The Week of August 2 – August 6, 2021

Macro Update

• Rising concerns about the spread of the Delta variant cast doubt on the prospect of the global recovery. As a result, commodity prices, including crude oil, drifted lower last week; and weighed on the Canadian dollar. Worries about demand was also aggravated by a decision from the Organization of the Petroleum Exporting Countries and Russia to increase production.
• The pace of the global recovery is moderating. Purchasing Managers Indices (“PMIs”) were mixed. Notably softer in China, although it is still above 50, in expansion territory.
• In the U.S. the July employment report was released last Friday, ‘nonfarm payrolls’ rose 943,000, beating expectations. Additionally, May and June were revised higher by 119,000. The unemployment rate fell from 5.9% in June to 5.4% in July. The ‘labour force participation rate’ rose from 61.6% in June to 61.7% in July.
• U.S. weekly jobless claims came in at 385,000, lower than the 399,000 in the previous week but still stubbornly high; with the four-week moving average stuck at 394,000.
• In our employment report released on the same day, Canada added 94,000 jobs in July, but that is shy of expectations of over 177,000. The unemployment rate fell from 7.8% in June to 7.5% in July, but that also missed forecasts of a drop to 7.4%. The labour force participation rate remained steady at 65.2%.
• Contrasted with a better-than-expected U.S. employment report, the miss in the Canadian report further entrenched the down trend in the Canadian dollar versus the U.S. greenback. As commodity prices retreat, the pressure on the Canadian dollar will likely increase. These factors are eroding previously held opinions that the Bank of Canada would be ahead of the U.S. Federal Reserve in removing monetary stimulus.
• Canada June imports fell 0.1%; exports rose 8.7%.
• Canada June building permits rose by 6.9% month over month, a nice recovery from May’s 12.9% drop.
• Eurozone June retail sales eased to a 1.5% month over month gain, from 4.1% in May.

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 6, 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.