Institutional Equity Research Industry Update

June 16, 2010
Sector Weighting: None

Off The Press — Collective Research Series

CIBC's CIO Roundtable - Volatility And Slower Growth
Sorting Through The Challenges

Funds have been shifting out of risky assets in recent weeks, reflecting concern about sovereign debt and global growth. Absent an outright sovereign default, we see those fears easing. The drag from fiscal tightening could keep risky assets to muted gains in choppy markets through 2010. Longer-term fundamentals, however, remain favourable for Canada's risky assets. The country's resource endowments, resilient financial system and favourable demographics relative to other G-7 nations make it an economic contender looking out over a five-year horizon. Another notable positive is in the healthier state of public and corporate sector balance sheets. These factors are no iron-clad recipe for national success in the near term, but do mean Canada is better-positioned than many of its competitors to deal with the challenges of the upcoming years. Where economic growth goes, corporate earnings, dividends and other rewards for investors are likely to follow. Nimble asset allocation is likely to be rewarded by the current markets. We are recommending an overweight on equities, tempered by the European uncertainty.

CIBC World Markets Inc. 1 (416) 594-7000 Perry Caicco 1 (416) 594-7279
Perry.Caicco@cibc.ca

Alex Avery, CFA 1 (416) 594-8179
Alex.Avery@cibc.ca

Cosmos Chiu 1 (416) 594-7106
Cosmos.Chiu@cibc.ca

Barry Cooper 1 (416) 956-6787
Barry.Cooper@cibc.ca

Peter Gibson 1 (416) 594-7194
Peter.Gibson@cibc.ca

Paul Holden, CFA 1 (416) 594-8417
Paul.Holden@cibc.ca

Alec Kodatsky 1 (416) 594-7284
Alec.Kodatsky@cibc.ca

All figures in Canadian dollars, unless otherwise stated.

10-103269 © 2010

Mark Petrie, CFA 1 (416) 956-3278
Mark.Petrie@cibc.ca

Andrew Potter, CFA 1 (403) 221-5700
Andrew.Potter@cibc.ca

Brian Quast 1 (416) 956-3725
Brian.Quast@cibc.ca

Ian Parkinson 1 (416) 956-6169
Ian.Parkinson@cibc.ca

CIBC World Markets does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. See "Important Disclosures" section at the end of this report for important required disclosures, including potential conflicts of interest. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report, or at the end of each section hereof, where applicable.
CIBC World Markets Inc., P.O. Box 500, 161 Bay Street, Brookfield Place, Toronto, Canada M5J 2S8 (416) 594-7000

Robert Sedran, CFA 1 (416) 594-7874
Robert.Sedran@cibc.ca

Avery Shenfeld 1 (416) 594-7356
Avery.Shenfeld@cibc.ca

Find CIBC research on Bloomberg, Reuters, firstcall.com and ResearchCentral.cibcwm.com

CIBC's CIO Roundtable - Volatility And Slower Growth - June 16, 2010

Table of Contents CIBC’s CIO Roundtable ............................................................................. 3 Economics............................................................................................... 4 Portfolio Strategy and Quantitative Research.............................................. 16 Introduction........................................................................................ 16 Asset Allocation................................................................................... 18 S&P 500 And TSX ROE ......................................................................... 32 Energy Sector ROE And Security ............................................................ 33 Conclusion.......................................................................................... 36 Sector Outlook....................................................................................... 37 Banks & Lifecos ................................................................................... 37 Asset Managers & P&C Insurers ............................................................. 39 Mining— Precious Metals....................................................................... 42 Mining— Metals & Minerals.................................................................... 45 Oil & Gas............................................................................................ 48 Consumer Products—Merchandising ....................................................... 52 Real Estate ......................................................................................... 55 Appendix .............................................................................................. 58

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CIBC's CIO Roundtable - Volatility And Slower Growth - June 16, 2010

CIBC’s CIO Roundtable
Volatility with Slow Growth – The New Normal Taking a Closer Look At The Future
On June 17, we are pleased to present our inaugural roundtable of Chief Investment Officers engaging our analytical team (equity research and economics) on a variety of market-pressing subjects. From the issues surrounding the Euro zone to the implications of muted global growth, prospects for China and the demand on base metals, we expect to have a wide-ranging conversation. Is the U.S. recovery happening or could this just be a head fake, which will continue to have implications for the financial services sector on both sides of the border? With continued volatility and no distinct leadership in the market, the lustre of gold shines brightly, but will the spotlight last? Finally, while much has been made of Canada’s ability to skate through the global market challenges, are we immune from the sniffles, cold and fever that has beset much of the world? Will our consumer continue to look on the bright side and continue supporting Canadian retail stores and buying real estate? In preparation for our discussion and to stimulate some of the conversation around the table, we have asked the analysts at CIBC to provide their perspective on many of the issues facing the markets over the next 12-18 months and tried to peer into the crystal ball for the 3-5 year outlook. We have tried to distill those views into this report. Avery Shenfeld, our Chief Economist, provides his sense on living in a world where growth is more lethargic and restructurings will continue. When it comes to equities, he has a mildly constructive view on their prospects. Peter Gibson, our Portfolio Strategist, has provided a somewhat complementary view to Avery’s perspective on growth, although they are not without their differences. While Peter believes the global economy is perilously close to a debt crisis, he thinks Canada’s equity market still has some legs – provided the U.S. economy skates through its challenges. Peter highlights his targets for a number of commodities, yields and valuations for the remainder of 2010. We have also provided our asset allocation recommendations, supplemented by a tactical view that is more tradingoriented. Finally, we have asked several of our fundamental analysts to outline their views on their verticals given the future that has been painted by Avery and Peter. We are indebted to our clients for agreeing to lend their expertise/knowledge as key contributors to the CIBC roundtable. A special thanks to the following individuals: Martin Hubbes, EVP & CIO, AGF Funds Inc. Duncan Webster, CIO, CIBC Asset Management John Wilson, CIO, Cumberland Private Wealth Management Inc. David Rosenberg, Chief Economist & Strategist, Gluskin Sheff & Associates Robert Spector, Chief Economist, McLean Budden Ltd. Neil Matheson, SVP, Investment Strategy – Standard Life Investments Inc.

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the US economy had a longer and steeper tumble. not stock picking. South of the border. and global growth. risky assets fell through March 2009. The business cycle. performance in the CIO seat will critically depend on reading the cyclical and risk-appetite tea leaves correctly.Volatility And Slower Growth . due to top 4% this year. In Canada. Long-suffering Japan has put together two solid quarters.CIBC's CIO Roundtable . and then. as sharply as it fell. annua lize d q/q rea l G DP gro wth. Looking at the recent performance of risky assets. gave up some ground. moving in near unison. “V”-shaped rebound. real GDP has rebounded even more sharply. markets are sensing that today’s economic success story won’t last. nearly returning to its pre-recession peak. has ruled in the past two years as. Global Economy To Slow In The Second Half 12 10 8 6 4 2 0 US 1H10F Source: CIBC World Markets Inc. but it too has shown solid growth in output. corporate bond spreads. although leaving the unemployment rate some 2%-points higher. we share that sentiment. Economic growth looks set to decelerate notably in the second half of the year in most major economies (Exhibit 1). All of which puts them in the Vfor-victory camp as well. which link stocks. risk-off trade. Exhibit 1. will be a half-point slower in 2011. Implausible as it might have seemed at the trough of the Great Recession. In the near term. and commodities into one risk-on.June 16. 2010 Economics Avery Shenfeld (416) 594-7356 Benjamin Tal (416) 956-3698 Peter Buchanan (416) 594-7354 Warren Lovely (416) 594-8041 Meny Grauman (416) 956-6527 From “V” to “U”: Living With Slower Growth The macro story matters. % Eurozone 2H10F C hina 4 . rebounded sharply thereafter. Given the tight correlations for risky assets. and China’s GDP is up nearly 12% in the past year. the global economy has traced out the first stages of a classic. more recently. if not employment.

While that might still transpire. That would tend to shift assets away from safe-haven assets such as high-rated government bonds (Treasuries.CIBC's CIO Roundtable . Exhibit 2. markets are still concerned about a near-term credit shock in the Euro zone. Chances are. the lack of any additional evidence of a further move to the brink of default in the next few months should allow some of the recent flight to safety to be reversed. one that would begin with a sovereign default and spread to the banking system. and will be difficult to sustain politically. and fiscal starting point. it seems less likely to happen in the next year. Canadas). In the interim.June 16. would be enough to refinance all of the weakest players’ maturities through 2011 (Exhibit 2). China’s monetary tightening will put a dent into housing prices in major cities and equities markets. investors could simply be disappointed by the pace of economic and earnings growth ahead. Stability Fund Covers Maturity 800 700 600 500 400 300 200 100 0 Debt refinancing Jun10-Dec11 Source: CIBC World Markets Inc. demographics. gold. with a potential IMF supplement. Canada enjoys a number of advantages in terms of its resource assets. and US dollars. that Greece will face a debt restructuring a few years down the road. and the Canadian dollar). and allow for a partial recovery in risky assets (corporate bonds. but it’s only moving to fight bubbles in those asset markets because Beijing feels it can get more sustained growth in industrial development and exports. then.Volatility And Slower Growth . but fiscal belt tightening elsewhere could prevent that from being the first in a chain.. Europe’s recent collective borrowing proposal. 2010 Longer term. So while portfolios should now be adjusted to reflect the transition from V to U through 2011. Austerity programs are likely to fall short of budget objectives. next year could be the time to begin looking for opportunities to capitalize on a favourable medium-term picture for our economy. We’re less concerned than some about risks of a China-syndrome meltdown in East Asia. 5 . Fiscal Policy: It’s A Drag Judging by trends in sovereign CDS markets and bond spreads. however. Bloomberg € billion IMF Ireland Portugal Greece Spain EU Stability Fund But equity markets may still be on to something. equities. The recent retreat in the purchasing managers’ index still left it at a level consistent with 10% growth (Exhibit 3). Rather than being hit by the one-time shock wave of sovereign debt defaults.

June 16. just as Canada’s economy was sheltered in the 1990s deficit battle by a cheap exchange rate. Spain and Ireland. in many countries. and the end to the one-time boost from inventory restocking. While detailed plans are still rolling in. for example. vs. Unlike Greece. Chinese PMI Consistent With 10% GDP Pace 14 12 10 8 6 4 2 0 48 GDP y/y g rowth (%) Ma y 2 010 PMI 50 52 54 56 58 Source: CIBC World Markets Inc. But that’s a zero sum game for the global economy. with more to come as states adopt additional belt tightening. and on the order of 2½% for North America (Exhibit 4). and a stronger greenback will. More troubling is that in the broader global economy. 2010 Exhibit 3. Its own growth trajectory will be helped by a weaker euro. a 1-3% GDP boost from stimulus in recent quarters. 6 . fiscal restraint has become the new. Bloomberg It’s the developed world where risks of a slowdown are more concerning. The turn from stimulus to tightening will shave as much as 2% from 2011 growth in Canada. orthodoxy. are seeing the political mood swing away from stimulus towards a more immediate assault on deficits. Even countries like the US and the UK. The US. But there are still implications for investment strategies in going from V to U. fiscal retrenchments will subtract 1 to 2 percentage points from economic growth in each of the next two years. with just under 4% 2011 growth for world GDP.Volatility And Slower Growth . faces a roughly 1% drag from federal budget measures already in place.. offsetting most of the fiscal drag. Europe stands alone in undertaking a major fiscal belt tightening this year. transmit some of Europe’s fiscal drag to the US. overdone. will be central to a deceleration from today’s global “V” into a flatter “U”-shaped advance. where bond markets seem perfectly willing to finance deficits at very manageable funding rates. policymakers have room to go slowly enough to avoid the dreaded “W” of a renewed recession. and perhaps. in effect.CIBC's CIO Roundtable . That fiscal tightening.

Interest & Exchange Rate Forecast INT EREST A ND FOREIGN EXCHA NGE RA T ES 2010 END OF PERIOD: CDA Overnight target rate 98-Day Treasury Bills 2-Year Gov't Bond 10-Year Gov't Bond 30-Year Gov't Bond U.05 -0.35 3.00 1.940 1.00 1.71 12.June 16.76 0.50 0.10 1.29 0.3 Jun 1.0 Dec 2.70 12.870 1.75 1.55 1.25 1. Year-ahead (i.40 4.30 0.15 1.50 1.96 1.00 4.10 4.30 1.60 1.40 5.99 91 1. and even in bull markets it’s typical for earnings projections to come down to earth as the year gets under way.05 0.04 90 1.25 1.75 1. suggesting that investors have taken a largerthan-normal haircut off the consensus in valuing Canadian equities.20 1.99 1.50 2.75 2.10 1.01 0.55 3.65 -0.35 0.00 -0.46 0.18 1.30 -0.15 1.e.25 4.36 4.5 2011 Mar 1. The market.25 1.90 0. Analysts’ bottom-up (First Call) consensus estimates for TSX earnings. nearly equivalent profit jump next year that seems far too optimistic for an economy where nominal GDP looks to rise by no better than 5½% in 2011.20 0.17 0.95 2.00 4.00 0. 2011) forward earnings yields (relative to analysts’ consensus) are in fact below the historical norm for that far out (Exhibit 5).20 3.98 87 1.15 1.S. It’s their call for a further. the difficulty is in discerning just what is being priced in for the next six quarters.73 12.16 1.15 2.75 0.25 4.20 1.99 87 1.40 2.73 12.85 4.24 1..01 92 1.5 Dec 1.75 4.95 4.00 4.00 3.25 0. 2010 Exhibit 4. therefore.23 0.20 1.22 1.8 Sep 1. Bloomberg How Much Room For Disappointment? In the equity market.20 -0.00 4.25 0.80 4. already chops something off the analysts’ calls in deciding how much to pay.43 0.18 1.75 12.24 1.15 1.12 1.890 1.05 91 1.30 1.46 0.27 1.50 3.05 2.40 4.15 3.0 Canada .00 1.60 4.50 0.850 1.05 4.80 3.30 5. the bottom-up consensus is consistently biased on the upside.930 1.97 3.US 10-Year Bond Spread Canada Yield Curve (30-Year — 2-Year) US Yield Curve (30-Year — 2-Year) EXCHA NGE RA TES CADUSD USDCAD USDJPY EURUSD GBPUSD AUDUSD USDCHF USDBRL USDMXN Source: CIBC World Markets Inc. showing growth of just over 20%.79 3.25 2. given the solid start to the year and the weak base of comparison from a year ago.2 Sep 2.95 1.95 3.20 0.44 0.00 1.38 3.38 0.85 3.26 0.88 3.01 0.910 1.Volatility And Slower Growth .15 2.82 12.46 1.13 1.40 4.00 89 1. 7 .US T-Bill Spread Canada .25 1.48 0.49 0.15 1.77 12.19 1.95 1.20 2.950 1.10 1.10 4.15 2.90 2.90 -0.20 0.02 1. Federal Funds Rate 91-Day Treasury Bills 2-Year Gov't Note 10-Year Gov't Note 30-Year Gov't Bond 27-May 0.95 3.02 0. might be only slightly above reality.40 0.95 1.20 0.45 2.15 1. However.CIBC's CIO Roundtable .

therefore. bid down comparable earnings yields on stocks. vs. in fact. rather than an outright bear market. closer to 10%) and still leave forward earnings yields at roughly the historical norm. so investors should. then.CIBC's CIO Roundtable . leaving them vulnerable to adverse news on economic developments in countries with deeper fiscal adjustments ahead. Earnings Yield Leaves Room For Misses 9 8 7 6 5 4 3 2 1 0 TSX Yr-Ahead Earnings Yield (%) Today Source: Thomson Reuters. 2010 Exhibit 5. a double-digit return in the preceding six months. Best bets. % 10-yr bond yields Average. Canadian equities have typically seen a deceleration after the first rate hike. Rising Canadian Equity Market Correlation With Non-US Stocks 120% 100% 80% 60% 40% 20% 0% Jan-90 (44% avg) 12 month moving correlation. CIBC World Markets Inc. % (83% avg) Jan-95 Jan-00 Jan-05 Jan-10 Source: MSCI/Barra Total Return Index. averaging a roughly 4% return in the six months after an initial Bank of Canada (BoC) move. All told.June 16. Looking across all cycles since 1958. Exhibit 6.e. equities are already discounting a much weaker year ahead than analysts. are for sluggish gains. 8 . Note that bond yields are also below the historical average. ('87-date) So much so that earnings growth could be about half the consensus projection and in line with our macro-based top-down view (i.Volatility And Slower Growth . and might therefore crawl higher over that period. And stocks in Canada have become much more sensitive to overseas equities than was the case in prior decades (Exhibit 6).

5 1. Real GDP Growth (AR) Real Final Sales (AR) All Items CPI Inflation (Y/Y) Core CPI Inflation (Y/Y) Unemployment Rate (%) 3. Fed fund futures.5 -2.1 1.4 1.9 1.8 8.1 2.2 1. and the inability to price in an outright rate cut. That would allow for the Bank of Canada to skip two rate decision dates over that period. Employment Rate: US is a Mile Behind 65 64 63 62 61 60 59 58 *15 yrs and older for C da.6 9.8 0.8 1.9 8.9 1.7 9. Since the Bank would likely continue to tighten if Canada’s growth rate remained above its estimate of the non-inflationary potential (i. US Bureau of Labor Statistics % of working age* population 57 Jan-03 Jan-07 May-08 Sep-09 US More telling is the fact that north of the border.9 9.2 3.2 11Q1F 2.1 2.8 2.8 2.5 2.0 9. Exhibit 8. already price in no hikes in 2010. 2% or higher).8 1.1 10Q3F 2. Note that America’s employment rate is still miles below where Canada’s stood when the Bank of Canada launched its 2010 tightening cycle (Exhibit 7).1 Source: Bloomberg and CIBC World Markets Inc.7 2.8 1.3 2.1 2009A -2.0 8. an even more dovish outlook than our sub-consensus forecast for a 1.9 8.6 2.5 2.0 8.9 1.1 4. 2010 We can also learn a lot about what investors are now assuming by looking at yield curves.6 1.1 9.25% rate that includes a pause in December (Exhibit 8). are pushing our first rate hike back another quarter. into late Q2 2011. Exhibit 7.5 -1.3 9.0 1.7 2.7 -0.June 16.3 3. 2010) CANADA Real GDP Growth (AR) Real Final Domestic Demand (AR) All Items CPI Inflation (Y/Y) Core CPI Ex Indirect Taxes (Y/Y) Unemployment Rate (%) U.5 2.5 1.5 1. for example.7 4.4 10Q1A 6.2 10Q2F 3.9 8.0 8. 9 .e.1 1.8 1. it appears that equity markets are already cushioned for a substantial slowing from the first quarter’s over-6% pace.0 1.4 1.0 1.4 2. Still.3 3.3 1.8 1.6 2. 16+ for US May-04 Sep-05 C anada Source: Statistics Canada. if growth in Q2 matches our 3½% projection. given how much slack there currently is in the economy. Economic Update (June 14.9 9.3 2010F 3.6 1.7 1.5 0.9 8.2 2.8 8.Volatility And Slower Growth . a norate-hike expectation in the futures market leaves a wide range of plausible assumptions for growth.4 2.4 9. Canadian OIS contracts are priced for a 1% overnight rate by December.CIBC's CIO Roundtable .0 2. We’ve long shared that view.4 -1.8 9.9 1.9 0.5 3.1 10Q4F 1.3 0.2 11Q2F 2.3 1. and in the wake of the latest employment shortfall.0 1.5 2.4 1. Equities therefore have room to rally.5 1.8 1. and bonds to sell off.8 2.2 2011F 2.S.5 2.

and tighter standards for CMHC insurance will combine to cool prices. Using an IMF model. as the slower growth path leaves the economy short of its non-inflationary potential right through 2011. which will disappear as prices level off and slowly retreat. would be consistent with a fairly rapid course of tightening. Rising rates. non-inflationary potential output by the second quarter of 2011. typically a leading indicator of a softening in prices. one that will still leave only a small fraction of Canadians under water relative to their purchase prices. House Prices Overshooting Estima te d dev ia tion of Av erage House Price s from Fa ir Value 60 50 40 30 20 10 0 -10 -20 2008 2009 2010 BC ALTA MAN/ QUE ONT ATL SASK 14. the new supply coming from an upturn in housing starts over the latter half of 2009. Canadians’ demand for consumer goods and housing. We estimate that the housing wealth effect has been adding about a half-percent to the recent pace of consumer spending growth. as we expect. but not crush. But since then.June 16. Exhibit 9. we face some corresponding choppiness in fixed income markets as investors price in. 10 .0% '000s 20.Volatility And Slower Growth . The Bank of Canada’s last published forecast for the Canadian economy. 2010 Rate Hikes And Canadian Households With all of the pressure points globally. and an even smaller share of houses with negative equity. Note that the ratio of sales to listings has already turned higher. just as equities are likely to move only sporadically higher.7 % 17. a decelerating global economy dents Canadian export growth materially. we find that house prices are already some 14% above “fair” value based on economic fundamentals (Exhibit 9). A 5-10% correction is likely through 2011.4 % 13.2 13. it saw the Canadian economy back at its full. additional rate hikes. the Bank’s message has been muddied by a correction in both equities and commodity prices. the need for rate hikes to moderate growth and inflation will be less pressing.0 % % 11.7 % 8. CREA and CIBC World Markets Inc. one sufficient to at least leave it with some doubts about the appropriate pace of future hikes. But the broad direction in Canada’s bond market through 2011 is towards higher rates and a flatter yield curve. A dampened wealth effect from housing will contribute to that. the Bank will find that a smaller dose of tightening is sufficient to becalm. then price out. Moreover. released in April. which would typically entail taking overnight rates to at least 3½% over that period.CIBC's CIO Roundtable . At that time. If.6% A s of April 2010 Source: IMF.

0 10. True.June 16. But it has been on a rising trend for more than a decade as the costs of servicing a given volume of debt have declined. With export’s contribution to growth set to slow. and much less net debt. at least among the industrialized economies of the West. and will be earlier than most in feeling the impact of monetary tightening. Given the high debt load. It was some 106 years ago that Wilfrid Laurier opined that while the US dominated the 19th century. a shallower climb than consensus forecasts. each 1% rise in rates will have a greater impact on consumer spending power. its second decade could be Canada’s to shine. talk of a crash in domestic demand under the weight of excessive household debt burdens looks to be overstated.4% this year.2% Effective interest rate on debt: 6.0 6.CIBC's CIO Roundtable . than most others (Exhibit 11). But it might well be that. its medium-term prospects look brighter than most other industrialized economies. followed by a still-reasonable 2.0 89 91 93 95 97 99 01 03 05 07 09 % of pdi Effective rate:5. 2010 That said.0 7.Volatility And Slower Growth . It didn’t. with 10-year yields at roughly 4%.5% by the end of next year. Canada has less gross debt. debt has reached a record level of nearly 1. The ratio of debt service to after-tax income looks well manageable at present (Exhibit 10).7% gain in 2011. 11 . The Medium Term Belongs To Canada While Canada will share in the global deceleration of 2011. Debt Service Burden 11. the US or Japan. That should leave real consumer spending growing at 3. of course. the 20th century would “belong to Canada”.0 9. Exhibit 10.0 8. if not the 21st century as a whole. the Bank of Canada will have to manage the pace of rate hikes so as to avoid a harsh deceleration by consumers. A Milder Hangover A key advantage is that the fiscal drag will come to an end sooner here than in Europe.5 times personal income. We therefore look for overnight rates to be no higher than 2. quite work out that way.3% Source: CREA and CIBC World Markets Inc. as forecasts with a 100-year horizon rarely pan out.

% G Net Source: Statistics Canada and CIBC World Markets Inc.CIBC's CIO Roundtable . while Canada’s short rates will top those of other countries in the near term. The result is that if each country aimed to stabilize its debt-to-GDP ratio at 45%. and have long lived with limits on leverage.Volatility And Slower Growth . Exhibit 12. While details are still forthcoming. Canada’s current federal deficit of 3% of GDP (or 5% including the provinces) pales next to double-digit deficit-to-GDP ratios for national governments in the US and the UK. given the country’s unquestioned AAA rating. G Gross While an earlier rate hike cycle could prevent such a growth differential from showing through in 2010-11.June 16. Canada will have a longer-term advantage in dealing with a much lighter burden from fiscal restraint. and changes are coming in the definitions used to calculate capital adequacy. while others would need fiscal cuts several times larger (Exhibit 12). The other hangover from the 2008-09 recession is that the world’s banks are still sitting with much less capital than regulators are likely to demand. the upcoming regulatory regime change should impose fewer restraints on lending growth in Canada than elsewhere given that stronger starting point. long-bond yields could be lower than elsewhere. But Canada’s banks are already better capitalized (Exhibit 13). Canada would require a retrenchment of less than 3% of GDP. Canada’s Government Debt Burden The Least Onerous 250 200 150 100 50 0 y re ec e U K er m U an ni te y d St at es C an ad a an Ja p It al A G d G -2 0 Ec A dv a nc e on o m ie s 2010 general govt debt-to-GDP ratio. 12 U ni G C -7 vg . 2010 Exhibit 11. Size Of Fiscal Cuts Needed To Stabilize Net Debt-to-GDP Ratio % of GD P 14 12 10 8 6 4 2 0 St at es pa n K y re ec e It al U er m an an a Ja da y G te d Source: IMF and CIBC World Markets Inc. Moreover.

If inflation doesn’t heat up. Fueled by immigration to a multi-cultural society. % Other Mature Europe Johnny Canuck Shows Potential Attaining full employment faster will colour the near-term outlook. and is ill-positioned to attract immigrants given language barriers and cultural homogeneity in its existing population. Canada’s Banks Well Capitalized By International Standards 13 12 11 10 9 8 7 6 C anada UK US Euro Area Source: CIBC WM. 13 .Volatility And Slower Growth . but Canada is well-positioned relative to other mature economies. the other key is the trend growth rate in the economy’s longer-term non-inflationary potential. the Bank is always willing to adjust its output gap estimate to be in line with that evidence.June 16. which allows for only a 2% longer-term pace. Demographers are concerned about an ageing work force that will slow growth ahead. Once full employment is reached. the economy’s non-inflationary speed limit is tied to growth in working age population and productivity per worker. Canada’s economically active population is still set to grow faster than that of the US or Europe (Exhibit 14). In that regard. but for the decade as a whole. IMF Source: IMF and CIBC World Markets Inc. 2010 Exhibit 13. Japan is already seeing labour force shrinkage. Average Tier 1 C apital Ratio. is likely to prove too conservative.CIBC's CIO Roundtable . That sets the speed limit on how fast the Bank of Canada will let the Canadian economy advance without judging it as excessively inflationary. the Bank’s current estimate of the elbow room for noninflationary growth. The IMF puts the country’s initial output gap at about a half-point wider than the Bank’s estimate.

