The Week of July 6 – July 10, 2020

Macro Update

• Last Monday, the Bank of Canada published its quarterly ‘Business Outlook Survey’, which often features heavily in the formulation of monetary policy. The ‘Overall business outlook survey’ index fell to -7.0 vs -0.7 in Q1 (revised to -0.5). Survey interviews were conducted from mid-May to early June. There was no new information in the report. The Bank of Canada is not expected to change monetary policy anytime soon.
• Canada June employment +952,900; prior was +289,600. The number of employed is still 1,800,000 below that of February, before the pandemic. The unemployment rate was 12.3% vs 13.7% prior.
• Canada June housing starts +211,700 vs +195,500 prior.
• The rising case count in the U.S. is exerting significant impact on the economy. A study by Goldman Sachs last week showed that “States with over 40% of the population have now put reopening on hold, and states with another 30% have already reversed part of their reopening.” Studies from John Hopkins University showed that case count is leading the number of people on unemployment benefit programs, and permanent job losers.
• U.S. weekly jobless claims came in at 1,314,000, lower than 1,413,000 in the prior week. Continuing claims were lower but remained elevated at 18,032,000.
• U.S. Institute for Supply Management Non-Manufacturing index surged to 57.1 vs. 45.4 in prior month; boosted by production, new orders, export orders & prices paid.
• U.S. June Producer Price Index (“PPI”) final demand -0.2% month over month; -0.8% year over year. Core PPI (ex food and energy) -0.3% month over month; +0.1% year over year.
• The vaccine developed by Oxford University is in three late-stage trials. AstraZeneca, a British pharmaceutical company, is building an international supply chain to make sure that the vaccine is available “widely and rapidly”.
• The EU Commission has released its paper on preparing for the post Brexit relationship with the U.K., after the transition period: Existing freedom of movement of people, goods and services will likely end. That is not exactly news, but a stark reminder.

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 10, 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.