The Week of September 28 – October 2, 2020

Macro Update

• U.S. September ‘non-farm payrolls’ rose 661,000, substantially below consensus of an 875,000 increase. The upward revisions of 145,000 from the previous two months diminished the net impact of the miss. Permanent job losses are on the rise, while temporary layoffs are falling. The sad truth is, temporary layoffs have turned into permanent loss of employment for many. The unemployment rate eased to 7.9% from 8.4% in August, but that 0.5% improvement was partly offset by a 0.3% decline in the ‘labour force participation rate’. ‘Average weekly hours’ rose 0.1 to 34.7 hours, which is in the right direction.
• Canada employment report will be released this Friday, October 9.
• Prime Minister Justin Trudeau outlined last Thursday that the Canada Infrastructure Bank intends to invest $10 billion in projects meant to create 60,000 jobs and contribute to the fight against climate change.
• Canada September Markit manufacturing Purchasing Managers’ Index (“PMI”) improved to 56.0 vs 55.1 prior.
• Canada July GDP +3.0% month over month; June was +6.5% month over month.
• U.S. Q2 GDP revised to -31.4% vs. -31.7% prior.
• U.S. August personal income -2.7% vs +0.5% in prior month; personal spending +1% vs +1.5% in prior month. The lower numbers are most likely the result of jobless benefits running out.
• U.S. August core Personal Consumption Expenditure price deflator (Federal Reserve’s favourite inflation gauge) +1.6% year over year vs. +1.4% year over year in prior month; m/m change +0.3% vs +0.4% in prior month. Real personal spending +0.7% vs +1.1% in prior month.
• U.S. August pending home sales +8.8% vs +5.9% in prior month. Year-over-year sales were +24%. The housing sector is extremely strong.
• Eurozone August unemployment rate 8.1% vs 8.0% prior.
• Bloomberg – “President Trump COVID-19 infection raises the risk of a widespread outbreak within the White House.”
• There is encouraging news from the medical research community. From the NIH.org website (U.S. National Institute of Health) – “A Phase 1 trial of an investigational mRNA vaccine to prevent SARS-CoV-2 infection has shown that the vaccine is well-tolerated and generates a strong immune response in older adults.”

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 October 2, 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.