Unprecedented. This word now applies to countless aspects of our lives as few things remain outside the impact of the fight against CoViD-19. This market update is being written from a home office after a busy business day of video conferences, web meetings and calls. Our team’s daily investment strategy meeting has been reimagined as a lively conference call. Society as a whole is being flexed to live and think outside the box, whether it has to do with work, school or even what to watch on the television (Nevin and Jack note that hockey is conspicuously absent from their evening plans). Many workplaces have successfully shifted to work-from-home, educational institutions are exploring online classrooms and even film studios are announcing straight to home movie releases. We will emerge from what some analysts have dubbed ‘The Great Pause’ a far more efficient society with far greater appreciation for the freedoms we’ve grown accustomed to. To quote a popular motivational poster:
Change is inevitable. Progress is optional.
We are fortunate in this context that our society has decided to progress, to do whatever it takes. The headlines are now overflowing with announcements from around the world as Governments and international authorities pledge to support the world and its economy by any means necessary. We’ve seen trillions of dollars in announced funding for businesses and even direct payments to citizens. Canada has firmly declared it would “do whatever it takes”. While we often joke about the risks in trusting government, it is in times like this when our governments earn our trust through decisive and non-partisan action. Today, we are putting aside perceived difference and fighting this battle together. That solidarity gives us as a society great hope for the future.
Some amazing headlines that may have been missed in the noise:
- CoViD-19 vaccine tests have started in the United States
- CoViD-19 vaccine tests continue in China
- The epidemic in China is showings signs of containment with valuable lessons for the rest of us
Below we will cover some recent announcements and what that means for you in practice. The news flow is still quite rapid and constantly changing, so please stay tuned for further policy decisions as they are announced. We realize we have been inundating you with emails recently, but in the context of the current news environment we feel it is important to have an abundance of transparency.
Canada has pledged over $82 billion in financial support on top of swaths of accommodative policy that will have a meaningful and direct impact on our citizens and the economy. From cell phone bills to mortgage payments, the expenses of Canadians are being targeted to minimize the impact that this disruption may have. Banks have been tasked with a coordinated effort to make sure Canadians are able to cover their obligations. Businesses are gaining access to a massive credit facility that will help them with the pause they are enduring. Some of the support on the way includes:
- $10 billion Emergency Care Benefit for workers disrupted by the current economic disruption consisting of $900 bi-weekly support for up to 15 weeks for those without other benefits who must stay at home
- Additional $5 billion in support those not eligible for E.I. who are facing unemployment
- Temporary boosts to both Canada Child Care Benefits and GST Refund Credits
- Six-month interest-free reprieve on student loan payments
- Doubling the homeless care program
- Tax filing deadline extended to June 1st
- $305 million to start a new Indigenous Community Support Fund
The details are still firming up as Parliament gets ready to vote in emergency legislation and we expect further accommodation and stimulus as we work through this pause and start phasing back into normal life in the coming months.
For Businesses – An Update from the Board of Trade
On Friday, March 13, the Minister of Finance, announced that BDC has increased the amount of financing available to support small businesses. We expect further economic measures to be announced by governments in the coming days.
The government has established a Business Credit Availability Program (BCAP). The program will further support financing in the private sector through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). Under this program, BDC and EDC will enhance their cooperation with private sector lenders to coordinate financing and credit insurance solutions for Canadian businesses.
Any creditworthy Canadian business seeking financing to support its operations and maintain jobs may apply. Canadian companies should first contact their financial institution account manager to determine how the Business Credit Availability Program applies to their situation. In some cases, they will be referred to the BDC or EDC. Companies may also contact the BDC or EDC directly if they already have an established business relationship with these organizations.
Our neighbours to the south are in the process of drafting their third relief bill. The details of which have yet to be announced but it is widely expected that it will exceed $1 trillion USD in support. It is likely to include direct payments to individuals, small-business lending facilities, payroll tax cuts and lending support for larger businesses. We feel this will be one step along the path to financial recovery but is a solid display of their willingness to be accommodative in the face of an unprecedented economic pause.
One of the financial minds we follow closely is Charlie Bilello. In a recent blog post, he made some important comments that help put this current volatility in perspective. We recommend having a read of his full post, link below!
“When all news is bad news it can seem as if it will be that way forever. But it won’t. Betting against human grit and ingenuity in the long-run has always been a bad bet in the past and this time is no different.
That’s true in life and in investing.
It will get worse before it gets better but this, too, shall pass. We’re going to beat this thing and come out stronger than before. Better days are ahead.”
See Charlie’s full site & commentary here.
We are having investment strategy meetings every morning and are in constant communication with each other as we analyze the data coming from our research sources around the world. We have been actively contacting all the third-party fund managers we use in our portfolios to understand how they are making decisions through this turbulence. We are weighing a very positive long-term outlook against the concern of the continuation in short term volatility. It is our opinion that the value in further reducing equity investment is offset by the cost of missing the rebound as the economy ramps back up in the coming months. China is already well on its way to returning to normal life. We look forward for our opportunity to do the same.
As always, if you have any questions please do not hesitate to give us a call or send us an email. We may be working from home but we are still here for you as we continue to navigate these unprecedented times.
Nevin, Tom, Rob, Jack & Karen
Chernick & Associates Wealth Management Group
Richardson GMP Limited
1055 West Hastings Street, Suite 2200
Vancouver, BC V6E 2E9
Toll Free: 1.866.640.0400