Mindset Wealth · 2015. 8. 27. · forecast for January 2016. The Canadian dollar is now besieged on all sides – falling oil, copper, and gold prices, further Bank of Canada easing

ECONOMIC MONITORJuly 2015

Prepared by:

Dr. Martin Murenbeeld &

William Tharp, Senior Economist

2Dynamic Funds Economics

FINANCIAL MARKETS OVERVIEWThe Fed continues to raise expectations that it will raise interest rates this fall – September most likely, but December as an alternative. (The Fed has press conferences after those meetings, not the others.) We continue to put a fairly high probability on no rate hike this year – for purely economic reasons, but recognize that the Fed wants to commence “normalizing” monetary policy, and get the FF rate off the ZLB (zero lower bound).

At his stage we would prefer the Fed to hike, if only to get speculation out of the way and have markets focus on more important things. A 25 basis-point hike will not affect the economy meaningfully; more importantly, the Fed will not soon be raising rates again.

The Bank of Canada cut rates again to stimulate a weaker than expected Canadian economy. With oil prices falling further, a third cut this year cannot be ruled out – although we have it forecast for January 2016.

The Canadian dollar is now besieged on all sides – falling oil, copper, and gold prices, further Bank of Canada easing expected, possible Fed tightening and an approaching election (with some polls giving the NDP the lead). We have chopped our dollar forecast accordingly. If manufacturing is to take over from a depressed energy sector the economy may well need a dollar closer to 70 cents.

Greek debt problems have been “resolved” for now, but without debt forgiveness there will be renewed financial difficulties within two years.

As it stands, Greece faces a possible election this fall, but unless the probability of a “Grexit” suddenly surges once more it will not affect markets significantly.

1.► The BANK OF CANADA is forecast to cut rates again. Most recent economic data continue to look poor and oil prices are sliding again.

2.► The FED FUNDS RATE is expected to rise gradually over the forecast period. We expect GDP growth rebounded in 2015-Q2, but will grow less than robustly in Q3 and Q4. Headline inflation is likely to remain close to zero in the next few months and the outlook for wage growth is subdued.

3.► Longer term BOND YIELDS may move a little higher based on a modest rise in inflation later this year (depending upon oil prices), provided the Fed also raises interest rates.

4.► We have a significant negative bias toward the CANADIAN DOLLAR. Chinese commodity demand looks tepid and Canada’s manufacturing sector may well need a bigger dollar decline. An end to Iranian oil sanctions and more oil on world markets will keep oil prices depressed too.

5.► The US DOLLAR is expected to rise further against most currencies. Were the Fed to decide against raising interest rates the US dollar could sell off momentarily, but the dollar still enjoys relatively high bond yields that will attract capital inflows.


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The US Dollar by Martin Murenbeeld

The US dollar last bottomed in August 2011, based on our in-house indices. (The DYX dollar index bottomed in April of that year!) Since 2011 the dollar has embarked upon a remarkable surge, the steepness of which exceeds the two previous surges (see chart). It’s an historic surge in other words, and based on factors quite different from those underpinning the two previous surges. The 1980-85 surge was underpinned by excruciatingly high real US interest rates (Volcker was the Fed Chair), and a popular president by the name of Ronald Reagan. The 1995-2001 surge was underpinned by global demand for US technology equities, culminating in the NASDAQ bubble (“irrational exuberance”, remember?). This surge, the third, is more difficult to sum up. The end of QE in the US, the adoption of QE in Japan and the Eurozone, the fear of a Eurozone breakup and a more robust US economy than elsewhere (despite the US economy’s underwhelming performance) all factor into this dollar surge. Who knows but 20 years from now we will just reflect on this period as “the end of QE”? We’ll see!Regardless, this third dollar surge is playing havoc with commodity prices; commodity price baskets are down sharply in US dollar terms, and while we do not look upon gold as a typical commodity, it too has suffered from the surge in the US dollar. Since September 2011 gold is off some 42%, or almost as much as our US dollar index has risen. (Not all the decline in commodity prices – note oil prices – is due to the strong dollar of course, but the dollar is a major contributor!)

One might hope that commodity demand at these lower dollar prices would pick up, but 1) commodity prices have fallen much less in local currency terms and 2) global demand remains weak (the IMF puts world growth at no more than 3.3% for 2015). With commodity prices down the Canadian dollar and the Aussie dollar are down too. And weak commodity prices depress the S&P/TSX, in so far as the Materials sector is overweight in the index (as compared with the sector’s weight in global equity indices). Meanwhile, the Financials sector, another overweight sector in the S&P/TSX, is exposed directly and indirectly to activities related to the development of Canada’s commodity resources; hence this sector also feels the heat of the strong US dollar.We think the US dollar is grossly overvalued, and it will – as before – undergo a protracted decline. But we are not able to say just when such a decline will commence, unfortunately.

60

70

80

90

100

110

120

130

140

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17

US DollarThe gain since August 2011 has been dramatic … !

Last month: July 2015 (e)

US recession

| DUNDEE ECONOMICS1

Source: Thomson Reuters DataStream, Dundee Economics

Rise: 38%Months: 78 US Dollar Index

EFXR0 Jan 1999=100

Rise: 34%Months: 83

To DateRise: 46%Months: 49


China – Some Macroeconomic Facts of Life: “There Will Be Blood!”

by Martin Murenbeeld

In the July 10th Gold Monitor (Quarterly Forecast Update), we noted the following: “it has become increasingly clear that China’s ‘mercantilist’ model of economic development has run into serious problems.” We suggested that domestic investment (in productive machinery and capital, and in buildings, apartments, and houses) had vastly outstripped the demand for the stream of goods and services produced by all this investment. Most of us have seen pictures of newly-built cities, devoid of inhabitants, and have wondered just how the rent on all these buildings was being paid; indeed, we all have wondered just how the debt undertaken to build these cities was being serviced. In truth, we don’t know. We presume the Chinese employ the time-honored method of “extend and pretend”, where new debt is issued in order to make payments on existing debt. What we do know is that diminishing cash flows from all this new capital makes the servicing of underlying debt increasingly problematic; the Chinese press of late has reported numerous bankruptcies, defaults, and debt restructurings.In our view rising debt-service problems lie at the root of recent domestic equity market volatility. The Chinese government may be able to dampen this volatility but it cannot wish the fundamental problem away: assets that generate diminished cash flow will inevitably be re-priced in a free market environment. This fact also underpins the substantial price correction in China’s real estate market. The Chinese economy has fundamental problems that can not be easily analyzed in great detail by someone as removed from the Chinese market as we are. There are local rules and practices that someone not intimately familiar with Chinese economic and financial regulations will simply not see or understand. Yet we can provide a bird’s-

eye view of China’s macroeconomic trends that will highlight some of the obvious problems now facing that economy. (It is our strongly held view that had currency markets been allowed to operate properly in years past many of China’s current problems could have been avoided, or at least mitigated. But currency markets did not operate freely; accordingly, China now has to make some very painful macroeconomic adjustments over the next five years or so, and the global economy will be directly affected.)A good place to start is with the basic GDP identity: GDP = C+I+G+(X-M); in plain English GDP is the sum of C - household consumption, I - investment (in productive capital, buildings, residential structures, etc.), G - government expenditures and investment, and X-M - the net foreign trade balance: exports less imports. It follows that GDP growth comes from C, and/or I, and/or G, and/or X-M, as we have often noted in discussions of US GDP developments. China’s growth has come mainly from I - investment, whereas US growth has come mainly from C - consumption. Charts 1-4 overleaf show this clearly; Chinese investment has been rising as a percent of GDP and Chinese consumption has been declining as a percent of GDP. For the US it is the other way around; investment has been declining and consumption has been rising. Indeed, the contrast is stark!A country with a high level of consumption must perforce have a low level of savings. The reader may remember that GDP also equals C+T+S, where C is consumption (as before), T is taxes, and S is savings. (This is the “income” side of GDP; all income is allocated to consumption, taxes, or savings). This identity implies that if C rises, and T remains constant, then S must decline!


