Breakfast With Dave June 12
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David A. Rosenberg Chief Economist & Strategist [email protected] + 1 416 681 8919
June 12, 2009 Economics Commentary
MARKET MUSINGS & DATA DECIPHERING
Breakfast with Dave WHILE YOU WERE SLEEPING In the markets, we see that equities are mixed to higher, the dollar is bid, commodities are undergoing some profit-taking, but the big news is the rally in government bonds (see more directly below). What happened was that Japan’s Finance Minister openly defended the U.S. debt market by saying that Japan’s faith in Treasuries is “unshakable” and that current yield levels are “attractive”. We’ve been saying the same thing but the key difference is that Japan actually owns $687 billion of U.S. govies (not far off China’s $768 billion cache). What else was interesting was the 49% indirect bidding share at yesterday’s long bond auction — a proxy for foreign central bank participation. This should help allay fears that Russia’s decision to diversify out of Treasuries into IMF bonds is not a case of follow-the-leader. We also saw on the data front a pretty stinky weed — industrial production in Euroland collapsed a record 21.6% YoY in April (consensus was for a 19.8% decline). INTERESTING SESSION YESTERDAY Nice rally in bonds and for a change, a late-day selloff in equities. Besides valuation and sentiment, the rally looks to be getting exhausted as volume wanes and the S&P 500 struggles with a serious breakout of the January 6 intraday high of 943.85. To recap: •
June 1st:
942.87
•
June
2nd:
944.74
•
June 3rd:
931.76
•
June
4th:
942.46
•
June 5th:
940.09
•
June
8th:
939.14
•
June 9th:
942.43
•
June
10th:
939.15
•
June 11th:
944.89
IN THIS ISSUE • Japan’s Finance Minister openly defended the U.S. debt market … we are seeing a rally in bonds this morning • In four of the past five years, we saw Treasury yield peak in June … could we see a bond rally take hold in the second half of the year if this pattern reasserts itself • The rally in the equity market appears to be getting exhausted • No sails in retail sales • For those who doubt the deflation theme, may we suggest that you read the latest Beige book
Remember, the intra-day high on January 6 was 943.85. Notice the pattern here? There isn’t one — it is a flat, trendless market, and the question is that when it breaks, which direction will it be?
Please see important disclosures at the end of this document.
Gluskin Sheff + Associates Inc. is one of Canada’s pre-eminent wealth management firms. Founded in 1984 and focused primarily on high net worth private clients, we are dedicated to meeting the needs of our clients by delivering strong, risk-adjusted returns together with the highest level of personalized client service. For more information or to subscribe to Gluskin Sheff economic reports, visit www.gluskinsheff.com
June 12, 2009 – BREAKFAST WITH DAVE
Part of the market’s dilemma is sentiment — it’s far too bullish at this juncture, which means that buying power could be diminishing. The latest Investors’ Intelligence survey shows bullish sentiment at 47.7% (versus 42.5% last week) and bearish sentiment all the way down to 23.3% (from 25.3%). There are more than twice as many bulls as there are bears. The whole credit collapse and recession must have been a hoax. Even those in the ‘correction camp’ have thrown in the towel and now total just 29.0% (down from 32.2% a week ago). Net inflows into U.S. equity funds have been positive now for 12 consecutive weeks — $2.83 billion alone last week — another sign of exuberance for the contrarians among us.
Part of the market’s dilemma is sentiment; it is far too bullish at this juncture
Meanwhile, the surge in oil prices, to $72/bbl from the lows, is equivalent to a two-percentage point drag from real GDP growth and on top of that we have seen mortgage rates spare 80 basis points in just the past two weeks to 5.8% and against that backdrop the once-promising refinancing wave has not only been snuffed out but has reversed course. A SEASONAL PEAK IN BOND YIELDS? This may sound uncanny, but in four of the past five years, we saw the yield on the 10-year Treasury note hit the peak right in June, and while the experts each time were lamenting about inflation, fiscal policy, growth and beta-assets, not to mention the oft-called-for end of the secular bull market in bonds, the second quarter selloff that culminated in a classic blow off in June proved to be a great buying opportunity. Consider: • June 14th, 2004: 4.89%. The 10-year note closed the year at 4.24%. • June 26th, 2006: 5.25%. The 10-year note closed the year at 4.71%. • June 12th, 2007: 5.26%. The 10-year note closed the year at 4.04%. • June 13th, 2008: 4.27%: The 10-year note closed the year at 2.25%.
But as the data above illustrate, after the June peak in yields, the 10-year note, on average, went on to rally 111 basis points (in 2005, it did look as though the bond market was looking to peak in terms of yield into June, but then we had the volatility amidst the Katrina hurricane, which begat a quick rally and then a huge selloff during the fall). So we should be seeing a nice little bond rally take hold in the second half of the year if this pattern reasserts itself. We also ran some correlations and found that the 10-year note yield has the highest relationships with the ‘carry’ (funds rate) at 88%; inflation (68%); fiscal deficits (46%) and the dollar (but with a positive 60% correlation — in other words, bonds tend to rally when the dollar is weak, not the other way around!). So, if the problem for Treasuries is fiscal deficits and the dollar, then we can rest assured that the far more important drivers are the Fed, which is not raising rates any time soon, and inflation, which is hardly going anywhere on a sustained basis, until the dramatic amount of excess capacity gets mopped up and the debt-strained household balance sheet begins to re-expand. Fiscal policy comes in a distant third in the bond yield-determination process and the dollar has the “wrong” sign as far as the inflation-phobes are concerned. Page 2 of 7
June 12, 2009 – BREAKFAST WITH DAVE
But we still have to shake our heads at how fiscal forecasts are made. Not only in the U.S., but in Canada — where a pledged balanced budget a little more than six months ago turns into a $50 billion+ deficit as auto sector bailouts become the intervention du jour. The U.S., though, really takes the cake. In January 2001, believe it or not, the Congressional Budget Office was forecasting budget surpluses of over $800 billion annually from 2009 to 2012. That was under Bill Clinton. Fast forward to Barrack Obama, and we now have projected deficits of $1.2 trillion on average over those three years. That is cause for pause, even for old bond bulls like us.
