ECONOMIC MONITOR · GDP in 2016-Q3 is 2.2% (and 1.3% for Q4), while the Fed of Atlanta’s “GDPNow” projection is 2.1% for Q3. Growth will not very robust for 2016-H2. The IMF

ECONOMIC MONITOROctober 13, 2016

Prepared by:

Dr. Martin Murenbeeld &

Chantelle Schieven

ECONOMIC MONITOR

Dynamic Funds Economics2

Financial Markets Overview

The US election has dominated the newswires in recent weeks and we doubt this will change before November 8. In the wake of some tawdry tape revelations the probability of a Trump victory has plunged to about 15% on betting sites. While this removes some uncertainty regarding the early onset of US protectionism (i.e. Trump’s tariffs on Chinese exports to the US, for example), we remind the reader in the article starting on page 3 that a Clinton Administration may also have to consider dollar devaluation, in lieu of protectionism, in order to boost US growth and bring the global economy back into some semblance of balance. (Clinton is also no “friend” of China - going by her speeches!) The Federal Reserve is forecast to stay out of the political fray by foregoing a hike in November, though several officials have indicated that meeting is “live”. We continue to forecast the Fed will hike in December! We have noted often there is no compelling reason for a 25 basis-point hike in November or December (such a small hike has symbolic value only); indeed, the US economy would benefit from more inflationary growth (as would most highly indebted economies). We also assume the Bernard Sanders faction of the Democrat Party, the party now very likely to be in the White House after January 2017, will not be overjoyed with a Fed anxious to raise interest rates in an environment of still very low labor-force participation rates. But the Fed is intent upon a hike, for better or worse!The charts on the US economy, starting on page 21, also do not make a compelling argument for

a hike. The latest Fed of New York “Nowcast” of GDP in 2016-Q3 is 2.2% (and 1.3% for Q4), while the Fed of Atlanta’s “GDPNow” projection is 2.1% for Q3. Growth will not very robust for 2016-H2.The IMF has downgraded the global economy yet again in its October Economic Outlook, and its outlook for Canada dropped from 1.4% and 2.1% to 1.2% and 1.9% for 2016 and 2017 respectively. The Bank of Canada will no doubt lower its own forecast for 2016 in its October Monetary Policy Report due on October 19. (The July Report’s forecast was 1.3% and 2.2% for 2016 and 2017 respectively.) Despite these downgrades, bond yields have risen significantly in recent weeks. Fear that both the ECB and the BoJ will end QE (quantitative easing) before long, and that the US will turn to fiscal stimulus in 2017 are rampant. Short duration is desirable! The baseline forecasts this month call for: 1.► The FED to hike in December;2.► The BANK OF CANADA to stand pat on

interest rates this year and probably next;3.► BOND YIELDS in the US and Canada to rise

on the back of more fiscal expansion in the US and uncertainty regarding ECB and BoJ policy going forward;

4.► The CANADIAN DOLLAR to trend sideways; 5.► The US DOLLAR to trend flat/up until after

November - a Clinton Administration will have to think about how it can “devalue” the dollar (much preferred over protectionism) thereafter.

3Dynamic Funds Economics

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ECONOMIC MONITOR


The US Should Devalue the Dollar ... And here is how!

Martin Murenbeeld

After recent developments on the US political front (including the second debate on October 9 and revelations on Trump’s “locker-room” behavior) the probability of Trump being elected President on November 8 has dropped to 15.4%. The likelihood of Clinton being elected has in turn risen to 83.0%*. The issue of unfair trade and dollar overvaluation will not go away however under a Clinton Presidency; her speeches have revealed a number of “Trump-like” views when it comes to US trade with China (and with other countries seen to be taking unfair advantage of the global trading system with taxes, currency manipulation, non-reciprocal legislation, impediments to imports and investment, etc.).

Our reports have frequently suggested that the US should devalue the US dollar. The global economy has serious imbalances; these imbalances affect employment and inflation in the “deficit” regions quite negatively, and create serious policy problems for these regions. (The US is a “deficit” region relative to Asia and Europe, for example, and the southern half of the Eurozone is a “deficit” region relative to the northern half.)

Historically chronic “deficit” countries/regions eventually adopt protectionist policies, which then risk another global recession or worse; or they decide to unilaterally devalue. The latter is preferable!

Recently, the IMF and other supra-national bodies have been warning of the perils of protectionism (no doubt the result of Trump’s overt protectionism). Unfortunately however, the IMF has

*(https://www.electionbettingodds.com/,10/11/16)

212 www.dundeeeconomics.com

(1) The Dollar is Overvalued …The dollar should be devalued … !

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

Last month: September 2016

US recession

Source: Wall Street Journal, Federal Reserve, Dundee Economics

US Dollar IndicesFed Major (March 1973=100)

Murenbeeld-EFXR0 (Jan 1999=100)

Murenbeeld-NEFXR (Jan 1999=100)


A headwind for GDP:• The US foreign balance (X-M) is contributing to US

GDP – US imports (M) are contributing to foreign GDP however …

• (I) Investment (notably non-residential) will remain weak because of an overvalued dollar - which doesn’t help US GDP either …

A headwind for inflation:• The US imports deflation - frustrating Fed efforts

to boost inflation

(2) The Overvalued Dollar …… is a major headwind for the US economy …

been mostly asleep at the switch when it comes to demanding a more appropriate currency alignment globally.

(We remind readers that in the run-up to the Bretton Woods agreement in 1944 Keynes argued – unsuccessfully – in favor of financial penalties for countries that run persistent surpluses. His thinking was that surplus countries


I. August 15, 1971On August 15, 1971 President

Nixon levied a 10% tariff on all foreign goods entering the US (and took the dollar off the “gold-exchange standard”); these tariffs were not removed until other currencies, and specifically the yen and the deutschemark, were revalued upwards against the dollar.

The Smithsonian Agreement later that year formalized the results of this action: the dollar was devalued against gold (from $35 to $38 an ounce) and other currencies were revalued against the dollar. The net effect was an approximate 10% devaluation of the dollar against a basket of the world’s major currencies.

Background: throughout the 1960’s global irritation with US balance of payments (BoP) deficits increased; these deficits bled dollars into the international economy and, inevitably, into the foreign exchange reserves of a number of “surplus” countries – including Germany and Japan. (It was pointed out that in the event all global “reserve” dollars were presented at the US Treasury in exchange for gold, the US would

not have sufficient gold reserves to satisfy the conversion – at least not with gold valued at $35/ounce.)

Overseas officials argued that the US needed to do something about its BoP “problem”. The US responded with the argument that a number of foreign currencies, notably those from economies healing from the devastation of WWII, should be revalued against the dollar instead. This


owned enterprises who undersell in the global market to hurt our companies, and it discriminates against American companies … We all know we are losing jobs. … China wants to keep people employed while they try to figure out what to do about their economy … They’re trying to solve their domestic economic problems on the backs of American workers ...

3. “We have to prevent China/other countries from manipulating their currencies to gain an unfair price advantage” (https://www.hillaryclinton.com/speeches/)

… For Both Republicans and DemocratsClinton angry with current trade practises too …!

1. “I will prevent countries like China from abusing global trade rules and reject trade agreements that don’t meet our high standards of raising wages, creating good paying jobs, and enhancing our national security” (https://www.hillaryclinton.com/issues/manufacturing/)

2. “China is, by far, the worst rule breaker in the world … China dumps cheap products in our markets, subsidizes state-


2. I am going to instruct my Treasury Secretary to label China a currency manipulator. Any country that devalues their currency in order to take advantage of the United States will be met with sharply, and that includes tariffs and taxes

3. If China does not stop its illegal activities, including its theft of American trade secrets, I will use every lawful presidential power to remedy trade disputes, including the application of tariffs

“Declaring America's Economic Independence” - June 28, 2016

The Dollar is a Political Issue …Trump wants “fair” trade … and a lower dollar …?

1. I'm going to direct the Secretary of Commerce to identify every violation oftrade agreements a foreign country is currently using to harm our workers. I will then direct all appropriate agencies to use every tool under American and international law to end these abuses

needed to be “disciplined” along with deficit countries. (Hey, you can’t have a “deficit” region without a “surplus” region!) Persistent imbalances should eventually also necessitate currency revaluation!)

We believe that the US dollar is grossly overvalued today. This commentary discusses how the US has engineered a devaluation in the past, and how it could do so again.

ECONOMIC MONITOR


argument fell on deaf ears however, for similar reasons China and others do not like their currencies to rise against the dollar today. To be sure, the US took a number of steps during the 1960’s to curb capital outflows (capital outflows were the essence of US BoP deficits at that time – not trade deficits), including the imposition of regulations to limit the outward-flow of foreign direct investment (FDI) and interest equalization taxes to stop foreign entities from borrowing dollars in the US.

In 1971 however the US trade balance began slipping into deficit, and the US Administration concluded enough was enough. It levied a 10% tariff on foreign goods coming into the US!

Lesson 1: The US can force dollar devaluation by limiting access to its domestic market with tariffs and other trade barriers.

II. The 1985 Plaza AccordThe G-5 concluded the Plaza Accord in

September 1985; it was an accord to devalue the dollar against the other G-5 currencies. (The G-5 included Japan, Germany, France and the UK, along with the US.)

Wikipedia notes the following: “Between 1980 and 1985 the dollar had appreciated by about 50% against the Japanese yen, Deutsche Mark, French Franc and British pound, the currencies of the next four biggest economies at the time. This caused considerable difficulties for American industry but at first their lobbying was largely ignored by government.”

I remember it well; I personally lost a fair bit of money betting against the dollar prior to the Plaza Accord (whereupon I learned that “the market can stay irrational for longer than I can stay solvent”).

Background: the election of Ronald Reagan in 1980 together with Fed Chair Volcker’s record high interest rate policy led to a surge of capital flowing into the US. (the FF rate hit 19% in 1981 and 10-year Treasuries yielded nearly 16%!) By 1985 corporate America was fed up, the

current account deficit of the US hit a record 3.4% of GDP, and Congress was ready to pass protectionist laws.

