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Economic Outlook &Capital Markets Investment Counsel Association of Canada Montreal June 19th, 2008 Clément Gignac VP Chief Economist& Strategist Topics 1. U.S. recession in the offing: How long and deep? 2. Emerging countries: How long will the decoupling with the U.S. last? 3. Canada: Our reasons to remain “cautiously optimistic” 4. Capital markets: Where are we heading? Disclaimer Parts of this presentation contain material that may not be suitable for some viewers. National Bank of Canada leaves it to the discretion of its clients whether or not to accept the implications of this scenario. Part 1: The world has changed! A U.S. housing bubble pop and a halt to securitization activity! 4 Price of a single-family home as a ratio of median family income Ratio 4.1 4.0 3.9 3.8 3.7 3.6 3.5 3.4 3.3 3.2 3.1 3.0 2.9 2.8 Average 1980-2000 2.7 2.6 80 82 84 86 88 90 92 NBF Economic Research, Federal Reserve 94 96 98 00 02 04 06 U.S. mortgage securitization activity suspended From 4% of GDP… 160 Quarterly change in value outstanding ($ billion) 140 120 100 80 60 40 20 0 -20 -40 -60 …to -2.0% ! -80 90 91 92 93 94 95 96 97 98 99 00 01 NBF Economy & Strategy (data via Federal Reserve) 02 03 04 05 06 07 A recipe for bubble creation by John Kenneth Galbraith (1972) Ingredients needed: 1- Wall Street Financial Innovation (like CDOs now) 2- Easy access to credit (ex subprime mortgages) 3- Lack of disclosure by participants (off balance sheet items) 7 U.S.: Precautionary increase in loan-loss provisions… As % of average assets, U.S. FDIC-insured institutions 1.40% Provisions for loan losses Net charge-offs 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 88 Source: FDIC 90 92 94 96 98 00 02 04 06 08 Credit crunch: Implications on banks and monetary policy Risk aversion is back = ABCP are back on banks balance sheets 1250 U.S. 120 $ billions 1200 Canada $ billions 110 1150 1100 100 1050 1000 90 950 80 900 850 70 800 750 60 700 650 50 600 40 550 2001 2002 2003 2004 NBF Economy & Strategy 2005 2006 2007 1999 2000 2001 2002 2003 2004 2005 2006 2007 Now playing at a Wall Street theatre: “The Survivor” 55 Citigroup share price Dividend cut predicted 50 45 Dividend cut confirmed 40 35 30 25 20 Meredith Whitney, Oppenheimer analyst 15 Jun-07 Sep-07 Dec-07 Mar-08 May-08 The Fed to the rescue: Sequence of non-traditional actions • Dec 12, introduces the Term Auction Facility (TAF) and arranges currency swaps with ECB and Swiss National Bank, BoE and BoC. • Dec 21, announces that TAF will continue for as long as needed. • March 7, again increases the size of TAF and initiates term repos with primary dealers. • March 11, upgrade its Term Securities Lending Facility, up to $200 billion of Treasury securities for 28 days against agency debt (Fannie Mae and • Freddie Mac) or AAA MBS. Increases currency swap with ECB and SNB. • March 16, cuts the discount rate by 25 bps after a Sunday meeting. Create a lending facility to US primary dealers for the first time since the Great depression on a backdrop of Bear Stearns rescue by JP Morgan … and do not exclude additional bold moves from the Fed US: CRE concentration larger than ever One third of institutions with CRE loans more than 3 times equity 40 % 33.4% FDIC-insured institutions with commercial real estate loans to total equity greater than: 35 30 25 300% 400% 500% 600% 20 15 10 5 0 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 2008: As at March 31 Source: FDIC Monetary Policy: Broken transmission mechanism? Spread Mortgage rate and government bonds Fed funds et Mortgage rates 7.0 % Mortgage rate 300 6.5 Basis points 280 6.0 260 5.5 240 5.0 220 4.5 200 4.0 3.5 180 3.0 160 2.5 Fed funds 2.0 06M01 06M04 06M07 06M10 07M01 07M04 07M07 07M10 08M01 08M04 140 120 1999 2000 2001 2002 2003 2004 2005 2006 2007 US Economic Outlook: Choosing between 4 scenarios? • Sub par GDP growth (1966, 1986 or 1995 episodes) • Recession (7 times