Market Insights. March 29, 2019

Transcription

1 March 29, 2019

2 Economic Overview 2

3 Global & Regional Growth Forecasts IMF GDP Forecasts (% change YoY) Advanced Economies 1.2% 1.4% 2.1% 2.3% 1.7% 2.4% 2.3% 2.0% 1.7% Emerging Markets 5.3% 5.1% 4.7% 4.3% 4.4% 4.7% 4.6% 4.5% 4.9% World 3.5% 3.5% 3.6% 3.5% 3.3% 3.8% 3.7% 3.5% 3.6% 10% 8% % 4% 2% 0% -2% World Japan Canada Euro US Russia Brazil China India -4% -6% 3

4 China European Union United States India Japan Russia Brazil Indonesia Mexico South Korea Saudi Arabia Canada Turkey Australia Taiwan Switerland Norway Dominant Contributors of Global GDP IMF Share of World GDP based on Purchasing Power Parity (Year Ending 2018) 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 4

5 Global Mergers & Acquisitions M&A Transaction Value Global Index by Quarter (15 years)

6 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Closer Look at China Export results provide valuable insight China Exports (exports by quarter) (USD billion) $ $ $ $ $50.00 $- 6

7 Closer Look at China % of GDP NSA Cumulative (10 years in CNY) 60% 50% 40% 30% 20% Farming and Forestry Industrie et construction Services 10% 0%

8 Total and Core CPI Canada and US Total and Core CPI (% change YoY) Canada US 4% CAN - Total CPI CAN - Core CPI 6% US - Total CPI US - Core CPI 3% 5% 4% 2% 3% 1% 2% 1% 0% 0% -1% -1% -2% -2% -3% 8

9 Consumer Spending & Business Investment Real Consumer Spending (q/q % a.r.) Real Business Investment (q/q % a.r.) 6.0% 6.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0% 2.0% 1.0% Canada USA 2.0% 1.0% Canada É.-U. 0.0% 0.0% -1.0% -1.0% -2.0% %

10 Corporate Profits Corporate Profits Growth Rate (% change YoY) US Corporate Profits Canada Corporate Profits 40% 20% 60% 40% 0% 20% -20% -40% -60% -80% -100% 0% -20% -40% -60% -80% -100% -120% % US Corporate Profits Without IVA and CCA Profits After Tax SAAR (in billions) Bank of Canada Corporate Profits After Taxes SAAR 10

11 Job Market US Unemployment Rate Canadian Unemployment Rate 12.0% 12.0% 10.0% 8.0% 6.0% 9.3% 9.6% 8.9% 8.1% 7.4% 6.2% 5.3% 4.9% 4.4% 3.9% 10.0% 8.0% 6.0% 8.4% 8.0% 7.5% 7.3% 7.1% 6.9% 6.9% 7.0% 6.3% 5.8% 4.0% 4.0% 2.0% 2.0% 0.0% %

12 Closer look at Canada GDP Breakdown GDP Breakdown across commodity related sectors (Indexed) 115 Selected export related industries Industries most affected by commodity prices Rest of the Economy Note: Selected export-related industries includes manufacturing, agriculture, forestry, fishing and hunting, and transportation. Industries most affected by commodity prices includes mining, oil and gas, engineering and non-residential construction, and related professional services. 12

13 US Economic Indicators US Real GDP Growth US Core Inflation 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% %

14 US Leading Economic Indicator (LEI) 15 Years ending March Leading Economic Index

15 US Home Sales and Prices 5 Years ending March US Existing Home Sales vs. Last month 11.8% vs. Last year (1.8%) $290.0 $270.0 $250.0 $230.0 $210.0 $190.0 $170.0 US Existing Home Selling Prices vs. Last month 0.1% vs. Last year 3.6% $

16 How Does Canada s Housing Market Compare? Canada housing market vs. U.S. housing market 20% 15% Existing Homes Prices US Canada 10% 5% 0% -5% -10% -15% -20%

17 Commodities 17

18 Commodity Overview Bloomberg Commodity Index 15 Year Performance to March 29,

19 Crude reality: Price of Oil West Texas Intermediate ($US per barrel) 15 Year Price to March 29, 2019 $160 $140 $120 $100 $80 $60 $40 $20 $

20 Gold Bullion Gold (US$/troy ounce) 15 Year Price to March 29, 2019 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 20

21 Canada s PetroDollar The Canadian Dollar plots a similar course as the price of Oil CDN$ vs. Price of Crude Oil (10 Years) CADUSD (lhs) WTI Oil Price (rhs)

22 Currencies 22

23 Canadian Dollar vs. U.S. Dollar Years ending March 2019 $1.10 $1.05 $1.00 $0.95 $0.90 $0.85 $0.80 $0.75 $0.70 $0.65 $

24 FX Rates USD Comparisons 1 Year Rates to March 29, Yen vs. USD Euro vs. USD CDN vs. USD Apr-18 Oct Apr-18 Oct Apr-18 Oct-18 24