The Plaza Accord proved so successful in devaluing the dollar that the Louvre Accord of February 1987 was required to stop the dollar from further declines. It had given back all of its 50% rise!

Lesson 2: The US can engineer dollar devaluation through direct agreement with its key trading partners.

III. What’s Next?Currently, US trade deficits are near record

highs, though the US current account deficit is “only” 2.8% of GDP – having benefited from a major reduction in oil imports since 2006 when the CA deficit was over 6% of GDP. The US economy has posted some of its lowest post-recession growth rates since WWII, inflation is below target and the percentage of the population at work is near levels last seen in the late 1970’s. Academic studies (as well as The Economist’s Big Mac Index) suggest the US dollar is seriously overvalued, and some studies are starting to question whether trade with China (specifically) has been as beneficial for the US as theory suggests it should have been.

Calls for countervailing duties abound as both presidential candidates have sworn to correct the massive US trade imbalance with China (if not also with Japan and Europe).

Based on present trends, a Trump Administration will likely employ the lessons of August 15, 1971 (Lesson 1) and limit imports from China and elsewhere with the imposition of tariffs. Presumably, once the dollar is more appropriately priced (i.e. 40% lower against the RMB, for example) these tariffs will be lifted.

If this happens there will be a period of extreme turmoil in global financial and currency markets – there was in 1971! With the US no longer the same global economic hegemon it


was in 1971 however, a global trade war cannot be ruled out; China and other countries can, and likely will, retaliate against US exports.

A Clinton Administration is more likely to have learned from Lesson 2, and call for a Plaza Accord II. I doubt this will be successful however, because China is not as pliable as the G-5 was in 1985. Furthermore, under both Bush and Obama Administrations the US Treasury has made numerous appeals to China and other countries to stop “predatory” currency and trade practices, often threatening to name these countries currency manipulators (which then opens the legal door to countervailing duties). To no avail!

Without China’s agreement to let the dollar decline, I doubt other Asian currencies (and the euro) will rise significantly against the dollar. A Clinton Administration may therefore eventually also have to decide whether unilateral tariffs and countervailing duties indeed promise the best hope for dollar devaluation.

There is another route to currency devaluation however; the US can devalue the dollar by direct currency market intervention. This is after all how other countries keep their currencies undervalued, and it is legal (although not generally done by the reserve currency country)!

Global currency reserves total about $11 trillion dollars; these reserves expand primarily because of currency intervention – i.e. when central bank sell domestic currency for dollars and other convertible currencies global reserves rise. The $11 trillion therefore indicates that currency manipulation is/ has been a very common practice.

Fred Bergsten, the then Director of the Peterson Institute of International Economics, gave the following testimony before Congress in 2010:

“There is one, directly monetary, measure that the United States should contemplate taking against China: direct purchases of renminbi to counter China’s direct purchases of dollars. It is

absurd, especially from a US national perspective but also from the standpoint of global financial stability, that other countries set the exchange rate of the dollar …

In principle there could be little objection to such ‘countervailing currency intervention’ [CCI] against manipulation by another country that was keeping its exchange rate substantially undervalued as a result. In practice, the United States could easily adopt such a policy against any currency that is generally convertible, such as the euro if it too became substantially undervalued …

… Countervailing currency intervention [CCI] would be decidedly superior to countervailing duties to deal with the problem of manipulated exchange rates. Undervalued currencies subsidize all of the exports of the country in question and pose a barrier of equivalent magnitude to all of its imports. Countervailing duties [tariffs, etc.] address only exports of individual products from such a country on a case-by-case basis and do not apply to its imports at all…”

A Proposed Strategy to Correct the Chinese Exchange Rate, C. Fred Bergsten - Director, Peterson Institute for International Economics – in testimony before the Treasury Department’s Committee on Banking, Housing and Urban Affairs - United States Senate, September 16, 2010

The idea of countervailing currency intervention (CCI) never took; yes, the US has intervened in foreign exchange markets from time to time, but always in cooperation with other countries. A reserve-currency country does not normally intervene in FX markets for the purposes of devaluing its own currency; other countries generally retain the prerogative of setting the price of their own currencies in terms of the reserve currency!

(This is why Fred Bergsten and some other observers have questioned whether the dollar’s reserve currency role is really still in the national interest of the US. A reserve currency invariably becomes overvalued when other countries are

ECONOMIC MONITOR


free to set their own exchange rates against the reserve currency.)

Lesson 3: the US can devalue the dollar with direct currency market intervention.

So how would the US go about it? The US Treasury will have to instruct its agent in international financial matters, the Federal Reserve Bank of NY, to employ the assets of the Exchange Stabilization Fund (ESF) and sell dollars in FX markets.

“Whenever necessary, the [ESF] trading desk buys or sells foreign currencies on behalf of the Treasury … for intervention purposes. Treasury and Federal Reserve foreign exchange operations are closely coordinated and typically are conducted jointly. … The ESF does not provide financing to the Federal Reserve System for foreign exchange operations. Rather, the Federal Reserve participates with its own funds…” (see Fed Point, FRBNY: Exchange Stabilization Fund, May 2007 – bolding added).

CCI requires money, and the FRBNY will have to come up with $billions to commence the program! Fortunately, the Federal Reserve has unlimited funds. It follows that US CCI is dollar devaluation with a QE4 component! Indeed, intervention funded by a central bank is (always) an extremely stimulative monetary policy, as we have seen in China and elsewhere. US CCI would be no different; the Fed might well need to supply, or at least be ready to supply, hundreds of billions of dollars for FX intervention.

(The old-fashioned way of devaluing had a government/central bank announce over a weekend that its currency would commence trading Monday morning at new, lower cross-rates. Imagine the US Treasury announcing one of these weekends that in conjunction with the FRBNY it is prepared “to do whatever it takes” to see the dollar trade at $1.50 euro and 5.00 RMB the following Monday!)

IV ConclusionDollar devaluation can be engineered with

tariffs, by agreement with trading partners, or through direct currency market intervention. One should not pretend dollar devaluation will go smoothly or be immediately appreciated overseas. There will be blood, as they say. But my point is that it can be done, and it has been done in recent history.

Addendum We have read several arguments that dollar

overvaluation is now “last year’s problem”. China is busy selling dollars of late, and buying RMB in order to stop the RMB from declining.

This is true, but somewhat irrelevant in my view. China has made a bit of a mess of it; it has allowed capital to flow into the country these last 15 years or so without letting the RMB rise sufficiently to choke off “fluff” investment. China welcomed the employment gains domestically

Source: The Economist


from all this capital, and was largely unconcerned with the employment losses abroad.

“The shock of trade with China was different than the shock of U.S. trade with other countries such as Mexico, Japan and Asian “tiger” economies such as Taiwan and Hong Kong, research shows. The scale of import competition from China was immense, dislocating millions of U.S. manufacturing workers, who had trouble adjusting and finding new work”, (WSJ, 08/11 – bolding added).

The fact that some “fluff” investment is now leaving China, along with the $ billions amassed by those Chinese families who have profited from the massive capital flows into China, is not an argument against restoring global balance. There is a serious, continuing, global demand shortage; Asia still needs to consume much more of its own output. It’s not clear that a new Administration in the US will condone picking up slack in global demand by the US economy consuming more foreign output at the cost of domestic output. Indeed, while there is never a good time to restore global balance the US would appear to have come to the end of its tether on this.

The Economist noted in an article entitled “Free Trade – Coming and Going”! (October 1, 2016) “… China’s accession to the WTO [in 2001] caused a big shock. The country’s size, and the speed at which it conquered rich-world markets

for low-cost manufacturing, makes it unique. By 2013 it had captured one-fifth of all manufacturing exports worldwide, compared with a share of only 2% in 1991 …

David Autor of the Massachusetts Institute of Technology (MIT), David Dorn of the University of Zurich and Gordon Hanson of the University of California, San Diego, looked into [US] job losses more closely, [and] they found something worrying. At least one-fifth of the drop in factory jobs during [1999-2011] was the direct result of competition from China …

In other rich countries, regions or industries with heavy exposure to Chinese imports also suffered material losses in factory jobs. A study of Spain’s jobs market by Vicente Donoso, of the Complutense University of Madrid, and others found that provinces with the greatest exposure to Chinese imports saw the largest falls in the share of manufacturing employment between 1999 and 2007 …” (bolding added).

We have noted many times that if China was the size of Jamaica no one would care what policies it followed or how cheap its currency was. But China and the rest of SE Asia encompass more than two billion hardworking, entrepreneurial people. If the currencies of that region are significantly undervalued global problems will inevitably follow ... and they now have!


ECONOMIC MONITOR

MONTHLY REVIEW ►CANADA – ECONOMIC GROWTH

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CANADA GROSS DOMESTIC PRODUCT

Annualized growth rate Last quarter: 2016 Q2

Source: Statistics Canada

-1.6-1.4-1.2-1.0-0.8-0.6-0.4-0.20.00.20.40.60.81.0

2008 2009 2010 2011 2012 2013 2014 2015 2016

CANADA MONTHLY GDP

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Source: Statistics Canada, Dundee Economics

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ConsumptionInvestmentGovernmentNet Exports

CONTRIBUTION TO GDP IN RECENT QUARTERS0.5%3.3% -0.9% -0.5%3.9% 0.5% 3.7% 2.1% -1.6%2.8% GDP

Contributionto GDP %

** Average of last 12 quarters: 1.56%Source: Statistics Canada

2.2% 2.5%

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CANADA MONTHLY GDP

Last month: July 2016Percent change month-to-month


The Canadian economy declined -1.6% (annualized) in 2016-Q2; the decline was due to a sharp

decline in exports as a result of the massive wildfires.

Monthly GDP increased 0.5% in July.

Growth for all of 2016 is shaping up to be less than 1.0%.


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CANADA INDUSTRIAL PRODUCTION

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Percent


Average 1968 to date 82.2


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8

12

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

CANADA INDUSTRIAL PRODUCTION



69

72

75

78

81

84

87

90

87 90 93 96 99 02 05 08 11 14

CANADA CAPACITY UTILIZATION

Last Quarter: 2016-Q2

Percent



Industrial production remains negative ...

