The Week of December 7 – December 11, 2020

Macro Update

• In last Wednesday’s monetary policy statement, the Bank of Canada kept policy steady. It said, “Canada’s economic recovery will continue to require extraordinary monetary policy support. The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In our October projection, this does not happen until into 2023.”
• The number of case counts is rising globally. As a result of renewed restrictions, global mobility indices are declining, except for the ‘Grocery and Pharmacy’ component. The other 3 main categories – ‘Retail & Recreation’, ‘Transit Stations’ and ‘Workplace’ are all lower.
• U.S. National Federation of Independent Business (“NFIB”) Small Business Optimism Index came in at 101.4 vs. 102.5 expected & 104.0 in prior month. Small businesses are struggling again as mobility declines. In the U.S., small businesses account for roughly 50% of jobs.
• U.S. weekly initial jobless claims rise to 853,000 vs 716,000 prior.
• Health Canada has approved the Pfizer-BioNTech COVID-19 vaccine, and the first dose was administered this morning .
• German Chancellor Merkel told the Bundestag lower house of parliament that “We won’t be able to do enough vaccinations in Q1 to bring about a major change in the pandemic.” She said, “It would, however, be possible to slash the number of deaths.”
• Washington Post – “Pfizer tells U.S. officials it cannot supply substantial additional vaccine until late June or July.”
• China has been touting its success in controlling the virus and the recovery in its economy. However, skeptics have pointed to the over-reliance on infrastructure spending by the government, while personal consumption remains muted. China November consumer price index (“CPI”) -0.5% year over year; the producer price index (“PPI”) -1.5% year over year.
• U.S. November consumer price index +0.2% month over month, excluding food and energy, core CPI +0.2%.
• U.S. November producer price index eased to +0.1% month over month. Excluding food and energy, core PPI came in at +0.1%, same as prior month.
• The frustration with U.S. Congress continues as both parties refused to co-operate to come up with a fiscal stimulus deal.
• Germany November consumer price index -0.8% m/m, same as prior month. That is deflation.
• The European Central Bank (“ECB”) now expects its economy to shrink in Q4, and lowered growth forecasts for the Eurozone.

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 North American Fund (formerly 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 December 11, 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.