The Week of April 27, 2020 – May 1, 2020

Macro Update

• Bank of Canada Governor Poloz spoke last Thursday and said one of the bank’s key areas of focus has been to create liquidity to ensure financial markets keep functioning well. He observed that the situation is much more like a natural disaster than a typical economic recession – with policies designed to essentially stop the clock and later restart it. Economic recoveries from natural disasters are usually quite rapid and robust.
• Poloz’s term expires in June 2020, Tiff Macklem (former deputy for Mark Carney) has been named for the job.
• Canada April Markit manufacturing index fell to 33.0.
• U.S. April Institute for Supply Management (“ISM”) manufacturing index fell to 41.5. A similar survey by Markit has it even lower, at 36.1.
• U.S. Q1 GDP came in at -4.8%. Real consumption at -7.6%. Services consumption fell 10.2%. All data are Q/Q, annualized. The Bureau of Economic Analysis (who published the report) itself pointed out in a technical note that the initial reading was probably inaccurate. Most observers feared subsequent revisions to the data could be even weaker.
• The Conference Board of the U.S. said its consumer confidence index for the U.S. dropped to a reading of 86.9 this month from a downwardly revised 118.8 in March.
• U.S. March imports fell 2.4% m/m; exports fell 6.7%, m/m.
• In Wednesday’s press conference, Federal Reserve Chair Powell suggested that the U.S. economy could go through a series of peaks and troughs if lockdowns have to be re-imposed time and again. The Federal Reserve has decided that it will not add to current quantitative easing programs but stand ready if more is needed. At the margin, it disappointed those who were calling for more.
• The European Central Bank took a similar approach after their meeting on Thursday, keeping its existing pace of quantitative easing, but stand ready to act.
• We continue to see progress in controlling the virus spread and advancement in medical research.

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 May 1, 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.