The reader may also recall that domestic investment, I, is generally funded with domestic savings, S. This is only partly true however; a country with a high I may still have a low S, but this means that the “extra” S will have come from abroad, i.e. that domestic investment is funded from both domestic plus foreign savings. The two GDP identities can be reorganized to produce the following: (S-I) + (T-G) = (X-M). If we assume that the government has a balanced budget (i.e. taxes are equal to expenditures: T-G=0) then S-I must equal X-M. In plain English, if a country’s investments exceed a country’s savings (I>S), imports will exceed exports (M>X); there will be a trade deficit/current account deficit. (Of course, if a country’s savings exceed investments then the country will have a trade surplus!)

Charts 5 & 6 highlight savings in China and the US. The reader can see that China’s savings have been rising as a percent of GDP while US savings have been declining; this is exactly what one would expect when China’s consumption is declining and US consumption is rising. China’s massive savings (which includes household, corporate and government saving – with China’s FX reserves included in the latter) has been more than sufficient to fund China’s domestic investment. In fact, some of China’s savings have leaked abroad and helped fund US investment! We know this not only because China is a very large holder of US Treasuries (China has FX reserves of around $3.7 trillion), but also because over the last 15-20 years China has run a trade surplus (X-M>0) and the US has run a trade deficit (X-M<0).

45

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65

70

80 83 86 89 92 95 98 01 04 07 10 13

CHINA FINAL CONSUMPTION EXPENDITURE

Last year: 2014

% of GDP

Source: World Bank, National Bureau of Statistics China

Private Consumption + Government Consumption

30

33

36

39

42

45

48

51

54

80 83 86 89 92 95 98 01 04 07 10 13

CHINA SAVINGS

Last year: 2014

% of GDP

Source: IMF

0

5

10

15

20

25

30

35

40

80 83 86 89 92 95 98 01 04 07 10 13

CHINA EXPORTS OF GOODS AND SERVICES

Last year: 2014

% of GDP

Source: World Bank

30

33

36

39

42

45

48

51

80 83 86 89 92 95 98 01 04 07 10 13

CHINA GROSS CAPITAL FORMATION (INVESTMENT)

Last year: 2014

% of GDP

Source: IMF

6

7

8

9

10

11

12

13

14

80 83 86 89 92 95 98 01 04 07 10 13

US EXPORTS OF GOODS AND SERVICES

Last year: 2014

% of GDP

Source: Bureau of Economic Analysis

16

17

18

19

20

21

22

23

24

25

26

80 83 86 89 92 95 98 01 04 07 10 13

US GROSS CAPITAL FORMATION (INVESTMENT)

Last year: 2014

% of GDP

Source: IMF

78

79

80

81

82

83

84

85

86

80 83 86 89 92 95 98 01 04 07 10 13

US FINAL CONSUMPTION EXPENDITURE

Last year: 2014

% of GDP

Source: IMF, Dundee Economics


14

15

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18

19

20

21

22

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24

80 83 86 89 92 95 98 01 04 07 10 13

US SAVINGS

Last year: 2014

% of GDP

Source: IMF

Chart 1

Chart 4Chart 3

Chart 2


Charts 7 & 8 highlight current account (CA) balances for China and the US; no surprise, China has surpluses and the US has deficits. There is some good news in these two charts however; recently China’s CA surplus and the US CA deficit have both declined. One might hope that in China’s case this is the result of a pickup in Chinese domestic consumption (along with a decline in Chinese savings and a decline in Chinese investment), but the data are not conclusive. Ditto, one might hope the decline in the US CA deficit is the result of less consumption, higher savings, and higher investment, but the data here are not conclusive either. The Great Recession, and its after-effects, has seriously distorted long-run trends. Is the US current account deficit really in a long-run downtrend or will an up-trend reemerge

as forecast by the IMF and others? We know that some of the decline in China’s foreign trade surplus in 2008-2011 (maybe all of it) was the direct result of recession abroad. And we know that China took up the slack in foreign demand with increased domestic investment! Indeed, to repeat ourselves, for many years now the Chinese strategy has been to boost growth 1) by way of the foreign sector (with a bigger trade surplus), and 2) by way of investment (more roads, buildings, apartments, productive capacity, etc.).Which brings us to the nub of China’s current problem: at 45-48% of GDP China’s investment is much too large a share of GDP, while Chinese consumption, at just over 50% of GDP, is much too low a share of GDP. China’s investment, other than in infrastructure, is furthermore directed to producing goods and services for export markets. (Even though investment in domestic

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80 83 86 89 92 95 98 01 04 07 10 13

CHINA FINAL CONSUMPTION EXPENDITURE

Last year: 2014

% of GDP

Source: World Bank, National Bureau of Statistics China


30

33

36

39

42

45

48

51

54

80 83 86 89 92 95 98 01 04 07 10 13

CHINA SAVINGS

Last year: 2014

% of GDP

Source: IMF

78

79

80

81

82

83

84

85

86

80 83 86 89 92 95 98 01 04 07 10 13

US FINAL CONSUMPTION EXPENDITURE

Last year: 2014

% of GDP

Source: IMF, Dundee Economics


14

15

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17

18

19

20

21

22

23

24

80 83 86 89 92 95 98 01 04 07 10 13

US SAVINGS

Last year: 2014

% of GDP

Source: IMF

-4

-2

0

2

4

6

8

10

12

80 83 86 89 92 95 98 01 04 07 10 13

CHINA CURRENT ACCOUNT BALANCE

Last year: 2014

% of GDP

Source: World Bank, IMF

-6

-5

-4

-3

-2

-1

0

1

80 83 86 89 92 95 98 01 04 07 10 13

US CURRENT ACCOUNT BALANCE

Last year: 2014

% of GDP

Source: IMF

-4

-2

0

2

4

6

8

10

12

80 83 86 89 92 95 98 01 04 07 10 13

CHINA CURRENT ACCOUNT BALANCE

Last year: 2014

% of GDP

Source: World Bank, IMF

-6

-5

-4

-3

-2

-1

0

1

80 83 86 89 92 95 98 01 04 07 10 13

US CURRENT ACCOUNT BALANCE

Last year: 2014

% of GDP

Source: IMF

Chart 5

Chart 6

Chart 7

Chart 8


infrastructure requires commodity-related imports, the low renminbi has assured that exports will exceed imports). But China is now running into significant limits to this strategy. 1) The foreign sector is too weak to take up all of China’s excess production (and policies abroad are becoming more protectionist – in some instances mirroring China’s own policies), and 2) debt levels underpinning Chinese

investment have reached uncomfortably high levels.With respect to the latter, China’s mountain of debt was highlighted in a McKinsey report entitled “Debt and (Not Much) Deleveraging”, February 2015. The following chart appeared in the February 6th issue of the Gold Monitor and is taken from the McKinsey report: Which brings us back to our main point: China is

McKinsey Global Institute Executive summary 10

The rapid growth of shadow banking in China is a second area of concern: loans by shadow banking entities total $6.5 trillion and account for 30 percent of China’s outstanding debt (excluding the financial sector) and half of new lending. Most of the loans are for the property sector. The main vehicles in shadow banking include trust accounts, which promise wealthy investors high returns; wealth management products marketed to retail customers; entrusted loans made by companies to one another; and an array of financing companies, microcredit institutions, and informal lenders. Both trust accounts and wealth management products are often marketed by banks, creating a false impression that they are guaranteed. The underwriting standards and risk management employed by managers of these funds are also unclear. Entrusted loans involve lending between companies, creating the potential for a ripple of defaults in the event that one company fails. The level of risk of shadow banking in China could soon be tested by the slowdown in the property sector.

China’s debt reached 282 percent of GDP in 2014, higher than debt levels in some advanced economies

Exhibit E7

SOURCE: MGI Country Debt database; McKinsey Global Institute analysis

Debt-to-GDP ratio%

2342 55

24

6583

72

125

20

38

2000 2Q14

158

282

2007

121

7

8

China By country, 2Q14

Total debt$ trillion

2.1 7.4 28.2

NOTE: Numbers may not sum due to rounding.

