The Week of February 17, 2020 – February 21, 2020

William Chin, MBA

Portfolio Manager & Chief Technical Analyst

William Chin, Chief Technical Analyst for Caldwell Investment Management Ltd. (“Caldwell”), is the lead Portfolio Manager on the Tactical Sovereign Bond Fund and Portfolio Manager for the fixed income portion of the Caldwell Balanced Fund. He also advises fixed income portfolios for affiliate Caldwell Securities Ltd.’s separately managed account platform and contributes to the Caldwell Investment Management Ltd. team’s research, specializing in macro-economics, currency risk management and technical analysis. William is a member of Caldwell’s Investment Risk Committee.
William has over 35 years of international investment experience in the areas of portfolio, currency risk and treasury management. He began his career in the currency market, progressing to the role of treasury manager for a large international bank. He was first registered as a Portfolio Manager with the Ontario Securities Commission in 1999 and managed high net worth client portfolios on a discretionary basis prior to joining Caldwell.
William has an MBA in economics and international finance. He has been a volunteer and a board member for the Canadian Society of Technical Analysts since 2001 and is their former President (2012-2014).
William is a frequent speaker on macro analysis, monetary policy and technical analysis.

Macro Update

• Rising number of new COVID-19 cases outside China is further raising concerns.
• Railway blockades are prompting economists to lower Canada’s Q1 GDP growth by as much as 0.3%. In its Monetary Policy Report published back on January 22, 2020, the Bank of Canada already lowered its 2020 full year GDP growth forecast to 1.6%; this number will need to be revised lower as well.
• Canada December retail sales came in flat. November was revised higher from a 0.9% gain to 1.1%. Excluding autos, December retail sales rose 0.5%; November was revised higher from a 0.2% gain to 0.5%. The upward revision is the key here. Core sales in December (sales excluding autos, gas stations and building materials) also rose a strong 0.9%.
• Canada December manufacturing sales fell 0.7%; November was revised from a 0.6% drop to a much larger 1.0% decline.
• Canada January Consumer Price Index (“CPI”) rose 0.3% m/m; y/y was 2.3%. Core measures are mixed, little-changed from December.
• U.S. National Association of Home Builders (“NAHB”) housing market index eased to 74 from 76 prior, still strong.
• U.S. Markit manufacturing purchasing managers’ index slipped to 50.8, from 51.9 prior. Services fell sharply to 49.4, from 53.4 prior.
• U.S. Producer Price Index (“PPI”) rose 0.5% m/m; 2.1% y/y. Core PPI rose 0.4% m/m; 1.5% y/y. The underlying data was highly uneven. Large gains in margins in retailers (apparel, jewelry), offset by large declines in machinery and equipment parts, freight and cargo transportation; which could partially be China driven.
• Japan Q4 GDP was expected to contract 3.9% after the national sales tax had hiked to 10% from 8%, which led to fears of a sharp drop in private consumption. The much larger 6.3% drop raised doubts about the Japanese economy’s resilience to withstand the impact from COVID-19.
• Eurozone consumer confidence index came in at -6.6, which is an improvement from the -8.1 prior.
• Germany consumer confidence index slipped to 9.8 from 9.9 prior. Investor sentiment index fell to -15.7 from -9.5 prior. Germany has complex economic links with China.