1st Quarter 2021 Commentary - April 2021
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1 Quarter 2021 Commentary
st
April 2021
Schacter Wealth
L
Palazzi Management
TDWealth I
Schacter Palazzi Wealth Management April 2021 | Quarterly Market Commentary 2
TD Wealth Private Investment Advice
Andrew Palazzi
Senior Vice President,
Portfolio Manager
& Investment Advisor
andrew.palazzi@td.com
Jef Schacter
Senior Vice President,
Portfolio Manager
& Investment Advisor
jef.schacter@td.com
“I Can See the Light”
James McKinnon How many of us have used this phrase in the last 12 months? I am sure that some have at times
Associate Investment Advisor
seen that light as the headlight of a train coming at them, while others see the light as blue skies
james.mckinnon@td.com
ahead. Whatever your outlook on the future might be, I think we all can, at last, probably agree
that the light at the end of the dark tunnel of COVID-19 is beginning to look more like a sunny day.
By now we are all a little “over familiar” with this pandemic. Starting in March 2020, governments
Schacter Palazzi
Wealth Management
essentially shut down the world economy (Canada included) to try and control the spread of
180-2300 Steeles Ave. W. the virus to minimize the long term negative economic consequences. As a tribute to the
Vaughan ON L4K 5X6 flexibility and resiliency of modern economic structures, we all adapted and many companies
T: 1 866 831 5501 continued almost unimpeded by the shut-down, moving business on-line. Consumers adapted by
purchasing online and focusing on home renovation and home technology renewal. This meant
that many segments of the economy (housing, technology enablers and home good providers)
not only survived but flourished. Other traditional areas of strength in our economy (primarily in
the services sector) struggled as they remained shut for extended and repeated periods of time.
These segments have only recently begun to return to normal and remain impaired. How many of
us have been on an airplane or in a movie theatre recently?
Through the first quarter of 2021, equities produced a positive performance in virtually all
geographies around the world when measured in local currencies. Last year was the year of
the growth stock, and looking at 2021, while the jury is obviously still out on what we will be
able to look back on from the perspective of equity performance, with vaccines becoming more
commonplace and what appear to be strong consumer balances sheets in the aggregate, the
economy has come roaring back to life. The growth stocks which were last year’s leaders are now
starting to lag and this is causing a healthy valuation re-set in some areas of the market that had
become a bit overextended (think Apple which saw a price decline of almost 8% in the quarter
versus TD Bank Group which increased in price nearly 14%).
Schacter Palazzi Wealth Management April 2021 | Quarterly Market Commentary 3
Here are some of your most common exercise equipment from companies (not the price) has plateaued recently.
questions from our investor group to such as Peloton. With gyms re-opening We would have expected increased
start of 2021…… the demand for that kind of in-home usage to drive price increases at least
How positive are you on this year and exercise equipment seems unlikely to partially.
should we worry about covid variants be as strong. Based on the travel plans
The hype of bitcoin really reflects the
causing volatility in our portfolio? of many of our clients, we think the
hope some people have for a shift
economy should be a big beneficiary
One of our primary research providers, to what money will be in the future.
of the re-opening efect.
Argus Research, in note on March 25th Ultimately the key function of money
by Jim Kelleher, Director of Research Covid variants are certainly causing is as a medium of exchange in which
stated the following: “GDP (Gross an increase in COVID-19 infections there is confidence as to its value by
Domestic Product) in the United States is but the rate of vaccination has made both buyers and sellers of goods and
expected to rise 6.5% in 2021 according a diference, especially in the United services (think of the popularity of
to a report prepared by members of States. Canada’s vaccination eforts the U.S. dollar around the world as an
the FOMC, back in December 2020. have been quite slow, but if we can example).
Expectations for core inflation moved find our “Olympic moment” on the
Bitcoin enthusiasts will argue that
slightly higher to a 2.2% gain in 2021. vaccination front, Canada’s economy
Bitcoin “in theory” can act as medium
Recent economic data shows the should be able to be brought back
of exchange and a store of value.
economy grinding back into gear, with quickly for those companies that have
Famed New York City economist,
particularly encouraging signs from planned well for the reopening.
Nouriel Roubini, was quoted in the
regional indicators.” So in summary, we expect volatility Globe and Mail business section
Just a reminder to everyone, the to continue but are positive on the regarding cryptocurrencies on March
United States is Canada’s largest prospects for equities when we look 12- 13, 2021, “pointing out that crypto is not
trading partner so strength south of 18 months forward in this economy. really a unit of account. Neither is it a
the border usually has a positive efect Can you explain what the hype and good medium of exchange (because of
on our own economy. Breadth in the fascination is around Bitcoin? Will bitcoins limited ability to process large
market is quite solid, with out of favour you be adding it to our portfolio’s any volumes of transactions. Nor is it a
industries finally seeing some signs time soon? great store of value given its propensity
of light. We remain constructive on to jump up and down in price.” So what
TD’s Investment Strategy Group wrote view is correct?