55

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70

65

56

61

70

125

105

69

67

54

60

38

81

113

77

54

92

44

31

25

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Canada

269United States

258Germany

247

China

South Korea

282

Australia

286

274

Government

Financial institutions

Non-financial corporate

Households


suffering from “excess” investment and “excess” production. Domestic demand is insufficient to soak up all the available infrastructure/buildings/apartments, and foreign demand is insufficient to soak up all available exports. In turn, this reduces returns on Chinese investment and adds to the problems of servicing the underlying debt! The bottom line is that there must then be a re-rating of the value of Chinese assets – a “deflation” of Chinese assets.We have contrasted China with the US because they are literally two sides of the same coin – not unlike the southern Eurozone and the northern Eurozone. For global economic harmony, and the avoidance of more global dislocations and crises, China must 1) consume more of its own output, 2) reduce its high savings rate, 3) reduce investment, and 4) reduce its current account surplus. The US, on the other hand, must 1) consume less, 2) save more, 3) invest more, and 4) reduce its current account deficit.(The same applies to northern Europe and Southern Europe. Germany has a massive CA surplus for example, which must come down in order that the Eurozone might achieve a better macroeconomic balance, and the pressure for a “Grexit” may diminish.)All this is easier said than done, of course. So, what steps need to be taken to correct the diametrically opposed Chinese and US economic trends? One conclusion in the book by Michael Pettis, “Avoiding the Fall – China’s Economic Restructuring” (published September 2013) is that Chinese households need to receive a much larger share of national wealth. Chinese households suffer from financial repression, relatively low incomes, a non-existent social safety net, and limited availability of consumer goods for domestic consumption (outside of the rich urban sectors) .

The US needs to correct the favorable treatment of consumption over savings in its tax system; it needs to simplify its tax code to favor investment and it needs to tax everyone fairly by eliminating a myriad of tax “expenditures”. A flat tax and a consumption tax would do wonders for the US economy, as would a massive reduction in corporate taxes. We have argued for many years now that the US dollar should have been allowed to decline naturally against the Asian currencies – that currency markets should have been allowed to do “their job”; currency prices should have been set according to demand and supply pressures, which would have helped bring the disparate trends seen in the charts herewith back towards equilibrium. The reader may not remember that the renminbi was 3.2 to the US dollar in 1986, but then was devalued sharply in stages to 8.7 by 1994. These devaluations made China hugely competitive in the late 1990s and the 2000s, and have directly contributed to the imbalance between investment and exports on the one hand, and consumption and savings on the other. Had the renminbi been allowed to “float upwards” over the last 15 years or so on the back of trade surpluses and foreign capital inflows for production/export purposes, much of the “excess” investment in China would have been choked off. Overseas corporations would have been slower to move production facilities to China, exports from China would have been lower, and Chinese households would have had a stronger currency with which to buy, had the government encouraged it, more domestically-produced and foreign-produced goods. In short, Chinese consumption would have been higher, investment would have been lower, savings would have been lower, and the foreign


surplus would have been lower! (Whether this all would have worked as seamlessly as suggested here is questionable, of course, but the massive investment-savings-consumption imbalance would have been significantly reduced.)Today China is reaching the point where its preferred economic policies have to be scrapped. If China does not alter course, if China persists in continuing to look for more growth by way of debt-fueled investment and low-renminbi-induced exports, the two barriers to growth already visible could quickly sink the Chinese economy into outright recession. One barrier is the “debt wall”; it will lead to plunging investment and massive deflation in asset prices. The government will then naturally wish to devalue the renminbi in order to generate some growth on the back of more exports. But then the next barrier is likely to kick in: the rest of the world will put a limit on Chinese imports. China will then be unable to “dump” its structural imbalances on the backs of foreign consumers!In the end, China must and will consume more of its own output. The real issue is whether the shift to more domestic consumption occurs smoothly (by way of correct price signals in the currency markets and improved domestic price signals in

domestic goods and financial markets – i.e. less financial repression of the household sector), or whether it occurs after a serious domestic recession. No one can be sure that the latter will be avoided. As China restructures, and growth rates decline, the investor might consider the following:1. The global economy will remain weaker for

longer – global growth may remain below 4% for some time to come

2. Commodity prices will remain weak and/or weaken further on the back of very weak Chinese demand (and SE Asian demand) and subdued global growth

3. The US dollar will remain strong/overvalued; this will depress US inflation rates and US employment gains

4. Global interest rates will remain “abnormally” low for an extended period of time, and the Fed will be extremely reluctant to follow up the initial interest rate hike in 2015 with successive hikes in 2016 and 2017

5. Because of the large size of the US domestic market, US equities with exposure to domestic demand will continue to be the asset of choice for many investors.


MONTHLY REVIEW ►CANADA – ECONOMIC GROWTH

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-8

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-4

-2

0

2

4

6

8

90 92 94 96 98 00 02 04 06 08 10 12 14

CANADA GROSS DOMESTIC PRODUCT

Annualized growth rate Last quarter: 2015 Q1

Source: Statistics Canada

-1.6

-1.4-1.2

-1.0-0.8

-0.6-0.4

-0.20.0

0.20.4

0.60.8

1.0

2008 2009 2010 2011 2012 2013 2014 2015

CANADA MONTHLY GDP

Last month: April 2015Percent change month-to-month


-10

-8

-6

-4

-2

0

2

4

6

8

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

CANADA GDP FORECAST

Annualized quarterly rate of change

Forecastthrough

2016

Source: Statistics Canada, Dundee Economics

-16

-12

-8

-4

0

4

8

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA INDUSTRIAL PRODUCTION

Last month: April 2015Percent change year-over-year


-10

-8

-6

-4

-2

0

2

4

6

8

90 92 94 96 98 00 02 04 06 08 10 12 14

CANADA GROSS DOMESTIC PRODUCT

Annualized growth rate Last quarter: 2015 Q1


-1.6

-1.4-1.2

-1.0-0.8

-0.6-0.4

-0.20.0

0.20.4

0.60.8

1.0

2008 2009 2010 2011 2012 2013 2014 2015

CANADA MONTHLY GDP

Last month: April 2015Percent change month-to-month


Economic growth may be as little as 0.8% this year on a December-over-December basis (1.2% year-over-year).

The Bank of Canada is predicting that the economy shrank again in

the second quarter, after contracting 0.6% in the first quarter. Technically

this counts as a recession even if much of the downturn is in Alberta.

April saw a small month-to-month contraction.

Canada‘s potential growth rate is currently about 1.8% over the next few years but is declining.

The numbers assume annual productivity gains of at least 1.0%

but these may be hard to come by.

ECONOMIC MONITOR

Dynamic Funds Economics12


-120

-100

-80

-60

-40

-20

0

20

40

60

80

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA JOB CREATION

Last month: June 2015000s, 3-month moving average


5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA UNEMPLOYMENT RATE

Last month: June 2015Percent


-120

-100

-80

-60

-40

-20

0

20

40

60

80

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA JOB CREATION

Last month: June 2015000s, 3-month moving average


5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA UNEMPLOYMENT RATE



Industrial production is very weak thanks to the slumping energy sector.

There was a small net loss of jobs in June.

The unemployment rate has been flat at 6.8% for five months.

-10

-8

-6

-4

-2

0

2

4

6

8

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

CANADA GDP FORECAST


Forecastthrough

2016

Source: Statistics Canada, Dundee Economics

-16

-12

-8

-4

0

4

8

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA INDUSTRIAL PRODUCTION




-30

-25

-20

-15

-10

-5

0

5

10

15

20

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA MANUFACTURING SHIPMENTS

Last month: May 2015Percent change year-over-year


-40

-30

-20

-10

0

10

20

30

40

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA MANUFACTURING NEW ORDERS




1.20

1.25

1.30

1.35

1.40

1.45

1.50

1.55

1.60

1.65

1.70

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA INVENTORY-TO-SHIPMENTS RATIO

Last month: May 2015


-8

-6

-4

-2

0

2

4

6

8

10

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA RETAIL SALES


Includes price changes


-30

-25

-20

-15

-10

-5

0

5

10

15

20

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA MANUFACTURING SHIPMENTS



-40

-30

-20

-10

0

10

20

30

40

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA MANUFACTURING NEW ORDERS



Despite the lower Canadian dollar, manufacturing shipments have

been disappointingly soft. This may cause the Bank of Canada to cut

rates again as early as September.

