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Weekly Insights: Golden Pause

Investing in gold, either gold producers or bullion, has never been easy. Of course we are not counting the “gold bugs” who believe anytime is a good time to buy gold. Gold investing isn’t easy because it changes so much from one period to the next. There are periods that gold is a hedge against inflation, other times a hedge against turmoil, sometimes it takes on a more speculative
ethos, sometimes a hedge against the U.S. dollar or fiat currency devaluation. Perhaps the yellow metal is more chameleon than an indestructible element.

Weekly Insights: Who Will Pick Up The Tab?

COVID-19 has caused a global recession, reducing government receipts while triggering a policy response that is unprecedented in size and scope. There is no question this has blown a huge hole through most countries’ budget and finances. According to the IMF, the fiscal policy response to COVID-19 has been $5.9 trillion so far (as of October 2020). There has also been $5.8 trillion of liquidity support.

Weekly Insights, The Great Rotation

This year has seen an historic divergence between the economy and the stock market, and also within equity markets themselves. There is no question that the COVID-19 pandemic and the response in fighting it has unfairly impacted many industries while
many others remain unscathed or have even benefitted. This divergence has manifested in the equity markets as well, accelerating some preexisting trends and abruptly changing others. This can be seen in the contrasting performance this year of Growth versus Value stocks. To be frank, Growth has outperformed Value by more so far this year than any year in the past (indices were created in the mid 1970s).

Weekly Insights, 2020 Election: Sweet Gridlock?

At this point it would appear, based on the odds and the views of political “experts”, that Joe Biden will be the winner. The Senate will remain under Republican control and the House will be under Democratic control, albeit less so than before. So here are our thoughts
on the market/economic implications with the HUGE caveat that the outcomes are not final and there are likely a few curve balls ahead.

November 2020 Investor Strategy: Pandemic, Polls, & Positioning

The relationship between politics and finance is closely intertwined. Every four years, we have a major convergence
when Americans head to the polls and investors try to figure out what it means for their portfolios. Canadians have a
vested interest as Canada’s economy and a large portion of diversified portfolio’s are directly exposed to the U.S.

Weekly Insights: Earnings Dance

The 2020 earnings season, much like so many aspects of 2020, is like no other. Q1 results, released in April, were partially impacted by the pandemic but it was guidance that took the real hit. The majority of companies simply stopped providing forward guidance with the legitimate excuse being “nobody knows how this progresses”.

Weekly Insights: Active vs Passive

Currently, we would suggest investors tilt more towards
active. Even the very efficient S&P 500 is now riskier
than normal given a handful of names carry such a
large weight in the index. Recent trends may continue
but at some point they will reverse. And given the
weightings, that will not be pleasant for some of the
market-cap-weighted indices.

Weekly Insights: Recession Like No Other

Clearly those that can spend are spending, on durables and not services given that services spending often requires more interaction with people. The problem is that while a large portion of the economy is doing OK, a big portion is not, leading to what is being deemed a K-shaped recovery. For now, government stimulus is attempting to hold up the lower part of the “K” until a vaccine is developed, or people feel safe to become more “economically” active again. The longer this persists, the greater the risk that the lower part of the “K” drags down the upper part. If this occurs, the pandemic was just the exogenous shock that pushes us into a more traditional recession.