The Week of March 15 – March 19, 2021

Macro Update

• The Federal Reserve Open Market Committee (“FOMC”) made no changes to monetary policy as it concluded its two-day meeting last Wednesday. Of note, the Fed raised growth (4.2% to 6.5%) and core inflation (1.8% to 2.2%) forecasts for 2021. Chair Powell reiterated that the Fed will “telepath” its plans with regard to balance sheet tapering and will “continue asset purchases at this pace until we see substantial further progress – and that’s actual progress, not forecast progress.”
• U.S. weekly initial jobless claims rose to 770,000, versus 725,000 prior (revised up from 712,000).
• Higher bond yields are definitely being felt by risk assets. Even the once red hot U.S. housing market is starting to slow down. U.S. February housing starts -10.8%, building permits -10.3%. The Mortgage Bankers’ Association Refinancing Index fell to its lowest level in 6 months. National Association of Home Builders (“NAHB”) housing market index eased to 82, from 84 in January. Higher mortgage rates and rising lumber prices were cited.
• U.S. February retail sales -3.0%, versus +7.6% (revised from +5.3%) in January. The important ‘control group’ (sales excluding autos, gas stations and building materials, which goes into Gross Domestic Product (“GDP”) calculation as ‘personal consumption expenditure’) -3.5%, versus +8.7% (revised from +6.0%) in January. The weaker-than-expected February numbers were largely offset by upward revisions to January. Worth noting is that the purchase of big-ticket items (furniture, appliances) in the January report is likely sapping future spending power.
• U.S. February industrial production -2.2%, versus +1.1% (revised from +0.9%) in January. Capacity utilization fell to 73.8% from 75.5% (revised from 75.6%) in January. The storm in Texas was a noticeable factor.
• Canada February consumer price index (“CPI”) +0.5% month over month, versus +0.6% in January. Core CPI +0.3% month over month, versus +0.5% in January.
• Canada February new housing price index +1.9% vs +0.7% in January.
• Canada January retail sales -1.1%, versus -3.4% in December.
• Financial Post – “Oil market may never return to ‘normal’ after COVID, warns International Energy Agency (“IEA”). Demand won’t recover from pandemic for another two years – after that growth will slow.” 

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 March 19, 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.