Benjamin Tal MBABC Vancouver

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March 2011

Benjamin Tal

The New Mix



| 2

Oil Prices & Recessions

Source: Wall Street Journal, CIBC

0

20

40

60

80

100

120

140

160

70 75 80 85 90 95 00 05 10

$/Barrel

?



| 3

Money Is Not Exchanging Hands

1.4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

92 94 96 98 00 02 04 06 08 10

Velocity of Money:Ratio of Nominal GDP to Money Supply M2 (Ratio)

Source: Statistics Canada, CIBC



| 4

Record High Negative Equity Position

Source: LoanPerformance, CIBC

No. of Mortgages in

Negative Equity

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2006 2007 2008 2009 2010

mn

Distribution of

Negative Equity

0% to -10%

-20% andover

-10% to -20%



| 5

Employees Now Working LongerWeekly Hours Than Before Recession

38.5

39.0

39.5

40.0

40.5

41.0

Mar-06 Nov-06 Jul-07 Mar-08 Nov-08 Jul-09 Mar-10

Hours worked in manufacturing




| 6

US Manufacturing Still Expanding

ISM Diffusion Index (PMI) - Manufacturing

30

35

40

45

50

55

60

65

05 06 07 08 09 10

Contraction

Expansion

60

Source: US Federal Reserve, CIBC



| 7

Strong Export Recovery

Source: Bureau of Economic Analysis, CIBC

Contribution of US

Exports & Investmentto Real GDP Growth

0

10

20

30

40

50

60

70

80

90

Avg. Post-

war

Current

First 5 quartersof recovery

(%)

Real Exports

85

90

95

100

105

110

115

120

125

1 2 3 4 5

Quarters since recession ends

82Q4 91Q1

01Q4 09Q2

Index: End of recession = 100



| 8

Emerging Markets Sizeable Enough toCarry Global Recovery

Source: IMF, CIBC

Share of Global GDP

1992

US

Other

13%

2009

US

Other

24%EmergingMarkets



| 9

Surging Exports to Emerging Markets

Source: US Census Bureau, CIBC

Diverging US Exports

80

90

100

110

120

130

140

150

160

J a n - 0 9

A p r - 0 9

J u l - 0 9

O c t - 0 9

J a n - 1 0

A p r - 1 0

rest of the world

emerging markets

Index Jan 2009=100

US$ Trade-Weighted

Indices (Exports)

80

85

90

95

100

105

Mar-09 Nov-09 Jul-10

US$ TWI (DevelopedWorld)

US$ TWI (EmergingMarkets)

Index Level



| 10

The New Consumer

Source: IMF, CIBC

Retail Sales

80

90

100

110

120

130

140

150

160

2007 2008 2009 2010

Emerging market Advanced economies

Index 2007Q1=100



| 11

US Manufacturing Is Restructuring

R&D Spending as a

share of MfgShipments

3.0

3.5

4.0

4.5

5.0

5.5

6.0

85 88 91 94 97 00 03 06 09

%

recession

Output Per Hour

(Manufacturing)

-4

-2

0

2

4

6

8

10

05 06 07 08 09 10

y/y % chg




| 12

Fastest Growing US Export Sectorsto China

Cumulative Year-to-September

(2010 vs. 2009)$Mn %

Motor cars and other motor vehicles 1399.7 204.5

Cotton textile fibers 630.2 130.3

Nonferrous base metal waste and scrap 581.2 62.3

Machinery and equipment specialized for particular industries 554.2 108.0

Food processing equipment 322.5 32.0

Wood in the rough or roughly squared 206.4 146.2

Pigments, paints, varnishes & related materials 188.7 117.8

Toys, games and sporting goods 151.5 177.0

Inorganic chemical elements, oxides and halogen

salts 151.1 63.3

Nitrogen-function compounds 113.8 71.7




| 13

Chinese StocksDon’t Always Reflect the Economy

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

00:Q1 01:Q3 03:Q1 04:Q3

4

5

6

7

8

9

10

11

Shanghai Composite (LHS)

Real GDP, y/y % chng (RHS)

Source: Bloomberg, CIBC



| 14

Eurozone’s Debt Challenges: Fiscal AusteritySlows Growth, Weakens Euro

Source: Bloomberg, IMF, CIBC

0

5

10

15

20

25

Ireland Greece Spain Portugal

2

4

6

8

Refinancing needs for 2011 (L)