... and capacity utilization is trending sideways/down.

Retail sales growth has declined again in recent months.


ECONOMIC MONITOR


-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 16

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 16

CANADA INVENTORY-TO-SHIPMENTS RATIO

Last month: July 2016


-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 16

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 16

CANADA INVENTORY-TO-SHIPMENTS RATIO



... and the inventory ratio continues to trend sideways.

... new orders are down ...

Manufacturing shipments continue to disappoint ...

-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 16

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 16

CANADA MANUFACTURING SHIPMENTS




-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 16

CANADA JOB CREATION

Last month: September 2016000s, 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 16

CANADA UNEMPLOYMENT RATE

Last month: September 2016Percent


MONTHLY REVIEW ►CANADA – LABOUR MARKET

64.0

64.5

65.0

65.5

66.0

66.5

67.0

67.5

68.0

90 92 94 96 98 00 02 04 06 08 10 12 14 16

CANADA LABOUR FORCE PARTICIPATION RATE



% of non-institutional population 16 and over in the labor force

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 16


Total

Public Administration


-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 16

CANADA JOB CREATION

Last month: September 2016000s, 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 16

CANADA UNEMPLOYMENT RATE



... the labour force participation rate increased however.

... but the unemployment rate remained at 7.0% ...

Labour market data were stronger than expected for September ...


ECONOMIC MONITOR

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 16

Last month: August 2016Percent change year-over-year


-2

-1

0

1

2

3

4

5

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

Headline CPICore CPI

CANADA CONSUMER PRICE INFLATION

Target band



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 16

Difference (inflationexpectation)Long term bond

CANADA INFLATION EXPECTATIONS


Source: Bank of Canada, Dundee Economics

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 16

CANADA HOUSING STARTS

Last month: August 2016

000s, total, all areas

Source: Canada Mortgage & Housing Corporation

Headline CPI declined to 1.1% in August from 1.3% in July and core

CPI declined from 2.1% to 1.8% .

Industrial product price inflation has been negative for the last seven

months, wages have declined and inflation expectations are stable.

We do not expect inflation to be an issue for the Bank

of Canada in 2016/2017.

64.0

64.5

65.0

65.5

66.0

66.5

67.0

67.5

68.0

90 92 94 96 98 00 02 04 06 08 10 12 14 16

CANADA LABOUR FORCE PARTICIPATION RATE




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 16


Total

Public Administration


MONTHLY REVIEW ►CANADA – INFLATION

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 16



-2

-1

0

1

2

3

4

5

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

Headline CPICore CPI

CANADA CONSUMER PRICE INFLATION

Target band




... led by higher prices in Toronto and Vancouver. (This may

change in coming months!)

New house prices continue to increase at a steady rate ...

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 16

Difference (inflationexpectation)Long term bond

CANADA INFLATION EXPECTATIONS


Source: Bank of Canada, Dundee Economics

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 16

CANADA HOUSING STARTS


000s, total, all areas

Source: Canada Mortgage & Housing Corporation

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

-4 -2 0 2 4 6 8

St. John'sHalifax

Fredericton

MontrealOttawa-Hull

Toronto

KitchenerWinnipeg

Regina

SaskatoonCalgary

Edmonton

VancouverVictoria


July 2016




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



-4 -2 0 2 4 6 8

St. John'sHalifax

Fredericton

MontrealOttawa-Hull

Toronto

KitchenerWinnipeg

Regina

SaskatoonCalgary

Edmonton

VancouverVictoria


July 2016



Housing starts are trending sideways.

MONTHLY REVIEW ►CANADA – HOUSING MARKETHousing market data remain mixed from region to region, but official concern over rapid increases in Vancouver and Toronto house prices has been rising (with Vancouver now levying a property transfer tax on foreign purchases).


ECONOMIC MONITOR

CANADA – TERANET HOUSE PRICE INDEX

50

75

100

125

150

175

200

00 02 04 06 08 10 12 14 16-8

-4

0

4

8

12

16

Source: Teranet (National Bank)

Composite 11 City Index



TORONTO – TERANET HOUSE PRICE INDEX

60

80

100

120

140

160

180

200

220

00 02 04 06 08 10 12 14 16-12

-8

-4

0

4

8

12

16

20


Index Percent change year-over-year


VANCOUVER – TERANET HOUSE PRICE INDEX

50

75

100

125

150

175

200

225

250

275

00 02 04 06 08 10 12 14 16-15

-10

-5

0

5

10

15

20

25

30



CALGARY – TERANET HOUSE PRICE INDEX

60

80

100

120

140

160

180

200

00 02 04 06 08 10 12 14 16-20

-10

0

10

20

30

40

50


Index




CANADA – TERANET HOUSE PRICE INDEX

50

75

100

125

150

175

200

00 02 04 06 08 10 12 14 16-8

-4

0

4

8

12

16


Composite 11 City Index



TORONTO – TERANET HOUSE PRICE INDEX

60

80

100

120

140

160

180

200

220

00 02 04 06 08 10 12 14 16-12

-8

-4

0

4

8

12

16

20




MONTREAL – TERANET HOUSE PRICE INDEX

40

60

80

100

120

140

160

00 02 04 06 08 10 12 14 16-3

0

3

6

9

12

15


Index


OTTAWA – TERANET HOUSE PRICE INDEX

60

80

100

120

140

160

00 02 04 06 08 10 12 14 16-3

0

3

6

9

12


Index




VANCOUVER – TERANET HOUSE PRICE INDEX

50

75

100

125

150

175

200

225

250

275

00 02 04 06 08 10 12 14 16-15

-10

-5

0

5

10

15

20

25

30



CALGARY – TERANET HOUSE PRICE INDEX

60

80

100

120

140

160

180

200

00 02 04 06 08 10 12 14 16-20

-10

0

10

20

30

40

50


Index




MONTHLY REVIEW ►CANADA – HOUSING MARKET

According to Teranet house price indices, existing house prices (11-city composite) increased 11.4% (year-over-year) in August. Existing house prices increased 25.8% in Vancouver and 14.6% in Toronto; elsewhere prices were more subdued or declined.

MONTREAL – TERANET HOUSE PRICE INDEX

40

60

80

100

120

140

160

00 02 04 06 08 10 12 14 16-3

0

3

6

9

12

15


Index


OTTAWA – TERANET HOUSE PRICE INDEX

60

80

100

120

140

160

00 02 04 06 08 10 12 14 16-3

0

3

6

9

12


Index





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 16



CANADA CONSUMER CREDIT GROWTH

Source: Bank of Canada

250

300

350

400

450

500

550

600

07 08 09 10 11 12 13 14 15 16


$ 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 16


CANADA RESIDENTIAL MORTGAGE CREDIT GROWTH


500

600

700

800

900

1000

1100

1200

1300

1400

07 08 09 10 11 12 13 14 15 16


$ volume, billions

CANADA RESIDENTIAL MORTGAGE CREDIT


-2

0

2

4

6

8

10

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


CANADA TOTAL BUSINESS CREDIT GROWTH


1000

1100

1200

1300

1400

1500

1600

1700

1800

07 08 09 10 11 12 13 14 15 16


$ volume, billions

CANADA TOTAL BUSINESS CREDIT


MONTHLY REVIEW ►CANADA – CREDIT AND DEBT

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 16



CANADA CONSUMER CREDIT GROWTH


250

300

350

400

450

500

550

600

07 08 09 10 11 12 13 14 15 16


$ 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 16


CANADA RESIDENTIAL MORTGAGE CREDIT GROWTH


500

600

700

800

900

1000

1100

1200

1300

1400

07 08 09 10 11 12 13 14 15 16


$ volume, billions

CANADA RESIDENTIAL MORTGAGE CREDIT

Source: Bank of Canada-2

0

2

4

6

8

10

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


CANADA TOTAL BUSINESS CREDIT GROWTH


1000

1100

1200

1300

1400

1500

1600

1700

1800

07 08 09 10 11 12 13 14 15 16


$ volume, billions

CANADA TOTAL BUSINESS CREDIT


Consumer credit growth has picked up somewhat; mortgage credit growth is expanding at about 6% year-over-year.


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 16

CANADIAN DOLLAR

Source: Wall Street Journal

US Cents

WeeklyLast date: October 7, 2016

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 16

OIL PRICENYMEX

Weekly, Friday dataLast date: October 7, 2016US$/bbl


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 16

CANADIAN DOLLAR


US Cents


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 16

OIL PRICENYMEX

Weekly, Friday dataLast date: October 7, 2016US$/bbl


4000

6000

8000

10000

12000

14000

16000

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

S&P/TSX COMOSITE

Index

Weekly, Friday dataLast date: October 7, 2016

Source: Thomson Reuters DataStream

1000

1500

2000

2500

3000

3500

4000

4500

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

Energy Sector Index50-day moving average200-day moving average

TSX ENERGY

Daily, last date: October 7, 2016

Oil prices increased to around $50 after the latest OPEC get-together.

... along with the TSX Composite Index.

The Canadian dollar has trended sideways in recent

weeks (as forecast) ...

MONTHLY REVIEW ►CANADA – ASSET PRICES


4000

6000

8000

10000

12000

14000

16000

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

S&P/TSX COMOSITE

Index


Source: Thomson Reuters DataStream

1000

1500

2000

2500

3000

3500

4000

4500

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

Energy Sector Index50-day moving average200-day moving average

TSX ENERGY


500

1000

1500

2000

2500

3000

3500

4000

4500

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

Materials Sector Index

50-day moving average


TSX MATERIALS


600

900

1200

1500

1800

2100

2400

2700

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

Industrials Sector Index50-day moving average200-day moving average

TSX INDUSTRIALS


The Consumer Staples, Telecommunications and Utilities sectors have all retreated from the highs set at the beginning of September.

