The Week of March 22 – March 26, 2021

Macro Update

• Recent batch of softer U.S. economic data has pushed the ‘Citi Economic Surprise Index’ for the U.S. back down.
• The Federal Reserve’s favourite inflation gauge, the ‘core personal consumption expenditure price index’ came in at only +0.1% in February. On a year over year basis, it eased to 1.4%, well below the Federal Reserve’s target of 2.0%. Healthcare cost, which is part of this calculation, has been rising. Necessities such as food, energy and healthcare displace future discretionary spending power. Reopening will surely unleash pent-up demand, and on a year-over-year comparison to 2020, there will be increases in inflation data; but going forward into Q2 and Q3, the inflation outlook is murkier since it will take another year or so for employment to fully recover.
• U.S. February personal income -7.1%, after +10.1% in January. Personal spending -1.0%, after +3.4% in January. Government stimulus checks can explain most of the gyrations in both income and spending.
• U.S. February ‘existing home sales’, -6.6%, much worse than expected. January was revised down from +0.6% to +0.2%. This came on the heels of more than 10% declines for housing starts (-10.8%) and building permits (-10.3%) for February. Higher mortgage rates is a common theme.
• U.S. February durable goods orders -1.1% vs +3.5% in January. The important ‘nondefence capital goods excluding aircraft’ (the best proxy for business capital spending) -0.8% vs +0.6% in January. These are all weaker-than-expected.
• U.S. February exports -3.8% month over month; -5.4% year over year. Imports -1.4% month over month. +10.1% year over year.
• CNN – “Turkey could be on the cusp of another currency crisis after President Recep Tayyip Erdogan abruptly fired the head of the country’s central bank, putting the Lira on track for its worst single day decline against the US dollar in nearly three years… the central bank has just $11 billion in foreign currency reserves available to defend the currency.”

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 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.