The Week of May 24 – May 28, 2021

Macro Update

• U.S. April Personal income -13.1%, vs +20.9% in March. Personal spending +0.5% vs +4.7% in March. The last stimulus cheque was mailed in March, which explains the volatility.
• U.S. April ‘Personal Consumption Expenditures’ price index (“PCE”) +0.6% month over month, vs +0.6% in March; year over year PCE +3.6% in April vs +2.4% in March. Core PCE price index +0.6% month over month, vs +0.4% in March; year over year core PCE +3.1% in April vs +1.9% in March.
• U.S. consumer confidence, represented by an index calculated by the Conference Board, eased to 117.2, missing expectations of 118.8 and lower than 117.5 in April. The index is still significantly lower than pre-pandemic levels; partly due to the unemployment situation, and partly due to worries about higher prices in necessities like shelter, food and energy. Higher cost of living will weaken consumers’ budgets and deter the consumer from discretionary spending.
• Since the beginning of ‘stay at home’ orders, consumers have stepped up purchases of sporting goods, furniture for the home office and major appliances to make ‘staying at home’ more comfortable. Part of the growth in retail sales came from such purchases. However, the majority of these are big ticket items that are not recurrent. Within the Conference Board U.S. Consumer Confidence report, the ‘Major Appliance’ index fell to the lowest in many years. This ‘front loaded’ spending pattern will take away future spending in these categories. There is pent-up demand in services such as dining and traveling, but it is not across the board.
• U.S. April exports +1.2%; imports -2.2%.
• U.S. April durable goods orders -1.3% vs +1.3% in March. The important ‘nondefence capital goods orders excluding aircrafts’ component (the best proxy for business capital spending) +2.3% vs +1.6% in March. 
• U.S. April ‘pending home sales’ (signed but not yet closed) -4.4% vs +1.7% in March.
• U.S. Q1 Gross Domestic Product (“GDP”) unrevised at 6.4%, slightly missing expectations for an upward revision.
• China, a significant consumer of commodities, also turns out to be a big player, including its retail investors. According to Reuters – “China’s banking regulator has asked lenders to stop selling investment products linked to commodities futures to mom-and-pop buyers, three people with knowledge of the matter told Reuters, to curb investment losses amid volatile commodity prices. It has also asked lenders to completely unwind their existing books for these products”.

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 May 28, 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.