Source: Thomson Reuters Datastream

MONTHLY REVIEW ►CANADA – TSX GICS SECTORS

500

1000

1500

2000

2500

3000

3500

4000

4500

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




TSX MATERIALS


600

900

1200

1500

1800

2100

2400

2700

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

Industrials Sector Index50-day moving average200-day moving average

TSX INDUSTRIALS


600

800

1000

1200

1400

1600

1800

2000

2200

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

Consumer Discretionary Sector Index



TSX CONSUMER DISCRETIONARY

Daily, last date: September 5, 2016

1000

1500

2000

2500

3000

3500

4000

4500

5000

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

Consumer Staples Sector Index



TSX CONSUMER STAPLES


600

800

1000

1200

1400

1600

1800

2000

2200

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

Consumer Discretionary Sector Index



TSX CONSUMER DISCRETIONARY


1000

1500

2000

2500

3000

3500

4000

4500

5000

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

Consumer Staples Sector Index



TSX CONSUMER STAPLES


0

500

1000

1500

2000

2500

3000

3500

4000

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

Health Care Sector Index50-day moving average200-day moving average

TSX HEALTH CARE


700

900

1100

1300

1500

1700

1900

2100

2300

2500

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

Financials Sector Index50-day moving average200-day moving average

TSX FINANCIALS


0

500

1000

1500

2000

2500

3000

3500

4000

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

Health Care Sector Index50-day moving average200-day moving average

TSX HEALTH CARE


700

900

1100

1300

1500

1700

1900

2100

2300

2500

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

Financials Sector Index50-day moving average200-day moving average

TSX FINANCIALS


50

100

150

200

250

300

350

400

450

500

550

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

Info Tech Sector Index50-day moving average200-day moving average

TSX INFORMATION TECHNOLOGY


400

600

800

1000

1200

1400

1600

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

Telecom Sector Index



TSX TELECOMMUNICATIONS


0

1

2

3

4

5

6

7

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

CANADA GOVERNMENT BONDS

T-bills

10-year bond

Percent



1000

1200

1400

1600

1800

2000

2200

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

Utilities Sector Index50-day moving average200-day moving average

TSX UTILITIES


50

100

150

200

250

300

350

400

450

500

550

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

Info Tech Sector Index50-day moving average200-day moving average

TSX INFORMATION TECHNOLOGY


400

600

800

1000

1200

1400

1600

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

Telecom Sector Index



TSX TELECOMMUNICATIONS



ECONOMIC MONITOR

-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 16

CANADA-US LONG TERM YIELD DIFFERENTIALS


10-Year

30-Year

Source: Bank of Canada, Federal Reserve

3

4

5

6

7

8

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

CANADA LONG-TERM CORPORATE BOND YEILDS Percent



-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 16

CANADA-US LONG TERM YIELD DIFFERENTIALS


10-Year

30-Year

Source: Bank of Canada, Federal Reserve

3

4

5

6

7

8

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

CANADA LONG-TERM CORPORATE BOND YEILDS Percent



0

1

2

3

4

5

6

7

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

CANADA GOVERNMENT BONDS

T-bills

10-year bond

Percent



1000

1200

1400

1600

1800

2000

2200

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


TSX UTILITIES


The Canadian 10-year bond yield has hovered around

1.0% in recent weeks ...

... and Canada-US long term differentials have widened

in recent weeks.

... long-term corporate bond yields have hovered around 3.7% ...

MONTHLY REVIEW ►CANADA – INTEREST RATES


-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 16


$ volume, billions

CANADA TRADE BALANCE


-6

-4

-2

0

2

4

6

00 03 06 09 12 15

Last quarter: 2016-Q2

Percent of GDP

CANADA CURRENT ACCOUNT BALANCE


-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 16


$ volume, billions

CANADA TRADE BALANCE


-6

-4

-2

0

2

4

6

00 03 06 09 12 15


Percent of GDP

CANADA CURRENT ACCOUNT BALANCE


... and both export and import growth have been negative

for the last six months!

... Canada’s trade deficit declined in August but remains elevated ...

The current account deficit increased to 4.0.% of GDP in 2016-Q2 ...

-40

-30

-20

-10

0

10

20

30

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



CANADA IMPORT/EXPORT GROWTH


Imports

Exports

MONTHLY REVIEW ►CANADA – CURRENT ACCOUNT AND TRADE BALANCE


ECONOMIC MONITOR

The leading indicator continues to point to only moderate growth.

... Atlanta Fed’s GDPNow estimate for 2016-Q3 is 2.1%. (Our forecast

for all of 2016 is 1.5%-2.0%.)

The third estimate of US GDP growth in 2016-Q2 was revised up to 1.4% from 1.1% (s.a.a.r) ...

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 16

Annualized growth rate Last quarter: 2016-Q2

Source: US Bureau of Economic Analysis

-3.5

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US LEADING INDICATOR

Last month: August 2016Percent change month-to-month

Source: The Conference Board

-2

-1

0

1

2

3

4

13 Q3 13 Q4 14 Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15-Q3 15-Q4 16-Q1 16-Q2


CONTRUBTION TO GDP IN RECENTQUARTERS0.9% 0.8%2.0% 2.6% 2.0%-1.2% 4.0% 5.0% 2.3% 1.4%3.1% 4.0% GDP

Contribution to GDP %

** Average of last 12 quarters: 2.2%Source: US Bureau of Economic Analysis

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 16

Annualized growth rate Last quarter: 2016-Q2




-0.5

0.0

0.5

1.0

1.5

2.0

2.5

13 Q3 13 Q4 14 Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15 Q3 15 Q4 16 Q1 16 Q2

Durable GoodsNondurable GoodsServices

C: HOUSEHOLD CONSUMPTION1.5% 1.1%1.6% 1.9% 1.8%1.3% 2.6% 2.5% 3.1% 2.9%1.3% 2.3% C**


** Average of last 12 quarters: 2.0%

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

13 Q3 13 Q4 14 Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15 Q3 15 Q4 16 Q1 16 Q2

NonresidentialResidentialInventories

I: INVESTMENT-0.4%-0.6%1.6% 0.2% 0.4%-1.1% 1.8% 1.5% 0.5% -1.3%2.1% 0.9% I**




-1.0

-0.5

0.0

0.5

1.0

1.5

13 Q3 13 Q4 14 Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15 Q3 15 Q4 16 Q1 16 Q2

Federal

State/Local

G:GOVERNMENT0.2% 0.3%0.5% 0.6% 0.3%0.2% 0.5% -0.1% -0.3%-0.4% -0.5% G**



0.0%

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

13 Q3 13 Q4 14 Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15 Q3 15 Q4 16 Q1 16 Q2

ExportsImportsNet

X-M: FOREIGN BALANCE

-0.5%-1.1% -1.7% 0.1%1.3% -1.2% -0.4% 0.5% 0.0% 0.2%0.1% X-M**


** Average of last 12 quarters: -0.3%Source: US Bureau of Economic Analysis


-0.5%

The largest contribution to US growth in 2016-Q2 came from

Household Consumption (services). Investment was the biggest drag on GDP growth and Government

Expenditures also subtracted from GDP growth in the second quarter.

-3.5

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US LEADING INDICATOR

Last month: August 2016Percent change month-to-month


-2

-1

0

1

2

3

4

13 Q3 13 Q4 14 Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15-Q3 15-Q4 16-Q1 16-Q2


CONTRUBTION TO GDP IN RECENTQUARTERS0.9% 0.8%2.0% 2.6% 2.0%-1.2% 4.0% 5.0% 2.3% 1.4%3.1% 4.0% GDP



-0.5

0.0

0.5

1.0

1.5

2.0

2.5

13 Q3 13 Q4 14 Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15 Q3 15 Q4 16 Q1 16 Q2

Durable GoodsNondurable GoodsServices

C: HOUSEHOLD CONSUMPTION1.5% 1.1%1.6% 1.9% 1.8%1.3% 2.6% 2.5% 3.1% 2.9%1.3% 2.3% C**



-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

13 Q3 13 Q4 14 Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15 Q3 15 Q4 16 Q1 16 Q2

NonresidentialResidentialInventories

I: INVESTMENT-0.4%-0.6%1.6% 0.2% 0.4%-1.1% 1.8% 1.5% 0.5% -1.3%2.1% 0.9% I**




-1.0

-0.5

0.0

0.5

1.0

1.5

13 Q3 13 Q4 14 Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15 Q3 15 Q4 16 Q1 16 Q2

Federal

State/Local

G:GOVERNMENT0.2% 0.3%0.5% 0.6% 0.3%0.2% 0.5% -0.1% -0.3%-0.4% -0.5% G**



0.0%

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

13 Q3 13 Q4 14 Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15 Q3 15 Q4 16 Q1 16 Q2

ExportsImportsNet

X-M: FOREIGN BALANCE

-0.5%-1.1% -1.7% 0.1%1.3% -1.2% -0.4% 0.5% 0.0% 0.2%0.1% X-M**


** Average of last 12 quarters: -0.3%Source: US Bureau of Economic Analysis


-0.5%


ECONOMIC MONITOR

-15

-10

-5

0

5

10

15

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

US RETAIL SALES


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 16

Last month: September 2016Index

Below 50 indicates contraction

US ISM MANUFACTURING INDEX

Source: Institute for Supply Management

Retail sales growth is trending sideways ...

... but the ISM service index increased sharply in September!

... as is the ISM manufacturing index ...

-15

-10

-5

0

5

10

15

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

US RETAIL SALES


Nominal


30

35

40

45

50

55

60

65

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



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 16



US ISM SERVICE SECTOR INDEX


-18

-15

-12

-9

-6

-3

0

3

6

9

12

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

US INDUSTRIAL PRODUCTIONPercent change year-over-year





... and durable goods orders are trending sideways.

... industrial capacity utilization, although up from recent lows,

remains depressed ...

Industrial production has been negative year-over-year for the ninth month through August ...