Research across countries has identified that bilateral trade tends to be enhanced between countries in response to the movement of people from one to the other. 2012 (%) y A pa n ce K U C It al an an U Source: Finance Department of Canada and CIBC World Markets Inc. Continued inmigration from East Asia and South Asia should help build Canada’s export prospects in these fast-growing markets. Business and cultural ties to the home country can facilitate the movement of goods. with corporate tax rates headed below those in all of the nation’s major developed-economy competitors (Exhibit 15).Volatility And Slower Growth . 2010 Exhibit 14. The blame has been placed. in part. Immigration also has a side benefit. 20102015 5 4 3 2 1 0 -1 -2 -3 -4 C anada United States Western Europe Japan % Source: International Labour Organization and CIBC World Markets Inc. and corporate Canada is carrying less debt than its US counterpart. Exhibit 15. Competitive Corporate Taxes Should Support Investment & Productivity Growth 40 35 30 25 20 projected corporate tax rate. 14 G er m Fr an a Ja da S y . on sub-par business investment in productivity-enhancing capital equipment. Governments have done their part to encourage such spending. Projected Growth In Economically Active Population. On that score. Capital spending plans are recovering from their recessionary malaise. leaving more room to add leverage to finance those plans. Where Canada’s report card has suffered is on squeezing out more output per worker. there are at least some reasons to expect improvement ahead. in terms of helping Canada make inroads into some of the world’s faster growing developing-economy markets.CIBC's CIO Roundtable . a trend that appears evident in the Canadian data.June 16.

2010 Productivity. These factors are no iron-clad recipe for national success in the near term. Longer-term fundamentals. volume gains were supplemented by an improvement in the global market value of the goods that Canada sells to the rest of the world (particularly commodities). doesn’t tell the whole story in terms of income and wealth. pointing to concerns about sovereign debt and global growth. While we see those fears easing off in the months ahead in the absence of an outright sovereign default. 15 M ar -9 M 8 ar -0 M 0 ar -0 M 2 ar -0 M 4 ar -0 M 6 ar -0 8 . The Bottom Line CIOs and other investors have been shifting funds out of risky assets in recent weeks. Even including the setback from softer energy and metal prices during the recent global recession. dividends and other rewards for investors are likely to follow. 10. remain favourable for Canada’s risky assets. In the past decade. The country’s resource endowments. Exhibit 16. And where economic growth goes.Volatility And Slower Growth . those terms-of-trade gains accounted for about a third of Canada’s domestic income growth since 2002. 6.4%. That trend almost certainly has further to run given the rising needs of dynamic resource-hungry emerging markets.CIBC's CIO Roundtable . the drag from fiscal tightening could contain risky assets to muted gains in choppy markets over the next few quarters.3%. productiv ity & work force growth). resilient financial system and favourable demographics relative to other G-7 nations make it an economic contender looking out over a five-year horizon. relative to what it imports (consumer goods) (Exhibit 16). corporate earnings. Another notable positive is in the healthier state of public and corporate sector balance sheets.June 16. Canada’s Terms Of Trade And Important Source of Income Growth 140 130 120 110 100 90 80 Domestic Force s (ie .pts Te rms of Trade 2002=100 Source s of Increa se in Incom es Since Q402 Source: Statistics Canada and CIBC World Markets Inc. however. but do mean Canada is better-positioned than many of its competitors to deal with the challenges of the upcoming years.pts Te rms of Trade. which focuses on the volume of goods produced per hour.

S.S. 2010 Portfolio Strategy and Quantitative Research Peter Gibson. more trading-oriented and more aggressive with respect to asset allocation.S. Canadian banks also continue to post strong profit growth and although profit growth is expected to be weaker over the next 12 months.S. Great returns from successful investing will continue to depend on tactical asset allocation decisions and every critically important change to stock and bond exposure will continue to be driven off the level of 10-year U. all asset class returns tend to fall to low single digit levels on average. In this environment. The financial.S. At the same time. economy. bond yield stay in the range of 3% to 3. the U. Volatility and risk premia tend to soar. the U.S. which can be many years. (416) 956-3250 Introduction The global economy is dangerously close to a debt crisis and western governments are doing everything possible to avert such a crisis. Concurrently.S.S. Our financial sector is stronger than the rest of the world and the energy and materials sectors should continue to benefit from emerging economy growth while inflation and interest rate risk remains paradoxically low. the enormous size of the emerging economies. is not yet out of the woods.S.Volatility And Slower Growth . For CIOs. thereby implying a stable U. is not yet selfsustaining and the entire global economy still depends on the urgent need to ensure that the U.2% and that tightening by the Federal Reserve be delayed as long as possible so that housing inventories have time to fall and corporate profitability has sufficient time to recover. debt levels. economy.S.CIBC's CIO Roundtable . growth is still positive. The U. It is imperative that the U. based on population and their potential to alter the global economic landscape. rates and relatively favourable commodity prices resulting from emerging economy growth. These challenges tend to persist until the financial system collapses or the debt levels recede. we expect a rebound in oil prices driven by current emerging economy growth.S. Canada is very well positioned as long as the U. Furthermore. real estate are all stable. Emerging economy growth. consumer and U. U. 16 . (416) 594-7194 Jeff Evans. bond yield is close to the recent 3% level and S&P 500 ROE is stable. economy can and must muddle along. energy and materials sectors represent 78% of the TSX market cap and Canada is benefiting from low U. Investors must be far more active. as well as recent weakness in the housing market and U. eclipses anything ever witnessed historically.S. treasury yields. employment. We recommend overweighting stocks since S&P 500 ROE is stable and bond yields are toward the lower end of our critical important range.S. suggest that the U. Base metals companies are recording an improvement in ROE and the gold companies continue to benefit from secular gains in the commodity. Federal Reserve can postpone tightening for the foreseeable future.June 16. however. will record a modest rate of economic growth thanks to an artificially low bond yield. We believe that the U.S. the asset allocation and currency calls have never been more complex or more important.

Treasury bond yield is currently 3. If we could be sure that we would remain below the crucial bond yield ceilings (3.666 Actual 640 18.47) 19. well below the $768 Street forecast. we believe gold will reach US$1300/oz by year-end.307 . the more time that the U. If. The Fed is in no hurry to tighten based on the still weak U. then the TSX has considerably more potential for strong returns than the S&P 500.. Exhibit 17. The longer the U. In addition. then the TSX P/E would be expected to decrease to 16.4x) 14. We also believe that the oil price will rebound to US$93-95/Bbl as a result of emerging economy demand and the modest U. As long as the U.59 3. or in the face of other geopolitical risk. economy is stable.0x GPS Fwd 0. Our outlook is based on the fact that the 10-year U.38 0.S.300 0. Bloomberg Recent 11.230 0. 2010 Expectations For The Remainder Of 2010 In part.091 Actual 65 16. our year-end 2010 targets represent a very attractive rate of return of 10.57%) 0. although it shows no evidence of growth.6 4.9688 2010E 12.46x (19.7-3.1 95 1.2x (16.75x compared with 17x for the S&P 500. but not with the bottom-up Street forecast.2 1.225 Ours $68 Ours 18.S.08 3.June 16.32) ROE2qF (14. or if the Fed is forced to tighten due to a bond yield level in excess of 3.8x GPS 15. The anticipated and recently witnessed rebound in earnings for the energy and materials sector could make the Street forecast achievable if global markets can avoid any more exogenous crises for now. banking system has to recapitalize.2x GPS 14. while the ceiling is in the range of 3.9%).02 Our TSX top-down earnings forecast for year-end is $634.53% (19.66x) 8.63) 14.9%.95-1. Targets TSX Earnings Top Down P/E (x) P/E Median(Wtd) & Street Fwd Trail ROE m(w) & Street Fwd ROE S&P 500 Earnings Top Down P/E (x) P/E Median(Wtd) & Street Fwd Trail ROE m(w) & Street Fwd ROE Canada T-Bills (%) 10-year Bond Yields (%) US T-Bills (%) 10-year Bond Yields (%) WTI Oil (US$/bbl) Gold (US$/oz) C$/US$ (Trading Range) Source: CIBC World Markets Inc. Ireland or France and Germany. 17 . a Greece default occurs that stands to spread to Spain.4 1.57%. housing market.S.6%) 1.28% for the S&P 500 over the next six months (Exhibit 17).06) ROE2qF (19.29 (0.22%. If so.07(0. yield curve can remain steeply positively sloped. S&P 500 ROE appears to be holding at 19.CIBC's CIO Roundtable .867 Ours $634 Ours 19.S.0x 1225/$72 (Street) = 17.Volatility And Slower Growth .1 0.9%.5 4. This would be consistent with the current rate of earnings growth.22 74. recovery.52 0.89% (11.9x 12587/$768 (street) = 16.S. we believe that the gold price could easily achieve levels in the range of US$1500-2000/oz.S.4x from 16.29% for the TSX and 12. however.12.4x GPS Fwd 0. due to the recent stock market correction.

TSX ROE should rise from the recent 11.6% level to the 14.Volatility And Slower Growth . but it is rising slightly at 0. is the fact that there is an underlying weakness to the U. however. Teasury yields to exceed the range of 3. especially if S&P 500 ROE was falling and/or the U.June 16.9%.89% and is rising at a more subdued 0. as well as the distinct possibility of another global liquidity crisis. Even at that point.02% ROE level. Our Canadian conservative asset allocation recommendations are predicated on a 12. as significant increases in debt levels are necessary to buy up debt in regions facing default. which may not be surprising for micro cap stocks.23 standard deviations. it is likely that an eventual rise in S&P 500 ROE and bond yields would lead to a rise in short-term rates.17 standard deviations. The median TSX ROE is 8. Specifically. Our 430 company Canadian small cap index is recording a +0. Of greater near-term concern. Inflation fears are otherwise misplaced. There remains a very significant possibility that the crisis in Greece leads to a default and continued concern over the survivability of the Euro.52 standard deviations on a weighted basis.6% to 14. 2010 Asset Allocation We recommend being overweight equities until we have indications that the equity cycle is over.S. then we would view that favourably as well.9% level over the next three quarters. Federal Reserve was tightening.60% and rising at an impressive 0. Since the global economy is still trying to recover from recession. Exhibit 18.S.7% to 3. real estate prices and S&P 500 ROE. if short rates increase and long rates fall proportionately. We would like to increase our equity weighting. economy. 18 . and the European crisis is not yet resolved. The one-quarter forward Street estimates for the TSX indicate a respectable 0. Recommended Asset Mix Equities 50% Bonds 45% Tbills 5% Source: CIBC World Markets Inc. but we need to see some resolution in the European crisis and a recovery in U. we would be looking for 10-year U. TSX ROE is currently 11.S.to 18-month horizon (Exhibits 18 & 19). The ECB has frequently cited concern over the risk of inflation.CIBC's CIO Roundtable . These concerns are most likely moral suasion.S.32 standard deviation growth rate.

05.to 6-month investment horizon.05 to 1. dollar reserve currency. we would expect the Canadian dollar to trade between $1. the economic and equity cycles can last for several years. and later because of anticipated renewed deflation fears. the Canadian dollar should appreciate further. Recommended Asset Mix Recommended Asset Mix Equities Bonds Tbills Source: CIBC World Markets Inc. Canadian Tactical Asset Allocation Recommended Asset Mix Equities Bonds Tbills 65% 35% 0% Allowable range Equities/Bonds Tbills 30-70% 0-40% Source: Company reports and CIBC World Markets Inc.00 and 1. if we are emerging from recession. Our asset mix models should tell us if the equity cycle ends in a more traditional way later this year or. The international asset mix is comprised of a 15% recommended exposure to gold (Exhibits 22 & 23).S. Gold is still favoured longer term. equities and a view that as long as the U. Exhibit 20. 2010 Exhibit 19.10 in 2011 and 2012.June 16. 50% 45% 5% Allowable range Equities/Bonds Tbills 40-60% 0-30% Our Canadian Tactical asset mix is based on a 3. initially because of an anticipated devaluation of the U. Exhibit 21.S.Volatility And Slower Growth . respectively. economy is stable. and $1. though it remains one of the most volatile asset classes historically. The more aggressive equity exposure is the result of indications of a rebound in index prices for the TSX and the S&P 500.CIBC's CIO Roundtable .S. as well as an upward implied move in bond yields (Exhibits 20 & 21). Canadian Tactical Asset Allocation Equities 65% Bonds 35% Tbills 0% Source: Company reports and CIBC World Markets Inc. but this would be unusual. In the latter case. 19 . We have been recommending gold for eight years. We also have a strong preference for Canadian equities over U.

20 . The significance of a possible Greek default is most relevant to the likelihood of a larger crisis in the region due to a contagion affect.Volatility And Slower Growth . 9% Bonds. 35% Asia. 4% U. Ireland and Spain. we predicted that the Euro would cease to exist by 2010 and today. geopolitical risk remains very elevated and our uninspiring weights in this region reflect the better perceived opportunities in Canada and less currency risk in the United States. International & Gold Asset Allocation Canadian Equities. International And Gold Asset Allocation Gold Bonds Canadian Equities U. 35% Gold. 2010 Finally.S.S. In 2003. 70% Source: Company reports and CIBC World Markets Inc. Equities. 9% France. Exhibit 23. 4% UK.CIBC's CIO Roundtable .S.S. Exhibit 22. & International Equities U. 15% Japan. the decision by the ECB to intervene is a decision to avert a potential bank crisis while taking a step toward centralizing banking through bailouts. we remain very uncertain about its survivability.June 16.S. 15% U. Equities 70% Asia 4% UK 9% France 4% Germany 4% Japan 9% Source: Company reports and CIBC World Markets Inc. The ECB role in buying Greek debt is critical. 4% Germany. The external debt of Spain and Ireland represent a larger concern for the survivability of the Euro if the Greek situation cannot be stabilized. Rarely when countries have a public debt to GDP ratio in excess of 93% can default or effective default be avoided. Ultimately. & International Equities 15% 35% 35% 15% U. & Initernatiional Equities. The Bank for International Settlements estimates that French and German banks have nearly one trillion dollars of exposure to the residents of Greece. Portugal.

92 UK 8. Exhibit 26.CIBC's CIO Roundtable .95 Japan 8.54 7. 10-yr Government Bond U. Exhibit 25.42 0.69 Canada 4.15 Asia (ex-Japan) 8.01 -4.53 9.80 4.Volatility And Slower Growth .36 18.07 -4.S.89 0.June 16.33 23.26 0.13 0.46 Others 20.49 17.16 Total Returns 12-month 15. S&P 500 (LHS) 21 .S.16 1. 3-month and 12-month Total Returns 3-month -2. 2010 Exhibit 24 – Global Benchmark Weights Benchmark Weights MSCI% U.63 Total 100 Source: Company reports and CIBC World Markets Inc.24 -5.59 S&P TSX Canadian 10-year Government Bond Canadian 3-month t-bills S&P 500 U.99 Germany 3. S&P 500 and TSX Price 16000 14000 12000 10000 8000 6000 4000 Oct-07 Apr-07 Apr-09 Jan-07 Jan-10 Oct-08 Oct-09 Apr-08 Jan-09 Jan-08 Apr-10 Jul-08 Jul-07 Jul-09 1800 1600 1400 1200 1000 800 600 400 S&P TSX (RHS) Source: Company reports and CIBC World Markets Inc.21 France 3.S. 3-month Tbills DOW Industrials Nasdaq S&P 500 C$ Source: Company reports and CIBC World Markets Inc. 41.09 -4.44 4.

Feb-09 Feb-08 S&P TSX Exhibit 28. S&P 500 and TSX ROE 25 23 21 19 17 15 13 11 9 Feb-07 Aug-09 Feb-10 Oct-09 Apr-10 Jan-10 Aug-07 Aug-08 S&P 500 Source: Company reports and CIBC World Markets Inc.4 0.2 Jan-08 Jan-07 Apr-07 Apr-08 Apr-09 Jul-08 Oct-07 Oct-08 Jul-07 Jan-09 Jul-09 Canada Equities/Bonds Source: Company reports and CIBC World Markets Inc. 2010 Exhibit 27.June 16.Volatility And Slower Growth . US Equities/Bonds 22 .2 1 0.6 0. Relative Total Return 1.8 0.4 1.CIBC's CIO Roundtable .

CIBC's CIO Roundtable - Volatility And Slower Growth - June 16, 2010

Exhibit 29. Selected Country Median Values
TSX S&P500 CANADIAN SMALL CAP US MID CAP US SMALL CAP SOUTH AMERICA ENGLAND FRANCE GERMANY SWITZERLAND SPAIN JAPAN CHINA TAIWAN AUSTRALIA ROE (%) ROE Chg/Vol 8.89 0.23 14.53 0.01 0.04 10.54 7.8 14.47 16.01 10 11.39 14.84 13.89 5.58 7.59 11.14 7.4 0 0.15 0.06 0.72 0.25 -0.29 0.59 0.08 -0.03 1.07 0 1.34 -0.12 P/E 14.46 15.2 1.13 17.08 15.8 14.8 12.01 15.45 15.1 16.93 10.45 15.62 15.21 12.88 13.52 P/BV Yield (%) 1.88 1.9 2.34 1.4 1.63 2.03 1.63 2.28 2.33 1.49 1.79 2.86 1.39 1.07 2.06 1.67 1.84 0 0.83 0 0.43 2.93 3.11 1.56 2.02 4.94 1.66 0 1.88 3.83 6 month Return # of Co. 6.32 221 2.66 500 9.33 6.7 6.72 -3.67 4.35 -1.92 3.04 -1.39 -15.65 -1.45 -18.38 -9.29 -3.87 430 400 600 99 101 39 30 20 34 225 53 117 201

Source: Company reports and CIBC World Markets Inc.

Core And Trading Portfolio Recommended Sector Weights
There are a myriad of ways to set sector weights. For example, our GPS (global portfolio system) has well over 100 criteria for value, growth, capital structure, operating characteristics and trading /option data. The recommended weights depend entirely on the investment style and investment horizon of the client. The portfolios (see Appendix) of 48 stocks are designed with the goal of being relatively large cap and as diversified as stock fundamentals allow. The name list is the same for both portfolios, but they involve differences in important underlying assumptions. The purpose of these portfolios is simply to show which stocks are relatively superior to their peers and the relative emphasis on sectors while remaining fairly close to the benchmark sector weights. These portfolios are what we refer to as core plus trading. The core names are more fundamentally attractive, relatively larger names. In order to be included in the core, the company must have an index weight of over 0.07%, an ROE level greater than 5%, moderate or stronger trailing ROE growth, forward ROE growth and a calculable probability of outperforming the TSX. The trading component by contrast requires only a positive ROE level, forward and trailing ROE growth, but requires favourable absolute price momentum and favourable relative price momentum based on our trading techniques. If a name qualified for both the core and trading portfolios, it is identified as C+T.

23

CIBC's CIO Roundtable - Volatility And Slower Growth - June 16, 2010

Exhibit 30. Summary Of Core + Trading (C+T) Portfolio Weights Vs. Benchmark Weights
Energy Materials Industrials Consumer Discretionary Consumer Staples Healthcare Financials Info Tech Telecom Utilities
Source: Company reports and CIBC World Markets Inc.

Total Weight: 22.33% 19.78% 6.94% 2.07% 0.72% 0.00% 41.63% 1.02% 4.20% 1.31%

Benchmark Weight: 26.15% 20.43% 5.44% 4.51% 2.96% 0.46% 31.39% 3.02% 3.97% 1.69%

Portfolio A (see Appendix) companies qualify for the portfolio based on their relative weights (relative market capitalization). There are no constraints on these weights and, therefore, they are more reflective of the weighted average fundamental characteristics of the various sectors (Exhibit 30). For example, the energy sector is 22.33% of this portfolio by weight relative to the 26.15% weight of this sector in the TSX. In recent months, this weight has increased significantly as fundamentals have improved. In the financial sector, the large banks with their significant rate of profit growth have caused the sector weight to reach 41.63% of the portfolios. Bank of Nova Scotia (BNS–SP) and Bank of Montreal (BMO–SO) are both core and trading recommendations. This significant financial sector overweight reflects the strong fundamentals, but real institutional portfolios are unlikely to be unconstrained like this. Portfolio B (see Appendix), therefore, overlays two important techniques. First, we increase or lower the recommended weight of every stock in the portfolio based on our price momentum ranks. This facilitates better timed exposure to core fundamental names and sets the trading names to their appropriate weights based exclusively on price momentum. Finally, we overlay a single stock weight limit (SSL) with a minimum single stock weight of 0.5% to a maximum single stock weight limit of 7%. Portfolio B, therefore, should outperform portfolio A over time due to changes in timing, but may give up some incremental performance due to limits on single stocks weights and better diversification. Both portfolios, however, provide indications of fundamental sector preferences (Portfolio A) and timing differences (Portfolio B) by comparing the precise, mathematically derived sector weights with the benchmark weights.

24

CIBC's CIO Roundtable - Volatility And Slower Growth - June 16, 2010

Exhibit 31. Summary Of Core + Single Stock Limit (SSL) Tilt Weights Vs. Benchmark Weights
Energy Materials Industrials Consumer Discretionary Consumer Staples Healthcare Financials Info Tech Telecom Utilities
Source: Company reports and CIBC World Markets Inc.

Total Weight: 26.48% 19.09% 5.26% 2.84% 1.09% 0.00% 36.05% 1.05% 6.37% 1.78%

Benchmark Weight: 26.15% 20.43% 5.44% 4.51% 2.96% 0.46% 31.39% 3.02% 3.97% 1.69%

There are some good core names outside of the financial, energy and materials sectors, but the concentration in these three sectors is a critically important issue for investors.

Background: A U.S. Economic Recovery Is Still Essential
Since the market low of 1998, the S&P 500 price level is essentially unchanged, yet the market has recorded five of the largest rallies and collapses in the last 150 years. Even from the lowest point the S&P 500 witnessed in 1998, the index has only averaged a 2.97% total return over the last 12 years. Yet, in succession, the market rallies and declines were +57%, -50%, +94%, -57%, and +84%. Each stock market rally coincided with a collapse in bond prices and each stock market collapse coincided with a huge rally in bond prices. This phenomenon has only been witnessed on two occasions in the last 150 years (The Long Depression and the Great Depression). This type of market behaviour only occurs during periods of debt crisis and/or deflation. It is a game changer. Truth be told, we have been living on the edge of a global debt crisis. The goal is to postpone the debt crisis by any and every means possible until an energyrelated, productivity-driven technological breakthrough allows us to grow out of debt. Until that happens, tactical, shorter-term, asset-mix decisions and stock trading systems are essential to generating even a respectable return.

Exhibit 32. S&P 500 P/E And Bond Yield Positive Correlation
40 35 30 25 20 15 10 5 0 1871 1889 1907 1925 1937 1943 1949 1955 1961 1967 1973 1979 1985 1991 1877 1883 1895 1901 1913 1919 1931 The Great Depression
8

T he Long Depression

7

Entire period positive correlation as illustrated by U.S. bon d yields & stock prices since 1998

1800 1600

6

1400 1200

5 1000 4 800 3 600 2

400 200 0

1

0

Apr-07

Apr-06

Apr-08

Apr-09

Oct-08

Oct-06

Oct-07

Positive Bond Yield/Equity Correlation

S&P 500 P/E (LHS) Monthly S&P 500 P/E levels from 2006 - present

10 year US bond yield

Oct-09

S&P 500

(Shaded region show only coincident falling bond yields and falling stock prices for calendar years) Source: CIBC World Markets Inc., Bloomberg

25

Apr-10

2003

1997

If the current crisis results in a contraction of economic growth in broader Europe and rising bond yields and credit spreads. Were it not for an ECB bailout of Greece. 2010 Exhibit 33. more serious than Greece because of huge external debt burdens. 10-Yr U. then the existence of the Euro itself is threatened and a global liquidity crisis is a possibility. defaulting would be their immediate fate (Exhibit 34). it is difficult or impossible for a country to avoid default. It Can Compromise Future Growth Usually. then bond yields tend to skyrocket and a debt crisis and economic crisis follow.S. Bloomberg Beware The Bond Yield Spike/ Currency Collapse When bond yields exceed the critical ceiling and the currency is falling.Volatility And Slower Growth . when public debt to GDP levels exceeds 90%. Spain and Ireland are in serious potential crises.96 Failure of US.07 Bankers Panic of 1907 Run on Knickerbocker Trust Co. the rise in bond yields and collapse in the currency can be halted.08 Mortgage Lender/ Subprime/ Banking Crisis/ Liquidity Crunch 1929 . Sometimes the resulting improvement in productivity growth leads to an economic recovery. 2001 100. When New Debt Is Used For Bailouts.39 Great Depression 1973 Quadrupling oil price 2000 .CIBC's CIO Roundtable .June 16. If the central bank does nothing to stop this.000 1900 Return to GOLD STANDARD TSX 1. S&P 500. 26 . This combination implies that bond investors are fleeing those countries’ debt markets. S&P 10 8 6 4 100 1893 . but great economic hardship and austerity tend to follow. Reading Railroad 10 1 US Bond Yield 2 0 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 0 2010 Source: CIBC World Markets Inc.79 Failure of Largest US Bank 1920 US unemployment soars 1921 Depression 2007 .000 1925 UK Returns to GOLD STANDARD 18 16 14 12 10. a hot capital exodus is gaining momentum. The risk to the Euro and the core Euro zone nations is that their bailouts might compromise the core countries to the Euro. Bond Yields 1873 .03 Technology Bubble September 11. if the central bank raises short-term interest rates dramatically. TSX Vs. Alternatively..000 1906 .

itself would be facing an imminent debt crisis. to “credit ease” in 2009. bonds outperformed U.S. the U. Exhibit 36 illustrates the 150. therefore. Asset Class Returns U. bonds U.S. Safe Haven Artificially Low Bond Yield Strategy Of course. but U.01 1998-present 3. 2010 Exhibit 34. Were it not for the fact that the U. the deflationary 1883 and 1893 time frames.S.95 2. are observed under the category of stock prices down and bond yields down.S. 2002 and 2008 are 27 .Volatility And Slower Growth . Source: CIBC World Markets Inc. and a paradigm shift occurred in perceived risk and with it a move to higher credit spreads. then the U. the inflationary mid to late 1960s and 1970s show a consistent pattern of rising bond yields and rising stock prices.30 9. Greece CDS USD SR 5yr Corp Credit default swaps spreads in Greece rose to truly crisis levels and the risk of default remains very high. P/E Compressed. the cumulative rate of return on stocks stalled out over an extended period of time. as indicated by Exhibit 35.38 1980-1998 6. T-bills U.S.70 9.present 4. bonds and T-bills. there is no prospect of a global recovery if the U. on average. our investment world almost completely changed.07 5.CIBC's CIO Roundtable .S. For only the sixth time in over 150 years and the third time since 1920. Not only did all asset class returns begin to fall to record low average levels over the next 12 years.S.88 8. is the relative “safe haven” and global reserve currency. The U. For example.S.97 9. Pension Challenges Multiplied Exhibit 35. stocks Canadian Stocks Source: CIBC World Markets Inc.S.64 15. Stock Volatility Soared. government debt at all levels is already 100% of GDP and so is consumer debt. stocks. The years 2000. consumer is lost and. economy. By contrast. and the 1930s.year historical relationships between bond yields and stock prices and relates this to rates of return for stocks.S.S. thereby allowing the U. Stock Returns Collapsed.S. 1850 .59 4.June 16.10 As bond yields and stock prices became positively correlated in 1998. The harsh reality is that U.61 11.

