The Week of May 18, 2020 – May 22, 2020

Macro Update

• Economic data continues to be poor, although mostly discounted.
• Canada March manufacturing sales -9.2%. Excluding autos, sales -5.5%. New orders -11.3%.
• U.S. April industrial production -11.2%. Retail sales -16.4%. Apart from “nonstore (on-line) retailers”, not a single category was spared.
• Last week’s U.S. initial weekly jobless claims totaled 2,981,000. According to the U.S. Department of Labor – “The ‘advance seasonally-adjusted insured unemployment rate’ was 15.7% for the week ending May 2, an increase of 0.3% from the previous week’s revised rate.”
• U.S. April Producer Price Index (“PPI”) -1.3% month over month; core PPI (excluding food and energy) -0.3% month over month.
• University of Michigan U.S. May consumer sentiment index rose to 73.7 versus a 68.0 estimate. April was 71.8. This index tends to mirror the performance of stocks.
• U.S. April National Federation of Independent Businesses ‘small business optimism’ index fell to 90.9 (lowest since 2013) vs. 96.4 in March. ‘Sales expectations’ at -42% (lowest in history); only 3% of owners think it’s good time to expand (lowest since 2010), but owners are still generally positive on outlook over next 6 months. Much could be attributed to the proper execution of the Paycheck Protection Program. Money has been going into the right hands.
• U.S. China relations are sinking fast. U.S. President Trump is reportedly looking at Chinese companies that trade on NYSE and NASDAQ that do not follow U.S. accounting rules; after telling the Thrift
• Savings Plan, which is a federal employee retirement fund, that the White House does not want it to have money invested in Chinese equities (about $4 billion in assets).
• Reuters reported that “U.S. Navy destroyer transits Taiwan Strait on same day as Chinese drills”; also “The Trump administration on Friday moved to block shipments of semiconductors to Huawei Technologies from global chipmakers, in an action ramping up tensions with China. The measures include launching investigations and imposing restrictions on U.S. companies such as Apple, Cisco Systems, Qualcomm as well as suspending purchase of Boeing airplanes, the report said here citing a source.”

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 May 22, 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.