Structural budget deficit in 2011 (R)

% of GDP % of GDP



| 15

Canada Has Limited Eurozone Exposure

Source: EuroStat, CIBC

0 10 20 30 40 50 60

Canada

Korea

Japan

India

US

China

Brazil

Russia

UK

% of total exports going to

Eurozone in 2009



| 16

Bond Market Inflow Unprecedented

-2

0

2

4

6

8

88 90 92 94 96 98 00 02 04 06 08 10*

Bonds Only All Securities

Net Foreign Purchases of C dn Securities, % of GDP

* Annualized rate




| 17

CDN Household LeverageReaching US Levels

Source: Statistics Canada, Federal Reserve Board, CIBC

0

50

100

150

200

Q1-90 Q1-94 Q1-98 Q1-02 Q1-06 Q1-10

United States C anada

% of Personal DisposableIncome



| 18

Record High Gap BetweenUS and Canadian Savings Rates

Personal Savings Rate

0

1

2

3

4

5

6

7

04 05 06 07 08 09 10

Canada US

3 qtrs moving avg%

Personal Saving Rate

Gap - US vs. Cda

-10

-8

-6

-4

-2

0

2

4

80 86 92 98 04 10

3 qtrs moving avg%




| 19

Real Household Credit


-0.5

0.0

0.5

1.0

1.52.0

2.5

3.0

3.5

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

q/q % chg

9-yr low



| 20

Wealth Effect Reduced Saving RateOver the Past Decade

Cumulative Spending

Due to Real EstateWealth Effect

0

10

20

30

40

50

60

70

80

97 99 01 03 05 07 09

$ Bn

Saving Rate

3.0

3.2

3.4

3.6

3.84.0

4.2

4.4

4.6

Actual Excluding

the impact

of wealth

effect

Avg 1997-2010%



| 21

Debt Service Ratios: Canada (L), US (R)

Source: Federal Reserve Board, Statistics Canada, CIBC

5

7

9

11

13

15

Q1-

90

Q1-

94

Q1-

98

Q1-

02

Q1-

06

Q1-

10

% of Personal DisposableIncome

5

7

9

11

13

15

Q1-

90

Q1-

94

Q1-

98

Q1-

02

Q1-

06

Q1-

10

% of Personal Disposable

Income



| 22

Relative Performance of theMain Components of Personal Income

Real Labour Income per Capita

95

100

105

110

115

0 4 Q 4

0 5 Q 2

0 5 Q 4

0 6 Q 2

0 6 Q 4

0 7 Q 2

0 7 Q 4

0 8 Q 2

0 8 Q 4

0 9 Q 2

0 9 Q 4

1 0 Q 2

Canada US

2004Q4=100

Source: BEA, Statistics Canada, CIBC



| 23

American Credit Cards Were Issued toLower-Rated Borrowers Than in Canada

0

20

40

C anada: September 2010 US: August 2007

% of total bankcard origination withsub-660 credit score

Source: Equifax Canada, CIBC



| 24

A Closer Look at theCanadian Mortgage Market

Source: CMHC, Ipsos Reid’s CFM, Statistics Canada, CIBC

Number of Households

Mortgage

13.1 million

27.8%

31.2%

Rent

DSR**<40%

28.9%39.9%

No-Mortgage

12.1%

* Loan-to-value ratio** Debt-service ratio

LVR*<80%

LVR*>80%

9.3% 2.8%

DSR**>40%

DSR**<40%

DSR**>40%

30.1% 1.1%



| 25

Personal Bankruptcies

Source: Industry Canada, CIBC

-30

-25

-20

-15

-10

-5

0

5

1015

20

25

30

35

4045

00 02 04 06 08 10

y/y % chg3-mo moving avg

-6.2

-9.2

-15.6

-17.0

-17.0

-19.5

-27.6

-35 -25 -15 -5

Atlantic

BC

Man/Sask

Alberta

Quebec

Canada

Ontario

Dec 08-Nov 09 vs.

Dec 09-Nov 10

%



| 26

Plan to Buy a Residential Propertyin the Next Year

4

5

6

7

8

9

10

2001 02 03 04 05 06 07 08 09 10

Winter

% of All Households Saying "Yes"

actual %

base in each year @ 3,000

Source: Altus Group/Ipsos-Reid, the FIRM Residential Mortgage Survey

Benjamin Tal MBABC Vancouver

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