The Week of June 14 – June 18, 2021

Macro Update

• From the Federal Reserve Open Market Committee’s (“FOMC”) latest Monetary Policy Statement, released last Wednesday, “Progress on vaccinations has reduced the spread of COVID-19 in the United States. Amid this progress and strong policy support, indicators of economic activity and employment have strengthened.” To be sure, recent economic data have been mixed to disappointing (more below). The so-called ‘dot plots’, a collection of forecasts by individual FOMC members, showed expectations of up to two quarter-point rate hikes in 2023 and higher inflation data. Interestingly, even Federal Reserve Chair Powell said the ‘dot plots’ need to be taken with a “big pinch of salt”. Italics mine.
• The prospect of the U.S. Federal Reserve ending their monetary stimulus earlier sent the U.S. dollar higher and commodity prices generally lower, taking the Canadian dollar with it. The latest batch of mixed to disappointing U.S. economic data, and recent Chinese measures to curtail commodity speculation might also be hurting risk appetite.
• U.S. May retail sales -1.3% month over month, versus +0.9% in April. Retail sales excluding autos, gas stations and building materials (the Control Group) -0.7% month over month, versus -0.4% in April; missing expectations.
• U.S. weekly jobless claims came in higher than expected at 412,000, vs 375,000 prior; another disappointing report.
• U.S. May Producer Price Index (“PPI”) +0.8% month over month, versus +0.6% in April.
• U.S. May industrial production +0.8%, versus +0.1% in April. Capacity utilization improved to 75.2%, versus 74.6% in April.
• U.S. National Association of Home Builders (“NAHB”) Housing Market Index eased to 81, from 83 prior. May housing starts +3.6% month over month, vs -12.1% in April. Building permits -3.0% month over month vs -1.3% in April. The once red hot U.S. housing market is moderating.
• Canada April manufacturing sales -2.1% month over month, versus +3.5% in March.
• Canada May consumer price index (“CPI”) +0.5% month over month, +3.6% year over year. Excluding food and energy, core CPI +0.4% month over month, +2.8% year over year. Similar to the U.S., Canada is also experiencing the impact from higher prices for shelter and vehicles, which in turn led to slower activities.
• China May retail sales +12.4% year over year, vs +17.7% year over year in April.
• Eurozone CPI eased to +0.3% month over month in May; April was +0.6%.

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 June 18, 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.