Weekly Market Commentary April 15th, 2020

The Markets

Why is the stock market doing so well when the coronavirus pandemic has yet to peak?

At the end of last week, the U.S. Centers for Disease Control and Prevention reported the United States remains in the acceleration phase of the coronavirus pandemic. This phase ends when new cases of the novel coronavirus level off. The next phase should be a period of deceleration, and the number of cases should decline. North of the border, the Coronavirus continues to spread, with Eastern Canada being hit harder than here in B.C., where social distancing appears to be having an effect.

There are several different models estimating when a peak may occur, and estimates vary from state to state, according to Sean McMinn of NPR. For instance, the model cited by the White House is from The Institute for Health Metrics and Evaluation at the University of Washington. It assumes social distancing measures will stay in place through the end of May. As per their models, all states have peaked or are projected to peak on or before May 2, 2020.

In Canada, the federal government’s models suggest that we are still in the early phases of the virus, and they do not give an estimate as to when the peak will occur.

Despite estimates suggesting the virus will continue to spread and businesses may not reopen fully until the end of May, North American stock markets moved significantly higher last week. Al Root of Barron’s reported:

“The S&P 500 index rose 12 percent…its best week since 1974 – and finished 25 percent off its March low. The corresponding gain for the Dow Jones Industrial Average was 13 percent, up 27.8 percent from its low. The Nasdaq Composite jumped 10.6 percent, raising it 23 percent off its low.”

By comparison, the S&P/TSX Composite index rose approximately 9.5 percent, finishing 26.2 percent above the lowest point in March.

Many factors affect stock market performance, including company fundamentals (how companies perform), investor sentiment (what investors think), consumer sentiment (what consumers think), monetary policy (what the central bank does), and fiscal policy (what the federal government does). The driver supporting stock market performance last week was monetary policy.

That said, there continues to be uncertainty about how global economies will recover. As a result, we are likely to see markets remain volatile. If you have any questions or concerns about your portfolio or current market conditions, please feel free to contact us.

Source: Refinitiv

Boredom sparks creativity

Early last year, Time Magazine cited a study that found boredom may trigger creativity. Time explained, “In the study, people who had gone through a boredom inducing task – methodically sorting a bowl of beans by color, one by one – later performed better on an idea-generating task than peers who first created an interesting craft activity.”

Recent social media and news reports are providing anecdotal evidence that supports the idea. For example, people are:

• Creating art galleries for pets. A couple of bored 30-year-olds built a mini art gallery for their pet gerbils while on quarantine. The Good News Network reported, “The tiny space was furnished with carefully curated rodent-themed takes on classic works of art – including the ‘Mousa Lisa.’”
• Playing real-life versions of children’s games. In Wales, a nursing home has seniors practicing social distancing while playing a real-life version of Hungry, Hungry Hippos. “Instead of using hippo mouths to capture the plastic balls, however, the women brandished baskets on sticks…,” reported Good News Network.
• Transforming their homes. One clever person transformed glass patio doors into stained glass using painters tape and washable markers, reported BoredPanda.
• Cooking together. Quarantine cooking clubs are catching on. For instance, one club, “…assigns a new dish every weekend; a last meal of one of the celebrities who has been a guest on the James Beard Award nominated podcast, Your Last Meal,” reported the MyNorthwest podcast.

If you’re looking for something to do, the J. Paul Getty Museum (The Getty) in Los Angeles recently asked their followers to select a favorite work of art from their collection and re-create it using three everyday household items. The museum’s blog reported on the results so far:

“You’ve re-created Jeff Koons using a pile of socks, restaged Jacques-Louis David with a fleece blanket and duct tape, and MacGyvered costumes out of towels, pillows, scarves, shower caps, coffee filters, bubble wrap, and – of course – toilet paper and toilet [paper] rolls.”

Weekly Focus – Think About It

“Fate is like a strange, unpopular restaurant filled with odd little waiters who bring you things you never asked for and don't always like.”

--Lemony Snicket, Author

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