over the last 50 years) • Stagflation (a 1973-75 commodities like the 70’s) • Depression (US in the 30’s and Japan in the 90’s) PS: As usual, we are trying to stay middle of the Road!!! U.S. BUSINESS CYCLE The real question is no longer whether or not the U.S. will go through a recession, but rather how long and deep it will be 16 U.S.: Consumers feel miserable Financial obligations and spending on energy as a % of disposable income Michigan sentiment survey and real wage bill* 7 % (y/y) 6 Wage bill (left) index 120 25.5 % 115 25.0 5 110 4 3 105 24.5 100 2 95 1 90 0 85 -1 80 -2 75 -3 70 -4 65 -5 -6 Michigan Sentiment (right) 60 55 -7 50 -8 45 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 * Deflated with CPI inflation 24.0 23.5 23.0 22.5 22.0 21.5 21.0 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 U.S. households: Time to rebuild the savings rate? Rate of saving Home equity withdrawal as % of disposable income 13 % 12 6.5 11 5.5 10 5.0 9 4.5 8 4.0 7 3.5 6 % 6.0 3.0 5 2.5 4 2.0 3 2 1.5 1 1.0 0 0.5 -1 0.0 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 NBF Economic Research 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 US: 1% increase in unemployment rate usually heralds a recession Change over 12 months 5 % 4 3 2 1 0 -1 -2 -3 -4 1950 Global Insight 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 U.S.: Recessions could have different amplitude and duration Duration of GDP contraction Rise in unemployment rate 1960-61 1960-61 1969-70 1969-70 1973-75 1973-75 1980 1980 1981-82 1981-82 1990-91 1990-91 Mean: 9 months 2001 0 2 4 6 8 10 12 Duration in Months 14 Mean: 2.6 pp 2001 16 18 NBF Economy & Strategy (data from Datastream) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Percentage points 3.5 4.0 4.5 Any message of hope? US: Unprecedented amount of rate cuts in a short period of time 5.6 % 5.2 4.8 4.4 4.0 3.6 3.2 2.8 2-year Treasuries 2.4 2.0 1.6 Fed funds 1.2 0.8 2002 2003 2004 NBF Economic Research, Datastream 2005 2006 2007 US: Fiscal tool remains a viable option Budget balance a share of GDP 3 % of GDP 2 1 0 -1 NBF Forecast -2 -3 -4 -5 -6 -7 1965 1970 1975 1980 1985 1990 1995 2000 2005 NBF Economic Research, CBO 23 US: Positive contribution to growth from external sector Net exports 0.0 % of GDP -0.5 -1.0 -1.5 -2.0 -2.5 real -3.0 -3.5 -4.0 -4.5 -5.0 -5.5 Nominal -6.0 -6.5 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 NBF Economic Research, BEA 24 U.S. Economy: Bottom line The ongoing rates cuts, falling dollar and upcoming fiscal stimulus should prevent a deep and prolonged US recession… … at least for now as we believe oil price will return to $80 over the next 12 months Risk factor: Geopolitics in Middle East and higher oil prices OIL Price: Nominal and real 130 $ 120 110 100 90 Réel ($ de 2006) 80 70 60 50 40 30 20 10 Nominal 0 1970 1975 1980 1985 1990 1995 2000 2005 * U.S. Risk factor: Protectionism on the rise? Part II: International The world has changed! The U.S. is no longer the powerhouse of the global economy World economy: An ebbing of U.S. hegemony 24 % of global GDP 23 BRIC 22 21 20 19 U.S. 18 17 16 15 14 13 12 11 10 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 NBF Economic Research, IMF (World Economic Outlook, April 2008) BRIC and Middle East account for half of global growth %, share of global GDP growth 30 Over half of the 3.7% increase in world GDP in 2008 to come from emerging markets ! 