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 16

US INDUSTRIAL CAPACITY UTILIZATION



Percent

Source: Thomson Reuters Datastream, Dundee Economics

US DURABLE GOODS ORDERS

200

210

220

230

240

250

260

270

280

290

300

12 13 14 15 16

Last month: August 2016$ US Billions


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 16

US INDUSTRIAL CAPACITY UTILIZATION



Percent


US DURABLE GOODS ORDERS

200

210

220

230

240

250

260

270

280

290

300

12 13 14 15 16

Last month: August 2016$ US Billions



30

35

40

45

50

55

60

65

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



US ISM SERVICE SECTOR INDEX


-18

-15

-12

-9

-6

-3

0

3

6

9

12

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

US INDUSTRIAL PRODUCTIONPercent change year-over-year




ECONOMIC MONITOR

... and the Case-Shiller Home Price Index continues to advance

around 5% year-over-year.

... new home prices are trending modestly higher, while existing home

sales appear to be leveling ...


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 16-20

-15

-10

-5

0

5

10

15

20

25CASE-SHILLER HOME PRICE INDEX

Case-Shiller Index, s.a.



Jan 2000 = 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 16

Last month: September 2016000s, monthly change3-month moving average

Source: US Bureau of Labor Statistics

US JOB CREATION

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 16

US HOUSING STARTS

Last month: August 2016Millions 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 15 163000

3600

4200

4800

5400

6000

6600

7200

7800

New home salesExisting home sales

US NEW AND EXISTING SINGLE FAMILY HOME SALES


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 16

US HOUSING STARTS

Last month: August 2016Millions 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 15 163000

3600

4200

4800

5400

6000

6600

7200

7800

New home salesExisting home sales

US NEW AND EXISTING SINGLE FAMILY HOME SALES


000s 000s

Source: US Census Bureau, National Association of Realtors

Housing starts have leveled off at just over 1.1 million units ...

MONTHLY REVIEW ►UNITED STATES – HOUSING MARKET


MONTHLY REVIEW ►UNITED STATES – LABOUR MARKET


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 16-20

-15

-10

-5

0

5

10

15

20

25CASE-SHILLER HOME PRICE INDEX

Case-Shiller Index, s.a.



Jan 2000 = 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 16

Last month: September 2016000s, 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 16

US UNEMPLOYMENT RATE



6

8

10

12

14

16

18

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

US BROADER UNEMPLOYMENT RATE (U6)



Unemployment rate plus workers that are discouraged, marginally attached and those

working part-time (for economic reasons).

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 16

US UNEMPLOYMENT RATE



6

8

10

12

14

16

18

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

US BROADER UNEMPLOYMENT RATE (U6)



Unemployment rate plus workers that are discouraged, marginally attached and those

working part-time (for economic reasons).

62

63

64

65

66

67

68

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

US LABOUR FORCE PARTICIPATION RATE




-10

-8

-6

-4

-2

0

2

4

6

8

10

12

07 08 09 10 11 12 13 14 15 16

CUMULATIVE WORKERS ADDED BY AGE


*Source: US Bureau of Labor Statistics, Dundee Economics

Cumulative workers added since January 2007

Workers aged 20 to 54

Workers aged 55 and older

62

63

64

65

66

67

68

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

US LABOUR FORCE PARTICIPATION RATE




-10

-8

-6

-4

-2

0

2

4

6

8

10

12

07 08 09 10 11 12 13 14 15 16

CUMULATIVE WORKERS ADDED BY AGE


*Source: US Bureau of Labor Statistics, Dundee Economics

Cumulative workers added since January 2007

Workers aged 20 to 54

Workers aged 55 and older


1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

90 92 94 96 98 00 02 04 06 08 10 12 14 16

US HOURLY EARNINGS

Last month: September 2016Percent change year-over-year

Seasonally adjusted

Production and nonsupervisory employees

All Employees

0

10

20

30

40

50

60

70

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

US REASONS FOR UNEMPLOYMENT


*Includes persons who completed temporary jobsSource: US Bureau of Labor Statistics

Percent of unemployed

Job losers*

Reentrants

Job Leavers

New Entrants

US labour market data remains mixed; 156 thousand jobs were created in September, and the 3-month moving average now stands at 192 thousand. The unemployment rate ticked up to 5.0%, due to an increase in labour force participation rate (which remains low). Meanwhile, the underemployed and those losing jobs remains elevated.


ECONOMIC MONITOR

MONTHLY REVIEW ►UNITED STATES – WAGE INFLATION


-12

-9

-6

-3

0

3

6

9

12

15

18

90 92 94 96 98 00 02 04 06 08 10 12 14 16

US MANUFACTURING UNIT LABOUR COSTS




1

2

3

4

5

6

90 92 94 96 98 00 02 04 06 08 10 12 14 16

US EMPLOYMENT COST INDEX - TOTAL


Total – Includes BenefitsPercent change year-over-year


-12

-9

-6

-3

0

3

6

9

12

15

18

90 92 94 96 98 00 02 04 06 08 10 12 14 16

US MANUFACTURING UNIT LABOUR COSTS




1

2

3

4

5

6

90 92 94 96 98 00 02 04 06 08 10 12 14 16

US EMPLOYMENT COST INDEX - TOTAL


Total – Includes BenefitsPercent change year-over-year


-2

0

2

4

6

8

10

90 92 94 96 98 00 02 04 06 08 10 12 14 16

US HOURLY WAGE COMPENSATION INDEX




-6

-4

-2

0

2

4

6

90 92 94 96 98 00 02 04 06 08 10 12 14 16

US BUSINESS UNIT LABOUR COSTS




1

2

3

4

5

6

90 92 94 96 98 00 02 04 06 08 10 12 14 16

US EMPLOYMENT COST INDEX - PARTIAL


Partial – Wages and Salaries onlyPercent change year-over-year


-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 16

TotalCore

US CONSUMER PRICE INFLATION

Last month August 2016Percent change year-over-year

Seasonally adjusted


-2

0

2

4

6

8

10

90 92 94 96 98 00 02 04 06 08 10 12 14 16

US HOURLY WAGE COMPENSATION INDEX




-6

-4

-2

0

2

4

6

90 92 94 96 98 00 02 04 06 08 10 12 14 16

US BUSINESS UNIT LABOUR COSTS



US wage inflation is trending sideways. Although hourly earnings have increased, overall labour cost declined in 2016-Q2 for all businesses and for manufacturing more specifically.


1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

90 92 94 96 98 00 02 04 06 08 10 12 14 16

US HOURLY EARNINGS

Last month: September 2016Percent change year-over-year

Seasonally adjusted

Production and nonsupervisory employees

All Employees

0

10

20

30

40

50

60

70

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

US REASONS FOR UNEMPLOYMENT


*Includes persons who completed temporary jobsSource: US Bureau of Labor Statistics

Percent of unemployed

Job losers*

Reentrants

Job Leavers

New Entrants


-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 16

DifferenceLong-term Bond30-yr Inflation-Protected Bonds

US INFLATION EXPECTATIONS


The “difference” is a measure of inflation expectations!

Percent

Source: Federal Reserve, Dundee Economics

-7

-6

-5

-4

-3

-2

-1

0

1

79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 1560

70

80

90

100

110

120

130

140US CURRENT ACCOUNT BALANCE

US$ index (EFXR0)

Current account as percent of GDP

Source: US Census Bureau, WSJ, Dundee Economics


MONTHLY REVIEW ►UNITED STATES – INFLATION

Both headline and core inflation rates are trending sideways

and likely to remain low ...

... PCE inflation remains well below the Fed’s target ...

... and inflation expectations are also stable/low.

-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 16

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

US PRODUCER PRICE INFLATION



-2

-1

0

1

2

3

4

5

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

TotalCore



Fed’s Target

US PERSONAL CONSUMPTION EXPENDITURE INFLATION

Source: US Bureau Economic Analysis


1

2

3

4

5

6

90 92 94 96 98 00 02 04 06 08 10 12 14 16

US EMPLOYMENT COST INDEX - PARTIAL


Partial – Wages and Salaries onlyPercent change year-over-year


-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 16

TotalCore

US CONSUMER PRICE INFLATION

Last month August 2016Percent change year-over-year

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 16

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

US PRODUCER PRICE INFLATION



-2

-1

0

1

2

3

4

5

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

TotalCore



Fed’s Target

US PERSONAL CONSUMPTION EXPENDITURE INFLATION

Source: US Bureau Economic Analysis


ECONOMIC MONITOR

... and the sharp contraction in the petroleum deficit!

The US trade deficit has been flat in recent months on the back

of weaker domestic growth ...

The US current account deficit is rising again, which is one reason we expected the US

dollar to decline in 2017-2018.

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Petroleum Balance

Non-Petroleum Balance

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16-900

-800

-700

-600

-500

-400

-300

-200

-100

0

Monthly Trade Balance Goods

12 mo moving total Goods

US Trade Balance With World

Last date: August 2016 12 mo. moving total, bn$


billion$


Last date: August 2016


billion$

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Petroleum Balance

Non-Petroleum Balance

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16-900

-800

-700

-600

-500

-400

-300

-200

-100

0

Monthly Trade Balance Goods

12 mo moving total Goods


Last date: August 2016 12 mo. moving total, bn$


billion$




billion$

-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 16

DifferenceLong-term Bond30-yr Inflation-Protected Bonds

US INFLATION EXPECTATIONS


The “difference” is a measure of inflation expectations!

Percent

Source: Federal Reserve, Dundee Economics

-7

-6

-5

-4

-3

-2

-1

0

1

79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 1560

70

80

90

100

110

120

130

140US CURRENT ACCOUNT BALANCE

US$ index (EFXR0)

Current account as percent of GDP

Source: US Census Bureau, WSJ, Dundee Economics


MONTHLY REVIEW ►UNITED STATES – CURRENT ACCOUNT AND TRADE BALANCE


The US continues to post very large trade deficits with

China, the EU, and Japan.