the Canadian and U.S. stock markets
a great piece on bitcoin recently which
with expectations for market average Our view is that if the U.S. Federal Reserve
many of you may have seen or read
returns even if this year’s winners will or the Bank of Canada ever decide
by now (In case you have not, we
likely look a lot diferent than last years. to create their own cryptocurrency
have attached a PDF copy for your
Last year with exercise facilities shut, then bitcoin could be in a bit trouble.
reference). One thing that really stands
many people rushed to buy home I suspect if Bitcoin becomes too
out in that article is that Bitcoin usageSchacter Palazzi Wealth Management April 2021 | Quarterly Market Commentary 4
successful the government would want most Canadians will rise over time as
to get involved. To answer the original the government grapples with paying
question, in the near-term we are not for all of the costs incurred fighting
embracing bitcoin as an investment COVID-19 and supporting the economy
vehicle however it might be something through the pandemic and people with
we revisit over time as cryptocurrencies wealth and income will almost certainly
mature. be asked to help pay for it.
Should we be at all concerned about We are also fielding a lot of questions
rising taxes in the year ahead due recently from our client families on our
to covid and what type of planning thoughts about various tax increase
can we do to protect ourselves after rumours from capital gains tax
everything the country has gone increases, estate taxes, and taxes on
through? secondary properties (think cottages
Let me start by saying that this is the or recreational properties that are not
most common concern among all our inhabited year-round). I do not think
investors right now, and many of you anything can be ruled out as potential
see a personal tax increase a foregone sources of income for a government suggest if we have not had a meeting
conclusion! looking for ways to clean-up a large already to discuss tax planning
amount of deficit spending. strategies and some of the other topics
Taxes are at least as much a factor in mentioned above you contact us soon
the political landscape as they are in In collaboration with a team of TD
specialists, we can address the full as possible as we are now booking out
the economic landscape and the first into May 2020 due to demand.
thing I notice is that, as of March 31st, spectrum of wealth management
2021 the Poll Tracker from CBC News needs, including investment and
showed the Liberal party at 35.4%, the insurance solutions, estate and
Thank You, Thank You, Thank You!
Conservatives at 29.7% and the NDP retirement planning, trust services,
at 18.3% popularity (Source: https:// and charitable giving strategies. We
newsinteractives.cbc.ca/elections/ encourage everyone who has a larger Jef, Andrew, James, Nino, Henry, Steve,
poll-tracker/canada/ as of March 31, estate to set up a meeting with any or all Stacey, Jane
2021). With the Liberal Party holding these professionals if you feel a second
look at your planning is warranted. Schacter Palazzi Wealth Management
a minority government currently and
likely wanting to trigger an election to Given the increase in concern amongst
our clients about how to protect an
win a majority it may not be politically
palatable to go too far on the taxation estate prior to COVID-19 and the pace
front. However, I suspect income tax for at which those concerns seem to be
rising in the last 12 months, we stronglySchacter Palazzi Wealth Management April 2021 | Quarterly Market Commentary 5 Thank you for the questions and also a big thank you to all our clients over the past 12 months as we have battled the efects of COVID-19 in general. Please feel free to reach out at any time if we can help alleviate any stress or concerns about life or portfolio’s in general. Andrew Palazzi Jef Schacter Nino Wijangco James McKinnon andrew.palazzi@td.com jef.schacter@td.com nino.wijangco@td.com james.mckinnon@td.com Senior Vice President, Senior Vice President, Associate Associate Portfolio Manager & Portfolio Manager & Investment Advisor Investment Advisor Investment Advisor Investment Advisor Steve Eng Stacey Espinola Jane Chen Henry Wu steve.eng@td.com stacey.espinola@td.com jane.chen@td.com henry.wu@td.com Associate Client Relationship Client Service Client Service Investment Advisor Associate Associate Associate Schacter Palazzi Wealth Management TD Wealth Private Investment Advice Schacter Wealth L Palazzi Management TD Wealth I The information contained herein has been provided by Schacter Palazzi Wealth Management and is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. Certain statements in this document may contain forward-looking statements (“FLS”) that are predictive in nature and may include words such as “expects”, “anticipates”, “intends”, “believes”, “estimates” and similar forward- looking expressions or negative versions thereof. FLS are based on current expectations and projections about future general economic, political and relevant market factors, such as interest and foreign exchange rates, equity and capital markets, the general business environment, assuming no changes to tax or other laws or government regulation or catastrophic events. Expectations and projections about future events are inherently subject to risks and uncertainties, which may be unforeseeable. Such expectations and projections may be incorrect in the future. FLS are not guarantees of future performance. Actual events could difer materially from those expressed or implied in any FLS. A number of important factors including those factors set out above can contribute to these digressions. You should avoid placing any reliance on FLS. Schacter Palazzi Wealth Management is part of TD Wealth Private Investment Advice, a division of TD Waterhouse Canada Inc. which is a subsidiary of The Toronto-Dominion Bank. All trademarks are the property of their respective owners. ®The TD logo and other trademarks are the property of The Toronto-Dominion Bank or its subsidiaries. BC22-1
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