27 Advanced economies 25 Emerging markets 20 15 11 8 10 5 5 3 6 3 4 0 US ro Eu n pa a J i na h C Ind ia l dd i M a eE st ia ss u R NBF Economic Research, IMF (World Economic Outlook, April 2008) il az Br China: Industrializing very fast Percentage of population living in cities: China versus U.S. 80 % of total population U.S. urbanization since 1840 70 60 Forecast for 2011 50 2004 40 2000 Every year more than 25 million Chinese people move to cities 1990 30 1978 20 10 1840 1860 1880 1900 1920 1940 1960 1960 NBF Economic Research, Census Bureau, China Statistical Yearbook 1980 Commodities: A new paradigm or history likely to repeat itself 550 500 450 400 350 300 250 200 150 100 1965 1970 1975 1980 1985 1990 1995 2000 2005 Emerging countries theme Any risk factors? China: Will authorities be too complacent on growth? Elasticity ratio of energy consumption*: China vs. G7 economies 1.4 Ratio (3-yr moving average) 1.3 China CPI inflation: Emerging Asia vs. G7 economies 18 % (y/y) 16 1.2 1.1 14 1.0 0.9 12 G7 economies 0.8 10 8 0.7 Emerging Asia 0.6 0.5 0.4 6 0.3 4 0.2 0.1 2 0 0.0 G7 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 -0.1 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 * Defined as the ratio of the growth rates in energy consumption and real GDP Risk factor: Food prices % world population living in urban area CRB foodstuff 440 index 400 55 % 50 360 45 320 280 40 240 35 200 30 160 25 120 20 80 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2008 Leading indicators: Synchronized decline in momentum!!! 18 16 14 12 10 BRICs 8 6 4 2 World 0 -2 OECD -4 -6 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 World GDP: Back to trend growth rate in 2008? Real world GDP growth 6.5 % 5.5 Average 1970 – 2006 4.5 3.5 2.5 1.5 0.5 70 72 74 76 78 80 NBF economic research, IMF 82 84 86 88 90 92 94 96 98 00 02 04 06 08 Canadian Economy Why are we much more upbeat about prospects in Canada than in the USA? Real estate: Canada not at risk according to the IMF Increase in home prices over the period 1997-2007 not accounted by fundamentals 35 House price gap (%) 30 25 20 15 10 5 0 -5 International Monetary Fund (April 2008) Austria Canada Germany Finland US Japan Italy Sweden Spain Belgium Denmark Norway France Australia UK Netherlands Ireland -10 Canada: Strongest public finances in the G-7 Net government debt 120 % of GDP 99 100 86 80 58 60 40 41 44 46 U.K. France U.S. 26 20 0 Canada NBF Economic Research, Finance Canada Germ. Japan Italy Net exporter of resources = Surging terms of trade Ratio of export to import prices 112 108 104 100 96 92 88 84 80 76 74 76 78 80 82 NBF Economic Research 84 86 88 90 92 94 96 98 00 02 04 06 External sector: Canadian surplus, U.S. deficit Current-account balance 3 % of GDP Foreign-held debt 48 % of GDP 44 2 40 1 36 0 32 -1 28 -2 24 20 -3 16 -4 12 -5 8 -6 4 -7 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 NBF Economic Research, Finance Canada CAD closely ties to commodities CAD vs. CRB futures index 600 CRB ijndec USD/CAD 1.15 1.10 560 CAD/USD (right) 520 480 1.05 1.00 440 0.95 400 0.90 360 0.85 320 0.80 280 CRB futures (left) 240 0.75 0.70 200 0.65 160 0.60 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 NBF Economy & Strategy (data from Datastream) Warning: Economics 101 Canada has great fundamentals but our economy will not be immune from a U.S. recession Canada-U.S.: Business cycles in-synch Real GDP growth: Canada vs. the U.S. 9 % (y/y) 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 NBF Economic Research GDP growth: Temporary soft-patch to be expected in 2008 Real GDP, 2008 forecast 4.0 % 3.5 3.5 3.1 3.0 2.9 2.6 2.5 1.8 2.0 1.8 1.7 1.5 Canadian average: 1.5% 1.5 1.0 1.0 0.5 0.5 0.0 ALB MAN SASK NBF Economic Research BC NS PEI NB NFLD QUE ONT Bottom line: BOC rate cuts not over yet in Canada 6.8 % 6.4 6.0 5.6 5.2 4.8 4.4 4.0 3.6 BoC overnight rate 3.2 2.8 Fed funds rate 2.4 2.0 1.6 1.2 0.8 1997 1998 1999 2000 2001 NBF Economic Research, Datastream 2002 2003 2004 2005 2006 2007 Forecasts Indicators 2008 2009 GDP U.S. Canada 1.4% 1.1% 1.6% 1.9% Inflation U.S. Canada 3.5% 2.2% 1.9% 1.4% Current Jun. 2009 Policy rate U.S. Canada 2.00% 3.00% 2.00% 3.00% 10-year yield U.S. Canada 4.19% 3.84% 4.25% 4.02% CAD 1.016 0.92 S&PTSX 14,863 12,800 Capital markets: Volatility will remain for some time 49 Capital markets: Volatility is back in stocks and bonds! CBOE VIX and MOVE* indexes, 40-week moving averages 140 Index Index 35 MOVE* index (L) 130 30 120 110 25 100 20 90 80 15 VIX index (R) 70 * Merrill Lynch trademark product 60 Apr-88 Feb-91 Jan-94 10 Nov-96 Source: NBF Economic Research, Datastream Oct-99 Aug-02 Jul-05 May-08 S&P 500: Volatility is back % of trading days on which the S&P 500 has moved more than 1% 80% First quarter 2008 70% 60% 50% 40% 30% 20% 10% 0% Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q1- Q151 54 57 60 63 66 69 72 75 78 81 84 87 90 93 96 99 02 05 08 NBF Economy & Strategy (data via Datastream) Performance of equities in five U.S. recessions S&P 500 Composite and U.S. real GDP growth -49% % q/q annualized From pre-recession peak to trough -36% -48% -19% -20% S&P 500 (R) -27% 20 16 12 500 In recession periods, the S&P 500 pulls back an average 36% from peak to trough 8 4 0 -4 -8 U.S. recessions in gray U.S. real GDP growth (L) -12 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 NBF Economic Research, Datastream 2000 1500 1000 250 150 100 50 Sector rotation: Any place to hide during recessions? S&P 500 Composite recession impact Index S&P 500 Comp. Energy Materials Industrials Cons. Disc. Cons. Staples Health Care Financials Banks IT Telecom Utilties -6m before recession -3m before recession -4.25 -2.14 5.94 -0.15 -0.93 6.31 3.89 2.60 2.52 -11.65 -8.21 -4.25 -1.02 0.77 1.58 0.35 -0.36 1.25 1.13 1.93 2.89 -5.14 -2.18 0.00 1970-2001 Recessions average -1m before Start +3m after recession recession to recession market trough trough -2.48 -22.38 18.62 0.86 -17.96 13.49 -0.30 -24.61 20.98 -1.76 -25.93 19.13 -3.28 -24.99 22.30 0.65 -16.64 19.79 0.03 -16.77 19.64 -2.87 -27.36 28.60 -2.23 -25.93 23.59 -5.86 -27.05 22.12 -6.67 -12.27 9.89 -0.68 -15.43 10.42 +6m after recession trough +9m after recession trough 30.18 22.50 35.74 33.25 40.95 31.90 30.27 40.39 34.50 39.04 11.03 13.29 36.19 34.37 46.21 40.53 47.47 36.87 34.26 51.07 47.45 37.27 7.70 15.22 S&P/TSX Composite U.S. recession impact Index S&P/TSX Comp. Energy Materials Industrials Cons. Disc. Cons. Staples Health Care Financials Banks IT Telecom Utilties -6m before recession start -3m before recession start -2.98 6.17 6.20 -3.93 -13.10 3.24 5.75 1.06 0.28 -14.03 -6.19 0.71 -0.33 0.77 2.96 -5.26 -3.36 -2.69 4.18 2.26 2.96 -6.20 -2.96 1.46 1970-2001 Recessions average -1m before Start +3m after recession recession to recession start market start trough trough -0.76 1.17 3.50 -0.67 -1.37 2.92 3.14 0.15 -0.81 -12.14 -0.46 1.55 -23.31 -17.93 -23.49 -25.60 -18.20 -4.70 -12.00 -17.26 -15.06 -22.61 -11.88 -11.63 16.03 6.56 9.44 19.28 19.66 11.33 19.45 19.34 19.03 24.92 11.66 11.96 +6m after recession start trough 27.73 15.25 29.09 34.79 29.12 28.21 32.92 31.83 31.68 24.47 10.51 15.61 +9m after recession start trough 31.37 24.24 36.48 30.67 37.88 33.82 39.16 40.70 40.38 17.79 14.94 14.77 Capital markets currently on the edge!!! Downside and upside risks about the same? 55 Equities valuation looks cheap … at first glance!!! Equities do not look overvalued on a forward basis… … and on a trailing basis S&P 500 12-month forward P/E S&P 500 & S&P/TSX 12-month trailing P/E PE ratio 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 30 Shaded area = recessions Ratio Shaded areas= U.S. recessions 28 S&P/TSX 26 24 22 20 16.0x 18 16 15.9x S&P 500 14 12 12-year low ! 10 8 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 NBF Economic Research, Datastream,I/B/E/S 6 1960 1965 1970 1975 NBF Economic Research, Datastream,I/B/E/S 1980 1985 1990 1995 2000 2005 … but be aware that inflation is a headwind for PE expansion Trailing PEs on S&P500 and headline CPI inflation PE 30 Tech bubble 28 24 22 20 18 30 EPS Projection 28 Given the limited scope for PE expansion in the current environment… 26 Bottom-up consensus of equity analysts 26 24 22 …equities will be vulnerable to earnings downgrades 20 Current 16 18 14 16 12 14 10 Consensus sees EPS surging 78% between now and Q4 2009 ! 