Sightline Conversations: The Dichotomy Between Wall Street and Main Street


It is estimated that the consumer drives over 80% of GDP1. So, at a time when consumers, the drivers of our economy, are house-bound and unable to participate in their usual economic activities, why do we have a booming stock market? In their latest conversation, Sightline’s Paul de Sousa and Warren Gerow discuss this dichotomy between Wall Street and Main Street. Specifically, de Sousa and Gerow discuss:

  • Earnings: With banks reporting below expectations and more than quadrupling their loan-loss provisions, they are signaling that there may be more trouble to come in their loan portfolios.
  • Oil: We entered the week with a possible resolution on the supply side, but when the agreement did not come to fruition, oil finished the week trading around $18.
  • Consumer behaviour: Cities in Northern China are “back to normal” but the consumers remain reticent to shop and go out to eat. If consumers here share this reticence, it could mean for a slow recovery, particularly for the entertainment, travel and leisure sectors.
  • The federal deficit: In just one year, Canada will have increased its budget deficit by 25%. While some argue we can grow our way out, others argue tax increases or spending cuts will be necessary.

While markets tend to lead the economy, history tells us that after market shocks, it’s common to see a bull rally after the initial drawdown, only to go back and retest the previous lows shortly thereafter. Given the economic conditions we are faced with today, de Sousa and Gerow expect a similar situation to play out.

You can listen to Gerow and de Sousa’s conversation here. You can also read our latest market commentaries on the coronavirus here. As always, please contact us at (416) 945-6228 with any questions.

1. Source: Federal Reserve Bank of St. Louis

Important Information:  

Warren Gerow is an independent investment wealth consultant to Sightline Wealth Management.

Sightline Wealth Management LP (“Sightline”) is an investment dealer and is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF). Sightline provides management and investment advisory services to high-net-worth individuals and institutional investors primarily through fee-based accounts. 

Sightline Wealth Management LP is a wholly owned subsidiary of Ninepoint Financial Group Inc. (“NFG Inc.”). NFG Inc. is also the parent company of Ninepoint Partners LP, it is an investment fund manager and advisor and exempt market dealer. By virtue of the same parent company, Sightline is affiliated with Ninepoint Partners LP. Information and/or materials contained herein is for information purposes only and does not constitute an offer to sell or solicitation to purchase securities of any issuer or any portfolio managed by Sightline Wealth Management or Ninepoint Partners, including Ninepoint managed funds.

Sightline Wealth Management (“Sightline”) makes every effort to ensure that the information has been derived from sources believed to be reliable and accurate. However, Sightline assumes no responsibility for any losses or damages, whether direct or indirect, which arise out of the use of this information. Sightline is not under any obligation to update or keep current the information contained herein. The information should not be regarded by recipients as a substitute for the exercise of their own judgment. Past performance is not indicative of future performance. Please speak to your Advisor regarding the suitability of information provided in this article for you. The opinions, estimates, projections and/or recommendations contained in this document are those of the author as of the date hereof.

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