The Week of September 14 – 18, 2020

Macro Update

• Risk aversion continued last week among equities and other risk assets.
• Due to fiscal impasse in the U.S. Congress, expired pandemic unemployment benefits were replaced, only partially, by smaller payments. Compared to peak levels in June and July, total benefit payments have declined significantly. At the same time, the ‘continuing unemployment insurance claims (all programs)’ remain near 30 million. All of these casts shadows on the future path of consumer spending in the U.S.
• The Federal Reserve Open Market Committee (“FOMC”) meeting concluded last Wednesday with Fed Chair Powell parading a wish list of when and where inflation and the unemployment rate should be, but offered no details as to how to get there. The Fed funds rate will stay close to zero at least through 2023, but there were no additional monetary stimulus plans. He highlighted uncertainty about the economic rebound.
• U.S. August retail sales +0.6% vs +0.9% in prior month (revised down from +1.2%).
• U.S. University of Michigan consumer sentiment index came in at 78.9. Prior was 74.1.
• U.S. August housing starts -5.1% month over month. Building permits -0.9% m/m.
• U.S. September NAHB housing market index soared to 83 vs 78 prior.
• U.S. August industrial production +0.4%. Prior was +3.0%.  Capacity utilization 71.4%.
• Canada July retail sales +0.6% (old data). Early Statistics Canada estimates suggest that retail sales increased by 1.1% in August.
• Canada August Consumer Price Index (“CPI”) +0.1% year over year. Core measures all fell below 2.0% year over year.
• Canada July manufacturing sales +7.0%. Prior was +20.7%.
• Canada August existing home sales +6.2%. Economists at Canadian Real Estate Association (“CREA”) did note signs of moderating in September along with a 10.6% rise in listings in August. Inventory is a tight 2.6 months. 
• Canada August Teranet house price index +5.7% year over year vs +5.5% prior.
• Japan’s August exports fell 14.8% year over year; the 21st straight monthly decline.

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 September 18, 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.