-18

-15

-12

-9

-6

-3

0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16-180

-150

-120

-90

-60

-30

0

-10

-9

-8

-7

-6

-5

-4

-3

-2

-1

0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0US TRADE BALANCE WITH JAPAN



12 mo. moving total, bn$billion$

US TRADE BALANCE WITH EUROPEAN UNION




-40

-35

-30

-25

-20

-15

-10

-5

0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16-400

-350

-300

-250

-200

-150

-100

-50

0

-50

-45

-40

-35

-30

-25

-20

-15

-10

-5

0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16-500

-450

-400

-350

-300

-250

-200

-150

-100

-50

0

Crude Oil

Crude Oil, 12-mo moving total

Total Energy Related PetroleumProducts, 12- mo moving total

US IMPORTS OF CRUDE OIL

Last date: August 2016billion$ 12-mo. moving total, bn$


US TRADE BALANCE WITH CHINA




MONTHLY REVIEW ►UNITED STATES – TRADE BALANCE

-12

-10

-8

-6

-4

-2

0

2

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16-90

-75

-60

-45

-30

-15

0

15US TRADE BALANCE WITH CANADA




300

900

1500

2100

2700

3300

3900

4500

5100

08 09 10 11 12 13 14 15 16

FEDERAL RESERVE BALANCE SHEETTotal Assets in Billions

Last date: October 5, 2016

Other Assets

Currency Swap lines

Liquidity to Banks

Commercial Paper Market

Securitization Market (support for mortgages)

Agency Debt

US Treasuries

Other CreditExtensions


-40

-35

-30

-25

-20

-15

-10

-5

0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16-400

-350

-300

-250

-200

-150

-100

-50

0

-50

-45

-40

-35

-30

-25

-20

-15

-10

-5

0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16-500

-450

-400

-350

-300

-250

-200

-150

-100

-50

0

Crude Oil

Crude Oil, 12-mo moving total

Total Energy Related PetroleumProducts, 12- mo moving total

US IMPORTS OF CRUDE OIL

Last date: August 2016billion$ 12-mo. moving total, bn$


US TRADE BALANCE WITH CHINA




-18

-15

-12

-9

-6

-3

0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16-180

-150

-120

-90

-60

-30

0

-10

-9

-8

-7

-6

-5

-4

-3

-2

-1

0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0US TRADE BALANCE WITH JAPAN




US TRADE BALANCE WITH EUROPEAN UNION





ECONOMIC MONITOR

Since QE3 ended in 2014, the Fed’s balance sheet has stabilized

at just over $4.5 trillion. Even as the Fed slowly increases

short-term interest rates the balance sheet will remain elevated

for the foreseeable future.

... but M2-velocity continues to plunge!

The M2 money supply increased at 7.5% year-over-year in August ...

MONTHLY REVIEW ►UNITED STATES – MONETARY POLICY

-12

-10

-8

-6

-4

-2

0

2

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16-90

-75

-60

-45

-30

-15

0

15US TRADE BALANCE WITH CANADA




300

900

1500

2100

2700

3300

3900

4500

5100

08 09 10 11 12 13 14 15 16

FEDERAL RESERVE BALANCE SHEETTotal Assets in Billions

Last date: October 5, 2016

Other Assets

Currency Swap lines

Liquidity to Banks

Commercial Paper Market

Securitization Market (support for mortgages)

Agency Debt

US Treasuries

Other CreditExtensions


6

7

8

9

10

11

12

13

2007 2008 2009 2010 2011 2012 2013 2014 2015 20160.0

1.5

3.0

4.5

6.0

7.5

9.0

10.5US M2 MONEY SUPPLY

M2 money supply trillions$



Source: Federal Reserve

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 16

US M2 VELOCITY Velocity (Nominal GDP/ M2)

Last date: 2016 Q2

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

6

7

8

9

10

11

12

13

2007 2008 2009 2010 2011 2012 2013 2014 2015 20160.0

1.5

3.0

4.5

6.0

7.5

9.0

10.5US M2 MONEY SUPPLY

M2 money supply trillions$




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 16

US M2 VELOCITY Velocity (Nominal GDP/ M2)

Last date: 2016 Q2

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


MONTHLY REVIEW ►UNITED STATES – HOUSEHOLD DEBT

0.3

0.4

0.5

0.6

0.7

0.8

2005 2008 2011 2014-12

-6

0

6

12

18US HOME EQUITY REVOLVING DEBT

Percent change year-over-year$ Trillion


Last quarter: 2016 Q2

0.5

0.6

0.7

0.8

0.9

2005 2008 2011 2014-12

-6

0

6

12US CREDIT CARD DEBT




0

2

4

6

8

10

12

14

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$ trillions


Mortgage

Home Equity

Credit Card Other


US TOTAL HOUSEHOLD DEBT

4

5

6

7

8

9

10

2005 2007 2009 2011 2013 2015-10

-5

0

5

10

15

20US MORTGAGE DEBT




0

2

4

6

8

10

12

14

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$ trillions


Mortgage

Home Equity

Credit Card Other


US TOTAL HOUSEHOLD DEBT

4

5

6

7

8

9

10

2005 2007 2009 2011 2013 2015-10

-5

0

5

10

15

20US MORTGAGE DEBT




0.3

0.4

0.5

0.6

0.7

0.8

2005 2008 2011 2014-12

-6

0

6

12

18US HOME EQUITY REVOLVING DEBT




0.5

0.6

0.7

0.8

0.9

2005 2008 2011 2014-12

-6

0

6

12US CREDIT CARD DEBT




0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

2005 2008 2011 20143

6

9

12

15

18

21

24US STUDENT LOAN DEBT




0.6

0.7

0.8

0.9

1.0

1.1

1.2

2005 2008 2011 2014-15

-10

-5

0

5

10

15US AUTO LOAN DEBT



Last quarter: 2016 Q2 0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

2005 2008 2011 20143

6

9

12

15

18

21

24US STUDENT LOAN DEBT




0.6

0.7

0.8

0.9

1.0

1.1

1.2

2005 2008 2011 2014-15

-10

-5

0

5

10

15US AUTO LOAN DEBT




Total US household debt, at $12.3 trillion, increased only slightly in 2016-Q2. Mortgage debt, the largest component of household debt, is not increasing significantly, but auto and student debt are. Home equity revolving debt continues to decline.


ECONOMIC MONITOR

... but US equity markets have come off all-time highs set at the beginning of September.

... total household assets (and net-worth) set new highs in 2016-Q2 ...

Consumer confidence is on the rise ...

MONTHLY REVIEW ►UNITED STATES – WEALTH CREATION

0

20

40

60

80

100

120

1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

Total AssetsTotal LiabilitiesNet Worth

US HOUSEHOLD SECTOR – NET WORTHTrillion $


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 16

US CONSUMER CONFIDENCE INDEX

Last month: September 20161985 = 100


Source: Federal Reserve, Thomson Reuters Datastream0

20

40

60

80

100

120

1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

Total AssetsTotal LiabilitiesNet Worth

US HOUSEHOLD SECTOR – NET WORTHTrillion $


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 16

US CONSUMER CONFIDENCE INDEX

Last month: September 20161985 = 100


Source: Federal Reserve, Thomson Reuters Datastream

600

900

1200

1500

1800

2100

2400

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

S&P 500



100

200

300

400

500

600

700

800

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

Energy Sector Index



S&P 500 ENERGY



The Energy, Financials, and (to a lesser extent Materials) sectors have lagged the S&P500 index.


MONTHLY REVIEW ►UNITED STATES – S&P500 GICS SECTORS600

900

1200

1500

1800

2100

2400

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

S&P 500



100

200

300

400

500

600

700

800

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

Energy Sector Index



S&P 500 ENERGY


100

130

160

190

220

250

280

310

340

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




S&P 500 MATERIALS


100

150

200

250

300

350

400

450

500

550

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

Industrials Sector Index

50-day moving average200-day moving average

S&P 500 INDUSTRIALS


100

130

160

190

220

250

280

310

340

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




S&P 500 MATERIALS


100

150

200

250

300

350

400

450

500

550

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

Industrials Sector Index

50-day moving average200-day moving average

S&P 500 INDUSTRIALS


100

200

300

400

500

600

700

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

Consumer Discretionary Sector Index50-day moving average200-day moving average

S&P 500 CONSUMER DISCRETIONARY


150

200

250

300

350

400

450

500

550

600

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

Consumer Staples Sector Index50-day moving average200-day moving average

S&P 500 CONSUMER STAPLES


100

200

300

400

500

600

700

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

Consumer Discretionary Sector Index50-day moving average200-day moving average

S&P 500 CONSUMER DISCRETIONARY


150

200

250

300

350

400

450

500

550

600

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

Consumer Staples Sector Index50-day moving average200-day moving average

S&P 500 CONSUMER STAPLES


200

300

400

500

600

700

800

900

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

Health Care Sector Index



S&P 500 HEALTH CARE


0

100

200

300

400

500

600

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

Financials Sector Index



S&P 500 FINANCIALS


200

300

400

500

600

700

800

900

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

Health Care Sector Index



S&P 500 HEALTH CARE


0

100

200

300

400

500

600

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

Financials Sector Index



S&P 500 FINANCIALS


150

300

450

600

750

900

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

Info Tech Sector Index



S&P 500 INFORMATION TECHNOLOGY


60

80

100

120

140

160

180

200

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

Telecom Sector Index50-day moving average200-day moving average

S&P 500 TELECOMMUNICATION


0

1

2

3

4

5

6

05 06 07 08 09 10 11 12 13 14 15 16

US INTEREST RATESWeekly dataLast Date: October 7, 2016

US Government 10-year yield

T-Bills

Percent


50

75

100

125

150

175

200

225

250

275

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


S&P 500 UTILITIES


150

300

450

600

750

900

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

Info Tech Sector Index



S&P 500 INFORMATION TECHNOLOGY


60

80

100

120

140

160

180

200

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

Telecom Sector Index50-day moving average200-day moving average

S&P 500 TELECOMMUNICATION



ECONOMIC MONITOR

... but the yield on high-yield bonds have declined.

The yield on AAA corporate bonds has risen in recent weeks

but remains very low ...

The yield on 10-year Treasuries has increased slightly from recent lows.