New orders have not been rising

The inventory ratio is reminiscent of a small recession.

ECONOMIC MONITOR



0

50

100

150

200

250

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

CANADA NEW MOTOR VEHICLE SALES

Last month: May 2015000s, unit sales

Not seasonally adjusted


100

120

140

160

180

200

220

240

260

280

300

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA HOUSING STARTS

Last month: June 2015000s, total, all areas

Source: Canada Mortgage & Housing Corporation

Trend

0

50

100

150

200

250

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

CANADA NEW MOTOR VEHICLE SALES

Last month: May 2015000s, unit sales

Not seasonally adjusted


100

120

140

160

180

200

220

240

260

280

300

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA HOUSING STARTS

Last month: June 2015000s, total, all areas

Source: Canada Mortgage & Housing Corporation

Trend

Housing starts have seen unexpected strength lately and will be helped by the recent interest rate cut.

Without seasonal adjustment the vehicle sales numbers are very volatile. But the trend has been

strong with May setting a multi-year peak (thanks to cheap financing).

Retail sales have been reasonably firm, with strength in vehicle sales.

The numbers look depressed because of lower gasoline prices.

1.20

1.25

1.30

1.35

1.40

1.45

1.50

1.55

1.60

1.65

1.70

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA INVENTORY-TO-SHIPMENTS RATIO



-8

-6

-4

-2

0

2

4

6

8

10

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA RETAIL SALES


Includes price changes



CANADA INDUSTRIAL PRODUCT PRICE INFLATION

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15



-2

-1

0

1

2

3

4

5

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Total CPICore CPI

CANADA CONSUMER PRICE INFLATION

Target band



MONTHLY REVIEW ►CANADA – INFLATION

CANADA AVERAGE WEEKLY EARNINGS

-4

-2

0

2

4

6

8

10

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15


Total

Public Administration


CANADA NEW HOUSE PRICES

40

50

60

70

80

90

100

110

120

81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15-12

-8

-4

0

4

8

12

16

20


Index, 2007=100


Percent change year-over-year

CANADA INDUSTRIAL PRODUCT PRICE INFLATION

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15



-2

-1

0

1

2

3

4

5

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Total CPICore CPI

CANADA CONSUMER PRICE INFLATION

Target band



Rising food and other import prices (because of a declining Canadian dollar) are helping to offset the impact of lower gasoline prices.

Average weekly earnings growth appears to be starting to react

to low headline inflation and will likely be dragged lower.

Industrial product price inflation is still negative thanks to weak commodity prices.

Core inflation remains above the 2% target but the Bank of

Canada considers this to be the transitory result of the Canadian

dollar’s decline. The headline rate has been under 1% because

of low gasoline prices which may fall again in the autumn.

ECONOMIC MONITOR


0

2

4

6

8

10

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Difference (inflation expectation)Long term bondReal Return Bonds

CANADA INFLATION EXPECTATIONS

Last month: June 2015

Source: Bank of Canada, Dundee Economics

-2 -1 0 1 2 3

St. John's

HalifaxSaint John, Fredericton and

MonctonMontréal

Ottawa–Gatineau

Toronto and Oshawa

Kitchener–Cambridge–Waterloo

Winnipeg

Regina

Saskatoon

Calgary

Edmonton

Vancouver

Victoria


May 2015




0

2

4

6

8

10

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Difference (inflation expectation)Long term bondReal Return Bonds

CANADA INFLATION EXPECTATIONS


Source: Bank of Canada, Dundee Economics

-2 -1 0 1 2 3

St. John's

HalifaxSaint John, Fredericton and

MonctonMontréal

Ottawa–Gatineau

Toronto and Oshawa

Kitchener–Cambridge–Waterloo

Winnipeg

Regina

Saskatoon

Calgary

Edmonton

Vancouver

Victoria


May 2015




Toronto is hot, with Vancouver heating up.

New house prices are rising but barely more than 1%.

CANADA AVERAGE WEEKLY EARNINGS

-4

-2

0

2

4

6

8

10

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15


Total

Public Administration



40

50

60

70

80

90

100

110

120

81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15-12

-8

-4

0

4

8

12

16

20


Index, 2007=100




Inflation expectations remain depressed.


-1

0

1

2

3

4

5

6

7

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Average since 1982: 3.75%



CANADA HOURLY COMPENSATION

Last quarter: 2015 Q1

-2

-1

0

1

2

3

4

5

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA LABOUR PRODUCTIVITY






-4

-2

0

2

4

6

8

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15




CANADA UNIT LABOUR COSTS


0

2

4

6

8

10

12

14

16

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15


CANADA CONSUMER CREDIT GROWTH

Source: Bank of Canada

-1

0

1

2

3

4

5

6

7

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15




CANADA HOURLY COMPENSATION


-2

-1

0

1

2

3

4

5

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA LABOUR PRODUCTIVITY





Unit labour costs rose 1.41% over the past year, slower than average.

(The data are measured in Canadian dollars; while the weaker dollar will

help restore competitiveness to some degree, currencies like the Mexican peso have also fallen considerably).

Productivity was well above average at 2.50% over the past year,

despite falling in the first quarter.

Hourly compensation rose 3.94% over the past year,

according to this measure.

ECONOMIC MONITOR


-4

-2

0

2

4

6

8

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15




CANADA UNIT LABOUR COSTS


0

2

4

6

8

10

12

14

16

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15


CANADA CONSUMER CREDIT GROWTH


500

600

700

800

900

1000

1100

1200

1300

1400

07 08 09 10 11 12 13 14 15

Last month: April 2015

$ volume, billions

CANADA RESIDENTIAL MORTGAGE CREDIT


-20

-15

-10

-5

0

5

10

15

20

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15


CANADA SHORT-TERM BUSINESS CREDIT GROWTH


200

250

300

350

400

450

500

550

07 08 09 10 11 12 13 14 15


$ volume, billions

CANADA CONSUMER CREDIT


0

2

4

6

8

10

12

14

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15


CANADA RESIDENTIAL MORTGAGE CREDIT GROWTH


200

250

300

350

400

450

500

07 08 09 10 11 12 13 14 15


$ volume, billions

CANADA SHORT-TERM BUSINESS CREDIT


0

50

100

150

200

250

300

350

400

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 142

4

6

8

10

12

14

16

18CANADA CORPORATE OPERATING SURPLUS

Total Profits After Taxes (bn$) Percent of GDP



200

250

300

350

400

450

500

550

07 08 09 10 11 12 13 14 15


$ volume, billions

CANADA CONSUMER CREDIT


0

2

4

6

8

10

12

14

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15


CANADA RESIDENTIAL MORTGAGE CREDIT GROWTH


MONTHLY REVIEW ►CANADA – DEBT AND CREDITConsumer credit growth and mortgage credit growth have been modest with a slight tendency to rise, while business credit growth has been strong but slowing.

500

600

700

800

900

1000

1100

1200

1300

1400

07 08 09 10 11 12 13 14 15


$ volume, billions

CANADA RESIDENTIAL MORTGAGE CREDIT


-20

-15

-10

-5

0

5

10

15

20

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15


CANADA SHORT-TERM BUSINESS CREDIT GROWTH



200

250

300

350

400

450

500

07 08 09 10 11 12 13 14 15


$ volume, billions

CANADA SHORT-TERM BUSINESS CREDIT


0

50

100

150

200

250

300

350

400

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 142

4

6

8

10

12

14

16

18CANADA CORPORATE OPERATING SURPLUS

Total Profits After Taxes (bn$) Percent of GDP



0

2000

4000

6000

8000

10000

12000

14000

16000

18000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15-60

-45

-30

-15

0

15

30

45

60

75S&P/TSX COMPOSITE

S&P/TSX Composite (month end)



Source: Thomson Reuters Datastream

0

50

100

150

200

250

300

350

400

450

500

81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15-15

-10

-5

0

5

10

15

20

25

30

35CANADA AVERAGE HOUSE PRICE (RESALES)

Source: Canadian Real Estate Association

$000



0

2000

4000

6000

8000

10000

12000

14000

16000

18000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15-60

-45

-30

-15

0

15

30

45

60

75S&P/TSX COMPOSITE

S&P/TSX Composite (month end)




0

50

100

150

200

250

300

350

400

450

500

81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15-15

-10

-5

0

5

10

15

20

25

30

35CANADA AVERAGE HOUSE PRICE (RESALES)


$000



Profits are declining thanks to a sharp fall in the energy

and commodity sectors.

