Genus Weekly In Focus – Addressing COVID-19 Concerns Week-34

Leslie Cliff: [00:00:03] So welcome. This is week thirty four of the covid series at Genus. My name is Leslie Cliff. I’m one of the co-founders. I’m here with Wayne Wachell, our CEO and the other co-founder. So this has been an amazing week that the US election has finally happened. It’s not quite over yet, but it did happen on Tuesday. And so, Wayne, really robust market this week. How did you see it?

Wayne Wachell: [00:00:28] Well, I think the fat lady has sung. It looks like looks like Biden’s going to win and Republicans are going to hold the Senate and Republicans probably pick up around 10 seats in the House. Now, I have concerns prior to this election about all the things are going on, a move towards more socialism and defunding the police in those kinds of things. But to me, the center held and that’s great news, I think, for capital markets and for I think for everybody. The senator did did hold. And from that we saw make a few points in terms of things, things that prevent certain individuals who are the winners. And looking at this year, the big check is probably the winner because they’re not going to have anybody going after them for the next four years, I would say. And we’re going to see less government spending. And because of that, it’s going to be more of a more of a growth type market, which will also help the tech sector. I believe.

Leslie Cliff: [00:01:22] Wayne, why do you sat less government is going to have to do a big stimulus bill. And…

Leslie Cliff: [00:01:33] Trump would have done a bigger one than Biden.

Wayne Wachell: [00:01:35] No, no, no. We are going to get a big one with with with Biden. And it’s going to be skinny now because the Republicans are going to be there in the Senate. They’re going to hold it back. Right. So it’s going to be a skinny you’re hearing numbers rather than two trillion, maybe a trillion. The Georgia race to have a runoff going on in the Georgia Senate race. And that might impact things as well. But it’s going to be less money spent. And when you have government gridlock, you always get less things done. Right. So it’s status quo. So coupled with that is going to be no increases in tax, which the market likes is probably 10, probably about 150 points in the S&P. So that’s a good thing. And another winner was China, just in terms of Trump was very belligerent to China and tough on trade. And we don’t think it will be that tough. They’re still concerned about China, obviously, but the Chinese Yuan was going down when Trump was winning. It just took off and when Biden came to the front. So and and from that, we also saw the bond market bond yields dropped based on less spending. Of course, the Yuan went up and gold start taking off as well because gold was going up as well, we think, because Jay Powell said, look, there’s not going to be any money coming from covid package. We’ll easy more and also the whole and also because what’s going on with the COVID as well as with the outbreak in Europe and the US. So all those things are leading into this. And so that’s where we sit right now. Things may change, though.

Leslie Cliff: [00:03:06] I am. And probably the whole world is just happy that the center is held. You don’t want far left or far right. I’m curious when what you think Trump is moving towards appointing his own people to the Federal Reserve? How do you think? Well, will Federal Reserve retain its autonomy going forward?

Wayne Wachell: [00:03:24] Oh, I definitely think it will. I think it will. I think and Trump tried a lot, but really that was shot down. Right. So he didn’t have his way. And I think because a lot of the Senate jumped in and the Senate already has been has acted like the adults in this whole thing. Has been really shone, I think, the whole piece here. So they did protect the Fed.

Leslie Cliff: [00:03:46] Let’s get back to the Fed for a minute. Just this is a longer reaching question, but the gap between, when we need to remember more people voted for Trump this time than last time. There was a serious problem in the world, in America on the gap between the wealthy and the not so wealthy. And this deflation, low interest rates since 2008 has not helped the worker in America has helped people who have assets, but people don’t have assets, haven’t benefited. What policies can help with that?

Wayne Wachell: [00:04:15] Well, it was happening prior to the pandemic. They were starting to actually get big increases in wages in that in that lower income demographic. And we did an interview with you with someone else a couple of weeks, a couple of months ago. And I was talking about a woak Jay Powell, and he came out in this incredible, incredible interview and said that, look, we have to get unemployment down, down, down. And that’s when it really has an impact on those lower demographics that don’t stop inflation once it starts to come, but happens in the past 10 years. The Fed is so much to blame as anybody else because they would actually start putting the brakes on when inflation started going above two percent or. To go much higher, to have an average of two over the longer term, so I think they’ve learned their lesson. They made mistakes. They overestimated inflation. And I think they’re going to let the economy run and keep it going. And they also see that as an issue of equality as well in terms of income. So they’re they’re going to make this happen? Well, they’re going to try and make it happen. So Jay Powell is well, from that perspective.

Leslie Cliff: [00:05:23] That makes me feel good too. Now, when we look at we talk about the covid losers and the winners and we know our dividend fund is full of value stocks, industrials, financial, consumer discretionary. It’s really the covid losers. If they don’t, they’re not thriving yet because of the environment. And then we have our CanGlobe Fund. That is more growth. It’s got more of the technology, more health care at that. Different weights in those different sectors has meant that they perform differently. But portfolios on both these funds. So we have a bit of a barbell going on. And it is is our strategy working. Wayne, how do you feel about it?

Wayne Wachell: [00:06:03] Well, at some point in time, the sun is going to shine on the dividend strategy, it will. You know, the seeds have been sown.

Leslie Cliff: [00:06:11] The value stocks.

Wayne Wachell: [00:06:12] The seeds have been sowing by the Fed longer term, like a zero amount of money that’s been printed is going to have an impact on the economy. And we’re going to slowly get through the turbulence of the covid. And the numbers that came out today were very good. The employment’s doing quite well in the US and in Canada as well. So I think we’re on our way. But we have these issues along and that when that happens, value will do well and growth will slow down. And

Leslie Cliff: [00:06:37] And in the meantime, just to remind clients, you do have a barbell, you do have a growth portfolio that’s you don’t have a solid value portfolio. You have a part of it. And that value part earns about a three or three percent dividend yield, which is much better than a portfolio. So you’re getting paid to wait for this value trade to to kick in. Well, Wayne that’s that’s really about all I had. I just am so happy that the elections turned out to be the center is held. I think that’s great. I think there’s some good things to be happy about. And, you know, the covid is so disturbing in its creation of such uncertainty for all of us that it’s great to have some good news. And on that note, we are going to end the covid series of weekly videos, the week three four. So I’ve been advocating for four months now, but we are not going to end the Friday market insights sessions. So we’re going to keep these up because we’ve had such terrific feedback from our clients. And so we really welcome the opportunity to serve you and keep you in the loop. And this is actually turned out really by accident to be a wonderful client service to all. And so we’re going to keep it up and we do it like introducing you to the next generation of Genus. So we’ll keep that up too. But please send in your questions. We really appreciate it. And any any positive feedback. We appreciate you. So, Wayne, I’ll let you go, but enjoy our sunny weekend in Vancouver. And thank you very much. We’ll see you next week. But it will be the Friday Market Insights series. Thank you very much.