92 2.34 -11. 1923.9%. 1937. 1954 yield < 4% 2.39 1. 1914.59 16 1883.46 7.91 31 Total 3. 1872. 1905. 1959. 1922. 1876. 1958.03 14 1884. 2008 Stock Up Yield Down 4%< yield < 7% yield > 7% 5.06 -14. 1941. 2000 Total 4. 1877.S. 1957.CIBC's CIO Roundtable . 1880. 1931.18 26.41 22 1889.98 27 5 1851. 1984. 1979.53 -11. 1890. 1943. 1961. 1981. 1938. 1967.08 6.03 19. we have witnessed our estimated ceiling on U. bond yields fall from the range of 4.90 29 1878. 2001 Total 5. 1896.13 11 6 1854. 1930. 1915. 1870. 1881.89 22. Fortunately for North America. 1861. This is the key to our forecasts of stock and bond returns. 1917. 1868.94 7.59 19 Source: CIBC World Markets Inc. 1912. 1891. 1965. 1996. 1901. 1925. yield < 4% T-bills Bonds Stocks # of observation Year 2. 1985. 1969. 2006 Total 4.01 21. 1983. Asset Class Observations in the U. 1966.93 2. 1982. 1960.68 1. This combination is also common to the early stages of new economic cycles.61 8. 1860. 1907. 2003. 1945. 1974. 1897. 1928.S. 1997. 1955.21 n/a 9. 1852.55 18. 1910. 1867. 1933. 1993. 1862. 1991. 1944. 28 . 1898. 1885.3% to 4. establishing a lower average level of bond yields. 1939. This gives the U. 1963. 1942.58 n/a 3 0 1853. 1920. 1992. bond yields down to 3. 1904. 2005. 1913. 1978. During the last year. The highest average rates of return and the largest number of occurrences are the more “normal” stocks prices up/ bond yields down environment. 1952.June 16. 1956.64 9. 1971. Exhibit 36.03 61 Stock Down Yield Up 4% < yield < 7% yield > 7% 7.68 0.S. 2009 yield < 4% T-bills Bonds Stocks # of observation Year 3. 1866.28 -8. 1976. 1908. 1995. 1886. 1911. 1948. Most relevant to CIOs has been the overarching significance of calculating bond yield “floors and ceilings” and selling stocks in favour of bonds at the “ceilings” and selling bonds in favour of stocks at the “floors”.30 17. 1888. 1892. which is crucial to home prices and forestalls any urgent need for Fed tightening. 2010 also found here. 1893. 1934. 1987. 1873. 1935. 1989 1864.84 3. 1927. 1919. 1932. 1929.87 -9.05 4. 1970. 1936.2%. 1895. 1988 1964.43 48 yield < 4% 3. 1903. 1916.07% to less than 3. 1865. 1950. 1940. 1859. 1990.43 -9. 1926. 1882. the Euro zone crisis caused an inflow of safe haven seeking capital that drove U. 1899. 1875. 1949. 1918. 1999. 1986. 1858.31 6.6% to 4. 1906. 1998. 1947. 1968. 1874. 1855. 2007 Stock Down Yield Down 4% < yield < 7% yield > 7% 7.Volatility And Slower Growth . 1994 1973. 1924. 1887. 1962. 1953 Stock Up Yield Up 4% < yield <7% yield > 7% 4. 1894. 1900.25 n/a -9.61 10. 1879. 1972. 1902.19 21. 2002.39 19 7 1856.86 0. 1869.09 19.88 1. 1946. 2004.86 21. 1909. especially if index profitability (ROE) is rising (Exhibit 37). 1863. 1977. 1857.S. economy more time to recover as long as the offshore crisis can be contained. 1921. 1975. 1951. 1871. 1980.

Of course.S.. dollar is falling at that point.64 +79% inc volatility -50% +94% +0.S.44% pa 1998 low Bond Buy & Hold 180 0 199 5 ceil in g 160 0 19 97 cei li ng 140 0 200 0 ceil in g 3 .3-4 . because of emerging economy growth.57%. treasuries that signals great valuation risk to stocks and real estate prices.9%. Canada In A Global Context Canada occupies a very unique global niche.34 Positive Correlation +57% +0.S.2% and sufficiently below the ceiling of 3.CIBC's CIO Roundtable . we benefit from relatively strong commodity prices. This is unusual because strong commodity prices are usually associated with higher inflation expectations and higher interest rates.7 -3.5%.67 9 Correlation & Volatility 8 +174% 200 9 cei lin g (4. At present. The record stock market crashes of 2000-2003 and 2007-2009 were signaled by the combination of Fed tightening while the level of bond yields exceeded their ceilings of the respective periods and S&P 500 ROE was falling. treasury yield is 3. stable rates and higher commodity prices are very beneficial for the TSX since the energy and materials sectors represent about 46% of the TSX market capitalization and the interest rate sensitive financials represent another 31. 2010 Exhibit 37. Fortunately.3 % 4 .9% Dan ger ran ge 7 6. Canadian interest rates can be relatively low as a result of artificially low U.Volatility And Slower Growth . To summarize.S.S.6 % 4 .June 16.S. Federal Reserve policy. rates. 29 . 10-year Bond Yield Floors And Ceilings S&P 500 Buy & Hold since 1.S. Bloomberg Significance Of The Bond Yield Ceiling The ceiling represents the level of 10-year U. Yet. we believe that it is the collective pressure of the global debt and currency market which dictates U. the Fed is not tightening.7% to 3. S&P 500 ROE is stable at a very high 19.20 Real Estate Bubble -41% -57% +84% +0.6 %) 120 0 20 03 ce ili ng (5. As long as the U. U.5% Exce ss deb t floo r 5 4 60 0 3.8% ce ili ng 6 100 0 4% 19 97 flo or 80 0 4 .0% De sired l on g te rm avera ge 2.2 % ceil in g 4. It is our floor/ ceiling analysis coupled with our ROE analysis of markets and currencies which determines unambiguously what the Fed can and must do at any time and how stocks and bonds will react. economy is stable.9% ) 2 002 ce il ing 5 . the 10-year U.0 7% 3. It is the level of bond yields which we believe forces the Fed to tighten unless a non-North American crisis forces yields down immediately.64% pa -0.0% Ul timate floo r Term Structure 3 40 0 2 20 0 1 0% 0 19 94 199 4 1 995 19 95 199 6 1 996 19 97 199 7 1 998 19 98 199 9 1 999 20 00 200 0 2 001 20 01 200 2 2 002 20 03 200 3 2 004 20 04 200 5 2 005 20 06 200 6 2 007 20 07 200 8 2 008 20 09 200 9 2 010 20 10 201 1 2 011 20 12 0 SPX In dex USGG10YR Ind ex Source: CIBC World Markets Inc. a crisis at that point may drive stock prices lower as well. This is especially true if S&P 500 ROE is falling and/or the U.

therefore.S. equities are undervalued relative to U. weakness in the U.6 Jan-22 Jan-32 Jan-42 Jan-52 Jan-62 Jan-72 Jan-82 Jan-92 Jan-02 Jan-07 Jan-27 Jan-37 Jan-47 Jan-57 Jan-67 Jan-77 Jan-87 Jan-97 US GDP yoy % C$/US$ 25 20 15 10 5 0 -5 -10 -15 Source: CIBC World Markets Inc. housing sector has necessitated a return to a steeply positive sloped yield curve in the U. as well as the urgent need for U. economic growth.S.S. During the 2003 -2007 speculative mania in housing and its subsequent collapse. financial sector.8 0.S. which would force the Federal Reserve to tighten. C$/U.S.7 0. Exhibit 38. depend on profit growth and a favourable level of bond yield.0% range.CIBC's CIO Roundtable .Volatility And Slower Growth .S.S. consumer spending and U. banks to re-liquefy and try to stabilize their balance sheets (Exhibit 39). the direction of housing prices was also profoundly important to ROE in the U.S. however.. dollar is significant. The direction of U. bond yields reach the 3.7% to 4. bond yield are favourable and imply that U.S.June 16.S. This is common for most export-dependent currencies when the U. Sustainable gains in stock indices. except when U.S.S. GDP yoy % 1. 2010 The potential for the Canadian dollar to rise vis-à-vis the U.1 1 0.S. In general. Bloomberg Corporate Profitability (ROE) As An Indication Of North American Economic Growth Recent levels for the U. we would expect the Canadian dollar to trade in successively higher ranges over the next several years. Naturally. 30 . Exhibit 38 illustrates the tendency for sharp selloffs in the Canadian dollar during economic crisis and/or recessions.S. housing cycle (or at least stabilizing it). housing prices is a major determinant of consumer confidence.9 0. dollar strengthens for safe haven reasons. with the hope of restarting the U.$ vs U. bonds. The real risk to the Canadian dollar in the shorter term is its link to the “risk bet”.S.

09 No v. at least until financial sector ROE has time to recover.06 Ma y. if U.US US Y ield Cu rve Source: CIBC World Markets Inc. bond yields rise and the Fed is forced to tighten.0 5 Ma y.S..S.Ca n Med . Clearly. Exhibit 40. U.0 7 N ov -00 N ov. and Canada Financial Sector ROEs & U.Can Av e-US Me d-US US Hou sing Ind ex ( Rad ar Lo gic) Source: CIBC World Markets Inc. and Canada Financial Sector ROEs & U.S. A tilting of the U. Bloomberg The crisis since 2007 is justification enough for the Fed to maintain the positively sloped yield curve for as long as possible. though. there is still the possibility that higher short rates could cause long rates to fall.C an Med-Ca n Av e-US Med.CIBC's CIO Roundtable .S.0 9 -1 0 2 3 + s lop e 4 5 A ve.0 1 M ay -03 M ay.0 1 N o v-02 N ov -03 N ov -0 4 No v. U. Housing Index 18 A ve US 16 26 0 14 24 0 22 0 20 0 10 A ve CA 18 0 16 0 14 0 6 12 0 4 10 0 30 0 28 0 12 8 M ay-0 1 M ay-0 2 M ay-0 3 M ay-0 4 M ay-0 5 N ov-0 5 N ov-0 6 N ov-0 7 N ov-0 8 Ma y-06 Ma y-07 Ma y-08 A v e.0 5 N o v-06 N ov -07 N ov. Yield Curve 20 18 + slo pe 16 14 12 10 8 1 6 4 2 0 Y ield C urve Slope Inv er te d M ay -0 4 Ma y.. Bloomberg 31 Ma y-09 N ov-0 9 N ov -00 N ov -01 N ov -02 N ov -03 N ov -04 .S.0 8 M ay.02 Ma y. 2010 Exhibit 39. yield curve of this type also tends to benefit stocks as long as ROE is recovering (Exhibit 40).S.0 8 Ma y.Volatility And Slower Growth .June 16.

24 1. By contrast.3 23. This is a very favourable combination for the TSX.41 4. S&P 500 ROE is currently 19.Volatility And Slower Growth .22% of the S&P 500 market cap.08 20.65 22.26 3.58% of the index weight.66 0.12 2.June 16. representing only 39.09 3.48 7.66 39.S.63% and 14. This same phenomena is being witnessed again in recent months.58 26.97 10.27 0.53 60.5 48.93 3. 2010 S&P 500 And TSX ROE Rarely do we see TSX ROE record dramatically stronger growth than the S&P 500.2 19.67 9.57% and shows no evidence of expected growth in the next two to three quarters.S.48 11.22% S&P 500 (500) Benchmark 11.93 9.28 2.79 3. Forward Street estimates for TSX stocks rolled up to forward ROEs indicate a range of between 14.94 169 companies 33.63 22. are expected to post ROE growth next quarter! All together.32 11. 2010 As of June 11.CIBC's CIO Roundtable .17 5.84 0.68 18. By contrast.3 19.91 15. Energy & Materials (%) Energy & Materials Source: CIBC World Markets Inc.62% and is rising at the impressive rate of 0.4 81.3 21.3 22.99 98 companies 60. 2010 Energy Materials Industrials Consumer Discretionary Consumer Staples Healthcare Financial InfoTech Telecom Utility Trailing > 0.29 30. Exhibit 41.26 10. yet the TSX is recording a phenomenal rebound in ROE.7 Fwd > 0. Exhibit 41 clearly indicates far better internal profit dynamics for the TSX. emerging economies pushed commodity prices higher and gave the TSX a vastly better rate of growth than the S&P 500.77 13.23 32 .71 6.87 46.81 3. ROE suggests that the Fed has a vested interest in sustaining the relatively low level of U.81 5.43% Trailing > 0.53 3 0.15 0.58% 87. rates. Between 2003 and 2007.61 1.45 197 companies 39. Even more startling is the fact that the forward analyst earnings suggest only 169 companies.72 2.19 6.64 77. Our data indicates that weighted average TSX ROE was recently 11.01 4.43 10.52 standard deviations.47 17.68 Fwd > 0.72 0.46 31.16 11. TSX And S&P 500 ROE Characteristics As of June 11.94 103 companies 49.02 3.47 3.03 1. with 98 of the 221 companies recording profit growth.3 33. representing a mere 33. TSX (221) Benchmark 26. the weak recovery in U. These companies represent almost 61% of the TSX weight.06 0.32 5.46 10. only 197 of the S&P 500 companies are recording ROE growth.71 0.90% in the future.02 0.87% Financial.

000.right ax is) Source: CIBC World Markets Inc.000. if China and India had as many cars per capita as the U. 000 14 12 10. 000 4. 000.000. Bloomberg Oil And Energy Security If the rapidly growing emerging economies get into trouble.000. but Exhibit 42 shows a stunning rise in consumption driven by China from the 1990s forward.S. Not surprisingly. Historically.000. 000. 000.June 16.000.S.. 000 4 2.000. China and India. 000 10 8 6 8.000.000. 000 Finally.000..000. 000 2 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 US GDP growth ( annual %) China GDP (current US$) China GDP growt h (annual % ) India GDP (current US$) n I di a GDP growth (annual % ) U GDP (current US $) S Source: CIBC World Markets Inc.000. 2010 Energy Sector ROE And Security International oil consumption has benefited from growth in India. then some moderation of the upward pressure on commodity prices is possible.000.000. Two simple examples illustrate the leverage to emerging economy growth and the obvious need for energy alternatives.000. suggest that an energy squeeze is an ongoing concern.. Correlation: GDP & Oil 45 40 35 30 25 20 15 10 5 0 -5 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Nov-00 Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Jul-09 Nov-09 India 120 100 Oil 80 60 40 20 0 -20 -40 -60 -80 China US USA China India Oil (US$/bbl . Exhibit 43. 16 12.CIBC's CIO Roundtable .000.. China And India 20 18 16.000.000.S. 000 14.000.S. this would be roughly equivalent to adding two billion new cars to the world with all of the related resources depletion and environmental destruction (Exhibit 43). energy security and selfsufficiency are an extremely urgent problem.000. Exhibit 42. the yearover-year rise in oil prices is driven by a recovery in the GDP of the U. Without a major energy-related technological breakthrough. a comparison of GDP growth rates for China and India relative to the U.. The World Bank Group 33 . 000 6.000. First. GDP Growth: U. the lagged year-over-year change in West Texas intermediate prices is very highly correlated with energy sector ROE.Volatility And Slower Growth .

43 $1.4 45 $994 .S. then the GDP circle would completely obscure all of China and India. CIA Wor ld Factbook . 2010 Second.141.June 16.29 5 $4.S.11 $49 0.390.433 $ 5. Evidence supporting this possibility is seen in the fact that oil prices remained in the US$40 to $90 range per barrel during the 2008/2009 recession (depression).CIBC's CIO Roundtable . GDP and population.5 0 $1. Image: GEBCO. Wikipedia It has been estimated that at 85 million barrels per day (bpd) of consumption.10 3. In fact.50 $136 $1 58.10 $25 3. GDP And Imports/Exports Russia US Silk Road Jap an Brazil Populat ion GDP (US$ trillion ) Imports (US$ billion) Exports (US$ b illion) Sources: CIBC World Mark ets.S..330 .Volatility And Slower Growth ..net. Ima ge : GEBCO. Exhibit 44. 34 .8 63 $14 .018 $ 1.70 Br azil 20 1.30 Russia 139 .net. 232.23 $196 . Wikipedia US Population GDP (US$ trillion) Imports (US$ billion) Expor ts (US$ billion) 310.17 3. Exhibit 44 provides an easy comparison of U.90 $ 165 China 1 . it is possible that a variety of base metals will also become depleted as a result of the scale of emerging economy growth.90 India 1.804 .19 4 Japan 12 6. the middle east and most of western Europe. China and India achieved the same ratio of GDP to population size as the U. If. oil reserves will be depleted in 30 years.10 8. but with new emerging economy consumption.80 $295 . BRIC Nations & U. oil demand.60 Source: CIBC World Markets Inc.60 $51 6.8 1 $ 921. would be expected to rise by 3060%. Population. one day.330 $1. if unconstrained. CIA World Factbook. 205 $1 .

1 00 J an-8 4 Jan-0 0 Jan -7 6 Ja n -86 Ja n-88 Ja n-90 Jan .000 Japan US $35. $40.CIBC's CIO Roundtable . CPI yoy & Oil price yoy % 40 35 300 250 200 C h ina N et Imp orter 150 100 50 0 U . Exhibit 46. probably due to the growing leverage from emerging economy growth as these nations became larger and larger. it would be preferred that these highly populous nations follow path A rather than path B (Exhibit 46).June 16.000 Com petitive Eff ect $10..Volatility And Slower Growth . For example.000 UK Germany France Italy Jan-06 16 Canada Austral a i $25. Bloomberg Conceptually.S .92 Ja n -94 Jan -96 Jan. 30 25 20 15 10 5 0 -5 -10 J an-82 Jan-7 4 Jan-7 8 C PI yoy W Ti oil p ri ce y o y R are ly Nega tive y oy . as China and India industrialize and GDP per capita grows. GNP Per Capita $45. IEA 35 . real GDP O bserve chang e in re lative pe rform ance . Path B would suggest that far more energy consumption is occurring for the world’s two most populated countries—implying enormous upward pressure on commodity prices and probably severe global constraints. U. The image shows the broad relation between wealth and energy consumption. the path that China and India take to energy consumption per capita is crucial.50 Jan-0 4 Jan -80 Source: CIBC World Markets Inc. Real GDP Growth.S. Path A would illustrate a clear focus on generating a higher GDP per capita relative to the energy inputs required to generate that standard of living–the direction of the highly energy-efficient Japan.000 $20..000 India Chin a $0 0 2 4 6 8 10 12 14 Saudi Arabia Population Effect South Af r ica Russia B k W p er cap ita h Ener gy Consumption vs GDP Source: CIBC World Markets Inc.000 GDP pe r cap it a The graph plots the per capita power versus the per capita income for all countries with more than 20 million inhabitants. 2010 Exhibit 45.000 A A rg entina World Spain Korea $15. it appeared as if the year over year change in oil prices turned consistently positive. Energy Consumption Rate Per Capita vs. more than 90% of the world's population.98 Jan -0 2 Jan.08 Ja n-10 18 Thousands Sometime around 1999.000 Mexico Brazil $5.000 $30.

Investors must constantly grapple with the following question: Is the equity cycle still intact? If it is.June 16.S. In the interim.S. The only real solution is a dramatic improvement in productivity growth. then Canada could probably be said to have the best of all characteristics that are essential to successful investing. time to work through its housing crisis with the goal of protecting consumer confidence. bond yields remain in a safe range so that an ROE recovery can lift U.CIBC's CIO Roundtable . The TSX index by comparison is dominated by the energy and materials sector. 36 .S. As long as the U. bond yields is critically important. the TSX can benefit from relatively high commodity prices with little or no inflation and interest rate risk.S. yet our financial sector may be the strongest in the world fundamentally. whose profitability is being driven by growth from emerging countries. Our focus is on ensuring that U. This may give the U.Volatility And Slower Growth . economy is stable.S. a low and stable level of U. equity prices. 2010 Conclusion There is no shortcut to confronting the problem associated with excessive western government and consumer debt levels. but the Euro zone continues to struggle with the dangerous combination of enormous debt and very weak economies.

Volatility And Slower Growth . For the Canadian banks. First. there is more lasting pressure on profitability). By contrast. this question might be difficult to answer across all banking regimes. The combination of these two factors leads to a positive 12.e.June 16. 2010 Sector Outlook Banks & Lifecos Robert Sedran (416) 594-7874 Mike Rizvanovic (416) 594-7283 Overweight & Market Weight Sector Outlook As we slowly exit a particularly nasty downturn that featured capital market and macroeconomic turmoil. we believe that bank shares should migrate towards their pre-crisis average of 12x forward earnings. We remain constructive on the capital markets businesses – though we do expect them to slow from an exceptionally strong F2009 – and look for them to remain above historical levels as the banks defend market share gained through the downturn. the upside is less compelling than it was.to 18-month investment stance on the banks at this time. We see two important implications flowing from this view.e. In short. core products in the lending and capital markets businesses carry better profitability with less risk and balance sheets are materially stronger. Moreover. Second. we think in Canada the answer is reasonably clear. we are convinced that the vast majority of the impact is cyclical. it is our view that the discount to the Canadian lifecos at which the shares previously traded is no longer appropriate given the lasting negative impact on profitability mentioned above for that sector. However. with products that are both higher-risk and less profitable than they appeared to be before the downturn. we believe the central question that must be asked of any financial service company globally is whether the nature of the downturn was cyclical (i. With better earnings visibility and less volatility.CIBC's CIO Roundtable . From a global perspective. earnings are depressed temporarily) or structural (i. Pretax pre-provision earnings are higher. we favour the banks over the lifecos at this time. the Canadian lifecos do show signs of structural damage from the downturn. we think they are exiting the downturn in a stronger position than the one in which they entered it – not just when compared against damaged international peers. although we note that after the very strong performance of the shares over the last year. it is here that we note a significant divergence between the Canadian banks and life insurance companies. but against themselves as well. on valuation. our investment thesis for the banks assumes improving profitability and accelerating earnings growth as loan losses continue to decline and the net interest margin benefits from a gradual increase in short-term interest rates. 37 . comfortably above the current average F2011 multiple of closer to 10x.

Top Picks TD Bank (TD–SO) is currently our top pick given the company’s above-average leverage to falling loan losses. We also have a favourable view on Bank of Montreal (BMO–SO). Presumably the regulatory environment will be more stable by this time. TD Bank – which we believe has achieved critical mass in the United States – has one of the best answers to that question. both regulators and politicians are actively considering reforms to help reduce the likelihood and/or severity of the next crisis. The potential for unexpected or unintended consequences is elevated. especially given the uncertainty created by the upcoming implementation of international accounting standards (IFRS). This bank is a leader in the Canadian marketplace and we expect it to perform well in the United States. we believe all stakeholders will need to balance the goal of improving the safety of the financial system with the desire to not impede what seems likely to be an already sluggish recovery. we look for a return to more normal single-digit earnings growth rates for the sector.June 16. In our view. the most significant long-term strategic question facing the banks is the deployment of excess capital being generated domestically. 2010 Regulatory Response To The Crisis Is Still Developing In response to the crisis. balance sheets are very well positioned to meet these challenges. which implies that the excess capital being generated in the mature Canadian market will be in part returned to shareholders through higher dividends and share repurchase programs and in part deployed into international expansion strategies. we are not dismissive of this issue as an ongoing challenge. We currently rate the shares Sector Outperformer with a $72 price target. The relative success of these expansion initiatives will be an ever larger influence on relative returns. 3-5 Year Outlook Once the recovery from cyclically depressed earnings is largely complete (we assume F2011 for the banks). personal and commercial banking expansion strategy and what we believe to be a compelling relative valuation. continued strong performance of the core retail franchises. after an early response to the crisis that saw the banks aggressively raise capital. 38 .CIBC's CIO Roundtable . we rate the shares Sector Outperformer with an $85 price target. Here again. which when combined with better performance in the domestic retail bank. while we are confident that the banks can manage tighter capital requirements.Volatility And Slower Growth . With solid positioning in both the near term and longer term.S. we believe the Canadian banks remain relatively well positioned compared to their international peer group given the exceptionally strong domestic franchise. In our opinion. In our view. our optimism regarding the firm’s U. That said. Moreover. where there has been less visibility on the potential impact of greater requirements. underpins our expectation of the highest earnings growth rate of the banks over the next two years. This bank retains above-average exposure to falling loan loss provisions. Uncertainty is higher for the life insurance industry.

Volatility And Slower Growth . rather than purely relying on their investment float. Through the first five months of 2010. Namely: 1) personal insurance lines are in a hard market as the low interest rate environment dictates that insurers must generate a greater return from underwriting insurance. 2010 Asset Managers & P&C Insurers Paul Holden. Valuations for Genworth Canada (MIC–SO) are extremely compelling at 1. valuations have recently been pushed down due to concerns over home prices and housing affordability in the context of higher interest rates. In addition. albeit lukewarm.9x and 10. In our opinion. which could total nearly $3 per share.0 billion in long-term fund sales.0x BV and approximately 8x 2010E and 2011E EPS given the prospect for rising EPS. a gradual rise in interest rates does not pose the same risk to the market value of float. which is predominately made up of fixed income instruments.CIBC's CIO Roundtable . the company expects to return a portion of its excess capital to shareholders in 2010. ROE for the P&C insurers likely bottomed in the first half of 2009 and the cyclical recovery for the industry should continue through at least 2011. you are paying much more for expected earnings from an asset manager versus an insurance company. The outlook is somewhat more challenging for the asset managers. whose profits are heavily skewed towards equity-related mandates. Volatile equity markets have already taken their toll on mutual fund flows. with the industry experiencing net redemptions in May of this year compared to average net sales of $1. Finally. is constructive for the volume of insurance underwritten.June 16. (416) 956-6676 Market Weight Sector Outlook Broadly speaking we favour the property and casualty insurance companies over asset managers in a slow-growth. CIBC’s outlook for gradually rising rates and manageable personal debt corresponds to an improving earnings environment for Genworth Canada. the company has netted $2. The average P/E on 2010 and 2011 expected EPS for the asset managers are 13.9x and 11.6% YTD. 2) regulatory capital levels are strong and getting stronger. DundeeWealth (DW–SO) is easily outpacing the industry in terms of mutual fund sale and AUM growth. (416) 594-8417 Kevin Cheng. Top Picks Our top picks in the vertical are Genworth Canada and DundeeWealth. poor returns on bond funds fueled by a rapid increase in rates (encouraging investors to buy/switch into equity funds). We expect that trend to continue through our 2010-2011 forecast horizon with improving employment and firm home prices. Industry AUM is up a measly 0. and 3) economic growth.1x for insurance companies.6 billion for the previous four months of May. Retail investors are clearly skittish and will likely remain gun shy if equity markets remain choppy. and a relatively consistent rise in equity markets. choppy equity market environment. A more ideal scenario for the asset management industry would be robust economic growth. as rapid interest rate increases would. Claims losses have been trending down since peaking in Q2/09. We would expect the positive underwriting trends we are seeing in the Canadian P&C insurance space to continue.5x versus 11. almost one-sixth of the industry 39 .

Given the superior growth outlook.9x EV/2011E EBITDA versus Canadian comps at 5. we think the shares are modestly priced at 5. 2010YTD AUM growth is 9. We believe that DundeeWealth will continue to grow faster than the industry during our forecast horizon due to strong fund returns and an overall portfolio tilt in favour of resources.6%. and thus potentially attract more inflows. 40 .8x and US comps at 7. In addition.0x.CIBC's CIO Roundtable . its hedge fund mandates provide more of an opportunity to generate returns in a volatile market environment. The company’s balance sheet looks solid with a net cash position of nearly $170 million.June 16. 2010 total.Volatility And Slower Growth . well ahead of the industry at 0.0%.

