The Week of July 13 – July 17, 2020

Macro Update

• Rising case counts in a large number of U.S. states and around the world (Japan, Australia, India…); plus escalation in U.S. sanctions on China, weighed on risk appetite this past week.
• At the same time, encouraging news from the medical research community helped soothe financial markets. Dr. Anthony Fauci predicted on Wednesday the U.S. will meet its goal of a coronavirus vaccine by year’s end.
• U.S. initial jobless claims for the week ending July 11 decreased by 10,000 to 1,300,000. Continuing claims for the week ending July 4 decreased by 422,000 to 17,338,000. However, the improvement could easily be erased with the roll back in reopening. According to the U.S. Department of Labour, total number of persons on all forms of assistance (bottom line) is still above 30 million.
• University of Michigan U.S. consumer sentiment index decreased 4.9 points to 73.2, giving back most of the 5.8-point gain in the prior survey. The gauge of ‘current conditions’ dropped 3.9 points to 84.2, ‘expectations’ declined 6.1 points to 66.2.
• It is earnings season again. JP Morgan CFO, Jennifer Piepszak: “In 1Q we expected a sharp downturn followed by a rapid recovery. Now we expect something “much more protracted.”
• Due to government support and the natural lag from legal procedures, U.S. bankruptcies are beginning to surface. This will likely mark the beginning of a wave.
• U.S. National Federation of Independent Businesses -NFIB’s Small Business Optimism rose to 100.6 vs. 94.4 in May. Kind of old news. The reverse of reopening could change these readings.
• U.S. June Consumer Price Index (“CPI”) +0.6% month over month; following a -0.1% in May. Excluding food and energy, CPI +0.2% m/m; after a -0.1% in May. The food index jumped 0.6%, led by a 0.7% increase in the food at home index.
• A new Ipsos poll concluded that “More than eight in 10 Canadians surveyed said they want to keep the U.S.-Canada border closed till at least the end of 2020.” 
• A Reuters’ analysis found growth in the four central banks’ balance sheets slowed for the second straight month in June, with some $852 billion added. That was less than half of what was added in April.
• According to an European Central Bank (“ECB”) survey, economists have lowered their expectations of Eurozone 2020 GDP from -5.5% to now -8.3%.

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 July 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.