0

1

2

3

4

5

6

05 06 07 08 09 10 11 12 13 14 15 16

US INTEREST RATESWeekly dataLast Date: October 7, 2016

US Government 10-year yield

T-Bills

Percent


50

75

100

125

150

175

200

225

250

275

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


S&P 500 UTILITIES


AAA CORPORATE BOND YIELDS

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

05 06 07 08 09 10 11 12 13 14 15 16

Percent Moody’s AAA Yield

4

8

12

16

20

24

05 06 07 08 09 10 11 12 13 14 15 16

HIGH YIELD BOND YIELDSPercent - Merrill Lynch High Yield Corporate Bond Yield



Weekly dataLast Date: October 7, 2016


AAA CORPORATE BOND YIELDS

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

05 06 07 08 09 10 11 12 13 14 15 16

Percent Moody’s AAA Yield

4

8

12

16

20

24

05 06 07 08 09 10 11 12 13 14 15 16

HIGH YIELD BOND YIELDSPercent - Merrill Lynch High Yield Corporate Bond Yield





MONTHLY REVIEW ►UNITED STATES – INTEREST RATES


The US dollar has trended sideways in recent months.

We think the dollar has peaked for this cycle ...

... but its decline will be slow and hesitant. (The UK pound has

declined significantly since the BREXIT vote for example, which

affects the US dollar index.)

75

80

85

90

95

100

105

110

115

120

125

13005 06 07 08 09 10 11 12 13 14 15 16 16

Units per US dollar

JAPANESE YEN


65

70

75

80

85

90

95

100

05 06 07 08 09 10 11 12 13 14 15 16

Weekly, last date: October 7, 2016

US DOLLAR INDEX - NEWEFXR


Euro, Yen, Pound, Rupee,Cdn$, Yuan, Swiss Franc, Aus$


75

80

85

90

95

100

105

110

115

120

125

13005 06 07 08 09 10 11 12 13 14 15 16 16

Units per US dollar

JAPANESE YEN


65

70

75

80

85

90

95

100

05 06 07 08 09 10 11 12 13 14 15 16


US DOLLAR INDEX - NEWEFXR


Euro, Yen, Pound, Rupee,Cdn$, Yuan, Swiss Franc, Aus$


5.5

6.0

6.5

7.0

7.5

8.0

8.505 06 07 08 09 10 11 12 13 14 15 16

CHINESE RENMINBI (YUAN)Units/US$Axis inverted

115

130

145

160

175

190

205

220

05 06 07 08 09 10 11 12 13 14 15 161.0

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 ►INTERNATIONAL – EXCHANGE RATES

5.5

6.0

6.5

7.0

7.5

8.0

8.505 06 07 08 09 10 11 12 13 14 15 16

CHINESE RENMINBI (YUAN)Units/US$Axis inverted

115

130

145

160

175

190

205

220

05 06 07 08 09 10 11 12 13 14 15 161.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

PoundEuro

Pound - UScents/Pound

POUND STERLING AND EUROEuro - US$/euro






ECONOMIC MONITOR

Government bond yields are off recent lows, and may well have bottomed, finally, for the cycle.

Ironically, US Treasuries are “high yield” government

bonds these days ... !

1

2

3

4

5

6

05 06 07 08 09 10 11 12 13 14 15 16

US 10-YEAR BOND YIELD


0

1

2

3

4

5

6

05 06 07 08 09 10 11 12 13 14 15 16 16

UK 10-YEAR BOND YIELD


Weekly dataLast date: October 7, 2016


1

2

3

4

5

6

05 06 07 08 09 10 11 12 13 14 15 16

US 10-YEAR BOND YIELD


0

1

2

3

4

5

6

05 06 07 08 09 10 11 12 13 14 15 16 16

UK 10-YEAR BOND YIELD




-1

0

1

2

3

4

5

05 06 07 08 09 10 11 12 13 14 15 16


GERMANY 10-YEAR BOND YIELD


-0.5

0.0

0.5

1.0

1.5

2.0

2.5

05 06 07 08 09 10 11 12 13 14 15 16

JAPAN 10-YEAR BOND YIELD



MONTHLY REVIEW ►INTERNATIONAL – BOND YIELDS

-1

0

1

2

3

4

5

05 06 07 08 09 10 11 12 13 14 15 16


GERMANY 10-YEAR BOND YIELD


-0.5

0.0

0.5

1.0

1.5

2.0

2.5

05 06 07 08 09 10 11 12 13 14 15 16

JAPAN 10-YEAR BOND YIELD




MONTHLY REVIEW ►INTERNATIONAL – LEADING INDICATORS

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-6.0

-4.5

-3.0

-1.5

0.0

1.5

3.0

4.5

6.0EUROZONE LEADING INDICATORS

Source: Thompson Reuters Datastream, OECD

% month-to-month

% year-over-year

-0.9

-0.6

-0.3

0.0

0.3

0.6

0.9

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-9

-6

-3

0

3

6

9OECD LEADING INDICATORS



% month-to-month

% year-over-year


-1.2

-0.9

-0.6

-0.3

0.0

0.3

0.6

0.9

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-12

-9

-6

-3

0

3

6

9BRIICS LEADING INDICATORS


% month-to-month

% year-over-year

-1.6

-1.2

-0.8

-0.4

0.0

0.4

0.8

1.2

1.6

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-10.0

-7.5

-5.0

-2.5

0.0

2.5

5.0

7.5

10.0CHINA LEADING INDICATORS


% month-to-month

% year-over-year


Last month: April 2016

-0.3

-0.2

-0.1

0.0

0.1

0.2

0.3

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-3

-2

-1

0

1

2

3INDIA LEADING INDICATORS

% month-to-month

% year-over-year

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-4.8

-3.6

-2.4

-1.2

0.0

1.2

2.4

3.6JAPAN LEADING INDICATORS


% month-to-month

% year-over-year



-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-6.0

-4.5

-3.0

-1.5

0.0

1.5

3.0

4.5

6.0EUROZONE LEADING INDICATORS


% month-to-month

% year-over-year

-0.9

-0.6

-0.3

0.0

0.3

0.6

0.9

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-9

-6

-3

0

3

6

9OECD LEADING INDICATORS



% month-to-month

% year-over-year


-1.2

-0.9

-0.6

-0.3

0.0

0.3

0.6

0.9

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-12

-9

-6

-3

0

3

6

9BRIICS LEADING INDICATORS


% month-to-month

% year-over-year

-1.6

-1.2

-0.8

-0.4

0.0

0.4

0.8

1.2

1.6

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-10.0

-7.5

-5.0

-2.5

0.0

2.5

5.0

7.5

10.0CHINA LEADING INDICATORS


% month-to-month

% year-over-year


Last month: April 2016

-0.3

-0.2

-0.1

0.0

0.1

0.2

0.3

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-3

-2

-1

0

1

2

3INDIA LEADING INDICATORS

% month-to-month

% year-over-year

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-4.8

-3.6

-2.4

-1.2

0.0

1.2

2.4

3.6JAPAN LEADING INDICATORS


% month-to-month

% year-over-year



The OECD’s leading indicators point to subdued growth, with the exception of India’s LI.

-0.9

-0.6

-0.3

0.0

0.3

0.6

0.9

1.2

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-6

-4

-2

0

2

4

6

8UK LEADING INDICATORS



% month-to-month

% year-over-year

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-6.0

-4.5

-3.0

-1.5

0.0

1.5

3.0

4.5

6.0CANADA LEADING INDICATORS


% month-to-month

% year-over-year

Source: Thomson Reuters Datastream, OECD

-0.9

-0.6

-0.3

0.0

0.3

0.6

0.9

1.2

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-6

-4

-2

0

2

4

6

8UK LEADING INDICATORS



% month-to-month

% year-over-year

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016-6.0

-4.5

-3.0

-1.5

0.0

1.5

3.0

4.5

6.0CANADA LEADING INDICATORS


% month-to-month

% year-over-year


ECONOMIC MONITOR

COMMODITY PRICES1. Bank of Canada Commodity Price Indices (Weekly data to October 7, 2016)

250

300

350

400

450

500

550

600

650

700

750

800

10 11 12 13 14 15 16

Bank of Canada Total Commodity Index

20 commodities produced in Canada

TOTAL COMMODITY

275

300

325

350

375

400

425

450

10 11 12 13 14 15 16

Bank of Canada Total CommodityLess Energy Index

TOTAL LESS ENERGY

400

600

800

1000

1200

1400

1600

1800

2000

2200

10 11 12 13 14 15 16

Bank of Canada Energy Index

ENERGY

180

200

220

240

260

280

300

320

340

10 11 12 13 14 15 16

Bank of Canada Agriculture Index

AGRICULTURE

450

500

550

600

650

700

750

800

850

10 11 12 13 14 15 16

Bank of Canada Industrial Materials Index

METALS AND MINERALS

250

300

350

400

450

500

550

600

650

700

750

800

10 11 12 13 14 15 16

S&P GSCI COMMODITY

Energy weight: 75% 150

175

200

225

250

275

300

325

350

375

10 11 12 13 14 15 16

Reuters-Jefferies CRB Index

REUTERS/JEFFERIES CRB

Energy weight: 33%100

120

140

160

180

200

220

240

10 11 12 13 14 15 16

25 commodities

ECONOMIST COMMODITY PRICE

2. Other Indices (Weekly data to October 7, 2016)

The recent uptrend in commodity prices has stalled ...

... but if we are right on the US dollar rolling over, we’d expect some improvement in commodity prices in 2017.

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


COMMODITY PRICES3. Metals (Weekly data to October 7, 2016)

6000

8000

10000

12000

14000

16000

18000

20000

22000

24000

26000

28000

30000

10 11 12 13 14 15 16

US$/tonne

NICKEL

100

150

200

250

300

350

400

450

500

10 11 12 13 14 15 16

COPPERUS cents/lb

1300

1500

1700

1900

2100

2300

2500

2700

10 11 12 13 14 15 16

US$/tonne

ZINC

1400

1600

1800

2000

2200

2400

2600

2800

3000

10 11 12 13 14 15 16

US$/tonne

ALUMINUM

1500

1750

2000

2250

2500

2750

3000

10 11 12 13 14 15 16

US$/tonne

LEAD

700

900

1100

1300

1500

1700

1900

2100

10 11 12 13 14 15 16

GOLDUS$/oz

800

900

1000

1100

1200

1300

1400

1500

1600

1700

1800

1900

2000

10 11 12 13 14 15 16

US$/oz

PLATINUM

1000

1500

2000

2500

3000

3500

4000

4500

5000

10 11 12 13 14 15 16

US cents/oz

SILVER

The price of metals dependent upon global growth (i.e. copper) remain subdued. Gold and silver have declined slightly on concern that central banks are going to end QE programs.

