The Week of June 1 – June 5, 2020

Macro Update

• Reports from U.S. and Canada showed a sharp rebound in employment following efforts at ‘reopening’, blowing past every forecast.
• Canada May employment +289,600 vs -500,000 expected. The unemployment rate eased to 13.7%. Prior unemployment rate 13.0%
• U.S. May ‘nonfarm payrolls’ +2.5 million, against expectations of -8.0 million. The unemployment rate fell to 13.3% from 14.7% in April. Employment in food services and drinking places rose by 1.4 million, accounting for about half of the gain in total nonfarm employment. After revisions, payrolls in March and April combined was 642,000 lower than previously reported.
• The large downward revisions are important, because the Bureau of Labour Statistics is using its statistical models to estimate the numbers for their first release, in this case, the May report. However, as real data starts to trickle in, previous estimates are being revised, as in the April and March revisions. The direction of the revision reveals the skew, or bias, in their statistical models. Governments and central banks are paying attention to them for sure, so the immediate impact from these reports on policies will likely be limited.  
• This past Wednesday, the Bank of Canada decided to hold its policy rate steady: “We maintain our commitment to continue large-scale asset purchases until the economic recovery is well underway.”
• New Governor Macklem assumed role as of Wednesday, and participated as an observer in deliberations for that announcement and endorsed the policy measures.
• There is more encouraging news on the vaccine front from the BBC. AstraZeneca is developing the vaccine with scientists at Oxford University, and hopes to eventually deliver 2 billion doses.
  OPEC+ delegates showed solidarity by agreeing to comply with production cut quotas, and will review in June whether longer extension of production cuts is needed.
• European Central Bank (“ECB”) added 600 billion Euros to the ‘pandemic emergency purchase program’ (“PEPP”, the new, temporary asset purchase program for both public and private sector debt). ECB President Lagarde sees 2020 GDP -8.7%. This compared to another forecast of -6.9% for Germany.

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 June 5, 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.