The Week of August 17 – August 21, 2020

Macro Update

• According to the European Centre for Disease Prevention and Control, twenty European countries have crossed a key threshold of new coronavirus infections. Latest data showed that these countries have recorded cumulative 14-day infection totals higher than 20 per 100,000 inhabitants, considered an early alarm level by many health experts. Germany, Spain and France all reported higher daily counts. Last Thursday Germany and France said that they would coordinate their coronavirus-related travel restrictions. German Chancellor Angela Merkel said she wanted to avoid closing borders again and that there is a desire in Europe for a common approach to the virus.
• Maersk, the world’s largest shipping firm, reported a Q2 revenue decline of 6.5%, owing to ocean volume declining by 16%; and it expects a “significant decline” in container demand for the rest of the year. Japan, an exporter, saw a 19.2% year over year decline in its exports in July. Its imports fell 22.3% year over year, indicative of the slump in its domestic economy.
• The U.S. employment picture, after rebounding from the abyss, is showing signs of stalling again, as reopening is met with multiple challenges. Job postings are leveling off. For the week ending August 15, 2020, ‘initial jobless claims’ in the U.S. rose to 1,100,000 vs 971,000 in prior week.
• The Mortgage Bankers Association reports that U.S. mortgage delinquencies as percentage of Total Loans rose to 8.22%. It is reasonable to expect this number to get bigger as the reopening keeps suffering setbacks.
• The housing market, however, is witnessing strong sales. U.S. July existing home sales +24.7% vs June. National Association of Realtors economist said: “The housing market post the recovery phase, is now in a booming stage. Certainly, record low mortgage rates are bringing more buyers into the market.” It also noted a shift to the suburbs as a result of coronavirus and inventory levels are back down near record low levels.
• U.S. July Housing Starts +22.6% after June’s +17.5%. Building permits +12.7%.
• Canada July existing home sales +26% from the month before, a record; prices +2.3% on a month over month basis.
• Canada June retail sales +23.7%; old data. Given the rapidly evolving economic situation Statistics Canada is providing an advanced estimate for July retail sales of +0.7%.

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 August 21, 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.