The Week of August 16 – August 20, 2021

Macro Update

• U.S. July retail sales fell 1.1%, much worse than the 0.3% decline expected by economists (June was revised upward by 0.1% to a 0.7% gain, but not enough to offset the decline in July). The important ‘Control Group’ – ‘retail sales excluding autos, gas station sales and building materials’ – which goes into Gross Domestic Product (“GDP”) calculations as ‘personal consumption expenditure’, fell 1.0% (June was revised upward by 0.3% to a 1.4% gain, not enough to offset the decline in July). There was also a general shift in spending from products to services.
• The once red hot U.S. housing market is also cooling off. The National Association of Home Builders (“NAHB”) U.S. ‘housing market index’ lost 5 points to 75. It is still a strong number but falling 5 points in a month is very unusual. NAHB cited sticker shock from potential home buyers, as high prices deterred demand.
• U.S. July industrial production +0.9% month over month, after +0.2% in June. It is still below pre-pandemic levels. The high was recorded in August 2018. Capacity utilization improved to 76.1%, from 75.4% prior (long-run historical average is around 81.0%).
• Canada July Consumer Price Index (“CPI”) +0.6% month over month, versus +0.4% in June. CPI +3.7% year over year. Shelter accounted for 1.44% out of the 3.7% increase. The ‘homeowners’ replacement cost index’, which is related to the price of new homes, rose 13.8%.
• Canada July housing starts eased to 272,200 from 281,200 in June. New housing price index +0.4% month over month, versus +0.6% in June.
• Canada June manufacturing sales +2.1% month over month, versus -0.3% in May. Wholesale sales -0.8% month over month, versus +0.5% in May.
• Canada June retail sales +4.2% month over month, versus -2.1% in May.
• Eurozone Q2 GDP +2.0% quarter over quarter, annualized.
• Eurozone July CPI -0.1% month over month, versus +0.3% in June. Core CPI -0.4% month over month in July versus -0.4% in June.
• U.S. June business inventories +0.8%, versus +0.2% in June.

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 August 20, 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.