benjamin tal mbabc vancouver
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8/7/2019 Benjamin Tal MBABC Vancouver
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March 2011
Benjamin Tal
The New Mix
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Oil Prices & Recessions
Source: Wall Street Journal, CIBC
0
20
40
60
80
100
120
140
160
70 75 80 85 90 95 00 05 10
$/Barrel
?
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Money Is Not Exchanging Hands
1.4
1.5
1.6
1.7
1.8
1.9
2.0
2.1
2.2
92 94 96 98 00 02 04 06 08 10
Velocity of Money:Ratio of Nominal GDP to Money Supply M2 (Ratio)
Source: Statistics Canada, CIBC
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Record High Negative Equity Position
Source: LoanPerformance, CIBC
No. of Mortgages in
Negative Equity
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2006 2007 2008 2009 2010
mn
Distribution of
Negative Equity
0% to -10%
-20% andover
-10% to -20%
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Employees Now Working LongerWeekly Hours Than Before Recession
38.5
39.0
39.5
40.0
40.5
41.0
Mar-06 Nov-06 Jul-07 Mar-08 Nov-08 Jul-09 Mar-10
Hours worked in manufacturing
Source: Statistics Canada, CIBC
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US Manufacturing Still Expanding
ISM Diffusion Index (PMI) - Manufacturing
30
35
40
45
50
55
60
65
05 06 07 08 09 10
Contraction
Expansion
60
Source: US Federal Reserve, CIBC
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Strong Export Recovery
Source: Bureau of Economic Analysis, CIBC
Contribution of US
Exports & Investmentto Real GDP Growth
0
10
20
30
40
50
60
70
80
90
Avg. Post-
war
Current
First 5 quartersof recovery
(%)
Real Exports
85
90
95
100
105
110
115
120
125
1 2 3 4 5
Quarters since recession ends
82Q4 91Q1
01Q4 09Q2
Index: End of recession = 100
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Emerging Markets Sizeable Enough toCarry Global Recovery
Source: IMF, CIBC
Share of Global GDP
1992
US
Other
13%
2009
US
Other
24%EmergingMarkets
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Surging Exports to Emerging Markets
Source: US Census Bureau, CIBC
Diverging US Exports
80
90
100
110
120
130
140
150
160
J a n - 0 9
A p r - 0 9
J u l - 0 9
O c t - 0 9
J a n - 1 0
A p r - 1 0
rest of the world
emerging markets
Index Jan 2009=100
US$ Trade-Weighted
Indices (Exports)
80
85
90
95
100
105
Mar-09 Nov-09 Jul-10
US$ TWI (DevelopedWorld)
US$ TWI (EmergingMarkets)
Index Level
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The New Consumer
Source: IMF, CIBC
Retail Sales
80
90
100
110
120
130
140
150
160
2007 2008 2009 2010
Emerging market Advanced economies
Index 2007Q1=100
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US Manufacturing Is Restructuring
R&D Spending as a
share of MfgShipments
3.0
3.5
4.0
4.5
5.0
5.5
6.0
85 88 91 94 97 00 03 06 09
%
recession
Output Per Hour
(Manufacturing)
-4
-2
0
2
4
6
8
10
05 06 07 08 09 10
y/y % chg
Source: US Federal Reserve, CIBC
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Fastest Growing US Export Sectorsto China
Cumulative Year-to-September
(2010 vs. 2009)$Mn %
Motor cars and other motor vehicles 1399.7 204.5
Cotton textile fibers 630.2 130.3
Nonferrous base metal waste and scrap 581.2 62.3
Machinery and equipment specialized for particular industries 554.2 108.0
Food processing equipment 322.5 32.0
Wood in the rough or roughly squared 206.4 146.2
Pigments, paints, varnishes & related materials 188.7 117.8
Toys, games and sporting goods 151.5 177.0
Inorganic chemical elements, oxides and halogen
salts 151.1 63.3
Nitrogen-function compounds 113.8 71.7
Source: US Federal Reserve, CIBC
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Chinese StocksDon’t Always Reflect the Economy
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
00:Q1 01:Q3 03:Q1 04:Q3
4
5
6
7
8
9
10
11
Shanghai Composite (LHS)
Real GDP, y/y % chng (RHS)