00 $33.9x 1.4x Historic Avg 1.00 Average: OTHER P/E Multiples Ticker DHF.00 $56.7x 2.4x Current (2) 1.5x 23.8x 1.25 Average: P&C INSURERS P/E Multiples Ticker IFC MIC Rating SP SO Price Target $53. P/B Multiples Target 11.6x 9.1x 1.0x 2.6x 10.7x Historic Avg 1.7x 15.3x 1.4x 14.1x Current (2) 1. Source: Thomson Analytics.0x 9.June 16.9x 13.8x Historic Avg 1.6x Historic Avg 14.2x 5.6x 11.2x Historic Avg 10.0x 9.8x 2.0x 1.0x 11.8x 11.5x 12.8x 2.00 Big Three Average: $40.3x Current (2) 2.9x 2.5x 2.1x 1.5x 12.0x CWB LB SU SP CANADIAN LIFECOS Ticker GWO MFC SLF Rating SU SO SP Price Target $28.6x nm 1.4x 9.4x 1.2x 11.4x 12. 2010 Exhibit 47.7x 14.5x 10.UN OCX Rating SP SO Price Target $17.75 Average: (1) Based on our current EPS estimates for F2011.3x 8.4x 2.6x IAG SO ASSET MANAGERS P/E Multiples Ticker AGF.2x 1.7x 3.5x 12.3x 8.0x 15.7x P/E Multiples Historical Avg 12.0x 9.9x 1.7x Current (1) 10.5x 11.4x 2.1x 1.6x 1.3x 12.2x nm 8.5x 11.8x 12.00 $85.8x 3.0x 11.1x 1.8x Current (2) 1.7x 11.0x 10.Volatility And Slower Growth .3x 11. company reports.7x 9.8x 8.0x 2.3x 11.8x 11.2x Target 12.2x Current (1) 7.0x 11.00 $67.0x 14.CIBC's CIO Roundtable .3x P/B Multiples Target 11.5x Target (3) 1.1x 3.7x 10.1x 10.4x P/B Multiples Historic Avg 2.8x 1.1x 22.8x 1.7x 10.3x 9.1x 1.5x 1.2x 1.8x Current (2) 1.4x 1.5x 8.3x Historic Avg 8. and CIBC World Markets Inc.5x 2.3x nm 10.8x 2.00 $47.00 $25.9x 11.2x 3.5x 2.75 $5.4x 13.1x 1.4x 5.4x 10.8x 9.00 $65.8x 10.6x Current (1) 10.2x 41 .4x 8.4x 11. Summary Of Our Ratings & Price Targets CANADIAN BANKS Ticker BMO BNS CM NA RY TD Rating SO SP NR SP SP SO Price Target $72.3x 12.0x 1.00 Avg for all Bank: Current (1) 10.2x 1.9x 6.25 $44.1x 1.7x 2.1x 2.9x 10.3x 12.8x 12.4x 9.0x Target 2.5x 2.0x 2.1x nm 11.0x 2.0x 2.4x 1.00 $22.4x 17.6x Target 12.1x 2.00 Big Six Average: $26.3x 2.1x 10.25 $20.1x 2.2x 1.3x 1.9x 14.B CIX DW GS IGM SII Rating SO SU SO SO SP SP Price Target $21.6x 1.00 $20.2x 11.4x 11.75 $38.3x 1.00 Avg for all Lifecos: Current (1) 10.4x Target (3) 1.7x 2.2x 11.1x 2.2x 12.5x 11.0x 10.0x Target 2.9x P/B Multiples Historic Avg 2.1x 1.7x 9.5x 15.7x 12.0x P/E Multiples Historical Avg 11.5x Target (3) 2.50 $33.1x 11.9x 6.4x 7.8x 12.2x 10.9x P/B Multiples Target 12.4x 1.6x 3.9x 2.00 $82.5x 2.1x 1. (2) Based on the current book value per share.4x 1.

Whereas most of the time gold prices behave as negatively correlated movements against the US dollar. $1.CIBC's CIO Roundtable . occurring about 18% of the time. 2010 has seen both the trade-weighted dollar and US dollar gold prices increase by about 13%.00 $14. (416) 594-7261 Overweight Sector Outlook Gold is asserting itself as an investment providing safety and performance. currency debasing. causing an extended period of varying uncertainty that should maintain the interest in gold.25 $9.85 $0.00 $16.00 $70.90 $3.00 $15. While jewelry demand has softened due to higher prices.02 $65. The reaction is uncommon.00 $0.00 $16.80 $0.28 $1.90 Source: CIBC World Markets Inc.00 $182. We believe that investors will continue to seek diversification to the multitude of uncertain factors described in the Economics section of this report.50 $2. (416) 956-3725 Khaled Sultan.74 2012E Long Term Est. market volatility.00 $14.400 $20. (416) 594-7106 Brian Quast. with these aspects underpinned by strong fundamental criteria.00 $125.00 $140.000 $15. Five years ago. Turmoil in Europe has provided the basis for not only currency devaluation.00 $200. In most cases.00 $1. The economic factors that have driven gold to current levels continue to plague the world.200 $18. (416) 594-7297 Kevin Chiew. (416) 956-6787 Cosmos Chiu.50 $1.90 $0. we think that demand will continue to drive gold prices higher.00 $0..00 $8.25 $1. 2010 Mining— Precious Metals Barry Cooper. as evidenced by the strength of the bullion-backed ETFs that now house 10 months of mine supply.000 $1. Exhibit 48. Key Commodity Price Assumptions Gold Silver Aluminum Copper Nickel Zinc Uranium Molybdenum Metallurgical Coal Iron Ore US$/oz US$/oz US$/lb US$/lb US$/lb US$/lb US$/lb US$/lb US$/tonne US$/DMTU 2010E $1. it has been more than replaced by increased investor purchases of gold.00 $0.Volatility And Slower Growth .00 $75.48 2011E $1.June 16. the correlation flips when some other major currency wavers in strength. We believe there will be a rotation of compounding problems that ripple through world markets. Secondary supply such as Central Bank selling is dwindling. (416) 594-7457 Robert Hales. With limited supply.00 $8. but the movement of money into gold bullion as a means to preserve capital. Primary production remains stagnant. and general mayhem in world geopolitics. including debt build up.95 $3.00 $1.00 $7. the holdings in ETFs were less than a week’s supply.00 $0. Bloomberg 42 .70 $75.85 $2. but not without precedent.

Finally. Amongst the non-producers. we favour: Detour Gold (DGC–SO). Pan American Silver (PAAS–SO) benefits from an excellent operating history. We think that newcomers to the group may look upon gold stocks with traditional valuation criteria and find the group attractive under this measure as opposed to the more common metric of net asset value where gold shares typically appear more expensive than other sectors. Eldorado Gold (EGO–SO) has the best growth profile for next year plus among the best reductions in operating costs. In the seniors’ space. Osisko (OSK–SO) is transitioning into an intermediate producer within 12 months and is a likely takeout candidate. It currently sits at 7 or 65% above the long-term average and 45% above the average trading levels of the past decade. We think that either gold shares are reflecting an impending lower gold price or they are mismatched with the commodity and the improved earnings power of the group. Amongst names in our universe. while Franco-Nevada (FNV–SO) offers a superior risk-return profile. Barrick (ABX–SP) has delivered a strong operational performance that is likely to draw attention to the name.Volatility And Slower Growth . 43 . Top Picks IAMGOLD (IAG–SO) is likely to benefit from a number of catalysts over the next six months including the startup at Essakane. The 23-year range of units of the XAU purchased for an ounce of gold has been between 3 and 6. and new discoveries at Rosebel. Some of the major gold producers are now trading below the average P/E multiple for the S&P 500 for the first time in history. 2010 Gold equities appear inexpensive relative to the commodity itself. A profile of our coverage universe and current ratings is shown below.June 16. appointment of a new CEO. Red Back (RBI–SO) is one of the few companies that are experiencing growth.CIBC's CIO Roundtable . and growth from the recently acquired Navidad project. Kirkland Lake (KGI–SO) has high grades with the potential of scaling up production that is building as of now. which we believe represents good value and potential for expansion through further drilling results and the transition to production albeit two years off. both in terms of production as well as reserves. our ranking is as follows: Goldcorp (GG–SO) is one of the few seniors that is forecast to experience growth in production of 10%-15% per year over the next five years. Newmont (NEM–SP) offers investors the prospect of gold leverage coupled with steady state production. we think Kinross’ (KGC–SU) growth has been impaired but prospects should improve in 2012. Semafo (SMF–SO) should benefit from continued growth at Mana.

49 $17.24 $59.43 $0.659 $17.864 $0.87 777 $23.74 425 $2.00 1.65 $14. Share Price (US$mlns.87 2.223 148 1.784 55 2.515 $18.214 7.086 2.50 1.81 53 9.210 437 745 1.99 870 $10.Volatility And Slower Growth .324 1.40 $1.89 $11.61 $4.75 593 $9.523 $43.126 127 224 362 1.13 $5. Summary Of Our Ratings Company Alamos Andean Resources Aurizon Detour Eldorado Gold Fortuna Silver Franco-Nevada Goldcorp IAMGold Corp Kirkland Lake Gold Minefinders Mineral Deposits Northgate Minerals Osisko Pan American Silver Perseus Red Back Mining Silver Wheaton Semafo Alexis Minerals Agnico-Eagle Mines Barrick Gold Corp Centerra Gold Coeur d'Alene Etruscan Resources Endeavour Silver First Majestic Gammon Gold Golden Star Resources Gold Wheaton Lake Shore Gold New Gold Newmont Mining Orezone Royal Gold San Gold Claude Resources Hecla Mining Kinross Gold Corp Rainy River Rubicon Minerals Silver Standard Silvercorp Metals Yamana Ticker AGI AND ARZ DGC EGO FVI FNV GG IAG KGI MFL MDM NXG OSK PAAS PRU RBI SLW SMF AMC AEM ABX CG CDE EET EDR FR GAM GSS GLW LSG NGD NEM ORE RGLD SGR CRJ HL KGC RR RMX SSRI SVM AUY Exchange TSX TSX TSX TSX NYSE TSX TSX NYSE NYSE TSX TSX TSX AMEX TSX NASDAQ TSX TSX NYSE TSX TSX NYSE NYSE TSX NYSE TSX TSX TSX TSX AMEX TSXV TSX TSX NYSE TSX NASDAQ TSX TSX NYSE NYSE TSX TSX NASDAQ TSX NYSE Currency US$ C$ US$ C$ US$ C$ US$ US$ US$ C$ US$ US$ US$ C$ US$ C$ US$ US$ US$ C$ US$ US$ US$ US$ US$ C$ C$ US$ US$ US$ C$ US$ US$ C$ US$ C$ C$ US$ US$ C$ C$ US$ C$ US$ 10-Jun-10 Market Cap.41 $0.) $14.81 0 $25..310 $8.37 $10.992 $17.01 6.01 221 $30.337 $7.58 $3.18 $17.657 $2.386 1.309 42.366 $4.62 31. Bloomberg 44 .June 16.917 $24.998 Rating Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector Outperformer Sector OutperformerSpeculative Sector Performer Sector Performer Sector Performer Sector Performer Sector Performer Sector Performer Sector Performer Sector Performer Sector Performer Sector Performer Sector Performer Sector Performer Sector Performer Sector Performer Sector Performer Sector Performer Sector Underperformer Sector Underperformer Sector Underperformer Sector Underperformer Sector Underperformer Sector Underperformer Sector Underperformer Sector Underperformer Source: CIBC World Markets Inc.23 607 $0.CIBC's CIO Roundtable .660 $1.98 $2.11 $6.35 $3. 2010 Exhibit 49.70 1.272 12.53 9.90 1.40 6.024 325 1.053 1.04 $3.48 6.82 $50.432 $2.60 $7.735 1.90 3.62 $3.38 $6.42 $42.461 26.27 $3.32 $55.90 $7.209 2.67 3.

resulting in an acute scarcity of supply across all commodities. we see limited downside to the prices for these metals from current levels. with positive implications for related equities.H. 2010 Mining— Metals & Minerals Alec Kodatsky. with growth being more heavily skewed towards emerging markets. much of the higher-cost “swing” production capacity of these commodities is in China. even under benign growth assumptions. metallurgical coal and iron ore. That said. we believe it becomes clear that subdued growth expectations for the Western World should be less of a concern for the commodities complex than current sentiment might suggest. in the order of 5% to 10% of global supply. For this reason. metallurgical coal and iron ore over an 18-month horizon. Declining domestic Chinese production typically necessitates the increase of metal imports to offset the drop in supply. aluminum and nickel. we strongly prefer investment exposure to copper. We remain less inclined to invest in aluminum. in our view. Sector Outlook – Near Term We believe that in the near term. Key to our demand expectations is a sustained GDP growth rate in China of 8%. The dramatic rise in commodity prices between 2004 and 2008 was fuelled by an extended period of strong geosynchronous economic growth. We believe our view aligns closely with Avery Shenfield’s expectations for a relatively weak economic recovery in developed nations. (416) 594-7284 Ian Parkinson. Tsui. Additionally. and very modest economic growth in the Western World.CIBC's CIO Roundtable . When viewed in this light. This rational response in a timely fashion lessens the risk. base metal and bulk commodities can sustain price levels well above historical averages despite a subdued outlook for global economic growth. dollars. In the absence of a similar economic environment. China currently consumes approximately 30%-35% of global metal supply and accounts for a remarkable 75% of metal demand growth annually. (416) 956-3287 Matthew Gibson. unless otherwise stated. the equities with underlying exposure to these commodities should demonstrate exceptional levels of profitability relative to their peers. we expect a generally more balanced supply-demand picture. (416) 956-6169 Terry K. zinc and nickel in the near-term for two key reasons: 1) we believe current supply is outpacing demand for these commodities. which typically has positive pricing implications. well below the double-digit growth rates observed at the beginning of 2010.June 16.Volatility And Slower Growth . of further accumulation of surplus metal inventories (which could further depress market prices for an extended period). and 2) substantial inventories of these metals accumulated during the recent economic downturn.S. We have already begun to see the emergence of substantial output cutbacks in zinc. Additionally. (416) 956-6729 Market Weight Constructive Pricing Outlook Despite Subdued Growth Environment All figures in U. 45 . but estimate that critical supply shortages persist in copper. CFA. as we believe they are the most likely commodities to sustain elevated price levels and possibly rise further.

to a lesser extent. leading to a normalization of prices.85 $2. Exhibit 50.95 $3. aluminum. we expect the supply-demand picture for the sector to undergo substantial changes.00 $140. the risk-reward profile appears skewed to the upside.80 Long Term $1.00 $0.00 $1. relative underinvestment should improve pricing prospects over a longer-term horizon.00 $1.00 $16.00 $16.400 $20. Consequently. The current uranium price is not enticing large-scale investment. even during a period of subdued growth. we anticipate less new supply of zinc.25 $1.000 $15. Key Commodity Price Assumptions Gold Silver Aluminum Copper Nickel Zinc Uranium Molybdenum Metallurgical Coal Iron Ore US$/oz US$/oz US$/lb US$/lb US$/lb US$/lb US$/lb US$/lb US$/tonne US$/DMTU 2010E $1. In the case of metallurgical coal and iron ore. which we think will compound to project supply shortages out 3-5 years.00 $0. we believe there is sufficient supply of new projects that a constrained growth environment should balance the market in 3 to 4 years. these markets could become tighter than we currently expect. This should prove supportive for copper prices over a long-term horizon. Given our expectations for weaker relative pricing.to 5-year horizon.00 $0. Bloomberg 46 . Should financing availability decline. This should prove supportive for longer-term pricing.00 $7. We forecast that the copper market will continue to remain very tight.00 $75.CIBC's CIO Roundtable . 2010 Sector Outlook – Long Term Over a 3. to the benefit of existing lower-cost producers. we would maintain an overweight exposure to copper on the basis of its very positive long-term supply-demand fundamentals. With downside price risk capped by the emergence of higher-cost new capacity. albeit with a higher cost structure due to rising energy costs and the general deterioration in the relative quality of new projects.90 $75. For example. The high capital intensity of new aluminum supply may deter investment in new projects and possible technical challenges associated with new nickel laterite projects may crimp supply expectations and deter further investment in this critical new source of supply for that metal. nickel in the coming years. few companies are devoting any capital to investments in zinc. we would be inclined to transition away from bulk commodity exposure over the longer term in favour of zinc. The availability of project financing and tax stability remain key risks to this view.70 $70. Although less certain. and in deficit for the foreseeable future.00 $200. uranium and aluminum and..200 $18.50 $1.02 $65.50 $8.June 16. we can envision several scenarios generating positive pricing implications.00 $0.00 $0.00 $14.74 2012E $1.00 $14.Volatility And Slower Growth . and at this point there is insufficient new supply in the pipeline to balance the market. Our forecast high price environment for copper and bulk materials should stimulate the addition of significant new supply.28 $1.25 $9. In our estimates.00 $0.00 $125.90 Source: CIBC World Markets Inc. this deficit becomes significant in 2012. Therefore.85 $2.00 $182. On a 3.000 $15.90 $3.00 $0. and/or potential changes to tax regimes discourage new project development.00 $8.to 5-year view. uranium and nickel.48 2011E $1.

63 3.Volatility And Slower Growth . Equinox (EQN–SO).78 1.42 8.25 5. First Quantum (FM–SO) and Taseko (TKO–SO). We estimate the market valuations for our covered mining equities imply long-term commodity prices well below the cost of production of many current producers. Summary Of Our Ratings Company Copper Capstone Mining Equinox First Quantum Ivanhoe Mines Mercator Minerals Quadra FNX Mining Taseko Uranium Bannerman Cameco Denison Paladin Uranium Energy Uranium One Diversified and Other HudBay Inmet Mining Lundin Sherritt Teck Molybdenum General Moly Thompson Creek Iron Ore Baffinland Consolidated Thompson New Millennium Labrador Iron Ore Ticker CS EQN FM IVN ML QUX TKO BAN CCO DML PDN UEC UUU HBM IMN LUN S TCK.402 345 2. metallurgical coal and iron ore) and are well-capitalized companies with good growth pipelines and a solid.CIBC's CIO Roundtable .) 453 2.79 14.02 48..912 20.B–SO). low-cost operational base.870 136 1.496 6. in our view.2 Market Cap.607 259 1. instigate a revival in M&A activity and support the financing of growth opportunities—all of which have positive implications for equity valuations. 2010 Equity Valuation Outlook Current equity valuations are extremely compelling.57 9.B GMO TCM BIM CLM NML LIF. is unsustainable and is reflective of the uncertainty surrounding Euro zone growth and the potential impact of a cooling Chinese economy. as higher political risk plays. Bloomberg 47 .474 159 1.504 2. Quadra FNX (QUX–SO). Consolidated Thompson (CLM–SO) and.735 2.5 1. Top Picks Our favoured stock recommendations focus on exposure to our preferred commodities (copper.11 1.91 55. we believe that equity valuations for the metals and mining space will ultimately be supported by what continue to be highly profitable commodity prices. Strong cash flow generation among our companies should in turn promote significant returns of capital to shareholders.310 961 56 9.62 2.25 11.128 1.322 1. This. Our preferred names are Teck (TCK.77 12.93 3.317 144 1.4 44.345 459 2. (US$mlns.29 3. with the space on average offering in excess of 40% upside potential under our conservative commodity price assumptions.42 0.67 6.766 4.35 3.28 23.45 2. Exhibit 51. While these events could continue to weigh on investor sentiment for the next few months. in our view.UN Exchange TSX TSX TSX TSX TSX TSX TSX TSX TSX TSX TSX AMEX TSX TSX TSX TSX TSX TSX AMEX TSX TSX TSX TSX TSX Currency US$ US$ US$ US$ US$ US$ C$ A$ C$ US$ US$ US$ US$ C$ C$ US$ C$ C$ US$ US$ C$ C$ C$ C$ Share Price 2.16 0.June 16.5 34.542 Rating SP SO SO SP SP SO SO SO SP SP SO SO Restricted SO SP SO SP SO SO SP SO-S SO SO-S SP Source: CIBC World Markets Inc.

(403) 216-3400 Adam Gill.75/Mcf in 2010 and gradually moving back up to a long-term sustainable price of US$6/Mcf. Over the long term (2012+). We believe the sector is discounting an approximately US$70/Bbl oil price over the long term. (403) 260-8657 Diana Chaw. with global GDP growth expected to remain around the 4% level for the foreseeable future. With this back-drop. in a bid to hold lands.Volatility And Slower Growth . With the oil price forecast to be somewhat range-bound in 2010 and 2011. It will be difficult for oil prices to move much beyond US$90/Bbl without a significant erosion in spare capacity – which is still likely several years away.CIBC's CIO Roundtable . we believe the industry requires US$6. particularly in the US. We forecast natural gas prices of US$4. 2010 Oil & Gas Andrew Potter. The short-term outlook for natural gas prices remains relatively bleak as inventories are plentiful and the pace of drilling is once again accelerating driven by aggressive development of gas shales. Sentiment towards the global economies took a severe turn for the negative surrounding the Greek bailout. we project 20% returns for the group as a whole based on our US$85/Bbl and US$6/Mcf long-term commodity price forecasts. (403) 216-3405 Nick Lupick.to medium-term price of oil has less to do with specific inventory levels and more to do with sentiment regarding the global economy. (403) 221-5700 Jeff Fetterly. leading to gradual erosion in spare capacity. Overall. it is difficult to see a scenario where inventories are eroded sufficiently to bring the supply-demand equation back into balance.00/Bbl at the beginning of April down to the US$70/Bbl level recently on concerns of global oil demand stalling. The short. producers continue to drill aggressively.June 16. when oil rallied 78% and the sector as a whole increased 43%. 48 .00/Mcf to generate sufficient cash flow to fund drilling efforts at the necessary pace. Overall sector valuations are quite attractive following the recent selloff with the average large cap trading at 80% of ‘risked’ NAV and 6. we expect less commodity momentum than 2009. We forecast US$80/Bbl in 2010 and US$85/Bbl in 2011. we believe stock returns will be driven more by company-specific factors such as growth and valuation re-rating/de-rating. Even with low prices.0x 2011 EV/DACF— slightly below historical valuation ranges. which is quite a discount from our US$85/Bbl forecast. However. (403) 221-5049 Jeff Shen. we see global oil demand increasing moderately. Key Themes Given our view of oil prices trading in a US$70-$90/Bbl range through 2011. (403) 221-5047 Market Weight Jeremy Kaliel. with spot prices trading above US$85. (403) 216-8518 Jon Morrison (403) 216-3402 Kyle Balaux (403) 216-3401 Sector Outlook Commodity Outlook – Taking An Oil Bias In Short Term WTI prices have remained volatile in recent months.

We believe non-upgraded SAGD projects offer some of the best risk-adjusted rates of return in the world while still holding significant optionality on technology. While the environmental backlash is still in full swing.50 ($0.00) $0.83 $6.98 $12.00) $0.13 Source: Bloomberg and CIBC World Markets Inc. similar to the impact it had on shale gas.29 $5.48) $5. Talisman (TLM–SO) and Nexen (NXY–SO) as our top investment ideas.48) $5. We also believe that further corporate splits are possible. We believe Suncor is capable of delivering 8% oil-weighted production growth through 2015 at least by spending only 65% of cash flow .Volatility And Slower Growth . Following the $3-4 billion of asset sales.C$/bbl NYMEX .00 ($2.00 ($2.89 $71.00 $69.48) $6.81 2015E $85.56 $6.58 $6.00 ($0.85) $0.50 2011E $85.34) $4. We continue to believe technology could unlock further value in the oil sands.00) $0. 49 . The valuation re-rating combined with above-average growth should lead to outperformance versus its domestic and global peers.00 ($2. We believe there is a large disconnect between oil sands valuations in the asset market (both producing assets and non-producing) and what is implied in corporate valuations.a rare combination of growth and free cash flow.00 ($2.81 2014E $85.00 ($1.34 $72.90 $18.95 $17.89 $75.00) $0.US$/mcf AECO 30+day spot .C$/bbl Western Canada Select .89 $71.48) $5.US$/C$ Light Heavy Differential . lower natural gas prices and tightening light-heavy differentials.US$/mcf NYMEX Diff .CIBC's CIO Roundtable . 2010 Exhibit 52. we expect Suncor to have debt down to the $9.63 $4. We expect corporate activity to remain high over H2/2010 and 2011 in terms of both M&A and potential corporate splits.96 $17.00 ($0.00 ($2. Husky (HSE–SO) is the most likely given its public musings of spinning off its international assets.81 2016E+ $85. Oil sands have received a bad rap over the past few years – both environmentally and in terms of economics.48) $5.00) $0.89 $71. As long-life resources comprise a greater proportion of production.25 2012E $85.US$/Bbl Forex .5 billion range by the end of 2010 at which point the company will be well situated to begin to utilize the substantial free cash in 2011/2012 to increase debt or buyback shares. Suncor – Sector Outperformer ($44 target.97 $15.00) $0.US$/bbl Light Oil Basis Differential .75 ($0.00 ($0. we expect valuations to continue to expand for the sector as a whole.00 ($0.June 16.00 ($2.75 2013E $85.95 $17.5-10. This disconnect may be a precursor to M&A.95 $17.C$/mcf $80.58 $6. Key Commodity Price Assumptions 2010E WTI . A dominant theme in the Canadian space will continue to be the progression towards long-life resources.41) $5. We highlight Talisman (TLM–SO) as having the most to gain if it spun off is North American assets in the next 12-18 months. Top Picks We highlight Suncor (SU–SO). 29% implied return) We believe Suncor's valuation is poised to re-rate upwards as the company completes its asset sales and once again starts to deliver reliable oil sands operations. the underlying economics have improved remarkably thanks to slightly lower costs. with return potential at or around 30%.71 $70.58 $6.00 ($0.

North Sea and West Africa. we expect unconventional to represent approximately 50% of North American production. Major discoveries in the Eastern Gulf of Mexico. we believe Nexen could ramp up production from this asset to 90 MMcf/d by year-end 2011 and 140 MMcf/d by year-end 2012.June 16. we believe it has better-than-average growth potential/visibility and catalyst potential. In a US$5/Mcf+ gas price scenario. implies that Nexen can generate ~8% average growth through 2015. Talisman's international business has also transformed with vastly improved growth visibility and greater exposure to high impact exploration. In H2/10 and early 2011. 30% implied return) Nexen has been a chronic underperformer. along with commercialization of Horn River shale gas. led by the Marcellus play.Volatility And Slower Growth . Weak results from Long Lake in 2008 and 2009 have overshadowed Nexen's strong performance elsewhere. we believe Talisman has the asset mix to finally see the valuation expand. 50 .a level that will likely lead to some market recognition for this asset. Talisman has transformed its uncompetitive North American gas business to top tier. the company would be prime for a break-up in the next 12-18 months. we estimate our $23 target would be easily achieved and there could be upside to the $30/share level. making it one of Nexen's largest single producing assets. By year-end 2010. 28% implied return) After many years of below-average performance and valuation. we expect a steady stream of exploration results.CIBC's CIO Roundtable . 2010 Nexen – Sector Outperformer ($30 target. Long Lake is showing encouraging signs. Should Talisman's valuation not re-rate as we expect. We believe the company is now capable of 10%-15% gas production growth through 2015. Talisman – Sector Outperformer ($23 target. with our focus being primarily Colombia and Indonesia. but is still a long way from peak production. In a break-up scenario. We believe it will achieve cash flow breakeven within the next few months and be generating ~$300 million of annualized cash flow by late 2010 . We believe Horn River is a hidden gem in Nexen's portfolio. but following a solid string of exploration success in 2008/09.

