads and around the business world since mid May. I actually sat out on a Restaurant Patio last week, with only one other table of two enjoying the sun, and I actually felt very safe and impressed with the steps taken by the Management to ensure their customers were educated about their protocols and new service approach. From the economic numbers that have captured the early data, it appears there are varying results locally, regionally and nationally here in Canada, but mostly positive. The low spread here has been impressive as the Island is almost nil, while BC is still very much under control and the country is doing quite well…especially compared to our neighbours to the south. I read last week, Canada has been averaging 300 new daily cases while the USA has seen an obscene 60,000 new cases every day.
There seems to be some growth in the economy globally, and the re-opening is showing some advancing positive numbers...with the unemployment numbers dropping, although still the highest in history. It appears the confidence in getting the world back to work, travel, socializing and entertainment...that has been buoyed by the immense stimulation from Central Banks and the Governments, is having a growing effect on business. Sports leagues have been operating in many places around the world with pretty good results, and North America will be starting games this week, albeit without spectators. I am still very much in agreement with our BC government keeping the protocols high that resulted in the NHL deciding to use Edmonton and Toronto as Hub-cities for their return season. It was also a good sign that the Federal government put health ahead of profits by not allowing the Toronto Blue Jays to play their home games in TO, when they would be exposed to teams from NY, Florida & Atlanta, all hot-spots in the States…as well as traveling to those places to play their away games…so that is good for our country. Basketball and MLS Soccer are in Orlando at Disneyworld in their man-made bubbles and have both reported little to no new cases inside the bubble.
Is there still another shoe to drop:
I am still of the opinion that we need to proceed through the Summer, into the Fall with caution of expectation in the markets, as more and more people get out to enjoy the warm weather and take their “stay-cations” in beautiful BC. With the gross number of new daily cases in the US and the reclosure of some cities, it only stands to reason that there will be a pushback in the economy, and therefore the Markets. Year-to-Date, the markets have almost re-hit the end of 2019 marks. The DOW stock index is about where it was in October, so what at first looked to be a corrections of historical perspectives, now appears to be just another glitch in the long term bull run in the markets. Given Central Banks around the world have lowered interest rates to near zero, finding investment interest income will be a challenge that likely will stay with us for quite awhile. This should allow both individuals and governments to manage their debt with historically low rates…and help kick-start economic growth, as most investors will look to find other solutions within their “risk tolerances” to keep their portfolio growing ahead of inflation. This too, will remain low until there is some signs of economic growth that will justify some reason to raise rates. If/when we see a second wave and further re-closures, we could see a marginal (5%-15%) pull-back in the markets, but nowhere near testing the lows of March. This could to take some time to surface, likely in the Fall or early winter.
We will be away for a “made-in-BC vacation” with a family camping trip to Bridal Falls & possibly the Okanagan, starting mid next week until the second week of August but I will be checking my email every few days. I expect the markets to be fairly quiet over the next month or so, which is why we felt this was a good time for a break. I hope you have a great summer and are feeling some comfort with the rebound in the markets. Stay safe and enjoy the weather, cheers!