Home prices are rising faster, primarily in Vancouver and Toronto

which enjoy strong immigration.

The TSX has lost a bit of ground

MONTHLY REVIEW ►CANADA – WEALTH CREATION

ECONOMIC MONITOR


-40

-30

-20

-10

0

10

20

30

40

50

60

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

VancouverCalgary


HOUSE PRICES (RESALES) – VANCOUVER AND CALGARY



70

90

110

130

150

170

190

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US AND CANADA DEBT-TO-INCOME RATIOS

Last quarter: 2015 Q1Percent of personal disposable income

Canada household and unincorporated businesses

US household and unincorporated businesses

New Series Canada household and non-profit serving households

Source: Federal Reserve, Statistics Canada

-30

-20

-10

0

10

20

30

40

50

60

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

HOUSE PRICES (RESALES) – TORONTO



-30

-20

-10

0

10

20

30

40

50

60

70

80

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

WinnipegRegina


HOUSE PRICES (RESALES) – WINNIPEG AND REGINA


-30

-20

-10

0

10

20

30

40

50

60

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

HOUSE PRICES (RESALES) – TORONTO



-30

-20

-10

0

10

20

30

40

50

60

70

80

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

WinnipegRegina


HOUSE PRICES (RESALES) – WINNIPEG AND REGINA


Toronto is enjoying strong price gains.

Vancouver house prices are up but Calgary prices are falling.

Winnipeg and Regina are seeing declining prices.



-40

-30

-20

-10

0

10

20

30

40

50

60

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

VancouverCalgary


HOUSE PRICES (RESALES) – VANCOUVER AND CALGARY



70

90

110

130

150

170

190

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US AND CANADA DEBT-TO-INCOME RATIOS

Last quarter: 2015 Q1Percent of personal disposable income

Canada household and unincorporated businesses

US household and unincorporated businesses

New Series Canada household and non-profit serving households

Source: Federal Reserve, Statistics Canada


0

1

2

3

4

5

6

7

8

9

10

11

90 92 94 96 98 00 02 04 06 08 10 12 14

CANADA INTEREST PAYMENTS

Percentage of disposable income Last quarter: 2015 Q1

Mortgage interest

Consumer interest

Total interest


0

2

4

6

8

10

12

14

16

18

20

22

81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

CANADA SAVINGS RATE



The savings rate has fallen back thanks to increased car sales.

Interest rates near record lows mean that the interest portion of debt

repayments is very low and falling.

The Canadian debt to income ratio has flattened out whereas in the

US it is declining marginally.

0

1

2

3

4

5

6

7

8

9

10

11

90 92 94 96 98 00 02 04 06 08 10 12 14

CANADA INTEREST PAYMENTS


Mortgage interest

Consumer interest

Total interest


0

2

4

6

8

10

12

14

16

18

20

22

81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

CANADA SAVINGS RATE



ECONOMIC MONITOR


55

60

65

70

75

80

85

90

95

100

105

110

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Daily, last date: July 22, 2015

CANADIAN DOLLAR

US cents

Source: Wall Street Journal

0102030405060708090

100110120130140150

00 01 02 03 04 04 05 06 07 08 09 10 11 12 13 14 15

OIL PRICENYMEX

Weekly, Friday dataLast date: July17, 2015US$/bbl


The Canadian dollar is suffering from looser Canadian monetary policy and

the prospect of tighter US policy.

Canada is losing its short-term rate advantage.

Oil prices momentarily stabilized near $60 but then fell back.

Increased Iranian production prospects as well as rising

OPEC production are threats.

MONTHLY REVIEW ►CANADA – FINANCIAL MARKETS

55

60

65

70

75

80

85

90

95

100

105

110

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15


CANADIAN DOLLAR

US cents


0102030405060708090

100110120130140150

00 01 02 03 04 04 05 06 07 08 09 10 11 12 13 14 15

OIL PRICENYMEX

Weekly, Friday dataLast date: July17, 2015US$/bbl


-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

2-year differential90-day differential

CANADA-US INTEREST RATE DIFFERENTIALS


Source: Bank of Canada, Federal Reserve

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

06 07 08 09 10 11 12 13 14 15

CANADA-US LONG TERM YIELD DIFFERENTIALS

WeeklyLast date: July 17, 2015

10-Year

30-Year



0

1

2

3

4

5

6

7

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA INTEREST RATES

T-bills

10-year bond



-6

-4

-2

0

2

4

6

8

07 08 09 10 11 12 13 14 15


$ volume, billions

CANADA TRADE BALANCE


Longer-term differentials increasingly favour the US.

Canada’s trade balance is abysmal as commodity prices

have fallen sharply.

The probability of another Canadian rate cut (perhaps as soon as

September) is well above 50%.

MONTHLY REVIEW ►CANADA – FINANCIAL MARKETS

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

2-year differential90-day differential

CANADA-US INTEREST RATE DIFFERENTIALS



-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

06 07 08 09 10 11 12 13 14 15

CANADA-US LONG TERM YIELD DIFFERENTIALS

WeeklyLast date: July 17, 2015

10-Year

30-Year


0

1

2

3

4

5

6

7

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

CANADA INTEREST RATES

T-bills

10-year bond



-6

-4

-2

0

2

4

6

8

07 08 09 10 11 12 13 14 15


$ volume, billions

CANADA TRADE BALANCE


ECONOMIC MONITOR


Economic Monitor

US GROSS DOMESTIC PRODUCT

-10

-8

-6

-4

-2

0

2

4

6

8

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Annualized growth rate Last quarter: 2015-Q1

Source: US Bureau of Economic Analysis

-10

-8

-6

-4

-2

0

2

4

6

8

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

US GDP FORECAST


Source: US Bureau of Economic Analysis, Dundee Economics

Forecastthrough

2016

MONTHLY REVIEW ►UNITED STATES – ECONOMIC GROWTH

US GROSS DOMESTIC PRODUCT

-10

-8

-6

-4

-2

0

2

4

6

8

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Annualized growth rate Last quarter: 2015-Q1


-10

-8

-6

-4

-2

0

2

4

6

8

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

US GDP FORECAST


Source: US Bureau of Economic Analysis, Dundee Economics

Forecastthrough

2016

The economy contracted 0.2% during the first quarter.

Thus far the economy has not gained enough traction

for the Fed to raise rates.

The leading indicators have shown moderate strength of late but may

be overstating future growth.

-4

-3

-2

-1

0

1

2

3

2007 2008 2009 2010 2011 2012 2013 2014 2015

US LEADING INDICATORS

Last month: June 2015Percent change month-to-month

Source: The Conference Board

0

20

40

60

80

100

120

140

160

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US CONSUMER CONFIDENCE INDEX

Last month: June 20151985 = 100


Growth for 2015 is expected to be around 2.0% on a December-over-December basis (2.3% on a year-over-year basis).


The unemployment rate continues to sink.

Job creation has slowed somewhat but is still fairly strong.

Consumer confidence still appears to be trending higher.