62 $17. 2010 (FY2010E)).5x 4.1 N/A N/A N/A N/A N/A 78% 89% 46% 55% 45% OPC UTS Potter Potter $1.25 $16.53 $1.89 $12.00 $32.13 $0.50 $7.50 $13.97 $0.22 $2.50 $10.00 $0.e. Summary Of Our Ratings & Price Targets 2010E Ticker Seniors Integrateds Cenovus Energy Husky Energy Imperial Oil Ltd Suncor Energy Average Canadian Large Caps Canadian Natural Resources Canadian Oil Sands Trust Encana2 Nexen Talisman Energy Average Small Cap Oil Sands OPTI Canada UTS Energy Average Intermediate & Junior Producers Anderson Energy Angle Energy Provident Energy Energy Equipment & Services Calfrac Well Services Cathedral Energy Services Ensign Energy Services Flint Energy Services Mullen Group Newalta North American Energy Partners3 Pason Systems Phoenix Technology Income Fund Precision Drilling Savanna Energy Services Total Energy Services Trican Well Service Trinidad Drilling Average Capital Equipment Finning International Toromont Industries Average 1) Price targets are 12 to 18 months 2) All figures in $USD unless stated otherwise 3) North American Energy Partners has a March 31st fiscal year-end.22 $0.50 $2.21 $1.00 $23.1x 8.10 $0.00 $30. 2009 figures are for the 12 months ended March 31.01 N/A R N/A 127% R 89% CFW CET ESI FES MTL NAL NOA PSI PHX.UN Gill Gill Gill $1.CIBC's CIO Roundtable .00 $12.48 $0.11 $40.6 $24.00 18% 23% 8% 31% 20% $22.00 $13.Volatility And Slower Growth .8x 4. Bloomberg and CIBC World Markets Inc.5x 9.3 $22.80 SP SP SP SO SO $41.81 $10.40 $5.00 $30.50 $7.00 24% 32% 28% $3.7x N/A N/A 51 .1x 9.70 $26.10 N/A N/A 40% 60% AXL NGL PVE.1x 9.37 $0. Source: Company reports.9 $18. Analyst Price Rating Price Target1 Price Return Mkt Cap ($C Bln) EV/EBITDA Price / Unrisked NAV CVE HSE IMO SU Potter Potter Potter Potter $29.6x 7.86 8.88 $0.50 $10..58 $31.50 $17.01 $33.36 $8.00 $7.73 $5.25 $1.3 N/A N/A N/A N/A 81% 66% 82% 67% CNQ COS ECA (US) NXY TLM Potter Potter Potter Potter Potter $37.43 $0.00 $44.1x 6.10 $8.7 $11.26 $8.62 SO R SP $1.00 $38.65 R 8.29 $7.24 SO SO SP SO SO SO SP SP SP SO SP SP SO SP $27.00 $19.00 $12.63 $6.00 10% 7% 13% 33% 29% 18% $40.93 SO SO SU SO $35.2x 7.00 $44.UN PD SVY TOT TCW TDG Fetterly Fetterly Fetterly Fetterly Fetterly Fetterly Fetterly Fetterly Fetterly Fetterly Fetterly Fetterly Fetterly Fetterly $20.4 $52.8x 8.88 $13.24 SP SP $22.0x 6.2 $34.00 $32.00 $10.31 Spec SO SO $2.27 $28.8x 7.8x 5.21 $11.25 $7.97 $0.63 8. As such.50 $17.93 $0.June 16. comparative figures shown are offset (i.0x N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A FTT TIH Fetterly Fetterly $17.68 $24.89 $2.01 $14.25 31% R 8% 20% 35% 23% 28% 31% 36% 36% 22% 14% 27% 31% 23% 31% 27% 34% 28% $0. 2010 Exhibit 53.3x 8.2x 5.7x 6.75 27% 19% 23% $0.02 $1.01 $8.10 $22.59 $1.40 $2.6 $13.

Because returns have been poor. Prices have stayed high because there are few aggressive price retailers in the Canadian market. Most Canadian retailers have been benefitting from the strong Canadian dollar since lower purchasing costs for goods sourced offshore have not turned up in lower retail prices. 2010 Consumer Products— Merchandising Perry Caicco. All of these will play meaningful roles in how investors should examine the consumer products and merchandising vertical. but recent results from the more discretionary retail companies (Forzani [FGL–SO]. but not in Canada. almost as if a recession never happened. patio furniture and sports equipment. the CAD will lap last year’s levels so profit windfalls will disappear. square footage growth is too slow to put pressure on sales productivity. 52 . and it is probable that other provincial governments will follow. Canadian Tire [CTC.Volatility And Slower Growth . hardlines. Reitmans [RET–TSX]) suggest that Canadian consumers are spending at reasonable rates. As always. (416) 594-7279 Mark Petrie (416) 956-3278 Market Weight Sector Outlook We don’t pretend to be economists. This has created a profit windfall in everything from fruits and vegetables to strollers. Walmart is a formidable force. but gross profits will be tougher to realize. the company has grown to over $3 billion in sales (in a $78 billion food market). finally. At that point. the continued growth of the ethnic consumer. they are not predatory. government intervention. by August or September. but not below. and. we consider six major issues: the Canadian dollar exchange rate. but has struggled to produce decent returns. When we think about the outlook for Canadian retail and consumer stocks. the retailer has come close to maximizing its business over the past 15 years and there’s not much more to conquer. and Walmart is uninterested in opening up the same price gaps here as they have in other countries. The economics of the drugstore industry have been severely damaged by government intervention in Ontario. and sales should be driven into more-efficient chain operations. Over time. However. provincial governments are seeking savings and drugstores are easy targets. but it’s basically back to normal for the Canadian consumer. sales may be maintained. The traditional Supercenter model has not driven strong results (for a wide variety of reasons). certain sectors have fared better than others (sporting goods. Hence. expansionary efforts outside of Canada. new entrants. the company prices right with Canada’s traditional discount food operators.CIBC's CIO Roundtable . Walmart (WMT–NYSE). apparel and furniture weaker). These interventions will also impact grocers and mass merchants who sell pharmacy products. the independent networks will likely shrink. As the major insurers of Canadians consuming prescription pharmacy products.June 16. On the food side. retailers may have to carefully raise prices and seek other types of cost efficiencies – in other words. On the general merchandise side. garden strong. but that may not begin to occur for a couple of years. In most countries. and the latest project is to simply jam fresh food into existing small discount stores.A–SP). while prices are “low”.

and threats remain on a number of fronts.CIBC's CIO Roundtable . dominant in the “dollar” category in Canada. Aeroplan (AER–SO). but their spending patterns and shopping behaviours are unlike those of traditional Canadians. or even those of traditional European immigrants.June 16. and reduce shrink and labour costs. has been a cemetery for Canadian consumer companies in the past. with good regular traffic growth. Its operating metrics are better than comparable U. Walmart. Banners are clearly positioned and the company has a solid national presence. Leading-edge logistics and a re-bannered discount store in Ontario should drive earnings growth to levels superior to its comparables. which should improve in-stock levels and sales. With a finite market to serve.B–SO). Aldi. Investors in Canadian companies live in constant fear of multinational retail or consumer companies entering Canada and destroying the existing competitors. The company is about to install scanning.S. Nevertheless. These have become a powerful economic force. most notably from Asia and South Asia. an undervalued supermarket chain with strong same-store sales momentum. 2010 Canada’s liberal immigration laws have led to huge growth in populations of ethnic new Canadians. it is imperative that Canadian companies at least consider other markets. As Canadian retail has become more sophisticated. the generally high pricing (on an international basis) in the Canadian market could attract selected discount entrants. Cott (COT–SO) and Weston (WN–SP) have worked out well. Top Picks Dollarama (DOL–SO) is a fast-growing niche retailer. but more recently aggressive expansions by Tim Hortons THI–SP). dollar stores. Lidl or Dollar General (DG–NYSE). who are struggling to respond and serve.S. Recent fears include possible entries from Target (TGT–NYSE). Gildan (GIL–SP). Costco and Home Depot had that impact in the early 1990s. It has strong same-store sales. and is adding stores in key markets at low rents. The U. specialty apparel is continually being invaded. these threats are somewhat muted. Couche-tard (ATD. 53 . They have in many geographies developed their own shopping venues and these venues are steadily siphoning sales from traditional Canadian retailers. Empire Company (EMP–SO) has over 90% of its asset value domiciled in Sobeys (SBY–TSX).Volatility And Slower Growth .

1x 6.2x 9.2% 2.99 15. Cott Corporation Gildan Activewear Inc.7x 7. Ltd.8x 6.UN PJC/a RON SC THI CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD CAD Sector Performer Sector Outperformer Sector Outperformer Sector Outperformer Sector Performer Sector Performer Sector Outperformer Sector Outperformer Sector Outperformer Sector Performer Sector Performer Sector Performer $ $ $ $ $ $ $ $ $ $ $ $ 55. Forzani Group Limited George Weston Limited Loblaw Companies Ltd.4x na 12.6x 10.55 8.1x 8.3x 8.3x 15.9x 7.Volatility And Slower Growth . Inc.50 51.9x 13.40 1.1x 8.7x 6.9x 13.860 3.177 10% 16% 5% 7% 6% 6% 7% 9% 7% 7% 11% 26% 13.04 $ 7.617 627 3.4% 0.5x 9.0% 1.0x 13. North West Company Fund Jean Coutu Group Inc.0% 2. AER ATD/B COT GIL SAP CAD CAD USD USD CAD Sector Outperformer Sector Outperformer Sector Outperformer Sector Performer Sector Performer $ 9.1% na 14.5x 12.7x 10.491 6.8x 7.19 73.4x 8.3x 22.1x 7.00 42.0x 15.6x 8.6x 13.1x Note: For companies not covered by CIBC World Markets.6x 11. consensus numbers were used.0% 2.9x 7.0% 2. Summary Of Our Ratings 14-Jun Share price LTM EBITDA Margin Price-toearnings ratio Last This Next year year year Current EV/EBITDA Last This Next year year year Company Consumer Products Groupe Aeroplan Inc.4x 6.5x CTC/A DOL EMP/a FGL WN L MRU/a NWF.835 3.30 $ 29.7x 12.2x 9.60 19.435 11.9x 9.3x 13.3x 11.20 $ 19. Metro Inc.8x 19.0x 6.7x 4.4% 1.6x 14.6% 7.0% 4.June 16.539 1.3x 16.4x 10.786 6.032 7.3x 4.5x 11.9% 1.624 948 2.62 25.6x 11.7x 7.7% 2.91 17. Consumer Products Average Merchandising Canadian Tire Corporation. Saputo Inc.2x 16.9x 13.5x 16.0x 6. Shoppers Drug Mart Corporation Tim Hortons.148 18% 4% 11% 20% 9% 15.4x 7. Source: Company reports and Bloomberg 54 . Dollarama Inc.7x 9.68 34.6x 6.2x 5. 2010 Exhibit 54.048 4.8x 16.4x 8. Alimentation Couche-Tard Inc.7x 6.5x 12.8x 7.5x 15.0x 7.9x 7.0x 8.9x 6.1% 1.6x 7.8x 9.9% 0.2x 7.2x 5.3x 12.4x 5.4x 15.8x 37.0x 9.0% 0. Merchandising Average Overall Average Ticker Currency Rating Dividend yield Market cap.9x 11.4x 11.124 2.1x 13.8x 19.3x 12.4x 12.CIBC's CIO Roundtable .6x 11.6x 5.8x 17.9x 11.83 $ 31.3x 6.2x 16.0% 1.5x 15.45 34.5x 10.4x 11.1x 7.1x 16.554 519 9.8x na 10.4x 10.64 5.6x 8.4% 0.5x 13.1x 4.7x 12.8x 5.8% 0.4x 7.6% 1.7x 6. RONA Inc.6x 7.6x 8.8x 9.6x 13.0x 12.0x 7.6x 11.3x 7. Empire Company Ltd.1x 15.3x 6.10 40.2x 10.1x 6.3x 14.0x 19.7% 1.3x 11.9x 7.9x 10.8x 21.4x 21.

Real estate cycles are typically ended by development booms that oversupply markets. partly because of maturing rental rates that were reflective of market rents 5 or 10 years ago when these leases were signed. We see these markets as offering risk and return characteristics that appeal to institutional investors. where financing strategies were generally conservative. but limited restructurings. etc). with stable. (416) 594-8179 Troy MacLean. Sector Outlook – Near Term Supply of space continues to define real estate market conditions. India. In the short term. developing mortgage markets. most Canadian and mature global markets have avoided over-building. (416) 956-3643 Brad Sturges. there had been no major economic or real estate downturns to challenge the industry since REITs emerged in their current form in the 1990s as a product of the real estate and economic recession of the early 1990s. offers relatively stable fundamentals (occupancies and rental rates are stable) and opportunities in financial restructurings. low-risk environments in which to own property and collect cash flow. 2010 Real Estate Alex Avery. Dubai. In Canada. The winners and losers among REITs in the credit crisis were defined by their financing strategies. with limited changes in occupancy and mainly positive lifts on lease renewals. (416) 594-7399 Overweight Sector Outlook Performance Through Crisis Has Been Very Stong The credit crisis was the first baptism by fire for Canadian REITs and REITs globally. 55 . Demand for commercial real estate remains relatively stable throughout economic cycles.Volatility And Slower Growth . Dubai has already crashed and China could follow. with broad-based growth returning in 2011E. where earnings and cash flows have greater exposures to shorter-term economic conditions. offer much greater return potential. driven by higher economic and population growth. with low-single-digit growth during times of expansion and flat demand during recessions and early recovery. which stifled market optimism. With a few notable exceptions (Calgary. they also present greater risk relating to the potential for overbuilding. REIT operating fundamentals have remained very stable. This compares very favourably with most other sectors. and rising incomes. However. cultural barriers and emerging market currency exposure. The vast majority of these declines in FFO and AFFO related to dilutive financings (both debt and equity) completed during the peak of credit market uncertainty. uncertain property rights.June 16.CIBC's CIO Roundtable .S. in part due to the speed and severity of the credit crisis. while Canada offers very stable fundamentals. Emerging markets like China. Until 2008. driven by top-of-cycle optimism. REITs experienced modest 3% to 5% average total declines in FFO and AFFO from 2008 to 2010E (not annual). and Brazil. the U. Large Canadian pension funds have recently been investing directly in major mature markets like Manhattan office property. Stable fundamentals and renewed financial discipline should support stable and growing financial performance from REITs focused in major markets in mature economies. differing and evolving legal and regulatory environments.

00) is another top pick. bringing its AFFO payout ratio to approximately 70% (still one of the very lowest payouts in the sector). following generally positive outcomes from REITs facing their first major economic and property market crisis. We believe the company is well positioned to generate strong returns from its high-quality asset portfolio and attract substantial new capital to manage on behalf of institutional partners. TransCanada (TRP–SO). life insurance companies and retiring baby-boomers have investment profiles that include net cash outflows that can be well matched with these cash-flow producing assets. The REIT structure is well positioned to gain real estate ownership market share (currently <10% in Canada). including 6%+ current cash yields. the company has a very strong board of directors. The company has developed robust operating platforms. renewable power and infrastructure assets globally. and has strong alignment through considerable insider and management ownership. which include professional management.June 16. 56 . both on its own behalf and for institutional investors. The REIT recently announced a plan to increase distributions by 46% over the next two years. PT: $33. We believe these characteristics are core to the company's future success. more liquid REIT sector in Canada and globally that will grow in importance as a capital markets sector.Volatility And Slower Growth . we expect REITs and real estate to perform well. long-term mortgages (8 years) and high-credit-quality tenants like Bell Canada (BCE–TSX). Multi-industry Brookfield Asset Management (BAM–SO. providing average annual returns near the lower end of the 10% to 15% range. Given this outlook. vastly better liquidity and the ability to manage and adjust exposure on a continuous basis. with a strategy of targeting the ownership and management of real estate. and 3 to 5 percentage points of growth in FFO and AFFO. and has a broad and deep senior management team with strong expertise across each of its operating platforms. We expect these returns to be comprised of distribution income accounting for 6 to 8 percentage points of annual returns. PT: $20. reflecting current spreads of capitalization rates over 10-year government bond yields that are wider than historical averages.A–SP). Demographically driven demand for high yields in a low-growth. reflecting the advantages it offers over direct ownership of property. Top Picks H&R REIT (HR. including the proliferation of the REIT structure. We expect this proliferation will result in a larger. Telus (T–SO). The institutionalization of real estate globally should continue. We expect further upside could result from upward revaluation of real estate and REITs. low-inflation environment with more conservative lending practices to result in limited new property development in mature markets over the next 3 to 5 years. In addition.00) is our current top pick among large capitalization Canadian REITs due to its discounted valuation to all other large cap Canadian REITs measured by both AFFO multiples and relative to NAV. assuming stable valuations.CIBC's CIO Roundtable . driven by the levered effects of 1% to 3% same-property NOI growth and the impact of accretive acquisitions. Royal Bank (RY–SP) and Canadian Tire (CTC. low-interestrate environment positions Canadian REITs to generate attractive returns. with strong economic growth.UN–SO. Pension funds. 2010 Brazil appears to have the most favourable real estate market among emerging economies. and its defensive strategy of targeting long-term leases (avg. 10 years remaining). relatively constrained property development and a developing mortgage market. geographic diversification. Sector Outlook – Long Term We expect a low-growth.

7% 5.3%) (9.420 1.4x 13.0%) 2.1x 12.)/ Prem.4x 10.22 7.8x $39.0x 14.471 $0.8% 6.6x 13.0x 17. ($mlns) 13.1x 14.44 5.50% 6.2x 15. ($mlns) 4.9% 1. Bloomberg Rating SO 6/15/10 Unit Price $24.50 7.0x 18.272 10.5x 16.50 7.1x 11.96 3.799 Current Yield 2.6x 18.0x Est.75% (4.9x 11.3x 13.5x 13. Summary of Our Large Cap Ratings 6/15/10 Unit Price $19.210 24.6% (5.36 2.392 1.3x 12.0x 12.50% 2.9% SP SO $14.80 $1.8x 14.00 $21.817 9.0x 20.8% Est.50 $18.9% 4.50 $22.June 16.66 2.3x 12.1x 19.0x 12. to Est.5x 14.9x EPS Multiple 2010E 2011E 30. 2010 Exhibit 55.748 $0.00% 7.1x 13.25% 7.9x 12.5% SP SU $40.863 1.116 2.9%) (13.8% Multi-Industry Brookfield Asset Management Source: CIBC World Markets Inc.067 Distribution Current Current Annual Yield $1.9x 15.00% 6.9% 13.9% 11.2x 12.00% Unit Price (Discount)/ Premium to Est.4x 12.9% 15.5% 6.38 $1.24 $17.7x AFFO Multiple 2010E 2011E 14.3x 17.1x 28.8x 14..5x 18.25 $12.0x 12.1%) 1.75% 7.05 $19.1% 5.74 $19.2x SO SP SP $16.4x 13.3x 13.00 Unit Price (Disc.958 $1.623 2.CIBC's CIO Roundtable .50 6. Avg NOI Cap Rate 6.0x 14.9%) 57 .1%) 1.3% 7.0x 12.00 Est.0x 14.4% 6.3x 14.3x 15.3% 14.6x 16.2x 17.25 $17.4% 12.3x 11.6% 6.0x 14. NAV (19.189 5.7x 14.55 $1.7x 12.80 $14.41 $1.8x 11.50 $27.8x 11.8x 11.1x 13.84 $1.04 Market Cap.46 $28.2x 8.0% 7.8x 10.00 7.5x $15.1x 12.31 $15.56 $0.128 1.9x 13.8x 12.4x 12. NAV Per Unit $30.9% 5.5x 13.Volatility And Slower Growth .59 Market Cap.25% (11.7% 25.082 3.6x $18.056 1.9%) (1.2% CFPS Multiple 2010E 2011E 9.4% 5.9x 11.210 27.08 4.0% 1. NAV 5.2x 12.8% 4.9x 11.8x 12. NAV Per Unit $18.2% Rating Shopping Centre RioCan REIT Calloway REIT Primaris Retail REIT First Capital Realty Shopping Centre Total/Averages Diversified (office/retail/industrial) H&R REIT CREIT Cominar REIT Diversified Total/Averages Office Brookfield Properties (US$) Brookfield Office Properties Canada Office Sector Total/Averages Average/Total: Commercial Residential Boardwalk REIT CAP REIT Residential Sector Total/Averages Average/Total: All REITs SO SO SO Restricted FFO Multiple 2010E 2011E 13.01 $20.25% 8.

98 2.98 5.72 17.16 0.84 211.45 1.98 0.07 0.81 0.84 16.69 0.86 -0.98 13.06 0.52 0.16 4.8 0.22 1.49 0.46 5.04 0.57 21.95 0.83 1.87 1.84 0.47 3 37.42 4.26 4.47 1.15 28.89 2.34 4.55 2.29 0.86 0.29 1.74 0.32 3.31 -0.2 0.42 5.8 0.34 0.19 1.9 1.98 2.56 0.86 0.51 1.46 30.98 1.99 1.22 2.04 1.98 15.01 0.08 -1.07 0.17 0.56 1.04 0.26 3.55 11.35 2.72 9.36 2.15 0.85 2.94 36.52 1.33 15.63 -0.74 3.03 0.46 12.79 4.18 4.81 0.79 1.2 19.96 2.11 1.87 1.81 0.25 2.94 15.85 0.45 12.83 2.76 2 P/Bv to 5yrAve 0.12 -7.74 21.08 0.03 0.91 0.55 21.01 1.98 1.16 1.58 0.07 3.7 0.39 -0.95 2.19 72.24 3.19 72.74 3.46 3.46 2.13 2.35 6.69 0.02 0.07 0.78 9.14 15.41 1.59 4.24 1.2 2.23 0.6 13.88 18.76 0.96 1.15 19.25 0.51 5.66 0.27 -0.8 3.64 12.02 6.52 4.81 2.04 12.63 2.96 15.77 11.8 0.31 2.9 0.72 -0.55 15.53 -0.41 17.71 13.8 0.1 -1.32 -1.96 326.98 4.62 1.52 0.07 1.93 12.59 0.17 2.98 16.Volatility And Slower Growth .58 10.48 4.27 0.95 0.85 0.21 9.76 -0.01 0.79 1.19 11.87 59.86 0.75 0.71 0.08 18.09 0.78 0.28 -0.07 0.92 3.89 0.77 0.17 2.84 3.11 1.85 0.56 16.05 1.71 12.19 0.93 0.77 3.93 0.54 2.25 0.97 -0.72 4 4 3 3 4 4 4.24 17.03 -2.98 12.78 2.01 13.14 1.58 0.19 -47.7 1.14 1.77 0.86 0.98 1.96 326.86 1.94 3.05 1.94 22.85 0.66 ROE 3Mo Chg 97 97 -34 -111 34 101 30 173 -321 -3 -28 119 119 344 365 342 70 70 74 116 69 25 30 285 285 -31 -172 -237 -237 -190 -190 -314 -314 8 8 -53 -69 -52 60 -182 7 7 49 -228 -228 68 66 173 -45 -45 92 475 475 475 326 61 61 392 392 120 120 120 -25 -25 -56 21 -57 86 -23 10 -21 -106 -6 54 160 19 6 -32 -48 -48 -18 -59 30 ROE BP Rng 280 280 281 277 285 280 316 321 190 101 257 248 248 299 371 295 90 90 241 336 215 189 333 187 187 140 226 302 302 176 176 115 115 199 199 104 104 63 97 130 104 104 98 225 225 87 84 231 220 220 126 159 159 159 192 80 80 220 220 170 170 170 107 107 117 74 173 101 84 96 76 209 53 124 170 102 132 115 90 90 48 105 211 ROE 3mo/ BPRng 0.51 24.04 5.3 1.27 2.11 0.33 7.62 7.56 10.96 -0.11 72.74 1.95 3.32 10.81 0.09 1.33 0.59 7.16 5.2 -0.12 18.1 -2.92 1.94 1.45 0.84 1.02 1.57 -1.81 0.85 27.25 9.19 1.29 3.03 1.96 16.28 11.03 1.June 16.49 5.23 12.87 0.49 13.42 17.9 0.03 0.09 2.93 0.72 12.36 2.55 15.26 2.19 1.42 1.87 0.85 0.53 6.17 ROE (%) 6.44 256.34 1.93 1.29 3.11 0.98 P/Bv 1.27 -0.48 10.98 4 3 1 3.23 1.98 1.19 20.98 0.07 0.1 3.46 5.05 0.83 11.91 1.86 0.18 6.92 0.12 27.7 3.99 22.68 0.29 3.4 1.01 1.84 3 3 3 2.97 1.67 1.03 0.09 1.04 12.52 -0.08 0.24 317.18 24.57 0.07 0.69 1.8 12.37 4.73 13.62 7.79 1.19 6.71 -0.6 27.9 15.16 5.36 0.41 3.54 1.08 0.85 0.6 1.23 -0.81 0.51 5.87 0.15 2.16 1.13 1.31 3.53 -0.8 2.6 25.34 67.31 7.26 11.26 0.7 Yield (%) 3.05 0.03 0.98 1.1 1.16 5.46 5.45 16.66 7.15 1.85 0.62 1.7 1.79 -3.84 0.04 0.99 19.64 14.49 6.52 4.01 0. 2010 Appendix Exhibit 56.44 256.13 2.71 0.14 1.17 1.26 17.8 20.53 19.51 18.75 11.03 1.27 0.78 0.02 25.37 6.75 0.22 0.94 0.95 1.05 38.97 87.68 -0.81 0.03 151.95 1.9 0.13 0.86 Abs Mom 2.95 2.2 0.63 -1.76 0.48 6.92 0.97 1.04 26.15 4 3 2.62 0.42 31.28 4.1 1.52 0.22 40.81 21.04 0.14 25.53 11.16 1.63 7.04 16.36 7.15 37.89 2.74 0.4 5.66 1.CIBC's CIO Roundtable .15 1.62 7.78 0.03 1.49 16.11 1.19 0.62 0.72 0.9 2.34 -0.98 0.96 0 0 2.1 0.76 -1.12 1.89 36.68 8.79 1.09 0.77 0.03 1.19 11.74 0.77 20.11 P/E 5o 5yrAve -1.96 -9.47 0.56 3.75 0.94 18.32 14.96 0.74 0.01 1.84 3 2.97 0.04 26.39 12.68 -2.59 24 7.19 1.25 12.92 15.37 1.98 0.51 2.2 14.92 0.28 6.97 0.89 9.41 0.08 1.48 -0.77 1.49 2.71 3 2.28 13.29 0 1.71 0.36 4.09 6.71 -0.35 2.73 21.09 11.11 1.65 8.54 2.04 0.52 -0.78 0.82 0.74 21.19 P/E 21.84 16.1 2.83 23.54 1.63 0.96 11.94 49.53 1.7 1.86 0.07 2.28 2.93 2.81 0.05 0.34 0.94 0.01 0.8 27.4 168.36 6.71 0.57 10.85 0.87 0.46 4.56 1.42 0.4 -0.6 4.66 3.28 2.42 10.44 19.41 2.73 2.95 0.88 2.63 17.91 1.96 2.46 30.77 25.6 7.87 40.94 8.38 12.96 0.26 13.16 1.29 0.63 0.19 40.16 10.55 1.04 0.17 1.07 0.54 0.09 0.9 36.32 18.08 8.1 1.09 4.03 0.16 22.6 2.96 26.5 18.22 -0.95 3.8 0.38 29.16 1.92 0.83 1.81 2.08 -0.56 1.89 0.28 0.56 4 4 4 1.11 0.34 17.17 4.08 1.15 15.03 2.92 0.94 1.95 0.89 1.44 18.72 5.14 3.35 0.67 0.91 0.59 4 4 1 1 4 4 4 3.65 2.4 0.66 0.9 0.78 0.68 9.18 2.57 12.51 -0.03 13.79 1.49 0.1 0. GICS TSX Summary Name Energy Energy Energy Equipment & Services Oil & Gas Drilling Oil & Gas Equipment & Services Oil Gas & Consumable Fuels Integrated Oil & Gas Oil & Gas Exploration & Production Oil & Gas Refining & Marketing Oil & Gas Storage & Transportation Coal & Consumable Fuels Materials Materials Chemicals Commodity Chemicals Fertilizers & Agricultural Chemicals Containers & Packaging Metal & Glass Containers Metals & Mining Diversified Metals & Mining Gold Precious Metals & Minerals Steel Paper & Forest Products Forest Products Industrials Capital Goods Aerospace & Defense Aerospace & Defense Construction & Engineering Construction & Engineering Machinery Construction & Farm Machinery & Heavy Trucks Trading Companies & Distributors Trading Companies & Distributors Commercial & Professional Services Commercial Services & Supplies Commercial Printing Environmental & Facilities Services Diversified Support Services Professional Services Research & Consulting Services Transportation Airlines Airlines Road & Rail Railroads Trucking Transportation Infrastructure Marine Ports & Services Consumer Discretionary Automobiles & Components Auto Components Auto Parts & Equipment Consumer Durables & Apparel Household Durables Home Furnishings Textiles Apparel & Luxury Goods Apparel Accessories & Luxury Goods Consumer Services Hotels Restaurants & Leisure Restaurants Media Media Advertising Broadcasting Cable & Satellite Movies & Entertainment Publishing Retailing Multiline Retail Department Stores General Merchandise Stores Specialty Retail Apparel Retail Home Improvement Retail Specialty Stores Consumer Staples Food & Staples Retailing Food & Staples Retailing Drug Retail Food Retail Food Beverage & Tobacco Count 53 53 8 4 4 45 5 31 1 6 2 55 55 3 1 2 1 1 48 13 27 5 3 3 3 19 8 2 2 2 2 1 1 3 3 4 3 1 1 1 1 1 7 3 3 3 2 1 1 1 19 2 2 2 2 1 1 1 1 1 1 1 9 9 1 2 2 1 3 5 2 1 1 3 1 1 1 12 8 8 2 6 4 Weight QMV (%) (US$ bln) 25.86 18.92 0.55 13.49 2.97 0.14 1.97 0.87 0.01 3.24 24.58 4.79 0 0 1.38 0.8 1 0.96 15.26 1.7 0.72 2.24 0.64 13.6 2.11 4.45 0.35 1.42 5.82 1.43 3.35 13.09 2.19 2.78 1.2 13.68 8.64 0.19 -0.88 1.18 5 3.31 0.41 1.36 0.81 2 2 1.98 2.03 1.77 1.53 6.06 0.96 3 3 3 2 2 2.7 0.87 5.4 1.98 11.96 27.46 1.31 8.84 2.47 0.69 0.12 1.76 0.71 -0.04 -0.82 P/Bv to FV VolAdj 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 58 .01 2.96 7.87 0.13 2.5 12.98 2.4 0.45 0.14 0.16 1.91 0.91 9.77 0.55 6.19 1.47 -0.1 4 4 3.35 15.54 57.77 5 3.35 18.4 5.46 4 4 4 2 2 3.82 1.93 2.53 -0.04 0.38 29.76 4.71 0.62 1.04 -0.54 2.44 0.24 26.79 1.09 2.05 4.81 0.69 4.32 1.05 0.36 3.41 0.7 12.68 0.08 3.48 6.63 9.64 7.92 0.59 0.41 -7.31 6.93 0.7 0.98 1.63 7.11 12.38 3.88 1.75 3.03 1.38 4.07 0.96 27.99 1.8 0.55 3.97 0.87 2.79 2.08 3.49 8.44 18.9 0 1.14 1.89 0.71 3.35 2 3 2 3 3 3.52 1.14 0.17 0.53 2.54 0.83 0.66 0.89 2.4 0.27 -0.28 1.83 1.48 17.18 11.38 3.4 5.75 1.69 0.99 12.

