Financial navigation in uncertain times


From Demo’s desk…
An overview of the economics in these pandemic times. Keep calm. Keep aware and keep in touch with your financial advisor. The financial situational will right itself in due time but for the moment it may be time to simply tread water.

When the Crew Dragon space capsule splashed down in August, it was a true lesson in successfully navigating uncertainty.

To return home, it sliced through the atmosphere at 27,000km/hour in 1,900°C temperatures before slowing to 30km/hour for touchdown in the Gulf of Mexico. Crew Dragon charted unnavigated territory: the first commercial spacecraft to carry astronauts through a completely different entry profile than previously used by any other space shuttle return.1

Back on earth, we find ourselves similarly navigating uncharted territory. While the future has always had an element of uncertainty, the pandemic has created many challenges and increased the unknowns, spawning an abundance of varying opinions on the path forward.

The near-term direction may feel particularly uncertain. For investors, today’s market concerns may contrast those of early spring. Can the climb of equity markets after the March lows be sustained? As we look forward, what will drive economic recovery? How will we acclimate to significant levels of debt?

The pandemic has transformed the way we live. Through technology, we have adapted many daily activities to the confines of home for both work and play. It has also sparked momentum towards deglobalization, exposing the vulnerabilities of being over dependent on global supply chains. U.S. Secretary of State Mike Pompeo opened a new chapter in global tensions when he declared that free nations should be concerned with the China Communist Party: “distrust and verify.”

Few can deny the need to support economies through the pandemic, however the trillions of dollars of stimulus injected globally has been unprecedented. This has helped to prop up economies and the equity markets, yet the longer-term effects are still to be seen. While we have experienced deflationary pressures in recent months, some wonder if inflation is an impending longer-term threat. Over the summer, the excess liquidity was one driver of the weakening U.S. dollar and gold hit all-time highs — all in response to the prevailing uncertainty.

We have yet to defeat the virus, though we inch closer to finding a successful vaccine. At home, there are signs of optimism as short-term economic data has been “less bad” than expected. Canadian retail sales rebounded in May and June; unemployment figures released in the summer were better than anticipated. However, south of the border, containment efforts have been slower than expected, hampered by social and civil unrest. With just weeks to go before the U.S. presidential election, a change in leadership may be imminent.

With many moving parts and change happening at rapid speeds, it is more important than ever to take advantage of professional advice in managing financial assets. Investing requires shifting gears on a continuous basis, particularly in assessing new situations. Fast-moving markets often mean additional risks, and careful review and monitoring of investments is vital. Balancing portfolio exposure to account for the ongoing uncertainty, risk factors and potential economic outcomes can help to ensure that investing for the long term remains a profitable strategy.

I am here to help harness the inevitable changes that lie ahead so that your investments can continue to work for you. As Crew Dragon’s successful return home should remind us, overcoming unnavigated territory, though not without its challenges, is often necessary for us to advance and progress.

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