The Week of May 4, 2020 – May 8, 2020

Macro Update

• Canada May employment change -1,993,800. The unemployment rate jumped to 13.0%. According to Statistics Canada, “In April, almost all (97.0%) of the newly-unemployed were on temporary layoff (not seasonally adjusted), indicating that they expected to return to former employer as the shutdown is relaxed.”
• Statistics Canada also mentioned “The April Labour Force Survey results released today reflect labour market conditions during the week of April 12 to April 18. By then, the COVID-19 economic shutdown had been fully implemented in all provinces and territories.”
• U.S. April unemployment rate jumped to 14.7%. It was published by way of the ‘Household Survey’ conducted by the Bureau of Labor Statistics, which ran from April 12 to April 18. Similar to Canada, that is also a period more or less coinciding with the maximum level of shutdown. ‘Nonfarm payrolls’ was -20.5 million, but it is still smaller than the St. Louis Fed’s earlier “back of the envelope” estimate of a peak of 49 million job losses during the height of fear. ‘Average hourly earnings’ rose significantly but that was the result of disproportionately large losses among lower paying jobs.
• South Korea has been the success story in battling the virus. It is about a month or two ahead of the U.S. and Canada in terms of timeline. Therefore, its subsequent economic performance might provide us with a glimpse of our recovery process. South Korean surveys representative of its consumer sentiment bottomed out in March, but the improved data in April are still deep in negative territory.
  IHS Markit (a well-respected business and consumer survey firm) has this comment on the U.S., “While manufacturing may see a rebound in production as increasing numbers of factories are allowed to re-open, prospects look bleaker for many parts of the services economy.” Most forecasts on the recovery process published to date seem to be too optimistic.
• There is a stern warning in a revised report from the Institute for Health Metrics and Evaluation (IHME) at the University of Washington on reopening the economy prematurely.

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 8, 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.