68 11.65 14.51 0.51 2.56 8.52 Yield (%) 0 0 1.91 2 4.19 11.4 2.13 1.79 1.61 3.23 11.53 6.56 0.19 15.87 12.43 P/E 5o 5yrAve 0.53 25.27 16.5 2.34 -2.8 1.17 2.87 0.64 0.71 0.87 30.4 ROE (%) 21.2 3.96 2.61 1.15 6.04 2.42 2.31 0.57 -0.5 2.85 2.31 -22.66 1.36 2 3 3 3.22 37.75 0.36 4 4 3.19 1.75 0.47 12.71 21.14 1.93 31.28 3.31 13.04 18.04 0.81 0.01 0.93 12.68 4.12 -0.66 0.99 0.51 1.32 11.4 2.55 5.17 4.9 -4.24 3.94 1.51 1.54 1.52 5.58 4.01 1.33 -2.29 4.08 9.26 4.19 0.18 5.03 4.05 0.45 0.18 2.32 0.04 11.94 4.6 95.74 1.61 1.8 2.08 0.96 35.08 0.01 29.57 3.89 6.June 16.68 1.21 17.38 4.59 4 4 2 2 3.06 3.23 0.62 0.63 13.19 0.67 0.87 0.95 0.5 21.06 4.47 0.76 2.75 4.03 2.57 0.24 2.62 ROE 3Mo Chg -448 -448 69 -86 147 -111 -112 -4 -4 -154 -154 -110 -71 -71 -261 -261 175 146 147 148 101 -8 -8 35 -198 -29 -500 78 105 103 161 267 267 290 118 112 221 -17 -98 -5 1 27 61 458 500 327 500 24 -77 -403 -403 31 31 102 102 49 51 51 14 14 80 80 6 6 237 237 4 4 59 59 -41 -41 -15 -15 110 ROE BP Rng 310 310 203 374 116 299 304 259 259 321 321 293 341 341 107 107 155 146 146 147 96 70 70 236 344 72 424 367 204 200 333 160 160 141 378 145 159 99 74 195 218 53 165 227 257 138 243 183 105 161 161 50 50 158 158 203 207 207 131 131 190 190 112 112 354 354 126 126 75 75 116 116 184 184 204 ROE 3mo/ BPRng -1.87 -4.25 0.53 6.32 0.35 1.03 0.46 0.5 0.76 34.61 5.94 2 2.75 0 0 4.8 0.18 2.15 1.11 2.26 11.6 95.13 1.15 3.87 17.66 -0.03 0.97 1.13 13.7 21.94 3 1.84 0.18 2.57 7.39 0.18 1.42 16.95 2.08 0.69 1.76 0.03 1.48 8.67 0.72 0.85 0.7 21.64 4.03 -0.6 82.79 12.96 30.67 1.07 0.19 21.88 4.21 9.51 0.46 -1.04 0.67 2.05 0.5 -0.74 1.05 5.26 28.84 0.CIBC's CIO Roundtable .94 0.24 7.68 1.26 17 14.91 0.3 3.99 22.94 2.82 0.71 2.87 2.34 3.43 16.31 13.56 35.07 0.9 21.45 4.75 1 -0.71 0.67 13.97 1.19 1.21 12.75 2.6 1.54 3.63 -11.48 395.96 0.02 37.72 0.59 -0.59 0.18 2.18 37.36 0.53 5.95 12.47 1.06 -0.61 1.99 15.74 1.76 6.26 0.52 0.04 4.85 2.01 6.95 9.36 3.13 5.46 1.05 2.82 1.29 4.49 1.56 0.8 0.06 0.97 11.65 -4.1 1.66 7.55 4.12 1.33 -0.46 -15.82 4.38 16.83 0.14 1.05 0.51 0.08 15.18 0.26 8.01 0.6 0.18 0.62 0.13 15.33 4.52 3.07 2.44 0.69 5 2.01 1.26 28.4 1.76 9.13 14.08 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5.92 0.83 0.24 0.1 1.83 0.23 0.19 13.72 15.63 0.42 49.52 7.49 12.12 27.69 1.83 0.04 -75 14.72 0.Volatility And Slower Growth .19 0.57 3.16 0.86 P/Bv to FV VolAdj 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Source: CIBC World Markets Inc.53 5.78 4 4 4 4 3 3 5 5 5 5 5 3.2 19.17 2.25 3.8 0.31 16.56 31.01 0.46 6.78 37.41 1.13 17.67 1.57 2.32 -0.93 0.3 16.45 6.22 13.46 1.4 2.38 2.82 0.02 4.14 1.09 13.19 2.06 0.19 0.7 0.13 1.49 244.69 2.39 0.94 0.12 12.52 16.23 2.02 1.02 21.31 16.02 0.63 0.75 1.72 3 3 4 4 3.07 4.2 16.11 1.52 0.86 18.24 3.9 1.01 -0.55 1.51 30.81 -0.03 0.88 0.76 13.72 0.64 4.69 0.27 9.94 0.15 19.68 2.25 1.2 15.97 1 4 3.92 0.86 1.9 2.49 12.58 0.83 0.43 -0.3 3.26 11.74 0.1 -0.3 33.17 16.1 2.63 1.93 13.83 10.11 1.74 6.56 3 3 3 3 3.64 15.67 247.08 -17.44 -1.69 5.45 7.34 4.71 2.6 7.5 2.38 6.1 1.28 0 1.74 0.24 1.34 1. 2010 Name Beverages Soft Drinks Food Products Agricultural Products Packaged Foods & Meats Health Care Health Care Equipment & Services Health Care Providers & Services Health Care Services Health Care Technology Health Care Technology Pharmaceuticals Biotechnology & Life Sciences Pharmaceuticals Pharmaceuticals Life Sciences Tools & Services Life Sciences Tools & Services Financials Banks Commercial Banks Diversified Banks Regional Banks Thrifts & Mortgage Finance Thrifts & Mortgage Finance Diversified Financials Diversified Financial Services Other Diversified Financial Services Multi-Sector Holdings Specialized Finance Capital Markets Asset Management & Custody Banks Investment Banking & Brokerage Insurance Insurance Life & Health Insurance Multi-line Insurance Property & Casualty Insurance Real Estate Real Estate Investment Trusts (REITs) Diversified REIT's Office REIT's Residential REIT's Retail REIT's Specialized REIT's Real Estate Management & Development Diversified Real Estate Activities Real Estate Operating Companies Real Estate Services Information Technology Software & Services Internet Software & Services Internet Software & Services IT Services IT Consulting & Other Services Software Application Software Technology Hardware & Equipment Communications Equipment Communications Equipment Electronic Equipment Instruments & Components Electronic Manufacturing Services Telecommunication Services Telecommunication Services Diversified Telecommunication Services Integrated Telecommunication Services Wireless Telecommunication Services Wireless Telecommunication Services Utilities Utilities Electric Utilities Electric Utilities Multi-Utilities Multi-Utilities Independent Power Producers & Energy Traders Independent Power Producers & Energy Traders S&P/TSX Composite Count 1 1 3 1 2 4 2 1 1 1 1 2 1 1 1 1 39 9 8 6 2 1 1 8 3 1 1 1 5 4 1 8 8 6 1 1 14 11 3 1 2 3 2 3 1 1 1 5 3 1 1 1 1 1 1 2 1 1 1 1 5 5 4 4 1 1 10 10 2 2 3 3 5 5 221 Weight QMV (%) (US$ bln) 0.5 1.17 13.36 -0.17 2.47 12.8 0.5 0.02 13.61 0.6 0.46 4.46 0.03 0.93 1.64 2.3 P/Bv to 5yrAve 0.14 0.81 0.6 7.59 0.18 2.07 0.88 1.87 2.1 1.64 1.62 1.22 2.94 20.55 9.63 15.62 3 10.71 0.12 0.02 1.99 0.12 4.55 2.93 15.89 0.27 15.27 0.03 1.87 -0.45 0.61 0.79 15.98 2.03 0.14 4.67 15.27 2.83 1.83 0.3 21.11 1.6 7.2 0.09 15.77 0.04 0.79 -3.69 1.57 7.64 0.66 0.41 2.37 -11 10.87 3.84 2.01 14.72 0.94 0.45 29.03 0.35 14.17 2.07 0.16 0.77 2.98 0.1 2.4 4.43 16.73 0.68 16.79 1.91 1.54 19.99 -0.35 1.99 7.13 12.52 11.13 1.02 19.61 7.07 4.13 0.23 0.92 1.68 2.16 -0.92 1.44 0.6 8.42 1.25 0.99 0.3 5.73 3.23 1.76 -22.53 0.74 0.83 0 0 2.75 0.25 1.75 2.22 5 2 4 4.75 -2.04 0.48 13.67 1.04 18.4 -0.73 0.5 9.55 P/Bv 1.81 10.63 3.81 4.96 0.05 0.18 3. 59 .43 0.23 1.64 1.85 2.48 20.27 24.58 7.95 0.34 0.45 8.15 21.13 9.54 2.67 0.37 -1.41 3.02 21.05 2.04 15.25 0.67 -2.82 0.16 7.5 -0.95 0.05 0.84 0.49 56.31 2.55 4.81 -1.61 1.43 5.91 18.37 27.19 -0.23 0.66 3.06 1.54 4.69 -0.51 Abs Mom 5 5 1.6 4.39 4.48 1.1 1.92 0.01 1.22 4.87 -3.46 5.89 1.31 16.76 -0.73 29.51 1.21 0.94 0.68 1.77 248.42 0.6 37.96 0.94 0.62 0.5 2.92 1.42 0.3 6.4 1.62 1.51 0.53 6.27 15.83 0.1 12.9 8.48 17.4 19.72 0.28 1.02 1.16 -0.47 1.95 14.39 1.41 30.5 0.35 1.22 5.03 0.41 30.6 0.92 0.39 16.95 0.69 -0.4 4.75 3.18 0.82 0.15 13.1 0.89 0.48 1.26 16.95 0.12 3.55 1.04 6.84 P/E 7.76 34.98 0.57 3.06 51.41 2.63 -0.26 3.86 3.15 3.98 1 1 1.71 0.85 0.06 51.23 13.26 2.01 0.23 0.62 3.53 100 1256.5 37.44 0.2 2.24 4.55 9.04 4.5 0.23 0.94 0.66 1.5 15.12 2.18 2.08 1.

89 220.8 272.06 18.02 0.2 0.45 0.54 17.21 0 1.95 3.33 0.69 -0.41 16.2 8.25 3.1 0.09 0.17 28.09 2.52 24.76 0.56 2.18 0.27 0.6 11.88 0.06 16.47 1.4 -1.49 2.02 1.13 0.96 1.21 0.41 154.26 1.44 3.2 0.09 1.36 -1.07 1.21 20.8 0.21 1.88 1.81 2.55 P/E 5o 5yrAve 1.93 17.09 0.09 -0.65 2.22 6.08 -1.65 609.04 1.39 1.98 0.78 -3.76 2.61 0.39 0.71 1.05 26.89 30.06 0.6 2.78 0.82 0.66 -0.06 1.81 3.53 59.08 14.96 0.16 5.32 1.94 1.43 1.1 2.08 0.66 0.81 2.67 27.28 16.46 0 -1.38 -0.03 3.12 0.03 17.29 0.3 18.87 0.74 19.18 11.14 ROE 3Mo Chg 129 129 -148 -207 -142 178 208 198 -372 -5 -227 140 140 109 327 -227 -12 36 -16 -16 -207 -290 -31 293 483 308 200 292 64 288 -75 -20 -47 -191 -191 289 289 -192 -192 11 11 -30 -30 151 174 128 7 7 -4 9 125 -17 303 -76 -99 -11 -184 95 125 125 76 76 65 68 -41 58 281 433 423 500 -217 0 -217 88 167 500 239 413 36 85 122 122 0 20 109 ROE BP Rng 254 254 224 224 224 259 245 297 369 222 314 224 224 179 237 221 89 100 186 186 198 251 85 323 215 458 212 338 195 267 150 129 137 146 146 208 208 143 143 122 122 100 100 175 240 109 96 96 150 110 120 86 218 88 345 289 372 88 97 97 119 119 76 74 118 162 307 173 147 352 369 399 188 158 192 238 89 245 190 176 175 161 311 128 167 ROE 3mo/BPRng 0.94 1.61 2.03 0.17 963.48 3.76 1.74 1.93 0.76 8.09 4 5 3.57 12.98 14.06 2.85 0.95 5 3.22 3.01 19.15 3.52 4.61 0.84 4.26 52.66 -1.57 5 3 3.32 -0.7 9.34 1.28 14.39 272.26 9.26 2.96 0.73 0.9 3.June 16.36 2.08 2.45 0.03 0.73 2.16 1.53 0.79 6.15 31.07 3.6 179.49 2 2 3.22 -0.06 4 4.63 0.01 0.74 4 3.44 16.3 1.8 14.08 1.91 2.05 36.17 1.73 5 5 5 3.04 -0.61 2.42 -0.61 2.36 1.47 -1.75 4 3.51 15.29 14.4 0.07 2.02 0.27 QMV (US$ bln) 1019.46 10.08 0.11 0.9 Abs Mom 4.23 27.65 0.89 0.01 -0.2 1.51 -0.6 5.84 11.72 19.2 1.22 0.02 1.29 0.49 0.32 17.78 0.18 0.98 0.91 0.49 4.55 7.88 1.44 14.84 40.11 22.28 2.13 0.07 34.41 2.87 0.25 3.84 0.08 -0.67 Yield (%) 2.58 18.31 0.01 2.96 12.96 6.83 0.44 62.72 0.25 5 5 3.41 28.92 0.7 -0.19 1.88 20.Volatility And Slower Growth .93 1.8 1.86 0.23 6.13 0.98 16.99 13.78 0.7 1.15 2.83 4 4 3.14 0.57 4.01 -0.33 0.11 1.04 1.79 0.17 4.8 4.84 1.6 0.89 2.17 20.35 ROE (%) 14.01 0.41 1.81 5.61 -6.01 1.91 0.64 -4.79 3.92 3.15 2.79 0.84 1.69 19.11 0.45 3.99 0.94 0.93 0.79 220.95 29.45 0.57 42.76 0 23.15 1.85 19.08 -0.25 26.95 11.83 1 1.3 81.92 0.01 0 0.69 1.03 -2.06 0.87 1.54 14.3 2.21 2.81 864.85 0.19 0.76 -75 -75 12.16 0.14 10.03 1.44 24.97 322.4 2.59 2.32 2.11 2.66 1.5 1.23 1.73 0.15 1.75 P/Bv to 5yrAve 0.53 2.95 36.63 0.76 23.62 79.11 96.86 13.8 1.34 21.82 16.19 27.1 2.78 0.73 24.02 10.4 14.31 3.36 15.76 77 74.66 1.69 2.2 2.92 3.29 19.3 8.82 0.93 4.87 31.11 3.51 2.37 2.18 0.CIBC's CIO Roundtable .33 49.13 6.28 2.92 0.61 1.67 0.82 50.87 3.56 0.11 0.08 3.84 3.13 27.86 1.37 2.46 8.83 0.96 0.34 11.95 9.75 2.65 -12.61 31.88 0.53 0.46 1.16 -0.4 0.14 2.77 19.32 16 -2.17 0.81 0 2.87 1.85 15.59 0.02 0.94 -11.03 0.88 19.43 0.79 166.4 47.98 17.64 0.18 1.8 19.04 0.99 11.8 0.59 1.01 1.26 4.79 0 4.27 1.21 -1.33 3 4.43 1.92 0.56 8.29 -0.75 0.21 0.26 971.11 1.95 3 3.64 4 4 3.02 0.14 3 4 3.79 0 -0.48 9.73 2.98 P/Bv 2.06 0.17 1.86 5.28 17.07 17.08 1.03 0.13 14.56 29.07 1.22 2.46 0.85 0.02 10.85 36.85 12.17 1.64 0.05 1.76 0.92 17.22 0 1.18 4.7 -19.15 0.93 0.25 4.71 1.02 20.77 3.94 17.69 13.12 11.61 2.34 18.41 -1.05 1.67 5 4 4 3.81 17.3 15.71 2.2 1.72 7.08 2.08 14.3 5.1 106.83 1.74 4.51 2.78 9.34 3.22 23.15 0.3 4.93 0.65 22.57 0.07 15.9 0.34 0.37 7.26 4.87 13.49 84.72 75 12.95 0.65 0.61 1.08 2.96 0.23 0.65 18.33 0.38 1.16 0.87 P/E 18.89 50.07 15.41 0.85 27.74 1.92 7.45 1.24 25.07 1.94 0.07 12.25 1.11 1.43 18.56 13.33 15.9 0.6 26.03 14.11 1.36 2.18 1.6 2.06 2.1 0. GICS S&P 500 Summary Name Energy Energy Energy Equipment & Services Oil & Gas Drilling Oil & Gas Equipment & Services Oil Gas & Consumable Fuels Integrated Oil & Gas Oil & Gas Exploration & Production Oil & Gas Refining & Marketing Oil & Gas Storage & Transportation Coal & Consumable Fuels Materials Materials Chemicals Diversified Chemicals Fertilizers & Agricultural Chemicals Industrial Gases Specialty Chemicals Construction Materials Construction Materials Containers & Packaging Metal & Glass Containers Paper Packaging Metals & Mining Aluminum Diversified Metals & Mining Gold Steel Paper & Forest Products Forest Products Paper Products Industrials Capital Goods Aerospace & Defense Aerospace & Defense Building Products Building Products Construction & Engineering Construction & Engineering Electrical Equipment Electrical Components & Equipment Industrial Conglomerates Industrial Conglomerates Machinery Construction & Farm Machinery & Heavy Trucks Industrial Machinery Trading Companies & Distributors Trading Companies & Distributors Commercial & Professional Services Commercial Services & Supplies Commercial Printing Environmental & Facilities Services Office Services & Supplies Diversified Support Services Professional Services Human Resource & Employment Services Research & Consulting Services Transportation Air Freight & Logistics Air Freight & Logistics Airlines Airlines Road & Rail Railroads Trucking Consumer Discretionary Automobiles & Components Auto Components Auto Parts & Equipment Tires & Rubber Automobiles Automobile Manufacturers Motorcycle Manufacturers Consumer Durables & Apparel Household Durables Consumer Electronics Home Furnishings Homebuilding Household Appliances Housewares & Specialties Leisure Equipment & Products Leisure Products Photographic Products Textiles Apparel & Luxury Goods Apparel Accessories & Luxury Goods Count 39 39 11 4 7 28 7 12 3 3 3 32 32 14 5 2 3 4 1 1 5 3 2 9 1 2 1 5 3 1 2 57 37 12 12 1 1 3 3 4 4 3 3 12 4 8 2 2 11 8 1 3 2 2 3 1 2 9 4 4 1 1 4 3 1 80 4 2 1 1 2 1 1 16 9 1 1 3 2 2 3 2 1 4 3 Weight (%) 10.2 12.45 17.07 -0.36 5 5 3.04 1.53 4. 2010 Exhibit 57.71 12.8 0.08 1.02 0.97 2.37 0.62 42.05 0.97 2.88 0.03 2.06 81.5 3.15 2.44 1.76 1.34 -1.21 22.06 4.28 0.24 25.58 4.3 4.98 6.97 0.5 3.79 3.94 10.03 0.44 13.14 0.25 0 4.35 82.47 17.79 3.46 3.44 0.07 -0.54 0.04 0.72 0.97 1.59 3.82 5 3.45 2.96 138.07 14.11 -1.79 0.96 0.05 17.2 2.6 2.74 5.67 18.24 4.18 0.42 0.18 -8.64 0.36 22.63 0.23 4.14 12.11 -0.29 0.15 1.53 12.57 0.57 1.09 0.77 2 2 3.07 0.99 1.47 8.87 17.51 0.58 15.78 0.46 10.73 16.73 0.06 0.57 0.24 3.93 4.8 20.99 3.97 14.69 0.36 1.99 1.54 2.79 29.02 1.88 0.83 2.48 3.46 0.11 2.76 -7.92 3.56 0.92 3.45 3.11 2.93 3.85 1.26 16.8 4.29 0.29 0.89 0.04 6.9 0.8 2.9 2.21 21.11 1.5 30.55 17.95 1.06 0.47 11.59 3.93 P/Bv to FV VolAdj 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 60 .01 7.63 1.67 10.93 3.47 2.03 0.39 4.15 0.51 -0.99 27.21 0.07 2.91 24.65 3.89 1.3 3 3 2.92 0 8.77 19.93 -0.51 3.72 0.92 0.43 1.75 2.14 13.29 -0.64 7.12 13.6 322.15 2.75 6.96 1.86 13.42 11.32 -1.77 16.45 3.76 15.79 0.89 0.82 0.08 -6.17 1.45 10.7 1.3 -0.84 0.55 5.05 0.65 0.38 2.05 1.97 1.39 1.24 0.15 19.65 4 3.21 13.29 1.76 24.33 17.41 1.36 3.77 1.15 1.15 -0.73 17.56 6.99 2.09 0.7 32.77 5.8 2.79 0.18 0.97 2.58 30.98 1.6 1.89 1.92 0.04 0.05 2.5 9.42 1.34 3.95 2.68 1.72 3.15 0.09 0.42 -1.93 1.97 17.07 6.4 1019.78 9.29 2.43 18.54 0.03 0.85 49.08 0.83 5 3.89 10.73 22.76 0.07 3.04 1.53 1.98 13.08 4.77 15.89 0.4 11.12 0.06 5.43 3.78 2.93 3.49 1.89 1.94 -0.2 188.68 -0.12 2.9 2.72 2.59 49.97 24.65 0.99 0.4 -0.58 24.6 0.5 18.59 0.04 1.12 0.62 2.39 2.23 -10.29 14.49 3.47 75 20.18 0.95 14.43 1.65 1.95 1.87 167.05 744.65 -7.96 0.59 1.7 1.63 13.76 0.

