The Week of November 25 – November 29, 2019

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

• Canada Q3 GDP rose 1.3% on the back of declining inventories and growing residential and business investment spending, so it is stronger than the headline might suggest. September GDP rose 0.1%, after the same increase in August.
• However, the Canadian consumer could restrain spending further. After September ‘core retail sales’ (sales excluding autos, gas stations and building materials) came in essentially flat compared to August; Statistics Canada reported that the savings rate has fallen to only 1.7%; that is just hovering above historical lows. The consumer is already stretched.
• Canada September wholesale trade rose 1.0%, after a 1.2% drop in August.
• In Q3, U.S. core inflation averaged 2.1%; but it eased to 1.6% in October on a y/y basis. Personal spending rose 0.3% in October, but personal income growth stagnated, and that combination should nudge the Federal Reserve closer to consider another quarter point cut. U.S. corporate profits fell 0.8% in Q3, on a Q/Q annualized basis.
• U.S. October durable goods orders rose 0.6%. The important ‘nondefence capital goods excluding aircraft’ (proxy for business capital spending) rose 1.2%, September was revised up from a 0.6% loss to a smaller 0.3% drop. It is a strong report in a volatile series, so confirmation is required.
• U.S. October wholesale inventories rose 0.2%. September was revised from a 0.4% drop to a larger, 0.7% decline. October retail inventories rose 0.3%, after a 0.2% increase in September. September housing price index rose 0.6% after a 0.2% increase prior. CaseShiller 20-city house price index rose 2.1% y/y. October new home sales little-changed after September was revised up by 3.9%.
• U.S. consumer confidence index declined to 125.5 from 126.1 prior.
• China is facing perhaps the inevitable slowdown after years of easy growth. Coupled with the trade war, Chinese firms are feeling the pinch between lower margins and rising funding costs as China’s credit market worsens, evidenced by recent defaults.