Source: Bloomberg, CIBC
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Eurozone’s Debt Challenges: Fiscal AusteritySlows Growth, Weakens Euro
Source: Bloomberg, IMF, CIBC
0
5
10
15
20
25
Ireland Greece Spain Portugal
2
4
6
8
Refinancing needs for 2011 (L)
Structural budget deficit in 2011 (R)
% of GDP % of GDP
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Canada Has Limited Eurozone Exposure
Source: EuroStat, CIBC
0 10 20 30 40 50 60
Canada
Korea
Japan
India
US
China
Brazil
Russia
UK
% of total exports going to
Eurozone in 2009
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Bond Market Inflow Unprecedented
-2
0
2
4
6
8
88 90 92 94 96 98 00 02 04 06 08 10*
Bonds Only All Securities
Net Foreign Purchases of C dn Securities, % of GDP
* Annualized rate
Source: Statistics Canada, CIBC
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CDN Household LeverageReaching US Levels
Source: Statistics Canada, Federal Reserve Board, CIBC
0
50
100
150
200
Q1-90 Q1-94 Q1-98 Q1-02 Q1-06 Q1-10
United States C anada
% of Personal DisposableIncome
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Record High Gap BetweenUS and Canadian Savings Rates
Personal Savings Rate
0
1
2
3
4
5
6
7
04 05 06 07 08 09 10
Canada US
3 qtrs moving avg%
Personal Saving Rate
Gap - US vs. Cda
-10
-8
-6
-4
-2
0
2
4
80 86 92 98 04 10
3 qtrs moving avg%
Source: Statistics Canada, CIBC
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Real Household Credit
Source: Statistics Canada, CIBC
-0.5
0.0
0.5
1.0
1.52.0
2.5
3.0
3.5
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
q/q % chg
9-yr low
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Wealth Effect Reduced Saving RateOver the Past Decade
Cumulative Spending
Due to Real EstateWealth Effect
0
10
20
30
40
50
60
70
80
97 99 01 03 05 07 09
$ Bn
Saving Rate
3.0
3.2
3.4
3.6
3.84.0
4.2
4.4
4.6
Actual Excluding
the impact
of wealth
effect
Avg 1997-2010%
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Debt Service Ratios: Canada (L), US (R)
Source: Federal Reserve Board, Statistics Canada, CIBC
5
7
9
11
13
15
Q1-
90
Q1-
94
Q1-
98
Q1-
02
Q1-
06
Q1-
10
% of Personal DisposableIncome
5
7
9
11
13
15
Q1-
90
Q1-
94
Q1-
98
Q1-
02
Q1-
06
Q1-
10
% of Personal Disposable
Income
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Relative Performance of theMain Components of Personal Income
Real Labour Income per Capita
95
100
105
110
115
0 4 Q 4
0 5 Q 2
0 5 Q 4
0 6 Q 2
0 6 Q 4
0 7 Q 2
0 7 Q 4
0 8 Q 2
0 8 Q 4
0 9 Q 2
0 9 Q 4
1 0 Q 2
Canada US
2004Q4=100
Source: BEA, Statistics Canada, CIBC
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American Credit Cards Were Issued toLower-Rated Borrowers Than in Canada
0
20
40
C anada: September 2010 US: August 2007
% of total bankcard origination withsub-660 credit score
Source: Equifax Canada, CIBC
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A Closer Look at theCanadian Mortgage Market
Source: CMHC, Ipsos Reid’s CFM, Statistics Canada, CIBC
Number of Households
Mortgage
13.1 million
27.8%
31.2%
Rent
DSR**<40%
28.9%39.9%
No-Mortgage
12.1%
* Loan-to-value ratio** Debt-service ratio
LVR*<80%
LVR*>80%
9.3% 2.8%
DSR**>40%
DSR**<40%
DSR**>40%
30.1% 1.1%
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Personal Bankruptcies
Source: Industry Canada, CIBC
-30
-25
-20
-15
-10
-5
0
5
1015
20
25
30
35
4045
00 02 04 06 08 10
y/y % chg3-mo moving avg
-6.2
-9.2
-15.6
-17.0
-17.0
-19.5
-27.6
-35 -25 -15 -5
Atlantic
BC
Man/Sask
Alberta
Quebec
Canada
Ontario
Dec 08-Nov 09 vs.
Dec 09-Nov 10
%
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Plan to Buy a Residential Propertyin the Next Year
4
5
6
7
8
9
10
2001 02 03 04 05 06 07 08 09 10
Winter
% of All Households Saying "Yes"
actual %
base in each year @ 3,000
Source: Altus Group/Ipsos-Reid, the FIRM Residential Mortgage Survey
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