The Week of February 24, 2020 – February 28, 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

• Global risk aversion accelerated this past week as the number of new cases of Coronavirus (COVID-19) outside of China jumped, along with a rising number of countries that have contracted the virus. Equities, Emerging Market currencies, crude oil and the Canadian dollar all fell; while government bond yields plunged. Yields of long U.S. Treasuries fell to all-time new lows.
• It is quite clear that we have not seen the worst of the virus outbreak, nor the fullness of the economic impact. Central banks around the world, including China, the U.S., and Canada, are ready to ease. The Bank of Canada meets Wednesday, March 4th. Money markets are pricing in around 60% chance of a quarter point cut.
• Canada December wholesale sales rose 0.9%, after a 1.1% decline in November.
• Canada December GDP rose 0.3% m/m. GDP growth in all of 2019 was 1.6%. Rail blockades and the economic impact from the virus will drag growth lower for Q1 2020, and beyond.
• U.S. January new home sales rose 7.9%, after a 2.3% gain in December.
• U.S. January personal income rose 0.6%, December was a gain of 0.2%. Personal spending rose only 0.2% in January, after a 0.3% gain in December.
• U.S. January durable goods orders fell 0.2%. The important ‘nondefence capital goods excluding aircrafts’ (best proxy for business capital spending) rose 1.1%, a welcome increase in a volatile series that has shown little growth.
• U.S. Q4 GDP unrevised at 2.1%. Business investment spending fell 8.1%. Excluding trade, inventories and government spending, the economy grew at 1.3% in Q4. The Coronavirus will have a negative, although less severe impact on U.S. growth.
• Germany Q4 GDP flat lined, as capital investment fell 0.2% (both q/q). Germany has much more complex economic ties with China. Growth in Germany and the rest of the Eurozone will be greatly affected.
• Crude oil, as represented by the West Texas Intermediate, fell through key support levels to below $45 a barrel. OPEC is pondering production cuts as global demand is expected to fall due to COVID-19.