The Week of April 26 – April 30, 2021

Macro Update

• The Federal Reserve Open Market Committee (“FOMC”) kept monetary policy unchanged last Wednesday; pinning the Fed funds rate near zero and continuing to buy bonds at the current pace of US$120 billion per month. 
• U.S. March durable goods orders +0.5% month over month, versus -0.9% in February. The important ‘orders for non-defence capital goods excluding aircrafts’ (best proxy for business capital spending) +0.9% month over month versus -0.8% in February; a welcome improvement but still tepid.
• U.S. March ‘personal spending’ +4.2% month over month, versus -1.0% in February; ‘personal income’ +21.1% month over month, versus -7.0% in February. Stimulus checks were the reason for the large fluctuations. The ‘personal savings rate’ rose to 27.6%.
• March ‘core personal consumption expenditures price deflator’ (the Federal Reserve’s favourite inflation gauge) +0.4% month over month, versus +0.1% in February. Year over year +1.8%.
• U.S. Consumer Confidence Index much stronger at 121.7, versus 109 in prior month.
• U.S. weekly jobless claims at 553,000 versus 566,000 in prior week. Continuing claims at 3,660,000 versus 3,650,000 in prior week.
• For February, S&P Case-Shiller U.S. Home Price Index +12.0% year over year versus +11.2% year over year in January. This is the largest year over year increase since 2006. 
• U.S. Q1 GDP +6.4% (annualized), versus +4.3% (annualized) in Q4 2020. Inventories reduced GDP by 2.64%, so growth was actually stronger than the headline number. 
• Last week, President Joe Biden unveiled a US$1.8 trillion plan to expand educational opportunities and child care for families, funded in part by the largest tax increases proposed on wealthy Americans in decades. Called the American Families Plan, the proposal combines US$1 trillion in spending with US$800 billion in tax cuts and credits for middle- and lower-income families.
• Canada February GDP +0.4% month over month, versus +0.7% in January. Economic activity is roughly 2.0% below February 2020 levels.
• Canada February retail sales +4.8% month over month. January was -1.1%. Advanced estimate to March is +2.3%.
• Eurozone Q1 GDP -0.6% q/q, versus -0.7% in Q4 2020.

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 April 30, 2021 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.