The Week of November 30 – December 4, 2020

Macro Update

• Business surveys in the form of ‘purchasing managers’ indices (“PMIs”) generally showed continuing improvement in manufacturing, as businesses start to prepare for the arrival of vaccines and the subsequent reopening of the economy. In the meantime, as case counts remain high and regional lockdowns/restrictions are imposed, the service sector is still under pressure. 
• U.S. November unemployment rate fell to 6.7% from 6.9% in October. However, the ‘participation rate’ fell to 61.5% from 61.7% prior, basically offsetting the drop in the unemployment rate. ‘Average hourly earnings’ were higher by 0.3% m/m, but unfortunately it is skewed by increased layoffs among lower-income workers. ‘Nonfarm payrolls’ increased by 245,000, a disappointment caused mostly by renewed restrictions imposed due to rising number of case counts. The two-month cumulative revision was a positive 11,000. The number of long-term unemployed (those jobless for 27 weeks or more) increased by 385,000 to 3,900,000.
• For November, Canada added 62,100 new jobs. The unemployment rate fell to 8.5%, from 8.9% in October. The participation rate also fell to 65.1%, from 65.2% prior.
• Canada October imports +3.0%; exports +2.0%.
• Canada September GDP +0.8% month over month vs +1.2% in August.
• Canada Q3 productivity -10.3% vs +10.5% in Q2. Plenty of noise in the data as the pandemic tore through the economy.
• Canada has been very aggressive in boosting fiscal spending to help the economy. It posted the largest jump in the ‘debt-to-GDP’ percentage from Q4 2019 to Q3 2020; followed by Japan and the U.S.
• U.S. October core ‘personal consumption expenditure’ (“PCE”) price deflator – the Fed’s favourite inflation gauge – came in flat vs. +0.2% prior.
• Eurozone October unemployment rate eased slightly to 8.4% vs 8.5% in September
• Crude oil extended its recovery after OPEC+ agrees to a moderate and monitored rise in production, seen as a sign of improving demand.

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 December 4, 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.