Sources: LME, LBMA, Wall Street Journal


ECONOMIC MONITOR

COMMODITY PRICES4. Energy (Weekly data to October 7, 2016)

20

30

40

50

60

70

80

90

100

110

120

130

10 11 12 13 14 15 16

NY oilBrent oil

US$/bbl

SPOT OIL PRICES

1

2

3

4

5

6

7

10 11 12 13 14 15 16

Henry Hub

US$/million BTU

NATURAL GAS

10000

11000

12000

13000

14000

15000

16000

10 11 12 13 14 15 16

TSX Composite13 wk ma52 wk ma

S&P/TSX INDEX

800

1000

1200

1400

1600

1800

2000

2200

10 11 12 13 14 15 16

S&P 50013 wk ma52 wk ma

S&P500 INDEX

7500

9000

10500

12000

13500

15000

16500

18000

19500

10 11 12 13 14 15 16

DJI13 wk ma52 wk ma

DOW JONES INDUSTRIALS

1500

2000

2500

3000

3500

4000

4500

5000

5500

10 11 12 13 14 15 16

NASDAQ13 wk ma52 wk ma

NASDAQ INDEX

EQUITY MARKETS 5. North America (Weekly data to October 7, 2016)

North American equity markets have retreated from recent highs. We remain constructive on the S&P 500 and S&P/TSX , but we cannot rule out significant volatility this fall. The US political environment is still very uncertain and US growth remains subdued.

Oil prices increased to just over $50 per barrel after OPEC agreed to limit production. However, nothing is certain when it comes to OPEC, so we’ll have to wait and see. Low oil prices are hurting OPEC revenues however ... !?



6000

8000

10000

12000

14000

16000

18000

20000

22000

10 11 12 13 14 15 16

JAPAN

Nikkei4000

6000

8000

10000

12000

14000

10 11 12 13 14 15 16

GERMANY

DAX12000

15000

18000

21000

24000

27000

30000

33000

10 11 12 13 14 15 16

INDIA

Bombay SENSEX

1500

2000

2500

3000

3500

4000

4500

5000

5500

10 11 12 13 14 15 16

CHINA

Shanghai Composite 600

800

1000

1200

1400

1600

1800

2000

2200

2400

10 11 12 13 14 15 16

RUSSIA

RTS-1

1200

1300

1400

1500

1600

1700

1800

1900

2000

2100

10 11 12 13 14 15 16

MSCI EAFE INDEX

35000

40000

45000

50000

55000

60000

65000

70000

75000

10 11 12 13 14 15 16

BRAZIL

Bovespa1000

1100

1200

1300

1400

1500

1600

1700

1800

1900

10 11 12 13 14 15 16

MSCI WORLD INDEX

EQUITY MARKETS 6. Around the world (Weekly data through October 7, 2016)

27000

30000

33000

36000

39000

42000

45000

48000

51000

10 11 12 13 14 15 16

MEXICO

Mexican IPC


ECONOMIC MONITOR


Exchange Rates - Comparison of Scenarios*Actual Projected

16-I 16-II 16-III 12-Oct Nov Dec Jan 17-I 17-II 17-III 17-IVUS Dollar incl Cdn$Scenario A 99.32 101.5 103.6 105.2 108.0 108.6 109.1Scenario B 98.69 93.61 93.66 95.80 95.01 95.32 95.17 95.17 94.43 93.45 92.02Scenario C 92.49 91.44 90.41 89.21 85.89 84.25 83.16Probability-Weighted 95.51 95.98 96.18 96.31 95.82 95.09 94.22

Canadian DollarScenario A 1.385 1.400 1.420 1.440 1.465 1.470 1.475Scenario B 1.373 1.288 1.304 1.326 1.330 1.340 1.335 1.335 1.330 1.325 1.325Scenario C 1.300 1.295 1.290 1.280 1.255 1.250 1.245Probability-Weighted 1.336 1.344 1.345 1.348 1.345 1.343 1.343

Japanese YenScenario A 106.0 109.0 111.0 112.5 115.0 116.0 116.0Scenario B 115.4 108.2 102.5 104.2 100.5 100.5 100.5 100.5 100.0 99.5 98.5Scenario C 99.0 98.0 97.0 96.0 93.0 91.00 90.00Probability-Weighted 101.5 102.0 102.3 102.4 102.0 101.5 100.8

British PoundScenario A 116.6 112.3 108.0 104.9 98.7 97.2 95.3Scenario B 143.1 143.5 131.6 122.2 121.0 121.0 121.0 121.0 122.1 124.2 128.4Scenario C 126.5 129.9 133.3 136.8 146.2 152.2 157.2Probability-Weighted 120.8 120.2 119.6 119.3 119.9 121.7 124.2

EuroScenario A 1.060 1.030 1.000 0.980 0.940 0.935 0.925Scenario B 1.102 1.129 1.116 1.102 1.100 1.100 1.100 1.100 1.120 1.150 1.200Scenario C 1.140 1.160 1.180 1.200 1.260 1.290 1.310Probability-Weighted 1.100 1.098 1.095 1.095 1.110 1.131 1.159

Australian DollarScenario A 70.76 69.64 68.31 67.36 65.87 65.65 65.42Scenario B 72.14 74.60 75.71 75.67 75.19 74.63 74.91 74.91 75.19 75.47 75.47Scenario C 77.69 77.99 78.29 78.91 80.48 80.80 81.12Probability-Weighted 74.71 74.22 74.10 74.02 74.18 74.35 74.37

Chinese Yuan/RmbScenario A 6.800 6.850 6.950 7.050 7.300 7.500 7.600Scenario B 6.542 6.534 6.667 6.719 6.720 6.750 6.800 6.800 6.850 6.700 6.500Scenario C 6.720 6.720 6.710 6.700 6.500 6.350 6.200Probability-Weighted 6.740 6.768 6.815 6.838 6.875 6.813 6.700

Indian RupeeScenario A 68.50 69.75 71.00 72.00 73.50 74.00 75.00Scenario B 67.50 66.89 66.97 66.82 67.00 67.50 68.00 68.00 68.00 67.00 66.00Scenario C 66.25 65.75 65.25 64.75 64.00 63.50 63.00Probability-Weighted 67.19 67.63 68.06 68.19 68.38 67.88 67.50

* Scenario A: Pound/Euro/RMB Weak - US Dollar Very Strong - Non-US Growth Weakens Scenario B: Modest US Growth - Clinton Administration Attemps Dollar Weakening Scenario C: Fed Does Not Hike - Brexit Delayed - ECB/BoJ End QE

Source: WSJ, Thomson Reuters Datastream, Dundee Economics


Interest Rates - Comparison of ScenariosActual Projected

16-I 16-II 16-III 12-Oct Nov Dec Jan 17-I 17-II 17-III 17-IV

Canadian Interest RatesT-Bills (91-day)Scenario A 0.53 0.54 0.55 0.65 0.90 1.15 1.30Scenario B 0.46 0.52 0.53 0.50 0.51 0.50 0.50 0.50 0.50 0.50 0.50Scenario C 0.50 0.25 0.25 0.20 0.20 0.20 0.20Probability-Weighted 0.52 0.48 0.48 0.51 0.60 0.68 0.74

10-year BondsScenario A 1.40 1.55 1.70 1.90 2.15 2.35 2.50Scenario B 1.20 1.33 1.04 1.21 1.20 1.30 1.25 1.35 1.45 1.50 1.60Scenario C 0.90 0.80 0.75 0.65 0.60 0.55 0.50Probability-Weighted 1.23 1.31 1.33 1.44 1.57 1.66 1.75

Target Overnight RateScenario A 0.50 0.50 0.50 0.58 0.83 1.08 1.25Scenario B 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50Scenario C 0.50 0.25 0.25 0.25 0.25 0.25 0.25Probability-Weighted 0.50 0.46 0.46 0.49 0.58 0.67 0.73

US Interest RatesT-Bills (90-day)Scenario A 0.44 0.46 0.58 0.75 0.92 1.08 1.25Scenario B 0.29 0.26 0.31 0.36 0.36 0.57 0.60 0.60 0.60 0.60 0.68Scenario C 0.35 0.32 0.32 0.20 0.10 0.08 0.05Probability-Weighted 0.39 0.49 0.55 0.59 0.64 0.69 0.79

10-year BondsScenario A 1.95 2.10 2.25 2.45 2.70 2.95 3.10Scenario B 1.82 1.72 1.58 1.77 1.75 1.85 1.85 1.95 2.10 2.15 2.25Bonds - Scenario C 1.50 1.40 1.30 1.15 1.05 1.00 0.95Probability-Weighted 1.78 1.87 1.91 2.01 2.15 2.26 2.35

Fed Funds RateScenario A 0.60 0.62 0.63 0.77 0.93 1.10 1.27Scenario B 0.36 0.37 0.41 0.44 0.44 0.60 0.62 0.62 0.62 0.62 0.70Scenario C 0.41 0.39 0.37 0.25 0.12 0.10 0.10Probability-Weighted 0.49 0.58 0.59 0.62 0.65 0.71 0.81

*Scenario A: Growth/Inflation Accelerate - Four Fed hikes Scenario B: Fed Hikes in December - Bank of Canada Stands Pat Scenario C: US Growth Stalls - Fed and Bank of Canada Cut RatesSource: WSJ, Thomson Reuters Datastream, Dundee Economics

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Documents

ECONOMIC MONITOR · GDP in 2016-Q3 is 2.2% (and 1.3% for Q4), while the Fed of Atlanta’s “GDPNow” projection is 2.1% for Q3. Growth will not very robust for 2016-H2. The IMF