The Week of August 9 – August 13, 2021

Macro Update

• U.S. July Consumer Price Index (“CPI”) +0.5% month over month, versus +0.9% in June. Core CPI (excluding food and energy) +0.3% month over month, versus +0.9% in June. Inside the report, ‘shelter’ rose 0.4% month over month, which equated to roughly half of the 0.3% increase in core CPI. Used cars eased from double digit monthly increases in two of the last three months to just rising 0.2% in July. Going forward, this component would likely be a negative contributor to core CPI.
• U.S. July Producer Price Index (“PPI”) – came in mostly higher than expected for July, rising 1.0% month over month, and 7.8% year over year.
• In the U.S. higher case counts are now causing restaurant spending to roll over and airline spending to fall. The driving force behind it could be the low vaccine uptake rate in the U.S.
• There are additional signs that the U.S., or the global, economy, is slowing down.
• Bloomberg – “There are signs that the delta variant is taking a bite out of economic growth. Total spending using Bank of America Corp. debit and credit cards “decelerated meaningfully” last week, economists Michelle Meyer and Anna Zhou (both from Bank of America) wrote in a note Thursday.” (U.S. retail sales rose 0.6% in June. July data will be out Tuesday, August 17. Consensus expectations are for a 0.2% decline.)
• Reuters – “Spread of COVID-19 Delta variant knocks oil demand outlook.” Comment courtesy of the International Energy Agency (“IEA”).
• The U.S. National Federation of Independent Business (“NFIB”) Small Business Optimism Index has yet to return to pre-pandemic levels. The latest reading came in at 99.7, a decrease of 2.8 points from the previous reading of 102.1, reversing June’s 2.9-point gain. Small businesses account for roughly half of employment in the U.S.
• The U.S. ‘Consumer Sentiment Index’ fell unexpectedly to 70.2, from an 81.2 reading prior, injecting more uncertainties in the economic outlook.
• Eurozone industrial production -03% month over month, after -1.1% prior; another soft data point.
• Geopolitical concerns stemming from tensions between U.S. and China are further complicated by the latest developments in Afghanistan. Historically, rising risk aversion would lead to a weaker Canadian dollar.

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 13, 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.