67 0 0 3.03 1125.03 1.21 4.75 1.44 1.04 1.96 10.47 -1.81 0.42 1.86 0.74 0.17 7.47 27.96 41.62 1.27 3.83 3.83 3.15 1.69 0.51 2 0.07 -0.8 16.42 6.23 0.1 4.91 0.8 1.02 187.57 0.31 1.01 4.24 0.83 21.9 1.99 1.07 7.05 2.68 0.44 -0.42 1.82 0.01 0.37 0.8 0.33 10.05 1.64 0.45 0.83 14.12 18.31 3.69 15.83 299.81 -0.39 9.03 0.19 3.03 18.31 10.18 4.07 1.07 76.12 249.75 0.32 1.4 1.8 1.69 0.92 0.95 1.46 4.18 109.09 20.91 0.04 1.1 14.82 0.36 11.27 4.05 27.18 2.4 4.32 0.11 11.99 -0.22 11.3 15.3 1.8 0.93 12.89 0.22 1.47 16.54 4.25 42.47 2.24 20.18 3.37 31.18 4.12 1.95 0.88 142.31 1.43 2.63 0.15 1.2 2.83 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 61 .8 2.64 2.67 43.71 3.31 19.88 0.84 1.23 5.82 16.11 424.21 22.74 1.98 0.14 3.79 1.46 -0.91 11.75 3.44 12.02 12.36 0.05 17.94 17.5 27.7 18.22 15.22 1.89 0.02 3.35 4.69 -7.23 5.99 0.14 0.05 11.02 4.73 0.81 1.24 3 3 3.8 0.11 0.79 -0.11 3.25 1.64 0.6 0.16 0.89 0.43 2.37 2.9 0.57 19.57 8.17 2.6 1.79 -0.69 0.05 2.21 0.82 3 4.57 3 3.89 1.69 0.1 0.97 0.77 1.74 1.01 18.27 25.07 0.8 201.26 1.49 16.73 -0.22 290.42 0.81 1.59 3.85 1.32 -0.71 2.35 3.17 0.76 0.12 15.33 1.3 1.18 4.45 1 1.76 14.38 3.12 7.2 -0.76 272.08 0 0.41 24.53 2.89 9.16 0.81 2.72 15.3 2.95 0.47 12.74 12.08 24.94 -1.08 14.19 1.04 -0.56 3 3 3.25 1.79 1.33 25.84 4.4 2.27 43.59 2.42 3.18 0.85 34.32 117.46 0.49 2.09 4.49 43.11 1.01 14.15 19.24 0.86 1.94 17.79 0.8 5.07 3.44 1.1 1.85 2.98 1.3 34.62 0.69 17.48 1.31 1.49 2.17 2.05 17.59 0.36 14.67 4.38 3.76 18.86 51.69 -0.47 345.94 0.06 1.14 0.81 1.71 2.18 15.49 1462.69 4.74 0.57 0.9 0.62 0.04 0.87 20.04 -1.87 4 4.54 -0.07 4.23 2.62 -0.77 25.81 2.71 0.94 15.5 3.19 0 0 4.52 0.24 14.4 0.74 0.65 0.6 244.75 2.37 2.76 0.93 26.82 48.88 0.81 9.22 -0.74 0.68 0.89 0.77 14.45 3.56 15.17 7.13 3.3 0.32 29.43 -0.57 2.99 0.35 6.04 0.18 3.27 0.CIBC's CIO Roundtable .94 28.22 730.36 1.41 74.81 33.42 1.99 -0.89 0.18 4.96 0.77 4.75 0.29 1.48 1.06 7.05 11.82 17.39 -0.46 -0.32 3.68 0.32 14.88 1.93 3.26 3.38 2.93 0.28 15.59 0.18 21 21.99 0.82 0.47 209.03 6.42 11.37 11.56 135.5 12.53 48.56 4.8 0.06 6.43 3.22 3.98 1.42 1.17 0 1.23 0.52 2.42 -0.97 3.95 1.96 379.74 0.89 0.94 1.57 0.13 3.05 0.62 175.89 -1.61 5.63 1.86 0.63 0.22 1.15 -0.15 20.34 164.82 0.32 21.75 0.07 2.Volatility And Slower Growth .07 25.63 0. 2010 Footwear Consumer Services Hotels Restaurants & Leisure Casinos & Gaming Hotels Resorts & Cruise Lines Restaurants Diversified Consumer Services Education Services Specialized Consumer Services Media Media Advertising Broadcasting Cable & Satellite Movies & Entertainment Publishing Retailing Distributors Distributors Internet & Catalog Retail Internet Retail Multiline Retail Department Stores General Merchandise Stores Specialty Retail Apparel Retail Computer & Electronics Retail Home Improvement Retail Specialty Stores Automotive Retail Homefurnishing Retail Consumer Staples Food & Staples Retailing Food & Staples Retailing Drug Retail Food Distributors Food Retail Hypermarkets & Super Centers Food Beverage & Tobacco Beverages Brewers Distillers & Vintners Soft Drinks Food Products Agricultural Products Packaged Foods & Meats Tobacco Tobacco Household & Personal Products Household Products Household Products Personal Products Personal Products Health Care Health Care Equipment & Services Health Care Equipment & Supplies Health Care Equipment Health Care Supplies Health Care Providers & Services Health Care Distributors Health Care Services Health Care Facilities Managed Health Care Health Care Technology Health Care Technology Pharmaceuticals Biotechnology & Life Sciences Biotechnology Biotechnology Pharmaceuticals Pharmaceuticals Life Sciences Tools & Services Life Sciences Tools & Services Financials Banks Commercial Banks Diversified Banks Regional Banks Thrifts & Mortgage Finance Thrifts & Mortgage Finance Diversified Financials Diversified Financial Services Other Diversified Financial Services Multi-Sector Holdings Specialized Finance Consumer Finance Consumer Finance Capital Markets Asset Management & Custody Banks Investment Banking & Brokerage Insurance Insurance Insurance Brokers Life & Health Insurance 1 13 10 2 4 4 3 2 1 17 17 2 3 3 4 5 30 1 1 3 3 8 5 3 18 6 3 2 3 3 1 41 9 9 2 1 4 2 26 7 1 2 4 15 1 14 4 4 6 4 4 2 2 52 30 13 12 1 16 4 5 1 6 1 1 22 6 6 11 11 5 5 79 16 14 3 11 2 2 27 9 3 1 5 4 4 14 10 4 21 21 2 7 0.12 5.75 22.11 119.65 0.34 0.25 0.2 1.33 111.01 2.98 3.91 0.47 17.12 0.5 3 3.73 0.62 14.8 0.49 4.8 132.91 0.92 3.64 0.46 -0.18 2.12 11.91 1.87 -0.41 0.78 126.75 2.03 1.66 7.87 5.48 -0.86 0.6 384.45 0.94 0.22 1.52 19.89 0.68 172.07 2.53 4.1 13.67 23.49 0.77 0.8 15 18.15 0.25 -1.32 0.73 18.June 16.36 11.43 11.18 0.07 2.4 -7.88 0.61 0.18 4.88 5.82 0.19 0.12 13.1 3.41 3.69 0.98 0.74 15 11.61 44.83 235.56 -0.97 4.19 2.42 3.72 11.06 0.42 0.78 12.8 565 565 43.88 4.87 11.29 6.01 9.92 1.22 -0.16 0.37 247.71 9.99 25.59 19.26 1.69 15.74 0.96 9.4 85.07 -0.63 0.23 0.12 0.54 1.45 15.53 1.95 0.91 0.44 0.02 0.39 0.61 190.71 16.09 -0.91 15.06 53.01 18.25 5.73 15.88 267.45 3.33 1.12 6.21 2.95 0.46 1.03 3 3 4.28 132.58 4.7 1.46 13.36 7.94 0.86 3.33 2.98 1089.98 1.11 1.84 1.92 2.75 0.95 0.73 0.54 2.4 14.15 0.99 -0.64 0 0 3.71 0.59 -0.26 0.62 3.52 1.42 -0.26 12.94 0.02 1.19 3.17 1.57 5.63 0.06 0.19 3.05 0.83 74.7 -0.8 0.14 13.32 8.3 310.51 0.22 3.56 0.23 0.84 0.57 17.49 3 3.01 142.11 0.77 15.72 0.92 2.06 0.37 -0.41 84.35 4.05 5 2.18 2.96 13.74 0.27 -0.74 -0.56 9.11 0.52 10.19 28.74 3.2 33.15 0.21 11.61 2.52 0.87 27.33 13.85 8.89 4.86 1.06 0.91 10.74 -0.77 0.89 0.79 5 4.01 27.6 0.86 1.82 -0.44 0.01 0.04 22.23 0.37 3.98 16.93 0.96 1.66 0.64 0.2 2.29 45.64 1.36 0.97 0.53 2.2 -0.38 1.71 1.03 0.65 0.05 0.95 0.37 8.82 26.23 5.91 2.45 14.36 2.95 6.14 25.29 1.53 741.82 0.79 0.88 -0.71 -0.12 32.83 230.59 3.52 16.12 42.59 10.27 3.59 2.34 7.51 3.25 5 3.87 4.12 8.61 14.67 3.59 3.83 16.8 16.57 13.53 5.42 -0.71 24.08 244.37 2.75 0.15 0.83 0.76 0.04 -0.71 16.67 0.81 2.42 1.19 4.41 3.64 4.62 3.55 15.69 3.79 2.98 272.79 578.52 2.06 0.87 3.27 18.87 0.45 0.55 3.98 0.47 32.94 15.42 4.7 0.81 4.94 0.71 15.82 0.02 41.99 0.67 7.31 19.43 42.8 94.62 0.4 15.8 4.72 1.5 15.31 0.5 3.4 10.03 0.39 32.15 249.1 1.66 2.85 2.49 3.86 0.61 1.97 1.06 -0.94 0.3 0.66 0.41 53.34 14.24 3.53 31.68 1.09 38.21 0.22 3.87 25.3 28.52 0.3 169.84 0.48 1.42 1.63 3 3 3.17 1.18 2.49 1.71 -0.62 0.61 -0.64 17.63 0.99 0.19 0.54 12.19 5.28 16.02 0.66 3.61 0.98 1.7 0.23 15.65 0.86 0.5 7.27 -61 -22 -22 -105 -34 -11 -18 -32 11 93 93 -58 62 196 61 -25 46 -10 -10 -106 -106 84 95 74 72 169 -23 37 30 65 183 -66 -15 -15 -24 -87 -59 11 -63 -213 -74 -10 -223 -71 148 -92 209 209 -121 -106 -106 -330 -330 -94 -52 -66 -67 -49 -41 48 -156 500 1 -3 -3 -116 -54 -54 -135 -135 -51 -51 40 -74 -77 -112 -16 17 17 133 100 105 500 14 337 337 125 90 157 -42 -42 40 -85 93 177 168 243 152 165 269 234 339 131 131 157 105 181 94 178 154 48 48 333 333 108 152 71 129 207 188 73 101 191 85 136 57 57 71 84 97 36 134 110 100 150 109 194 182 195 100 100 211 204 204 314 314 146 127 106 107 67 144 98 177 352 133 68 68 155 203 203 148 148 110 110 169 136 138 143 129 104 104 183 170 162 303 235 233 233 190 126 249 173 173 115 138 -0.75 0.8 0.42 -0.93 0.11 0.91 2.19 12.91 0.21 9.27 7.1 0.22 87.55 25.73 48.12 3.76 7.88 -0.43 2.26 16.63 0.66 0.73 14.58 1.59 5.46 5.24 19.24 14.11 1.1 0.99 2.59 3.92 0.44 14.45 18.46 3.13 0.32 0.54 30.75 -0.96 1.69 0.3 88.09 0.95 8.88 3.25 15.72 13.57 0.77 1.07 1.46 15.95 0.44 14.4 0.78 0.35 1.82 0.34 15.71 0.47 3.09 37.19 0.97 3 3.26 14.08 70.26 3.23 3.4 2.73 20.54 2.69 14.27 -0.72 0.48 1.99 13.01 9.88 1.98 24.96 3.73 290.23 15.39 -1.32 3.83 160.04 -0.57 0.67 3.46 1.41 3.07 1.78 0.53 5.44 20.16 -1.77 0.36 0.87 3.33 0.45 4 3.73 1.06 0.04 50 17.31 0.71 0.94 0.92 0.62 0.75 0.79 14.65 5 3.82 17.16 -0.26 4.2 14.72 13.76 19.01 14.72 0.59 4.

98 1.64 205 -121 -67 -52 125 -383 1 -96 42 -111 -500 -500 26 -154 14 14 -318 -446 -131 -98 -20 -116 228 112 102 102 98 87 149 286 229 293 458 68 68 426 426 451 422 -23 -23 -17 -17 -68 -68 -15 -15 -19 -19 143 143 -4 -4 -210 -210 13 192 222 167 161 190 216 246 81 152 171 339 339 198 188 146 146 199 246 130 199 212 195 292 189 167 167 190 180 239 263 275 269 155 241 241 257 257 290 253 107 107 104 104 131 131 116 116 90 90 192 192 124 124 232 232 170 0.57 11.41 5 4 4 3 3 3.35 0.CIBC's CIO Roundtable .71 15.82 178.36 0.18 3.39 1.87 14.76 18.81 0.52 0.32 0.04 0.1 3.38 2.99 130.85 0.13 6.69 2.95 0.48 6.26 0.21 3.63 18.3 -1.79 0.81 0 -0.25 -0.31 11.39 0.19 234.79 0.95 0.73 1.44 18.73 0.08 2.41 178.37 17.97 14.05 0.16 -0.65 27.82 1.43 11.54 0.59 1.55 0.66 0.96 11.87 0.78 311.89 0.92 251.57 2.96 15.29 4.07 3.89 3.9 0.2 0.54 34.51 1.04 23.02 2.53 0.64 126.04 3.04 3.98 0.15 0.05 0.35 0.95 2.22 11.21 0 0.2 1.93 8.02 3.86 0.87 20.13 0.89 0.51 -0.51 39.28 -0.38 12.57 1.96 12.88 37.95 32.92 17.94 18.79 3.27 3.3 17.13 12.94 46.64 419.21 34.9 -2.38 1.48 3.75 15.63 9.81 0.2 3.67 3.97 2.76 12.19 27.82 2.93 6.38 2.03 2.66 -1.47 1.35 3.16 3.55 17.96 12.99 0.82 0.38 0.01 5.26 3.14 0.51 0.45 1.33 2.81 4.93 0.75 19.11 4.66 0.36 367.98 0.87 0.95 3 5 2 4 2.99 0.12 2.19 13.75 27.15 48.61 29.57 0.15 4.91 1.71 1.93 0 0 4.74 0.94 129 129 18.39 -0.88 -2.95 0.73 33.87 -0.69 0.79 0.2 100 34.19 2.88 0.66 1.08 17.17 12.68 13.51 -0.13 348.76 0.38 -0.95 1.66 4.04 4.46 4.41 345.97 251.05 0.79 1.04 0.46 1779.92 284.85 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 62 .67 5.24 6.68 2.65 9364.19 11.44 13.71 0.05 2.64 12.86 6.31 0 1.64 11.05 7.58 1.78 0.43 3.37 0.6 -2.7 0.78 0.6 0.23 20.29 2. 5 7 15 14 1 1 1 3 2 6 1 1 75 33 6 6 12 3 9 15 6 8 1 24 7 7 10 4 6 6 2 2 2 1 1 18 18 5 13 9 9 6 6 3 3 36 36 14 14 4 4 15 15 3 3 500 0.54 2 2 2.3 19.48 28.53 2.86 0.44 14.93 17.66 222.63 1.88 0.75 1.1 1.82 24.05 1.55 3.67 4.17 0.23 4.82 0.27 3.89 2.33 1.01 2.3 35.09 178.41 4.12 0.37 1.91 2.4 29.96 0.29 2.93 0.22 3.71 0.16 8.48 -1.61 0.05 172 172 301.4 3.54 -0.91 0.69 2.48 0.8 4.2 0.19 -1.15 18.91 4.07 -0.04 0.85 1.47 12.63 0.5 2.98 0.23 1.85 5.73 11.21 0.83 0.24 17.79 0.86 -5.99 3 3 3.85 -0.57 0.14 2.41 13.96 1.65 3.31 1.64 222.11 0.86 0.13 6.28 -0.19 6.95 0.72 0.89 0.34 16.55 12.26 1.11 30.67 9.04 14.88 17.59 37.31 234.03 71.74 19.76 0.87 0 0 1.06 -0.73 2.64 26.02 2.22 7.36 -0.39 2.71 0.29 4.94 39.06 0.76 0.29 5.95 2.82 284.99 0.02 1.07 -0.99 5.22 12.8 3.79 0.45 2.07 1.86 16.96 11.9 3.66 0.83 0.95 30.84 0.66 1.26 3.96 704.09 1.57 0.94 0.32 0.91 1.48 0.71 4.12 -0.79 0.57 3.36 35.46 22.73 -2.29 2.68 3.66 16.79 0.38 4.73 0.93 0.82 13.4 1.61 0.91 0.87 2.95 345.25 -0.4 25.69 3.85 10.36 1.8 0.9 2.69 3.1 51.Volatility And Slower Growth .17 3.73 3.1 0.41 4.37 206.84 1.04 2.94 1.87 -2.74 10.14 1.89 4.69 63.09 33.24 3.43 1.04 1.62 2.3 33.6 5 4.57 0.47 0.31 0.71 5.84 0.11 -1.01 8.6 16.92 3 3 3.65 18.51 0.June 16.08 1.95 0.83 3.5 0.84 0.49 1.04 18.86 1.86 17.78 -0.96 18.95 5.19 11.11 0.52 70.82 2.02 0.64 12.06 4.63 -0.02 1.58 6.18 4.34 17.84 0.66 0.55 0.96 51.45 3.43 0.49 1.06 -0.42 0.86 19.89 3.71 -0.08 -0.98 0.43 26.26 3.88 2.63 1.17 0 0 1.82 0.34 2.48 140.68 3.13 2.72 3.78 0.31 0.08 8.47 10.72 122.91 1.88 12.22 1.9 841.63 0.84 3.95 3.56 -1.29 2.12 0.87 0.36 1.94 2.15 24.93 0.46 4.39 -0.8 7.56 5.7 0.29 9.19 1.38 11.55 12.82 18.78 17.04 -0.25 3.73 1.79 4.34 0.97 32.93 0.63 5.72 30.11 21.79 3.46 4.93 0.86 0.96 0.44 3.4 27.88 0.15 21.59 14.72 3.09 2.48 0.52 1.05 19.92 0.73 3.23 0.55 0 0.31 3.3 13.81 0.8 0 0.04 4.47 0.91 0.39 4.88 4.98 0.52 1.84 0.54 17.46 2.69 1.44 11. 2010 Multi-line Insurance Property & Casualty Insurance Real Estate Real Estate Investment Trusts (REITs) Diversified REIT's Industrial REIT's Office REIT's Residential REIT's Retail REIT's Specialized REIT's Real Estate Management & Development Real Estate Services Information Technology Software & Services Internet Software & Services Internet Software & Services IT Services IT Consulting & Other Services Data Processing & Outsourced Services Software Application Software Systems Software Home Entertainment Software Technology Hardware & Equipment Communications Equipment Communications Equipment Computers & Peripherals Computer Hardware Computer Storage & Peripherals Electronic Equipment Instruments & Components Electronic Equipment & Instruments Electronic Components Electronic Manufacturing Services Office Electronics Office Electronics Semiconductors & Semiconductor Equipment Semiconductors & Semiconductor Equipment Semiconductor Equipment Semiconductors Telecommunication Services Telecommunication Services Diversified Telecommunication Services Integrated Telecommunication Services Wireless Telecommunication Services Wireless Telecommunication Services Utilities Utilities Electric Utilities Electric Utilities Gas Utilities Gas Utilities Multi-Utilities Multi-Utilities Independent Power Producers & Energy Traders Independent Power Producers & Energy Traders S&P 500 Source: CIBC World Markets Inc.64 12.

Bloomberg Utilities Financial Telecom Info Tech Healthcare Consumer Staples Consumer Discretionary Industrials Materials Energy 50 100 150 S&P 500 TSX 63 .Volatility And Slower Growth .CIBC's CIO Roundtable . 2009 Low Utilities Financial Telecom Info Tech Healthcare Consumer Staples Consumer Discretionary Industrials Materials Energy -100 -50 0 50 100 150 0 Source: CIBC World Markets Inc. 2010 Exhibit 58.June 16.. S&P 500 and TSX Sector Performance Last Month Last Quarter Utilities Financial Telecom Info Tech Healthcare Consumer Staples Consumer Discretionary Industrials Materials Energy -15 -10 -5 0 5 -10 -5 0 5 10 15 Utilities Financial Telecom Info Tech Healthcare Consumer Staples Consumer Discretionary Industrials Materials Energy 1-year Trailing Last 5 years Utilities Financial Telecom Info Tech Healthcare Consumer Staples Consumer Discretionary Industrials Materials Energy -40 -20 0 20 40 -100 -50 0 50 100 150 Utilities Financial Telecom Info Tech Healthcare Consumer Staples Consumer Discretionary Industrials Materials Energy Last 10 years Since March 9.

44% 1.26% 22.11% 6.UN C+T CWB AGF.June 16.62% 0.54% 0.34% 0.68% 0.44% 0.23% 1.25% 2.15% 7.02% 3.31% 1.17% 0.33% 0. Portfolio A: Core + Trading Portfolio (June 15. 2010) Energy C+T CNQ C+T ECA C+T ENB COS.43% 5.42% 2.26% 0.23% 1.73% 1.35% 0.CIBC's CIO Roundtable .A MDA Telecom 64 .74% 5.19% 19.17% 1.79% 1.02% 6.39% 0.UN IMO C+T NKO C+T BTE.B RET.78% 20.42% 1.71% 0.53% 0.33% 26.07% 4.33% 0.96% 0.77% 6.UN T BNP.91% 3.UN T PIF.77% 0.63% 31.A C+T SAP Health Care Info tech GIB.78% 9.67% 0.70% 0. 2010 Exhibit 59.83% 0.53% 0.84% 0.50% 0.06% 0.72% 2.UN T TCW T FCE.87% 4.91% 0.16% 2.40% 0.UN T IPL.Volatility And Slower Growth .UN Canadian Natural Resources Ltd EnCana Corp Enbridge Inc Canadian Oil Sands Trust Imperial Oil Ltd Niko Resources Ltd Baytex Energy Trust Bonavista Energy Trust Inter Pipeline Fund Pembina Pipeline Income Fund Trican Well Service Ltd Fort Chicago Energy Partners L Total Weight: Benchmark Weight: Barrick Gold Corp Potash Corp of Saskatchewan In Kinross Gold Corp Silver Wheaton Corp First Quantum Minerals Ltd Sino-Forest Corp New Gold Inc Inmet Mining Corp Centerra Gold Inc Sherritt International Corp Gammon Gold Inc Total Weight: Benchmark Weight: Canadian National Railway Co Canadian Pacific Railway Ltd Total Weight: Benchmark Weight: Tim Hortons Inc Gildan Activewear Inc Dorel Industries Inc Reitmans Canada Ltd Total Weight: Benchmark Weight: Saputo Inc Total Weight: Benchmark Weight: Total Weight: Benchmark Weight: Financials TD C+T BNS C+T BMO CM PWF IGM GWO POW IFC BPO T REF.46% Materials ABX POT TK SLW FM TRE T NGD IMN C+T CG S T GAM Industrials CNR CP Consumer Discretionary THI C+T GIL DII.21% 0.94% 5.18% 41.51% 0.03% 4.52% 3.00% 0.B Toronto-Dominion Bank/The Bank of Nova Scotia Bank of Montreal Canadian Imperial Bank of Comm Power Financial Corp IGM Financial Inc Great-West Lifeco Inc Power Corp of Canada/Canada Intact Financial Corp Brookfield Properties Corp Canadian Real Estate Investmen Canadian Western Bank AGF Management Ltd Total Weight: Benchmark Weight: CGI Group Inc MacDonald Dettwiler & Associat Total Weight: Benchmark Weight: 10.72% 0.

51% 1.00% 6.96% Barrick Gold Corp Potash Corp of Saskatchewan In Kinross Gold Corp Silver Wheaton Corp First Quantum Minerals Ltd Sino-Forest Corp New Gold Inc Inmet Mining Corp Centerra Gold Inc Sherritt International Corp Gammon Gold Inc Total Weight: Benchmark Weight: -4 -3 -2 -4 -5 -3 -1 -3 -1 -3 -2 5.20% 3.84% 4.44% 0.UN T IPL.50% 1.34% 5.03% 0. Exhibit 60.51% 2.Volatility And Slower Growth .87% 5. Portfolio B: Core + Single Stock Limit (SSL) Tilt Energy C+T CNQ C+T ECA C+T ENB COS.52% 0.15% -4 -1 -4 -4 -1 Financials TD C+T BNS Toronto-Dominion Bank/The Bank of Nova Scotia 65 . 2010 T BCE BCE Inc Total Weight: Benchmark Weight: TransAlta Corp Emera Inc Total Weight: Benchmark Weight: 4.UN T TCW T FCE.51% 0.A Consumer Staples C+T SAP Health Care Total Weight: Benchmark Weight: 0.UN IMO C+T NKO C+T BTE.85% 4.June 16.31% 1.CIBC's CIO Roundtable .67% 0.69% 0.54% 0.10% 2.82% 0.71% 0.09% 1.46% -4 -2 7.97% 0.63% 0.47% 2.53% 0.48% 26.43% Canadian Natural Resources Ltd EnCana Corp Enbridge Inc Canadian Oil Sands Trust Imperial Oil Ltd Niko Resources Ltd Baytex Energy Trust Bonavista Energy Trust Inter Pipeline Fund Pembina Pipeline Income Fund Trican Well Service Ltd Fort Chicago Energy Partners L Total Weight: Benchmark Weight: -2 -1 -2 -3 -4 -2 -2 -2 -2 -2 -2 -2 7.UN T BNP.20% 4.09% 2.B RET.52% 19.00% 0.UN Materials ABX POT TK SLW FM TRE T NGD IMN C+T CG S T GAM Industrials CNR CP Consumer Discretionary THI C+T GIL DII.67% 0.52% 26.09% 20.00% Canadian National Railway Co Canadian Pacific Railway Ltd Total Weight: Benchmark Weight: Tim Hortons Inc Gildan Activewear Inc Dorel Industries Inc Reitmans Canada Ltd Total Weight: Benchmark Weight: Saputo Inc Total Weight: Benchmark Weight: -4 -4 3.78% 0.53% 0.69% Utilities C+T TA C+T EMA Source: Company reports and CIBC World Markets Inc.UN T PIF.40% 1.92% 0.26% 5.26% 1.80% 0.00% 7.52% 0.80% 1.05% 0.92% 1.

37% 6.45% 1.CIBC's CIO Roundtable .69% -4 -3 -1 -2 -1 Source: Company reports and CIBC World Markets Inc.75% 1.05% 31.B Info tech GIB.02% 6.81% 1.78% 1.51% 1.51% 0.72% 3.76% 1.54% 0.97% 1.39% 0. 2010 C+T BMO CM PWF IGM GWO POW IFC BPO T REF.Volatility And Slower Growth .00% 3.52% 0.69% 0.05% 3.June 16. 66 .50% 36.UN C+T CWB AGF.55% 0.A MDA Telecom T BCE Utilities C+T TA C+T EMA Bank of Montreal Canadian Imperial Bank of Comm Power Financial Corp IGM Financial Inc Great-West Lifeco Inc Power Corp of Canada/Canada Intact Financial Corp Brookfield Properties Corp Canadian Real Estate Investmen Canadian Western Bank AGF Management Ltd Total Weight: Benchmark Weight: CGI Group Inc MacDonald Dettwiler & Associat Total Weight: Benchmark Weight: BCE Inc Total Weight: Benchmark Weight: TransAlta Corp Emera Inc Total Weight: Benchmark Weight: -1 -4 -3 -3 -3 -3 -4 -4 -2 -2 -5 7.02% 0.37% 3.55% 0.

futures or other derivative instruments based thereon. including the CIBC World Markets Investment Banking Department. Additionally. Recipients of this report are advised that any or all of the foregoing arrangements. In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report. 2010 IMPORTANT DISCLOSURES: Analyst Certification: Each CIBC World Markets research analyst named on the front page of this research report.Volatility And Slower Growth . 67 . related securities or in options. CIBC World Markets may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein. hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was. as well as more specific disclosures set forth below. or at the beginning of any subsection hereof. or will be.CIBC's CIO Roundtable . directly or indirectly. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. may at times give rise to potential conflicts of interest. is.June 16. CIBC World Markets generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. CIBC World Markets generally prohibits any research analyst from serving as an officer. Potential Conflicts of Interest: Equity research analysts employed by CIBC World Markets are compensated from revenues generated by various CIBC World Markets businesses. director or advisory board member of a company that such analyst covers. related to the specific recommendations or views expressed by such research analyst in this report.

