Caerus Wealth June Commentary
There is an eerie sense these days that the U.S. has some difficult challenges ahead as it grapples several issues such as the Covid-19 pandemic, racial inequality and politics with the former taking center-stage. Recently, we wrote about data around transportation and restaurant bookings that were pointing to a steady recovery in the U.S., but it appears that those statistics have come at a cost.
Over the last few weeks, there has been a surge of Covid-19 cases in U.S. states that pushed to re-open their economy as well as the others that did not take the appropriate safety measures to slow down infections. From a healthcare standpoint, these areas are now seeing an increase in hospitalization that may result in some dire implications. From an economic viewpoint, it is difficult to watch the rampant surge in cases in states such as California, Texas and Florida that rank first, second and fourth respectively for their contribution to the U.S. economy and GDP growth. In 2019, these three states counted for approx. one-third of 30%of the U.S. total GDP and subsequently are significant to the wellbeing of the U.S. economy and on its global counterparts. (Wikipedia June 30, 2020)
There is an incredibly large scale push amongst drug companies to create new or test existing drugs on Covid-19 patients. Investors are taking notice and this has sparked an influx of capital from investors that are largely betting on companies likely to succeed with some kind of treatment or possibly even a vaccine. This race, driven by profits, is probably the most important race of our lifetime due to the potential impact. Nearly a week ago, Dr. Fauci, the most prominent figure of the Covid-19 task force, said that he was hopeful that the vaccine may be obtained by as early as late 2020. This all may very well be optimism and wishful thinking but the race to find a treatment and cure is on and it is heating up. We suppose only time will tell.
Here in Canada, the day before Canada Day, Statistics Canada reported its largest monthly drop in GDP on record in April as it came to a near standstill due to the pandemic. In April, Canada lost nearly one-fifth of its GDP output. However, due to the measures taken by Canadians and our leadership, we can expect to see a nice rebound in June and modest travel locally within Canada. This is a positive sign that perhaps the worst is behind us and if we continue to remain vigilant with our Covid-19 response, we can perhaps avoid another large outbreak. (CBC News, June 30, 2020)
Caerus Private Wealth Portfolios
These are difficult times. There are still many questions unanswered and uncertainty remains elevated. We continue to monitor and research the best course of action and we continue to see a common theme. Over the last several weeks we have allocated funds to technology-related stocks too ur portfolios that are proving to be part of the long-term solution and offering services that will endure during pandemic times. We still remain slightly underinvested in equities to account for the uncertainty that lies ahead and we feel that we are correctly allocated to provide the most optimal risk-reward opportunity. We continue to be cautiously optimistic as we evaluate the present and the future. We have directly witnessed the positive impact of measures such as social distancing and wearing masks. We know that it has proved effective and that businesses and institutions are able to operate successfully within those parameters. We are hopeful that the U.S. can show leadership and adopt those important measures to avoid a major global catastrophe.
As your trusted Portfolio Managers, Caerus Private Wealth and its team are available to address any questions you may have. Stay safe!
Terry Fay, Director, Private Client Group, Portfolio Manager
Kian Ghanei, Director, Private Client Group, Portfolio Manager
Caerus Private Wealth – HollisWealth, a division of Industrial Alliance Securities Inc.
700 – 609 Granville Street, Vancouver BC V7Y 1G5
T: 604.895.3316 | TF: 1800.665.2030 | F: 604.682.0529
terry@caeruswealth.ca | kian@caeruswealth.ca
holliswealth.com | caeruswealth.ca
This information has been prepared by Terry Fay and Kian Ghanei who are Portfolio Managers for HollisWealth® and does not necessarily reflect the opinion of HollisWealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. Terry Fay and Kian Ghanei can open accounts only in provinces in which they are registered. HollisWealth® is a division of Industrial Alliance Securities Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.