-4

-3

-2

-1

0

1

2

3

2007 2008 2009 2010 2011 2012 2013 2014 2015

US LEADING INDICATORS

Last month: June 2015Percent change month-to-month


0

20

40

60

80

100

120

140

160

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US CONSUMER CONFIDENCE INDEX

Last month: June 20151985 = 100


-800-700-600-500-400-300-200-100

0100200300400500

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Last month: June 2015000s, monthly change3-month moving average

Source: US Bureau of Labor Statistics

US JOB CREATION

3

4

5

6

7

8

9

10

11

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US UNEMPLOYMENT RATE



-800-700-600-500-400-300-200-100

0100200300400500

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Last month: June 2015000s, monthly change3-month moving average


US JOB CREATION

3

4

5

6

7

8

9

10

11

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US UNEMPLOYMENT RATE



ECONOMIC MONITOR


30

35

40

45

50

55

60

65

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Last month: June 2015Index

Below 50 indicates contraction

US ISM MANUFACTURING INDEX

Source: Institute for Supply Management

30

35

40

45

50

55

60

65

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15



US ISM SERVICE SECTOR INDEX



Manufacturing remains depressed by the energy sector slump as well as by

the rising US dollar but is recovering from severe winter weather.

Capacity utilization remains below average. This won’t

generate much inflation.

The service sector has lost steam lately.

66

68

70

72

74

76

78

80

82

84

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US INDUSTRIAL CAPACITY UTILIZATION


Average 1968 to date 80.4

Percent

Source: Federal Reserve

-15

-10

-5

0

5

10

15

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US RETAIL SALES

Last month: June 2015Percent change year-over-year

Nominal

Source: US Census Bureau

30

35

40

45

50

55

60

65

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15



US ISM MANUFACTURING INDEX


30

35

40

45

50

55

60

65

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15



US ISM SERVICE SECTOR INDEX



66

68

70

72

74

76

78

80

82

84

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US INDUSTRIAL CAPACITY UTILIZATION


Average 1968 to date 80.4

Percent


-15

-10

-5

0

5

10

15

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US RETAIL SALES


Nominal


Retail sales have been somewhat disappointing. Car sales have been

boosted by cheap financing but consumers haven’t been spending

much of their gasoline price savings.

Housing starts are still in a moderate uptrend with multi-family apartment

building leading the way. This should eventually suppress rent increases.

New and existing home sales show some improvement.


0.3

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US HOUSING STARTS

Last month: June 2015Millions of dwelling units


0

200

400

600

800

1000

1200

1400

1600

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 153000

3600

4200

4800

5400

6000

6600

7200

7800

New home salesExisting home sales

US NEW AND EXISTING SINGLE FAMILY HOME SALES

Last month: New May 2015Existing June 2015

000s 000s

Source: US Census Bureau, National Association of Realtors

0.3

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US HOUSING STARTS

Last month: June 2015Millions of dwelling units


0

200

400

600

800

1000

1200

1400

1600

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 153000

3600

4200

4800

5400

6000

6600

7200

7800

New home salesExisting home sales

US NEW AND EXISTING SINGLE FAMILY HOME SALES

Last month: New May 2015Existing June 2015

000s 000s

Source: US Census Bureau, National Association of Realtors

ECONOMIC MONITOR


.


-3

-2

-1

0

1

2

3

4

5

6

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

TotalCore

US CONSUMER PRICE INFLATION


Seasonally adjusted

-8

-6

-4

-2

0

2

4

6

8

10

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Finished Goods (disc.)Finished Goods core (disc.)Final Demand (new)Final Demand Core (new)

US PRODUCER PRICE INFLATION



Lower commodity prices are holding down headline producer prices.

Headline inflation remains at zero, and there has been little

change in the core rate, presently 1.77% (1.73% in May).

MONTHLY REVIEW ►UNITED STATES – INFLATION


-3

-2

-1

0

1

2

3

4

5

6

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

TotalCore

US CONSUMER PRICE INFLATION


Seasonally adjusted

-8

-6

-4

-2

0

2

4

6

8

10

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Finished Goods (disc.)Finished Goods core (disc.)Final Demand (new)Final Demand Core (new)

US PRODUCER PRICE INFLATION



0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

US EMPLOYMENT COST

Last quarter: 2015-Q1Percent change year-over-year

Average 3.47

Includes benefits


-24-20-16

-12-8-40

48

1216

202428

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

IMPORT PRICES – ALL IMPORTS

US CPI

All Imports

“All commodities” (BLS selected categories of goods)



Headline inflation is expected to remain close to zero through October, then begin to rise but perhaps not quite as high as 2.0%.

Employment costs were rising but in recent months the low rate of

inflation appears to be reducing wage gains on a month-over-month basis. This may become a concern for the

Fed if lower wage increases start to suppress consumer spending.


Overall import prices recently rose along with oil prices but import

prices from non-oil exporters are still pulling inflation down. And oil

prices are now falling again.


-8

-6

-4

-2

0

2

4

6

8

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

IMPORT PRICES FROM JAPAN

US CPI

Japan



-4

-2

0

2

4

6

8

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

IMPORT PRICES FROM CHINA

US CPI

China



-8

-6

-4

-2

0

2

4

6

8

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

IMPORT PRICES FROM JAPAN

US CPI

Japan



-4

-2

0

2

4

6

8

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

IMPORT PRICES FROM CHINA

US CPI

China



0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

US EMPLOYMENT COST

Last quarter: 2015-Q1Percent change year-over-year

Average 3.47

Includes benefits


-24-20-16

-12-8-40

48

1216

202428

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

IMPORT PRICES – ALL IMPORTS

US CPI

All Imports

“All commodities” (BLS selected categories of goods)



-10

-8

-6

-4

-2

0

2

4

6

8

10

12

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

IMPORT PRICES FROM EUROPE

US CPI

Europe



-1

0

1

2

3

4

5

6

7

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

DifferenceLong-term Bond30-yr Inflation-Protected Bonds

US INFLATION EXPECTATIONS


The “difference” is a measureof inflation expectations!

Percent

Source: Federal Reserve, Dundee Economics

ECONOMIC MONITOR


-10

-8

-6

-4

-2

0

2

4

6

8

10

12

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

IMPORT PRICES FROM EUROPE

US CPI

Europe



-1

0

1

2

3

4

5

6

7

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

DifferenceLong-term Bond30-yr Inflation-Protected Bonds

US INFLATION EXPECTATIONS


The “difference” is a measure of inflation expectations!

Percent

Source: Federal Reserve, Dundee Economics


-2

-1

0

1

2

3

4

5

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

TotalCore



Fed’s Target

US PERSONAL CONSUMPTION EXPENDITURE DEFLATOR

Source: US Bureau Economic Analysis

1.4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

2.3

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US M2 VELOCITY Velocity (Nominal GDP/ M2)

Last date: 2015 Q1

Velocity measures the turnover rate of the money supply as it is used to purchase goods and services

Source: Federal Reserve, Bureau of Economic Analysis, Dundee Economics

Inflation expectations appear to be up but some of this reflects bond

market distortions caused by Greece.

Velocity (the rate of money circulation) fell again in the

first quarter, dampening inflation prospects.

The PCE measure of inflation (preferred by the Fed) is very weak

with a tendency to slip through May.

-2

-1

0

1

2

3

4

5

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

TotalCore



Fed’s Target

US PERSONAL CONSUMPTION EXPENDITURE DEFLATOR

Source: US Bureau Economic Analysis

1.4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

2.3

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US M2 VELOCITY Velocity (Nominal GDP/ M2)

Last date: 2015 Q1

Velocity measures the turnover rate of the money supply as it is used to purchase goods and services

Source: Federal Reserve, Bureau of Economic Analysis, Dundee Economics


-30

-20

-10

0

10

20

30

40

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

US COMMERCIAL AND INDUSTRIAL LOANS


500

600

700

800

900

1000

1100

1200

1300

2007 2008 2009 2010 2011 2012 2013 2014 2015-40

-30

-20

-10

0

10

20

30

40US COMMERCIAL AND INDUSTRIAL LOANS


Percent change year-over-yearTotal credit outstandingbillion dollars



-30

-20

-10

0

10

20

30

40

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

US COMMERCIAL AND INDUSTRIAL LOANS


500

600

700

800

900

1000

1100

1200

1300

2007 2008 2009 2010 2011 2012 2013 2014 2015-40

-30

-20

-10

0

10

20

30

40US COMMERCIAL AND INDUSTRIAL LOANS





-10

-5

0

5

10

15

20

25

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

US CONSUMER INSTALLMENT CREDIT


2000

2175

2350

2525

2700

2875

3050

3225

3400

3575

2007 2008 2009 2010 2011 2012 2013 2014 2015-8

-6

-4

-2

0

2

4

6

8

10US CONSUMER INSTALLMENT CREDIT



series revised



MONTHLY REVIEW ►UNITED STATES – CREDIT GROWTHCredit growth is still fairly limp compared with past cycles, even though such consumer credit sub-categories as auto loans and student loans are growing fairly quickly. Mortgage growth is especially slow though on the cusp of rising. C & I loan growth has weakened (energy sector).