12 8 6 10 4 8 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 CPI inflation NBF Economy & Strategy (data via Datastream and S&P) US recessions = More downward earnings revisions??? % Current year consensus earnings revisions, from start to end of a given year 10 5 0 -5 -10 YTD: -10.0% -15 -20 -25 -29.3% -25.1% -24.2% Shaded for recessions -30 80 85 90 95 00 05 Any message of hope? Stocks typically bottom 2/3 of the way through a recession 0 100 Mar-01 to Nov-01 200 204 Jul-90 to Mar-91 300 400 243 Jul-81 to Nov-82 407 86 488 182 Nov-73 to Mar-75 336 Dec-69 to Nov-70 485 176 Apr-60 to Feb-61 335 207 0 600 245 102 Jan-80 to Jul-80 500 100 306 200 300 Days 400 Number of days from start of the recession to market trough NBF Economy & Strategy (data from Datastream) 500 600 Total recession length Credit crunch: The worst behind us? Investment grade spreads 260 1100 High-yield spreads 1000 240 900 220 200 800 180 700 160 140 600 120 500 100 80 400 60 40 300 20 200 0 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 360 CMBS spread 200 320 180 280 160 240 140 200 120 160 100 120 80 80 60 40 40 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 RMBS spread 20 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 Our « cautious » view on oil price and S&P/TSX S&P/TSX: Still heavily exposed to resources S&P/TSX and S&P 500 sector weights S&P/TSX Resources weight: 51% 32% 40% AN N I F US AL CI S 0% 2% 5% 2% 4% 11% 11% 17% 0% 4% 5% 4% 3% 4% 10% 9% 11% 15% 5% 15% 20% 15% 25% 19% 30% Canada 26% 35% . S LS ET GY IES CH RE ES AL RV A T I L R E R A I I E T R P E C R S SC TIL O H TA ST EN TE M F DI U T S U A . O L IN D M S. EA NS EC IN N L H O C CO TE NBF Economic Research,Datastream S&P/TSX: Longest sequence of excess return in 45 years S&P/TSX return minus S&P 500 return in CAD Longest winning streak in 45 years 30% 20% 10% 0% -10% 2008 to date -20% -30% -40% 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 to date NBF Economic Research, Datastream Stock markets : How much longer can the S&P/TSX outperform the S&P 500 ? S&P/TSX and S&P 500 5-year rolling return differential (in C$) % 150 100 50 0 -50 -100 -150 -200 74 75 77 78 80 82 83 85 87 88 90 92 Source: NBF Economic Research, Datastream 93 95 96 98 00 01 03 05 06 08 Commodity prices tend to slide when growth slows for 2 years Deviation of global growth from long-term trend (3.8%) vs. Reuters/Jefferies CRB 6 Percentage points Index Shaded areas show two or more consecutive years of below-trend global growth 500 ? Reuters/Jeffe ries CRB 4 400 300 2 200 0 World GDP growth minus 3.8% -2 100 70 72 74 76 78 80 82 84 86 88 90 92 94 NBF Economy & Strategy (data via Datastream, IMF) NBF Economy & Strategy forecast for 2009: 3.5% 96 98 00 02 04 06 08 Slower GDP growth = weaker oil demand = lower oil price Real world GDP growth and global oil consumption 8 % y/y 7 World GDP 6 5 4 3 2 1 0 -1 Oil consumption -2 -3 -4 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 EIA Indonesia, Malaysia, Bengladesh, Sri Lanka… the list is getting longer How long can China and India continue to maintain their subsisdies? OPEC Surplus Crude Oil Production Capacity 6 Forecast 5 4 Million barrels 3 per day 2 1 0 1997 1999 2001 2003 2005 2007 Note: Shaded area represents 1997-2007 average (2.5 million b arrels per day) Short-Term Energy Outlook, June 2008 2009 Investment strategy Preference for • Low debt companies •Large capitalisations •Dividend paying •U.S. equities over S&P/TSX Some sectors we currently favour Consumer staples, Utilities, Health care Summary – Economic Outlook 2008-09 • International : – Continued expansion, but at a cooler pace; – U.S.: A consumer led recession highly probable; – Fed and Capitol Hill will continue the rescue’s operation • Canada : – Excellent fundamentals to cushion a U.S. slowdown; – Quebec and Ontario to face stiff headwinds; – BOC: On the sidelines for some time; • Capital market: – Volatility likely to stay for some time; – U.S. equities: Downsize risk less significant than a year ago – S&P/TSX: Vulnerable to investors’ sentiment shift on commodities; Thank you for your attention