The Week of September 21 – 25, 2020

Macro Update

• Pleading from the Fed Chairman might not be as effective as a stock market selloff; as the political will to gobble up another U.S. fiscal stimulus package suddenly emerged last week. Bloomberg – “Democrats Crafting New $2.4 Trillion Stimulus Bill to Spur Talks…Pelosi, Mnuchin express willingness to resume stimulus talks. The bill could get passed by the House next week.”
• U.S. August new home sales +4.8% month over month. Supply shrank to 3.3 months vs 3.6 months prior. Median sales price +4.3% year over year.
• U.S. July housing price index +1.0% month over month for the second month in a row.
• U.S. August durable goods orders +0.4%. July was +11.7%. The important ‘non-defence capital goods orders excluding aircrafts’ component (best proxy for business capital spending) +1.8%. July was revised up from +1.9% to +2.5%.
• South China Morning Post – “Independent research firm China Beige Book claims its survey shows an alternative narrative to Beijing’s official economic recovery in the wake of the coronavirus. Survey of 3,300 firms across China shows a disjointed recovery away from the ‘corporate elites’ in the coastal hubs of Beijing, Shanghai and Guangdong…Demand in China has lagged behind supply all year, with retail sales and imports trending much lower than industrial production and exports.”
• Strait Times (Singapore) – “China Evergrande bonds halted; world’s most indebted developer hit by fears of cash crunch…China Evergrande Group mapped out the scenario in an Aug 24 letter to the Guangdong government seen by Bloomberg, in which the company sought support for a restructuring proposal needed to secure the listing and avert a cash crunch.“ Bloomberg – “Evergrande Faces Crisis of Confidence Over $120 Billion Debt”
• All is not well with Brexit. FT – “France rejects UK ‘intimidation’ on post-Brexit deal”
• The return in risk appetite last week was only partial. Perhaps rattled by credit concerns out of China (see above), credit spreads in the U.S. widened.

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 25, 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.