The Week of September 6 – September 10, 2021

Macro Update

• Last Wednesday, the Bank of Canada made no changes to monetary policy, disappointing those who were expecting more reduction in stimulus. The Canadian dollar weakened.
• Bank of Canada Governor Tiff Macklem’s speech on Thursday did not provide any new information. On the economy, he highlighted that “consumption, business investment and government spending all contributed to growth.” He gave no indication that the Bank of Canada would want to raise interest rates before the second half of 2022.
• In the August employment report released last Friday, Canada added 90,200 new jobs. The unemployment rate fell from 7.5% in July to 7.1% in August. The stronger-than-expected report offered only short-lasting support for the Canadian dollar as the U.S. dollar rallied across the board on stronger U.S. inflation data – U.S. August Producer Price Index (“PPI”) rose by 8.3% year over year; 0.7% month over month.
• Federal Reserve’s Beige Book, a collection of surveys conducted by the regional Federal Reserve branches, released last Wednesday, showed that businesses are feeling stronger inflation and paying higher wages. It also cited the impact from the Delta variant.
• A survey by KPMG on U.S. CEOs showed that “CEOs back to pre-pandemic levels of confidence.”
• The European Central Bank raised 2021 GDP forecast to 5.0% from 4.6%, inflation forecast to 2.2% from 1.9%.
• The series of government crackdowns in China continue on. One main focus is on the property sector and the high costs for shelter, which is a major source of discrepancies between the rich and the poor. Nervousness in financial markets hit highly-leveraged property developer Evergrande (second largest in China) hard. Credit rating agencies, typically laggards, have decided to slap a triple-notch downgrade to Evergrande’s bonds to CC, warning that “defaults appears probable”.
• The sharp decline in the latest China official non-manufacturing Purchasing Managers’ Index (“PMI”) is a telling sign that confidence has been severely shaken.
• Crude oil could be underpinned in the short run by an OPEC report that raised global crude oil demand by 900,000 barrels for 2022, but it has been met with a large dose of skepticism.

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 September 10, 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.