October 2020
Market Update & Outlook
It would not be an election year without talk of an “October surprise”. Coined by Reagan’s campaign manager in the 1980s, this term has come to encompass the full spectrum of news, events, and scandals that seem to pop up right before US elections. While we are barely into the start of October, we have already had quite the surprise.
The news (dispensed over Twitter, of course) that Donald and Melania Trump tested positive for coronavirus sent shockwaves around the world late Thursday night. Just one month ahead of the election, and days after a chaotic debate where Trump mocked Biden for always wearing a mask, the news sent conspiracy theorists spiraling. Throwing new uncertainty into an already turbulent leadership contest, this diagnosis presents specific challenges for Trump who has spent most of the last year downplaying the impact of the virus. What this means for his health, his presidency and his candidacy will be closely watched. Should he need to step back from presidential duties, the 25th amendment allows Pence to take over temporarily. What this would mean for the election, however, remains unclear.
The markets continue to be volatile on the bumpy road to the US elections. Quick drops and fast recoveries have been the hallmark of 2020. Our expectation is for volatility to continue into the end of the year as we face a tumultuous US election, now with a contentious supreme court vacancy, on top of the continuing saga of the CoViD19 pandemic. While the markets have cooled off since September highs, we expect continued government stimulus and support to empower the economic recovery for the rest of the year.
If you have any questions or concerns about the markets or your portfolio, please do not hesitate to give us a call or email. We remain vigilant on your behalf.
A new school year: learning how to learn again
One month into the new school year, British Columbians seem to be navigating the back-to-school transition with relative success. As of October 1st, Dr. Henry clarified that while there have been several exposures and even a few instances of transmission, there have been no widespread (untraceable) infections let alone a major outbreak to date.
Programming a school year during a pandemic has been a challenge for the ministry all summer. While online classes and activities can help bridge the gaps when students must stay home, the very nature of our education system is changing. It is clear that the learning environment will evolve over the coming months with their official guidelines revised once already. Originally, many symptoms were on the health checklist that most parents would consider consistent with simply being a child. From playgrounds to team sports, several elements of a child’s life are not structured for physical distancing and vigilant hygiene. Some young families are taking the risks in stride in the pursuit of a life similar to pre-pandemic days. Not all homes have this luxury however, and school-based exposure represents a greater challenge for multi-generational households where at-risk individuals cohabitate with the children. How we balance these dynamics going forward will be vital to our management of new cases.
Graduating classes face new challenges as they prepare for the workforce yet there is also great opportunity ahead of them. The digital revolution has accelerated at an unprecedented pace with countless job openings many computer science industries. Switching their education to the online world may yet set them up for great success. The sounds of bustling playgrounds, while unnerving to many, bring a flavour of normalcy to the end of an extraordinary year. While masks may hide their smiles, a child’s bright energy is not so easily hidden.
In the Shopping Cart: The Energy to Renew
Most Canadians would consider ‘energy stocks’ to be in the extractive oil and gas business. A recent addition to our managed portfolios is an energy company that breaks this mold. A darling that we continue to remain buyers of is an outlier amongst its energy peers: Algonquin Power.
Algonquin operates over 35 clean energy facilities deriving their power from wind, solar, hydroelectric, and thermal. Diversifying their business, they also have a sustainable utility distribution subsidiary that has over 750,000 customers in twelve US states. A global leader in clean renewable energy and sustainability, they were recognized in the 2020 Global 100 Most Sustainable Corporations ranking with a top 10 finish. Our rationale for liking Algonquin is not just environmental. It is a well-run, well-capitalized business that is on the leading edge of the green wave. Combining strong cash-flows with a renewable development pipeline, we see Algonquin as a stable and profitable business that is poised to accelerate into the next decade. Advances in technology will have outsized impacts on the renewable energy industry as efficiencies increase and costs are reduced. Algonquin is an energy name we truly consider electrifying.
Robot Companions: Fighting off Loneliness
The pandemic has been quite jarring for many seniors and at-risk individuals who can no longer enjoy many of their hobbies and social engagements. The isolation has been one of the largest adjustments, especially for those that live alone. Robot companions were gaining popularity before the pandemic and are now seeing even more interest. While a growing body of research suggests social robots can improve well-being and aid in fighting loneliness, we must be sure that this mechanical company is not in lieu of human caregiving and interaction. A recent article in Vox (link below) outlined the current state of robot companions and the ethics behind using them to alleviate perceived isolation. If you are thinking about gifts to buy this coming holiday season, perhaps a robotic friend could be in order (batteries not included).
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