US RESIDENTIAL MORTGAGE CREDIT


-10

-5

0

5

10

15

20

70 75 80 85 90 95 00 05 10 15

Percent change year-over-year Last quarter: 2015 Q1

8.3

8.6

8.9

9.2

9.5

9.8

10.1

10.4

10.7

11.0

2007 2008 2009 2010 2011 2012 2013 2014 2015-6

-4

-2

0

2

4

6

8

10

12US RESIDENTIAL MORTGAGE CREDIT


Percent change year-over-yearTotal credit outstandingtrillion dollars


US RESIDENTIAL MORTGAGE CREDIT


-10

-5

0

5

10

15

20

70 75 80 85 90 95 00 05 10 15

Percent change year-over-year Last quarter: 2015 Q1

8.3

8.6

8.9

9.2

9.5

9.8

10.1

10.4

10.7

11.0

2007 2008 2009 2010 2011 2012 2013 2014 2015-6

-4

-2

0

2

4

6

8

10

12US RESIDENTIAL MORTGAGE CREDIT


Percent change year-over-yearTotal credit outstandingtrillion dollars


-10

-5

0

5

10

15

20

25

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

US CONSUMER INSTALLMENT CREDIT


2000

2175

2350

2525

2700

2875

3050

3225

3400

3575

2007 2008 2009 2010 2011 2012 2013 2014 2015-8

-6

-4

-2

0

2

4

6

8

10US CONSUMER INSTALLMENT CREDIT



series revised



ECONOMIC MONITOR



50

70

90

110

130

150

170

190

210

230

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15-20

-15

-10

-5

0

5

10

15

20

25CASE-SHILLER HOME PRICE INDEX

Case-Shiller Index, s.a.



Jan 2000 = 100

600

800

1000

1200

1400

1600

1800

2000

2200

03 04 05 06 07 08 09 10 11 12 13 14 15

S&P 500

Weekly, Friday dataLast date: July 17, 2015



50

70

90

110

130

150

170

190

210

230

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15-20

-15

-10

-5

0

5

10

15

20

25CASE-SHILLER HOME PRICE INDEX

Case-Shiller Index, s.a.



Jan 2000 = 100

600

800

1000

1200

1400

1600

1800

2000

2200

03 04 05 06 07 08 09 10 11 12 13 14 15

S&P 500

Weekly, Friday dataLast date: July 17, 2015


MONTHLY REVIEW ►UNITED STATES – WEALTH CREATION

Home price increases showed an unexpected month-to-

month deceleration in April.

The US savings rate is (arguably) trending higher.

The strong dollar has inhibited corporate profit growth and stock prices, but not much.

0

2

4

6

8

10

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US PERSONAL SAVINGS RATE

Percent of personal disposable income Last month: May 2015


0

1

2

3

4

5

6

7

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US INTEREST RATES


Bond Yields – 10-year

T-Bills

Percent



AAA CORPORATE BOND YIELDS

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

2-Jul-07 25-Aug-08 19-Oct-09 13-Dec-10 6-Feb-12 1-Apr-13 26-May-14 20-Jul-150.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

DailyLast day: July 22, 2015Percent

Moody’s AAA – US 10-year rate spreadMoody’s AAA Yield

2

4

6

8

10

12

14

16

18

20

22

24

2-Jul-07 25-Aug-08 19-Oct-09 10-Dec-10 6-Feb-12 1-Apr-13 26-May-14 20-Jul-150

2

4

6

8

10

12

14

16

18

20

22HIGH YIELD BOND YIELDS


Merrill Lynch High Yield Corporate Bonds less

US 10-year rate spread

Merrill Lynch High Yield Corporate Bond Yield

Source: Federal Reserve, Wall Street Journal

Source: Federal Reserve, Thomson Reuters Data Stream

MONTHLY REVIEW ►UNITED STATES – FINANCIAL MARKETS

Corporate bond yields are following the 10-year yield higher, partly the result of Fed intentions but

also because the risks associated with Greece have abated.

The Fed would like to raise interest rates somewhat but weak growth, low inflation and a rising US dollar

have resulted in a delay so far.

Higher yielding bonds have also seen rising yields lately.

AAA CORPORATE BOND YIELDS

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

2-Jul-07 25-Aug-08 19-Oct-09 13-Dec-10 6-Feb-12 1-Apr-13 26-May-14 20-Jul-150.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0


Moody’s AAA – US 10-year rate spreadMoody’s AAA Yield

2

4

6

8

10

12

14

16

18

20

22

24

2-Jul-07 25-Aug-08 19-Oct-09 10-Dec-10 6-Feb-12 1-Apr-13 26-May-14 20-Jul-150

2

4

6

8

10

12

14

16

18

20

22HIGH YIELD BOND YIELDS


Merrill Lynch High Yield Corporate Bonds less

US 10-year rate spread

Merrill Lynch High Yield Corporate Bond Yield

Source: Federal Reserve, Wall Street Journal

Source: Federal Reserve, Thomson Reuters Data Stream

0

2

4

6

8

10

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US PERSONAL SAVINGS RATE

Percent of personal disposable income Last month: May 2015


0

1

2

3

4

5

6

7

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US INTEREST RATES


Bond Yields – 10-year

T-Bills

Percent


ECONOMIC MONITOR


5.5

6.0

6.5

7.0

7.5

8.0

8.500 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15


CHINESE RENMINBI (YUAN)Units/US$Axis inverted

135

145

155

165

175

185

195

205

215

225

02 03 04 05 06 07 08 09 10 11 12 13 14 150.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

PoundEuro

Pound - UScents/Pound


POUND STERLING AND EUROEuro - US$/euro



5.5

6.0

6.5

7.0

7.5

8.0

8.500 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15


CHINESE RENMINBI (YUAN)Units/US$Axis inverted

135

145

155

165

175

185

195

205

215

225

02 03 04 05 06 07 08 09 10 11 12 13 14 150.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

PoundEuro

Pound - UScents/Pound


POUND STERLING AND EUROEuro - US$/euro



MONTHLY REVIEW ►FOREIGN EXCHANGE RATES

The yen will likely move past 125 (weaken) later this year.

The euro has averaged around 1.10 in recent weeks but we

expect it to weaken before long.

The Chinese currency has weakened slightly and is closer to 6.21 than 6.20 where it had

remained for several years.

75

80

85

90

95

100

105

110

115

120

125

130

13502 03 04 05 06 07 08 09 10 11 12 13 14 15

Units per US dollar


JAPANESE YEN


0

1

2

3

4

5

6

7

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

UK SHORT-TERM RATE




MONTHLY REVIEW ►INTERNATIONAL SHORT-TERM RATES

The Fed continues to talk as if a rate hike is not far off but inflation

is very low, wage gains are decelerating and the economic

rebound from a severe winter is overstating the underlying

growth rate. The Fed may delay any increase into 2016.

The US and other industrialized economies resemble that of Japan

from the early 1990s on, so if/when rates are raised the rise might

have to be reversed before long.

