Weekly Market Comment: May 11, 2020

Is it finally time to get off the couch?

The slow and gradual reopening of business continued around the world. Florida started opening businesses on Monday while Arizona started today. You’ve probably noticed street traffic slowly rising, as confirmed by Raymond James GPS analysis and RBC’s analysis of major Canadian cities. More people are walking around, visiting parks and grocery stores. You may also feel less concerned about walking within six feet of somebody in Costco when compared to just a few weeks ago.

B.C. is preparing to gradually reopen the province, as it starts its first phase of loosening restrictions mid-May. For example, gatherings of up to six people will be permitted in time for the long weekend, and most provincial parks will open by May 14th.

Canadian productivity has increased an estimated 25% for workers who transitioned to work from home, according to an independent global study. Telus raved about this on their quarterly call yesterday, when they reported strong revenue and operating growth across most of their businesses lines as a result of COVID-19. BMO announced that 80% of its workforce would spend more time working from home to one degree or another once COVID-19 eventually hits the rearview mirror.

In fact, most of us are not so much on the couch as we are on our computers and smart phones, or making a point to get out for a walk outside in this lovely weather with loved ones. Besides, the virus does not do well under the sun’s rays.

Disney outlines plans to stop Mickey Mousing around

Like the politicians, Disney outlined some plans for a staged re-opening. They didn’t outline timeline yet for America (probably because they don’t know and it’s still too early) but Shanghai will start staged opening on May 11. Stage one won’t exceed 30% of normal capacity. This is the first time they’ve talked about re-opening details.

But beware the virus-sized elephant in the room

While impatience to go back to the way things were is understandable, concerning virus trends remain. New York City’s infection and death rates have been falling impressively but America’s trends on the whole have not. The virus has already killed more Americans than the Vietnam, Afghanistan and Iraq wars combined. An internal White House model predicts a doubling of daily cases by June 1st with daily deaths trending higher still. There have been some reports of “second wave” occurrences here and there. This remains the biggest risk for next few weeks as we see more re-openings unfold.

In the meantime, the unprecedented global effort to develop a vaccine continues. Pfizer has entered human trials for its lead vaccine candidate.

Where’s the meatless beef?

Burcon Nutrascience, which we own in some Legacy accounts, reported that its joint venture secured an impressive $85 million loan from a syndicate of friendly lenders, including Export Development Canada, Farm Credit Canada and CIBC. Government was eager to lend not just to support the creation of new jobs but because they like the industry’s bright future. The money will ensure that their first two phases of development gets built and into production on time for the fourth quarter of this year, and that’s after implementing plans to upsize due to overwhelming demand. It will be the world’s first food grade canola protein plant.

Plant-based food sales are up over 50% year-over-year, illustrating that the trend toward meatless food remains intact. Legacy’s ownership of the stock is up about double, despite the recent volatility. This Beyond Meat video sums up the plant-based protein approach, though keep in mind that Burcon’s pea and canola protein isolate is far higher quality than anything Beyond Meat uses or anything else being produced today.

Notable reads:

Musings Beyond the Markets

From Twitter: “King Jong-il, the father of the current North Korean dictator, loved film. In fact, he loved it so much he kidnapped a famous actress and her director-husband (depicted in the middle of this photo) from South Korea in 1978 and forced them to make 17 films. The couple managed to escape in 1986.”

Kim Jong-il, with a woman and a few men.

This week, the TSX Composite rose 2.4% while the S&P 500 gained 3.5%