The Week of April 13, 2020 – April 17, 2020

Macro Update

• Progress in the fight against the virus spread (flattening the curve) means more clarity in the ability of the healthcare system to bring it under control. At the same time, advances in medical research provides us a clearer ‘schedule’ and the time required before returning to normal. Risk assets continued to recover this past week, and that lent support to the Canadian dollar, despite bouts of weakness in the front futures contract of West Texas Intermediate (“WTI”).
• The front futures contract (May) for WTI fell below $18.00 a barrel at one point last week. It is important to note that the decline is mainly in the May contract, as storage facilities are all used up and holders of the May contract (CL/K20) have to dump them or they face ‘taking delivery’. The December (CL/Z20) contract is holding steady. After staring into the abyss, Saudi Arabia and Russia are reportedly talking again about “further measures”.
• Abbott Labs is on track to ship 4 million of its new antibody tests this month. It plans to ramp up to 20 million shipments per month, beginning in June.
• U.S. March retail sales plunged 8.7%. Excluding autos and gas stations, sales fell 3.1%. If grocery and pharmacy stockpiling is excluded, the decline could easily be 20%. The decline in the second half of March, with the full impact of the shutdown, could be another 20% more, according to one estimate. It is important to note that most, if not all, of the decline has been discounted.
• U.S. March industrial production fell 5.4%
• Canada March existing home sales fell 14.35%
• Bank of Canada met this past Wednesday, but it has already slashed its ‘Policy Interest Rate’ to 0.25%, and launched its quantitative easing program on March 27.
• The WTO said global trade would fall this year between 13% and 32%, giving a wide range because so much about the economic impact of the health crisis was uncertain. At the height of the financial crisis in 2009, trade dropped 12.5%. ‘On shoring’ of production of critical items (healthcare supplies, food production) will work to reduce global trade.
• China imports and exports both fell, but less than feared. China Q1 GDP, industrial production and retail sales also fell less than feared.

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.

All data is sourced from Thompson Reuters and Capital IQ as of April 17, 2020 unless otherwise indicated. While believed to be reliable, the accuracy of the information cannot be guaranteed. Caldwell Investment Management Ltd. and its affiliates make no representations or warranty as to its completeness, reliability or accuracy.

Investment involves risk, uncertainty and assumptions. The value of investments rise and fall such that there is a risk you may not recoup your original investment. Past performance is not a reliable indicator of future performance.

The views expressed herein of those of the portfolio manager and not necessarily those of CIM. Such views, while based on current market conditions and information, are subject to change without notice such that there can be no assurance that actual results will not differ materially from such expectations. The views expressed are an illustration of broader themes and intended to be for general information purposes only. They should not be relied upon nor construed as investment advice. Readers are expected to consult with their investment advisor for advice specific to their circumstances before making investment decisions.

Forward-looking statements are not guarantees of future results as they involve uncertainties and assumptions; there can be no assurance that actual results will not differ materially from expectations.