75

80

85

90

95

100

105

110

115

120

125

130

13502 03 04 05 06 07 08 09 10 11 12 13 14 15

Units per US dollar


JAPANESE YEN


0

1

2

3

4

5

6

7

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

UK SHORT-TERM RATE



0

1

2

3

4

5

6

7

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US SHORT-TERM RATE



0

1

2

3

4

5

6

7

2-Jan-98 24-Sep-99 15-Jun-01 7-M ar-03 26-Nov-04 18-Aug-06 9-M ay-08 29-Jan-10 21-Oct-11 12-Jul-13 3-Apr-15

Friday dataLast date: July 17, 2015

UK 10-YEAR BOND YIELD


-1

0

1

2

3

4

5

6

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

GERMANY SHORT-TERM RATE



0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

JAPAN SHORT-TERM RATELast month: June 2015Percent


-1

0

1

2

3

4

5

6

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

GERMANY SHORT-TERM RATE



0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

JAPAN SHORT-TERM RATELast month: June 2015Percent


ECONOMIC MONITOR


0

1

2

3

4

5

6

7

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

US SHORT-TERM RATE



0

1

2

3

4

5

6

7



UK 10-YEAR BOND YIELD


0

1

2

3

4

5

6



GERMANY 10-YEAR BOND YIELD


0.0

0.5

1.0

1.5

2.0

2.5



JAPAN 10-YEAR BOND YIELD


MONTHLY REVIEW ►INTERNATIONAL 10-YEAR YIELDS

The (temporary) resolution of Greek financial problems has

allowed global bond yields to rise slightly but a renewed fall in oil

prices has kept that rise in check.

A potential Fed rate hike has been partially built into current yields.

0

1

2

3

4

5

6



GERMANY 10-YEAR BOND YIELD


0.0

0.5

1.0

1.5

2.0

2.5



JAPAN 10-YEAR BOND YIELD


0

1

2

3

4

5

6

7

8


Thursday dataLast date: July 17, 2015

US 10-YEAR BOND YIELD



COMMODITY PRICES1. Bank of Canada Commodity Price Indices (Weekly data to July 17, 2015)

300

400

500

600

700

800

900

1000

06 07 08 09 10 11 12 13 14 15

TOTAL COMMODITY

Bank of Canada Commodity Price Index250

275

300

325

350

375

400

425

450

06 07 08 09 10 11 12 13 14 15

TOTAL LESS ENERGY

Bank of Canada Commodity Price Index 500

750

1000

1250

1500

1750

2000

2250

2500

2750

3000

06 07 08 09 10 11 12 13 14 15

ENERGY

Bank of Canada Commodity Price Index

150

170

190

210

230

250

270

290

310

330

350

06 07 08 09 10 11 12 13 14 15

AGRICULTURE

Bank of Canada Commodity Price Index400

450

500

550

600

650

700

750

800

850

900

06 07 08 09 10 11 12 13 14 15

METALS AND MINERALS

Bank of Canada Commodity Price Index

250300350400450500550600650700750800850900

06 07 08 09 10 11 12 13 14 15

S&P GSCI COMMODITY

Energy weight: 75%

175

200

225

250

275

300

325

350

375

400

425

450

475

06 07 08 09 10 11 12 13 14 15

REUTERS/JEFFERIES CRB

Energy weight: 33%

75

100

125

150

175

200

225

250

06 07 08 09 10 11 12 13 14 15

ECONOMIST COMMODITY PRICE

Energy weight: 0%

2. Other Indices (Weekly data to July 17, 2015)

Weakening Chinese growth and growing commodity supplies continue to be problematic for most commodities.

Sources: Bank of Canada, Thomson Reuters Datastream, The Economist

ECONOMIC MONITOR


COMMODITY PRICES3. Metals (Weekly data to July 17, 2015)

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

55000

06 07 08 09 10 11 12 13 14 15

NICKELUS$/tonne

100125150175200225250275300325350375400425450475500

06 07 08 09 10 11 12 13 14 15

COPPERUS cents/lb

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

06 07 08 09 10 11 12 13 14 15

ZINCUS$/tonne

1200

1400

1600

1800

2000

2200

2400

2600

2800

3000

3200

3400

06 07 08 09 10 11 12 13 14 15

ALUMINUMUS$/tonne

500750

1000125015001750200022502500275030003250350037504000

06 07 08 09 10 11 12 13 14 15

LEADUS$/tonne

300

500

700

900

1100

1300

1500

1700

1900

06 07 08 09 10 11 12 13 14 15

GOLDUS$/oz

600

800

1000

1200

1400

1600

1800

2000

2200

2400

06 07 08 09 10 11 12 13 14 15

PLATINUMUS$/oz

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

06 07 08 09 10 11 12 13 14 15

SILVERUS cents/oz Metal prices are forecast

to “bottom out” in 2015. But any upturn in 2016 is likely to be subdued!

Sources: LME, LBMA, Wall Street Journal


COMMODITY PRICES4. Energy (Weekly data to July 17, 2015)

2030405060708090

100110120130140150

07 08 09 10 11 12 13 14 15

NY OilBrent Oil

SPOT OIL PRICESUS$/bbl

0

2

4

6

8

10

12

14

06 07 08 09 10 11 12 13 14 15

Henry Hub

NATURAL GASUS$/million BTU

7000

8000

9000

10000

11000

12000

13000

14000

15000

16000

06 07 08 09 10 11 12 13 14 15

TSX composite13 wk ma52 wk ma

TSX COMPOSITE INDEX

600700800900

1000110012001300140015001600170018001900200021002200

06 07 08 09 10 11 12 13 14 15

S&P 50013 wk ma52 wk ma

S&P 500 INDEX

6000700080009000

10000110001200013000140001500016000170001800019000

06 07 08 09 10 11 12 13 14 15

DJI13 wk ma52 wk ma

DOW JONES INDUSTRIALS

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

06 07 08 09 10 11 12 13 14 15

NASDAQ13 wk ma52 wk ma

NASDAQ INDEX

EQUITY MARKETS 5. North America (Weekly data to July 17, 2015)

The outlook for US equity markets remains broadly constructive; policy interest rates will remain low and a US recession is not on the horizon. We expect increased volatility to remain however as the markets continue to debate if/when the Fed will raise interest rates and a rising US dollar interferes with earnings growth.

Low oil and gas prices will persist through year-end.


ECONOMIC MONITOR


0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

22000

06 07 08 09 10 11 12 13 14 15

JAPAN

Nikkei0

100020003000400050006000700080009000

10000110001200013000

06 07 08 09 10 11 12 13 14 15

GERMANY

DAX0

2000400060008000

1000012000140001600018000200002200024000260002800030000

06 07 08 09 10 11 12 13 14 15

INDIA

Bombay SENSEX

0500

100015002000250030003500400045005000550060006500

06 07 08 09 10 11 12 13 14 15

CHINA

Shanghai Composite0

200400600800

100012001400160018002000220024002600

06 07 08 09 10 11 12 13 14 15

RUSSIA

RTS-1

800

1000

1200

1400

1600

1800

2000

2200

2400

2600

06 07 08 09 10 11 12 13 14 15

MSCI EAFE INDEX

05000

100001500020000250003000035000400004500050000550006000065000700007500080000

06 07 08 09 10 11 12 13 14 15

BRAZIL

Bovespa600700800900

1000110012001300140015001600170018001900

06 07 08 09 10 11 12 13 14 15

MSCI WORLD INDEX

EQUITY MARKETS 6. Around the world (Weekly data through July 17, 2015)

0300060009000

12000150001800021000240002700030000330003600039000420004500048000

06 07 08 09 10 11 12 13 14 15

MEXICO

Mexican IPC



ECONOMIC MONITOR



13DW

D239

_DF_

EcoM

on_0

715_

EN_V

1_DO

P071

5 MO

E946

3

Views contained in this report regarding a particular company, security, industry or market sector are the views of the writer and do not necessarily represent the views of Dynamic Funds, its affiliates and subsidiaries. Views expressed should not be considered a recommendation to buy or sell nor should they be relied upon as investment advice. Information contained in this report is current as of the date of publication and has been obtained from third party sources believed to be reliable. Dynamic Funds, its affiliates and subsidiaries does not warrant or make any representations regarding the use or the results of the information contained herein in terms of its correctness, accuracy, timeliness, reliability, or otherwise, and does nor not accept any responsibility for any loss or damage that results from its use.

Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P.

Documents

Mindset Wealth · 2015. 8. 27. · forecast for January 2016. The Canadian dollar is now besieged on all sides – falling oil, copper, and gold prices, further Bank of Canada easing