The Week of March 23, 2020 – March 27, 2020

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.

Macro Update

• This past Monday morning, the Federal Reserve launched an ‘open-ended’ asset purchase program, some called it limitless Quantitative Easing (“QE”). It includes measures such as the issuance of assetbacked securities backed by student loans, auto loans, and credit card loans. The Federal Reserve is also working on a program to include loans guaranteed by the Small Business Administration and certain other assets.
• On Tuesday, in a joint statement, the G7 said they will do “whatever is necessary” to restore confidence.
• On Friday, the U.S. Congress passed a $2.2 trillion fiscal package to help the economy.
• The task ahead is enormous. The case count in the U.S. will skyrocket, although that is already widely discounted. Still, great uncertainties remain. Researchers at the Federal Reserve Bank of St. Louis did a ‘back-of-the-envelope’ estimate and concluded that the unemployment rate in the U.S. could reach 32.1% in Q2. The US$2.2 trillion fiscal package passed by Congress is less than 10% of U.S. GDP, so more is clearly needed.
• On Friday, in an emergency meeting, the Bank of Canada cut its benchmark interest rate by another 0.50%, lowering it to 0.25%. It also announced plans to acquire commercial paper and government securities. The new commercial paper program will greatly ease any liquidity issues among businesses.
• The EU is pondering a 750 billion Euro fiscal package (less than US$ 1 trillion). As the European Central Bank starts its latest quantitative easing program, which includes buying ‘peripheral Eurozone sovereign debt’, Spanish and Italian government bond prices jumped, but after investors already frontrunned the ECB.
• Along with similar supportive actions by other central banks, a revival in risk appetite reversed the ‘flight-tosafety’ bid under the U.S. dollar, and triggered its steep decline across the currency markets, including the Canadian dollar.