The Week of November 16 – November 20, 2020

Macro Update

• In the U.S., case counts are still rising alongside tests, although successful developments on vaccines are very encouraging, sparking episodes of resurgence in risk appetite.
• Rising number of case counts is hurting employment in the U.S. Bloomberg – “U.S. Job Picture Worsens Amid Latest Surge in Coronavirus Cases. Census data show 4.5 million fewer Americans were working. More of the jobless are sick or caring for Covid-19 patients.”
• Earlier this year, the Treasury gave the Federal Reserve $75 billion (to be leveraged 10 times) and created a standby lending facility of $750 billion for businesses on Main Street. Only $25 billion of the seed money has been used so far. Last Thursday, Treasury Secretary Mnuchin asked the Fed to return the unused funds. (The Fed has said it cannot lend to parties that might default. These Treasury/Fed joint programs are meant to support smaller, riskier businesses.)
• U.S. October retail sales at +0.3% vs. +1.6% in prior month (revised down from +1.9%). The control group (sales excluding autos, gas station sales and building materials, which goes into GDP calculations as ‘personal consumption expenditures’) +0.1% vs. +0.9% prior (revised down from +1.4%). The headline numbers all missed expectations and the downward revisions add insult to the injury.
• U.S. October industrial production +1.1% vs. -0.6% in prior month.
• The U.S. housing market is on fire. The National Association of Home Builders (“NAHB”) Housing Market Index reached an all-time high of 90.0 just recently. (The index averaged 51.1 from 1985 until 2020. The record low of 8.0 was reached in January of 2009, after the subprime crisis.)
• Another measure, U.S. October existing home sales, rose +4.3% vs +9.9% in prior month (revised up). It is growing at a pace not matched since November 2005.
• Canada September retail sales +1.1% month over month; very old data. Statistics Canada’s preliminary October estimate is “unchanged.”
• Canada October Consumer Price Index (“CPI”) +0.4 month over month, versus -0.1 in September. Core CPI (excluding food and energy) +0.1, versus +0.2 in September.
• Eurozone November advance consumer confidence -17.6. Prior was -15.5. The deterioration was better-than-feared but still going the wrong way.

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 North American Fund (formerly 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 November 20, 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.