2g) (DML-TSX.77.: Stock Prices as of 06/16/2010: AGF Management Limited (2g. (2g.26.90. 2g. (2a. 2c.43. Sector Performer) Canadian Pacific Railway Ltd.15. 7) (CAR. 2e. (AGI-TSX. Sector Underperformer) Canadian Imperial Bank of Commerce (2a. C$1. 2f. Sector Outperformer) Brookfield Office Properties Canada REIT (2g) (BOX. Sector Outperformer) CI Financial Corp. 2e. Sector Performer) Canadian Western Bank (2g) (CWB-TSX. 2c. 2g) (AEM-NYSE. 7) (COS.UN-TSX. 2e.15. 2g.B-TSX. C$21.00. Sector Outperformer) Baffinland Iron Mines Corporation (2a. 3c. Sector Outperformer) Andean Resources Ltd. 2e) (DW-TSX.42. Sector Outperformer) Calloway REIT (2a. Sector Outperformer) Anderson Energy Ltd. 2g) (COT-NYSE. Sector Outperformer) Cenovus Energy Inc. (2a. 2e. 2g) (CWT. 7.97. 2e. 2e. Sector Outperformer) Centerra Gold Inc. Sector Performer) Canadian Apartment Properties REIT (2g.96. 3a. (2a. Sector Performer) Canadian REIT (2a.42. 2g. Restricted) Aurizon Mines Ltd. 13) (CTC. US$42.95.June 16. 3a. Sector Performer) Brookfield Asset Management (2a. C$15. Sector Performer) Bannerman Resources Ltd. 2g) (CIX-TSX. Sector Outperformer) Angle Energy Inc. (CLM-TSX. C$1. C$18. C$8. C$63. 2g) (BIM-TSX. Sector Outperformer) Cott Corporation (2a. Sector Underperformer) Capstone Mining Corporation (7) (CS-TSX. C$31. 9) (CNR-TSX. 9) (CVE-TSX.40. Sector Performer) BCE Inc.Speculative) Bank of Montreal (2a. 2e.UN-TSX.70.44. Sector Performer) Cathedral Energy Services (2g) (CET-TSX. (2g) (ATD. 2c. (2a. C$15. 2e. 7) (BCE-TSX. 7) (BMO-TSX. 2c. 2c.24.27. C$23.Volatility And Slower Growth . (2a.94. 2g) (DOL-TSX.24. C$15. C$5. 2c.26. Sector Outperformer) Agnico-Eagle Mines Limited (2f. 2f.UN-TSX. C$60. 3a. 8. 9) (CM-TSX. C$19. 2c. Sector Outperformer) Cameco Corporation (2a. 2c. 3a) (BPO-NYSE. C$1. 13) (AGF. C$56. (2a. 2c. 3a. 2c. Sector Outperformer) Brookfield Properties Corporation (2a. Not Rated) Canadian National Railway Co. 2c. 2c. 2e. (2a.A-TSX. Sector Performer) Boardwalk REIT (2g. 2d.12. 2g. 2g. 2c. 2e. 2g. C$20. C$75. Sector Performer) Consolidated Thompson Iron Mines Ltd. 2d. C$0. 2e. 2e) (CCO-TSX. 2g) (CG-TSX. 2c. C$19.UN-TSX. Sector Performer) Detour Gold Corporation (DGC-TSX. 3c. Sector Outperformer) DundeeWealth Inc. (2a.03. 2f. C$3. 2c.28.90. Sector Outperformer) Dollarama Inc.10. Sector Performer) Denison Mines Corp.68. Sector Outperformer) Bank of Nova Scotia (2a. 2g) (AXL-TSX. Sector Performer) Canadian Oil Sands Trust (2a. C$28.80. (2g) (ARZ-TSX. Sector Performer) Cominar Real Estate Investment Trust (2a.UN-TSX. 2c. Sector Performer) CGI Group Inc. Sector Outperformer) Davis + Henderson Income Fund (2g. C$28.UN-TSX. C$2. 7. C$0. 2e. 6a.03. 7) (CUF. 2c.UN-TSX. Sector Performer) Canadian Natural Resources Ltd (2g. 7) (REF. 7. 9) (CNQ-TSX. C$12. 2e.72. (2g) (CDE-NYSE. Sector Outperformer) 68 . 2c.51. 7. 12) (GIB. US$61.67.74. 3a. (2a. 2g. 7) (DHF. C$15. (2g. (2g) (BAN-TSX. US$15.35. 14) (BAM-NYSE. 2g. C$0. Sector Outperformer) Alexis Minerals Corporation (2a.34. US$15.B-TSX. (2g) (CRJ-TSX. 2c. Sector Outperformer . 3c. Sector Performer) Calfrac Well Services Ltd. (2a. 2e. 2c.20. C$16.76. C$24.CIBC's CIO Roundtable . 2e.68.82.70. 9) (CP-TSX. 2g. 2g) (NGL-TSX. 7) (BNS-TSX. 7. Sector Performer) Canadian Tire Corporation. US$7. C$51. (2a.58. 2e. 2010 Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc. Ltd. C$38.18. C$24. 2g) (AMC-TSX. 2e. 7.36. 2e. 2e. 3c. C$18. 7) (BEI. 2e.85. 2e.53. (2g) (CFW-TSX.A-TSX. Sector Outperformer) Barrick Gold Corporation (2a. 2c. (2g. Sector Underperformer) Coeur d'Alene Mines Corp.02. Sector Underperformer) Claude Resources Inc. C$63. C$16.UN-TSX. C$29. C$5. US$24. 2g. Sector Performer) Alamos Gold Inc. 2g) (AND-TSX. 2e. 2g. C$40.Speculative) Alimentation Couche-Tard Inc. 9. 2g) (ABX-NYSE. C$8. 2d.91. C$25. 2c.00. 2e. Sector Outperformer .

27. C$26.01. 2e) (EDR-TSX.96. 2g. (2a. 2c. 7) (FTT-TSX.A-TSX.57.UN-TSX. C$49. (2a. Sector Outperformer) Fort Chicago Energy Partners. 2e. 2g. C$13. C$25. US$43.06.15. (2g.UN-TSX.68. Sector Outperformer) IAMGOLD Corporation (2g) (IAG-NYSE. Restricted) First Majestic Silver Corp. Sector Performer) Endeavour Silver Corp.10. C$12. Sector Performer) Loblaw Companies Limited (2g) (L-TSX. C$14. Sector Performer) Goldcorp Inc. 2g. 3a. Sector Performer) First Quantum Minerals Ltd. 2c. Sector Performer) Gildan Activewear Inc.40. 7. Sector Outperformer) Gold Wheaton Gold Corp. 2g) (HSE-TSX.: (Continued) Stock Prices as of 06/16/2010: Eldorado Gold Corporation (2g) (EGO-NYSE. (2a. (2g) (FR-TSX.32. (2a. Sector Outperformer) Labrador Iron Ore Royalty Income Fund (7) (LIF. C$8. 2e. (2a. (2a. 2e. Sector Outperformer) Golden Star Resources Ltd. 13) (EMP. US$17. 2c.June 16. Sector Outperformer) Flint Energy Services Ltd. L. 2e. US$3. (2a. (2g) (GAM-TSX. 2e.45. Sector Performer) General Moly. 2c. 2c. Sector Outperformer) EnCana Corporation (2a. 7) (MIC-TSX.19. C$3. 2e. L. 2g) (FCR-TSX. 2e. 2g) (HR. Sector Performer) Fortuna Silver Mines Inc. (2a. 3a. 2f. 2c.14. C$40. 4a. C$47. (2g) (GSS-AMEX. Sector Outperformer) Ivanhoe Mines Ltd.97. 2g. 2g) (IGM-TSX.95. Sector Outperformer) George Weston Limited (2g. 2g) (FVI-TSX. C$47. Sector Outperformer) Enbridge Inc. (2g. 7. (2a. Sector Performer) Gluskin Sheff + Associates Inc. 7) (EMA-TSX. 7) (IAG-TSX.23. 2g. 7) (FNV-TSX. 2e. Sector Outperformer) Husky Energy Inc.44. US$34. 2e. 3c.A-TSX. 2f. 2c.06.10. C$11. 12) (PJC. 2e. C$14.09. Sector Performer) Finning International Inc. 2g. 2e.P. US$4. C$4. 2c. 2c. Sector Performer) 69 . C$44. C$10. (LSG-TSX.35. 7. 3a. Sector Performer) Imperial Oil Limited (2g) (IMO-TSX. C$23.66. Sector Outperformer) H&R REIT (2a. (2a. (2g) (EET-TSX. Sector Performer) Empire Company Limited (2g. (2g) (GIL-NYSE. 2e. Sector Performer) Inter Pipeline Fund.70. Sector Underperformer) HudBay Minerals Inc. 2010 Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc. 2c. C$60.25. 2g) (GWO-TSX.10.51. Sector Outperformer) Emera Inc. C$17.07. 2c. Sector Outperformer) Kinross Gold Corporation (2g) (KGC-NYSE. 2c. Sector Underperformer) Industrial Alliance Insurance And Financial Services Inc. C$39. 7. (KGI-TSX.90.57. C$4. Sector Performer) Jean Coutu Group (PJC) Inc. (FM-TSX. Sector Outperformer) Inmet Mining Corporation (2a. (7) (HBM-TSX. Sector Outperformer) Hecla Mining Company (2g) (HL-NYSE. Sector Performer) Equinox Minerals Limited (2g) (EQN-TSX. Sector Outperformer) Etruscan Resources Inc.40. Sector Performer) First Capital Realty Inc. C$11. 2e. 2c. 2e. C$17. C$25.19.37.CIBC's CIO Roundtable . 2c.51.53. Sector Underperformer) Groupe Aeroplan Inc.35. Sector Performer) Intact Financial Corp.00. 3c) (GG-NYSE. 9) (ENB-TSX. 14) (IFC-TSX. (2g. Sector Performer) Lake Shore Gold Corp.P. Sector Underperformer) Kirkland Lake Gold Inc. 2e. 2c. C$2. (2g) (ESI-TSX.09. C$75. 2g) (IVN-TSX. Sector Outperformer) Gammon Gold Inc. US$5. C$0. 9) (ECA-NYSE. Sector Performer) Laurentian Bank (2g) (LB-TSX.24.55. Sector Outperformer) Franco-Nevada Corporation (2a. C$35. Sector Performer) Ensign Energy Services Inc.87. 7) (IPL. C$44. C$18. (2a.17. Sector Performer) Great-West Lifeco Inc. (2g) (GMO-AMEX. C$9. (2g) (FES-TSX.56.UN-TSX. 2g. C$7.82. C$41. 7) (WN-TSX. (2a. 2g. 7) (AER-TSX. 2e. (2a. C$52.73. (2a. Sector Outperformer) Genworth MI Canada Inc.Volatility And Slower Growth . C$2.UN-TSX. US$17. (2g) (GLW-TSX. 12) (GS-TSX. 2g) (IMN-TSX. Sector Outperformer) IGM Financial Inc.73. 2g) (FCE. 2g. 4b.51.71. 2c. (2a. US$31. Inc. C$3. (2a. C$9. C$33. 2e. 2e. 2e. US$17.

C$0.40.Speculative) Newalta Inc. Sector Outperformer) Mineral Deposits Limited (2g) (MDM-TSX.65. 2e. C$20. 2e. 2e. C$0. Sector Underperformer) Red Back Mining Inc.71. (RBI-TSX.54. 2e. (2a. 2e.58.67. Sector Outperformer) Manulife Financial Corporation (2a. 2d. Sector Performer) Royal Gold. 2c. Sector Outperformer) Primaris Retail REIT (2a. 3a. 2g) (SMF-TSX.99. 2e. 3a. (2a. 2c. 2c. 2c. 3b) (NEM-NYSE. US$56. C$8.24. 2g. 2g. 2c. (2g) (NGD-TSX. (2a. 2c. Sector Outperformer . C$4. Sector Performer) Nexen Inc. 7) (PMZ.73.85. (2a. 2d. 7.57. 7) (PHX. 7.33. (2a.79. 2g. 2g) (PRU-TSX. C$58.34. 2g) (PAAS-NASDAQ. C$54. Dettwiler and Associates Ltd. 2c.92. 2e. Sector Performer) Semafo Inc. C$6. 3c. 3a.90. 2e. 2e. Sector Outperformer) Northgate Minerals Corporation (2a. C$43.UN-TSX. C$5.38. Sector Outperformer) RONA Inc. C$7. 2e. C$15.58. C$1. 2g) (ORE-TSX.11. 2c. 2010 Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc.49. (2g. 2c. 2c.33. 7) (MFC-TSX. C$11. 2g.50.52. C$34. (2g) (RGLD-NASDAQ. Sector Outperformer) Sherritt International Corporation (2g) (S-TSX. C$26.Speculative) Orezone Gold Corporation (2a. 7) (RON-TSX. 2g) (NOA-TSX. Sector Outperformer) Mercator Minerals Ltd. Sector Outperformer) National Bank Of Canada (2a. Sector Performer) Saputo Inc. Inc. C$3. 2e. C97) (QUX-TSX. C$3. C$1. 2c. 2g. Sector Performer) Pembina Pipeline Income Fund (2g. 7) (SAP-TSX. Sector Underperformer) San Gold Corporation (2g) (SGR-V. 2g) (POT-TSX.65. Sector Performer) Shoppers Drug Mart Corporation (2g) (SC-TSX.UN-TSX. Sector Performer) Metro Inc.57.41. Sector Outperformer) Phoenix Technology Income Fund (2a. C$17. 2e. 2e.80. Sector Outperformer) North American Energy Partners (2a.80. (2g) (MFL-TSX. C$3. 3a. 7) (NWF.95. Sector Outperformer . Sector Outperformer) Pason Systems Inc.98.UN-TSX.46. 2g. 2e. 7) (RY-TSX. 2e. (2a. Sector Performer) Royal Bank of Canada (2a.UN-TSX.CIBC's CIO Roundtable . Sector Performer) North West Company Fund (2g. (2g) (PDN-TSX. C$11. C$6. Sector Outperformer) 70 .61. C$12. 2b. C$43. (RR-TSX. Sector Outperformer) Rainy River Resources Ltd. 3c.62. Sector Performer) Potash Corporation (2a. C$30. Sector Outperformer) Minefinders Corporation Ltd. 12) (MRU. US$25. C$16. 2g. (2g) (ML-TSX. 2f. (2g) (SVY-TSX.June 16. 2g) (OPC-TSX.15. Sector Outperformer) Provident Energy Trust (2g) (PVE.20. Sector Outperformer) Paladin Energy Ltd. 7) (REI. (2g) (NML-V.UN-TSX. C$1. C$18. 3a. 12) (OCX-TSX. 2e. 2e.UN-TSX. 2e. C$9.: (Continued) Stock Prices as of 06/16/2010: Lundin Mining Corporation (2g) (LUN-TSX. 2e) (SLW-TSX. 7) (PIF. 2g) (SSRI-NASDAQ. (2a.83. Sector Performer) Osisko Mining Corporation (2g) (OSK-TSX. 2d. C$1. Sector Performer) Precision Drilling Trust (2g) (PD. 2c. US$52. Sector Underperformer) Silver Wheaton Corp. US$18. C$10. (2a. 2g) (NAL-TSX. 2c. Sector Outperformer) Onex Corporation (2g. 8) (NA-TSX. (2g) (PSI-TSX.17. (2g) (MDA-TSX. C$7.UN-TSX.70.51. Sector Outperformer) MacDonald.76. Sector Performer) Silver Standard Resources Inc. 2e. Sector Performer) Rubicon Minerals Corporation (RMX-TSX.55. 2e. C$19. Sector Performer) Savanna Energy Services Corp. 3c. Sector Underperformer) Perseus Mining Limited (2a. Sector Performer) New Millennium Capital Corp. Sector Outperformer) RioCan REIT (2a. C$6. Sector Outperformer) OPTI Canada Inc. (2a. 2c. 3b) (NXY-TSX. 2c. C$23. C$14. C$7. 2b. C$19. 2c.00.27. C$26. Sector Outperformer) Mullen Group (2g) (MTL-TSX. 2g) (NXG-AMEX. C$8.A-TSX. 2f.53. (2g.Volatility And Slower Growth . 2g.10. Sector Outperformer) Pan American Silver Corp. Sector Performer) New Gold Inc. US$2. C$104.64.58. Sector Outperformer) Newmont Mining Corporation (2a. Sector Performer) Quadra FNX Mining Ltd.

7. 2e. (2g) (SVM-TSX.B-TSX. 2g) (TRE-TSX.25. Inc.61. 2g) (UUU-TSX. Sector Outperformer) Teck Resources Limited (2g. 2g) (TIH-TSX. (2a. Inc.24.10.16.26.64. 2c. (2a. US$30.: (Continued) Stock Prices as of 06/16/2010: Silvercorp Metals Inc. 71 . Sector Outperformer) Trinidad Drilling Ltd.26. (2a.: Stock Prices as of 06/16/2010: Baytex Energy Trust (BTE. 7. (2a. 2g. 2e.55. Sector Performer) TransCanada Corp. 2f. C$2. Sector Outperformer) Trican Well Service Ltd. 2g.UN-TSX. Not Rated) Dollar General (DG-NYSE. Sector Outperformer) Yamana Gold Inc. Not Rated) Dorel Industries Inc. (2g) (SII-TSX. 2g) (THI-TSX. C$10. 2c. 7. C$5. US$32. 9) (SU-TSX. C$21. (2g) (UEC-AMEX.UN-TSX.19.June 16. C$2. (2a. Not Rated) Costco Wholesale Corp. 2c. C$102. 7) (TRP-TSX. 2e.36.48. 9. US$2.94. 7) (TLM-TSX.63. C$16. 2g. 2c.04. 2e. US$59.89.60.44. Sector Outperformer) TD Bank (2a. 2e. (2g) (AUY-NYSE. US$51.99. Not Rated) Important disclosure footnotes that correspond to the footnotes in this table may be found in the "Key to Important Disclosure Footnotes" section of this report. 2g.A-TSX. 2e. (COST-NASDAQ. (2g) (TCW-TSX. Sector Outperformer) Talisman Energy Inc. (2a. Not Rated) Power Financial Corporation (PWF-TSX. Sector Performer) Sino-Forest Corporation (2a. 2010 Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc. C$18. 7) (TDG-TSX. 2b. Sector Performer) Toromont Industries (2a. 3c. 7) (SLF-TSX. Sector Outperformer) Taseko Mines Limited (2g) (TKO-TSX. 13) (T-TSX. (2a. 2c. Not Rated) Niko Resources Ltd. C$3. C$36. C$39.22. (DII. Not Rated) Home Depot (HD-NYSE.Volatility And Slower Growth . 2e.40. (TGT-NYSE. C$13. Not Rated) Target Corp. C$28. 12) (TCK.97. C$5. Not Rated) Reitmans (Canada) Ltd. C$6. 2e.90. 2c. C$34.94. 2g. (NKO-TSX. 2g.71. 2g. Sector Underperformer) Companies Mentioned in this Report that Are Not Covered by CIBC World Markets Inc. 2c. 2g. Sector Performer) Total Energy Services (2g) (TOT-TSX. C$24.50. C$34. Sector Performer) Sprott Inc. (SBY-TSX. C$36. Sector Performer) TransAlta Corporation (2a.79. Sector Performer) Suncor Energy Inc. (2g) (TCM-TSX.00. C$57. Not Rated) Power Corporation of Canada (POW-TSX. Sector Outperformer) Thompson Creek Metals Company. 2c. Sector Outperformer) Uranium One Inc. C$73.95. 3a.48. 7) (TD-TSX. Sector Outperformer) The Forzani Group Ltd. C$16. 2e. (RET-TSX. Sector Outperformer) TELUS Corporation (2a. Restricted) UTS Energy Corporation (2g) (UTS-TSX. Sector Performer) Sun Life Financial Inc. US$10.CIBC's CIO Roundtable . C$33. C$24.00. C$26. C$8. C$36. C$17. 2e.48. (2g) (FGL-TSX. Not Rated) Wal-Mart (WMT-NYSE. 2d. Sector Performer) Tim Hortons. Not Rated) Bonavista Energy Trust (BNP. Not Rated) Sobeys Inc. Sector Performer) Uranium Energy Corp.23. 2e. 9) (TA-TSX. US$54.36. C$30.81.90.

2010 Key to Important Disclosure Footnotes: 1 2a 2b 2c 2d 2e 2f 2g 3a 3b 3c 4a 4b 4c 5a 5b 6a 6b 7 8 9 CIBC World Markets Corp. has managed or co-managed a public offering of securities for this company in the past 12 months.CIBC's CIO Roundtable . analyst(s) who covers this company also has a long position in its common equity securities. the parent company to CIBC World Markets Inc. CIBC World Markets Inc. has received compensation for investment banking services from this company in the past 12 months. is an advisor to Quarda FNX Mining in a JV agreement with State Grid. has received compensation for non-investment banking. A member of the household of a CIBC World Markets Inc. 10 11 12 13 14 C97 72 . has received compensation for non-investment banking. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. CIBC World Markets Inc. CIBC World Markets Corp. has received compensation for investment banking services from this company in the past 12 months.June 16. has received compensation for non-investment banking. securities-related services from this company in the past 12 months. An executive of CIBC World Markets Inc. and CIBC World Markets Corp. The equity securities of this company are non-voting shares. CIBC World Markets Inc. and CIBC World Markets Corp. beneficially own 1% or more of a class of equity securities issued by this company. The equity securities of this company are restricted voting shares. fundamental research analyst who covers this company has a long position in the common equity securities of this company. fundamental analyst(s) who covers this company also has a long position in its common equity securities. The CIBC World Markets Inc. CIBC World Markets Inc. A senior executive member or director of Canadian Imperial Bank of Commerce ("CIBC"). securities-related services in the past 12 months. CIBC World Markets Inc. director or advisory board member of this company or one of its subsidiaries.Volatility And Slower Growth . has a significant credit relationship with this company. CIBC World Markets Corp. CIBC World Markets Inc. securities-related services from this company in the past 12 months. This company is a client for which a CIBC World Markets company has performed non-investment banking. The equity securities of this company are subordinate voting shares. has received compensation for non-investment banking. the parent company to CIBC World Markets Inc. A member of the household of a CIBC World Markets Corp.. and their affiliates. Canadian Imperial Bank of Commerce ("CIBC"). in the aggregate. has managed or co-managed a public offering of securities for this company in the past 12 months. or a member of his/her household is an officer. The CIBC World Markets Corp... non-securities-related services from this company in the past 12 months. This company is a client for which a CIBC World Markets company has performed investment banking services in the past 12 months. or any analyst involved in the preparation of this research report has provided services to this company for remuneration in the past 12 months. CIBC World Markets Corp. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. makes a market in the securities of this company.. CIBC World Markets Corp. CIBC World Markets Corp. The equity securities of this company are limited voting shares. CIBC World Markets Corp. research analyst who covers this company has a long position in the common equity securities of this company. non-securities-related services from this company in the past 12 months. This company is a client for which a CIBC World Markets company has performed non-investment banking. CIBC World Markets Inc. non-securities-related services in the past 12 months.

cibcwm. Stock Rating System Abbreviation Stock Ratings SO SP SU NR R O M U NA Sector Outperformer Sector Performer Sector Underperformer Not Rated Restricted Overweight Market Weight Underweight None Stock is expected to outperform the sector during the next 12-18 months. relative stock rating system utilized by CIBC World Markets Inc.6% 44.com/sec2711 or write to CIBC World Markets Inc.cibcwm.CIBC's CIO Roundtable .0% 0. please visit CIBC on the web at http://apps.Volatility And Slower Growth .3% 7.com under 'Quick Links' or by writing to CIBC World Markets Inc.3% Inv. including potential conflicts of interest information.8% 90.0% Off The Press — Collective Research Series Sector includes the following tickers: (none). Sector rating is not applicable. Sector is expected to equal the performance of the broader market averages.0% 0. CIBC World Markets is restricted*** from rating the stock. Stock is expected to perform in line with the sector during the next 12-18 months. Toronto. 73 . Price Chart For price and performance information charts required under NYSE and NASD rules. Brookfield Place.4% 4. ***Restricted due to a potential conflict of interest. 4th Floor. Sector is expected to underperform the broader market averages. Coverage Universe (as of 16 Jun 2010) Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 123 125 21 12 Percent 43. Toronto.0% Inv.5% 100. 161 Bay Street. *Although the investment recommendations within the three-tiered. and the S&P/TSX Composite in Canada... do not correlate to buy. Ratings Distribution*: CIBC World Markets Inc.0% 0. Rating Description Sector Weightings** **Broader market averages refer to the S&P 500 in the U. Attn: Research Disclosure Chart Request. and sell ratings to securities rated Sector Underperformer without taking into consideration the analyst's sector weighting. 2010 CIBC World Markets Inc.0% Ratings Distribution: Off The Press — Collective Research Series Coverage Universe (as of 16 Jun 2010) Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 0 0 0 0 Percent 0. Sector is expected to outperform the broader market averages. Brookfield Place.June 16. hold ratings to securities rated Sector Performer. our system for rating investment opportunities and our dissemination policy can be obtained by visiting CIBC World Markets on the web at http://researchcentral. CIBC World Markets Inc.0% 0. for the purposes of complying with NYSE and NASD rules.0% 0. "Speculative" indicates that an investment in this security involves a high amount of risk due to volatility and/or liquidity issues. CIBC World Markets does not maintain an investment recommendation on the stock. hold and sell recommendations. Ontario M5J 2S8. Banking Relationships Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 0 0 0 0 Percent 0. Ontario M5J 2S8. Important disclosures required by IIROC Rule 3400.0% 0. 161 Bay Street. 4th Floor. Banking Relationships Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 116 116 19 12 Percent 94.S. has assigned buy ratings to securities rated Sector Outperformer. Attention: Research Disclosures Request. CIBC World Markets Inc. Stock is expected to underperform the sector during the next 12-18 months.3% 92.

The analyst writing the report is not a person or company with actual. (b) in the United Kingdom. Major Institutional Investors (“MII”) (as such term is defined in SEC Rule 15a-6) or (ii) CIBC World Markets Corp. This report is provided. distribution. for distribution only to U. clients should consult with their own independent tax adviser. Before making an investment decision with respect to any security recommended in this report. As with any investment having potential tax implications.S. financial situation or specific needs of any particular client of CIBC World Markets. Internet web sites. objectives and financial circumstances.. Recipients who choose to access such third-party web sites or follow such hyperlinks do so at their own risk. which is regulated by the Financial Services Authority ("FSA"). 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75 .Volatility And Slower Growth . CIBC World Markets Inc.CIBC's CIO Roundtable . 2010 Legal Disclaimer (Continued) without the prior written permission of CIBC World Markets is prohibited by law and may result in prosecution. Canadian Imperial Bank of Commerce is a related issuer of CIBC World Markets Inc.June 16. is a wholly-owned subsidiary of Canadian Imperial Bank of Commerce.

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