The Week of September 8 – 11, 2020

Macro Update

• Fiscal impasse in the U.S. is coinciding with inevitable layoffs as companies cannot hold off any longer. The total number of “persons claiming unemployment insurance benefits” is the most important metric.
• That number remains stubbornly high and has been edging up; it was last reported at 29.6 million.
• U.S. August consumer price index (“CPI”) +0.4% vs +0.6% in prior month; core (excluding food and energy) +0.4% vs +0.6% prior.
• U.S. August producer price index (“PPI”) +0.3% month over month vs +0.6% in prior month; core (excluding food and energy) +0.4% vs +0.5% prior.
• Canada Q2 capacity utilization 70.3% vs 79.8% in Q1. Manufacturing capacity utilization 63.6% vs 47.3% prior.
• Canada August housing starts 262,400, up from 245,600 in July. The boom in housing continues.
• Canadian household debt fell to 158.2% of income. This was at one point above 170%. 
• Last week, Saudi Aramco has to cut its prices to Asian refiners due to weak demand. The end of the North American driving season and the risk aversion that set in for the past two weeks are also weighing down on crude.
• From 898 a year ago, U.S. rig count has fallen to 256, a dramatic drop of 642.
• Eurozone Q2 GDP -11.8% vs 12.1% preliminary reading.
• The ECB kept monetary policy steady, but raised their GDP forecasts.
• EU is pondering legal action over U.K., regarding its plan to breach the Brexit deal. Brexit deadline is October 15, 2020.
• China is looking to increase its already colossal state reserves of crude, strategic metals and farm goods over the next five years.

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 11, 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.