25 Jan-00 Dec-02 Dec-05 Dec-08 Dec-11 Dec-14 Dec-17 Dec-20 Dec-23 Dec-26 Dec-29 Dec-32 Dec-35 Dec-38 Dec-41 Dec-44 Dec-47 Dec-50 Dec-53 Dec-56 Dec-59 Dec-62 Dec-65 Dec-68 Dec-71 Dec-74 Dec-77 Dec-80 Dec-83 Dec-86 Dec-89 Dec-92 Dec-95 Dec-98 Dec-01 Dec-04 Dec-07 Dec-10 Dec-13 Dec-16 Emerging Market Currencies Exchange rates against the U.S. Dollar 3 Year Rates to March 29, 2019 (Indexed to 100 on March 31, 2016) Brazil Real Chilean Peso South African Rand Russia Rouble Indian Rupee Turkish Lira Argentine Peso Chinese Yuan 25

26 Currency The Hidden Difference n currencies vs. Canadian Dollar 1 Year Rates to March 29, 2019 to 100 on March 31, 2018) USDCAD EURCAD JPYCAD 80 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Comparing 1 Year returns in local currency to CDN$-based Canada U.S. Euro Area Japan Emerg. Markets China World S&P/TSX S&P500 MSCI Europe NR MSCI Japan NR MSCI EM NR MSCI China NR MSCI World Local Currency Returns 9.2% 12.0% 4.3% (3.6%) (1.7%) (5.5%) 8.2% CDN$-Based Returns 9.2% 15.9% (0.5%) (4.3%) (4.1%) (2.2%) 9.1% 26

27 Equities 27

28 A View of Global Market Indices S&P/TSX Composite Index Prices - 12 months ending March 29, Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 S&P/TSX S&P 500 Euro Area Japan Emerg. Mkts China World 1-Year returns to Mar 29: 9.2% 12.0% 4.3% (3.6%) (1.7%) (5.5%) 8.2% Year-to-Date: 13.3% 13.6% 11.6% 7.6% 9.8% 17.9% 12.6% Quarter-to-Date: 13.3% 13.6% 11.6% 7.6% 9.8% 17.9% 12.6% Month-to-Date: 0.5% 1.2% 1.4% (0.5%) 1.2% 1.4% 1.0% 28

29 Global Market Results 60,000 50,000 40,000 30,000 20,000 10, % ,000 6,000 5,000 4,000 3,000 2, , % S&P/TSX Composite Index S&P 500 Index 7,000 6,000 5,000 4,000 3,000 2, , % ,000 6,000 5,000 4,000 3,000 MSCI Europe Index MSCI Japan Index 2, , %

30 S&P/TSX by Sector S&P/TSX returns for 2018 and 2019 YTD 60% 50% 40% 30% 20% 10% 0% (10%) (20%) (30%) S&P/TSX Composite Index Health Care Information Technology Real Estate Utilities Energy Industrials Consumer Staples Financials Telecom Services Consumer Discretionary % 49.1% 26.0% 17.5% 16.1% 15.6% 15.3% 10.6% 10.4% 10.0% 9.8% 8.5% 2018 (8.9%) (15.9%) 13.0% 2.0% (8.9%) (18.3%) (2.4%) 2.0% (9.3%) (0.8%) (16.0%) (9.3%) Materials 30

31 Don t Fear the Fed S&P 500 Index following the Federal Reserve boosting interest rates May Nov 1959 July Nov July Aug March Aug Feb July 1974 Jan May 1980 July June 1981 Feb Aug June Dec Oct Sept Mar Mar Dec April 1995 June July 2000 Dec July % -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 31

32 Fixed Income 32

33 U.S. Fed Overnight Rate Fed Funds: Target Rate (%) 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 33

34 Bank of Canada Overnight Rate Bank of Canada Overnight Rate (%) 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 34

35 Central Bank Rates Central Bank Rates and 10-Year Government Bond Yields - 3 Years to March 29, 2019 Canada U.S Apr-16 Apr-17 Apr-18 Canada - Overnight Rate 10-Year GoC Mar-16 Mar-17 Mar-18 US - Overnight Rate 10-Year Treasury 35

36 Central Bank rates around the globe Central Bank Rates and 10-Year Government Bond Yields - 10 Years to March 29, % 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% Australia Canada England USA (Upper Range) ECB 1.00% 0.50% 0.00%

37 US Canada Mexico Germany Britain France Italy Spain Greece Switzerland Japan Australia New Zealand Hong Kong South Korea India 10 Year Government Bond Yields As of March 29, 2019, 3 months ago and 1 year ago (bps) 10% 8% 6% 4% 2% 0% Today 3 months ago 12 months ago -2% Americas Europe Asia 37