The Week of February 22 – February 26, 2021

Macro Update

• In his semi-annual, two-day testimony to Congress last week, Federal Reserve Chair Powell assured market participants that the Fed will not change its current policy stance until full employment is reached and that inflation hits 2.0%. (The Fed’s favourite inflation gauge, the ‘core personal consumption expenditure price deflator’ was at 1.50% year over year in January.) Powell did commit to continue its current path of bond purchases. Thus the so-called ‘taper tantrum’ (fear that the Fed might be trimming bond purchases) is premature.
• U.S. January ‘personal income’ +10.0%, boosted by cheques from the government. ‘Personal spending’ +2.4%; December was revised lower from -0.2% to -0.4%; partially reflecting the lessened propensity to spend, as larger shares of income went into savings and debt repayment.
• U.S. January ‘durable goods orders’ +3.4%. December was revised up from +0.5% to +1.2%. The important ‘non-defence capital goods orders excluding aircraft’ segment (best proxy for business capital spending) +0.5%. December was revised up from +0.7% to +1.5%. It is a reasonably strong report, but a volatile series.
• U.S. January exports +1.4% vs +4.6% in December; imports +1.1% vs +1.4% in December.
• U.S. January ‘pending home sales’ -2.8% vs. +0.5% in December. The decline was mostly due to a lack of inventory. ‘New home sales’ +4.3%. December was revised up from +1.6% to +5.5%.
• U.S. Q4 GDP (second reading) +4.1%. Notably, inventories accounted for 1.1% of the 4.1% gain. Business investment +14.0%. Home investment +35.8%. All Q/Q change at annualized rate.
• Bloomberg – China state media says Biden’s early policy ‘Smacks of Trumpism’.
• BNN – (European Central Bank Executive Board member) Schnabel says ECB may need to add support if yields hurt growth.

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 February 26, 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.