The U.S. consumer is again benefiting from huge fiscal stimulus…
NO SAILS IN RETAIL SALES The U.S. consumer is yet again, for the first time in two years, benefiting from huge fiscal stimulus (tax relief and extra social security receipts) and yet the ‘core’ retail sales index that feeds directly into GDP was flat as a pancake in May and down at a 4.0% annual rate over the last three months. We have no idea how that gets translated into a ‘green shoot’ unless we want to compare that to the -10.0% trend at the end of 2008 when the post-Lehman collapse economy went into free-fall.
… yet ‘core’ retail sales, which feeds directly in GDP, come in flat as a pancake in May
Much like the tax rebates last year, the stimulus is having very little effect on consumer spending. The message from the retail sales report is that while spending is not collapsing, it is still very soft and there is still a clear trend away from discretionary towards essentials. • Furniture sales fell 0.4% MoM in May and are down in each of the last three
months — a 14.0% annualized collapse.
• Electronics/appliance stores are also under downward pressure after a brief
January-February countertrend bounce — down 0.5% MoM in May, also down three months running, and sliding at a 33.6% annual rate over that time frame.
• Clothing sales did hook up 0.4% in May but that followed two months of big
declines and left the trend since March running at a -9.0% annual rate.
• General merchandise stores (ie, department stores) posted a 0.2% drop, the
third decline in a row (sound familiar?) and running at a -4.8% annual rate over the last three months.
• Sporting goods/music/books sales fell 0.8% in May and off at a 3.3% annual
rate over the last three months.
• Nonstore retail sales (online sales) fell for the fourth month in a row — down
0.4% in May and the three-month trend is at a -5.6% annual rate.
• Restaurants did turn in a 0.2% gain in May but sales here are on a -2.5%
trend over the last three months.
The positives: Food/beverage stores saw retail sales rise 0.4% in May and have advanced at a 2.7% annual rate over the last three months. Pharma stores jumped 0.7% MoM and up at a ripping 8.0% annual rate over the last three months.
Page 3 of 7
June 12, 2009 – BREAKFAST WITH DAVE
FOR THOSE WHO DOUBT THE DEFLATION THEME … …may we suggest that you read the latest Fed Beige Book. Specifically, these passages: “With few exceptions, the District Banks reported that prices at all stages of production were generally flat or falling. Manufacturers in Philadelphia, Cleveland, Atlanta, Chicago, Dallas, and San Francisco said that overall input prices were stable or declining, although in Kansas City those declines were said to be moderating. In contrast, Richmond noted that prices of raw materials had increased at a quicker pace … Reports from a number of Districts indicated that pricing at retail remains very soft. The Cleveland and Dallas Districts indicated that retail prices were stable; San Francisco said that they were held down by discounting, and Philadelphia noted that steady input costs were holding retail prices in check. In Kansas City, retail prices were declining and expected to soften further. Richmond's retail prices continued to rise, albeit more slowly than in the past.”
Yes, the equity market is on wheels but for all the talk of it being a leading indicator, sometimes it takes months for reality to catch up to stocks
“Labor market conditions continued to be weak across the country, with wages generally remaining flat or falling. Kansas City, Dallas, and San Francisco reported that businesses were cutting or freezing wages, and Boston cited wage freezes in the retail sector. The Chicago District reported that the downward pressure on wages was abating somewhat there, as firms turned instead to cutting hours or jobs outright to contain labor costs. Firms in the Atlanta and Dallas Districts also reported having to cut hours to reduce costs. In addition, the Boston and San Francisco Districts also mentioned employers' plans to scale back employee benefit programs.” After three years of relentless fiscal largesse, two years of massive interest rate cuts and a year of monumental balance sheet expansion at the Federal Reserve, this is the best we can show for it? Wages and prices “flat or falling”? The monetary base that Arthur Laffer was lamenting in Wednesday’s Wall Street Journal op-ed has been ballooning since last August, and if anything, the deflationary rhetoric in the Beige Book (this one went to early June) has become even louder. The Fed has been boosting the money supply to meet burgeoning demands for cash at all levels of the economy, and it surprised us to see Mr. Laffer’s claim that money demand was subsiding because if that were true, would one and three-month Treasury bill yields still be trading at 7bps and 16 bps respectively? Those are normal levels of T-bill rates that characterize a normal demand for cash? We fail to see it. Yes, yes, the equity market is on wheels but to tell you the truth, for all the talk of it being a leading indicator, sometimes it takes months for reality to catch up to stocks. After all, it was the same stock market in 2002 that took 10 months to figure out the recession was over. It was the same stock market that took 10 months in 2007 to realize that yes indeed, New Century Financial did close its doors and we were in fact in the throes of a major credit collapse.
Page 4 of 7
June 12, 2009 – BREAKFAST WITH DAVE
The market was so forward-looking that it gave investors less than two months warning in October 2007 that the worst recession in 70 years was on its way in less than two months. LEADING INDICATOR, INDEED Global Trade Flows Reversing Course: After a couple of ‘green shoots’ after global trade finance was revived in the opening months of the year, it seems as though everyone’s exports are taking it on the chin again. The latest data on China’s outbound shipments showed renewed hints of slowing. Same for Korea. German exports plunged 4.8% in April and are off 28.7% from a year ago. Canadian export volumes sank 5.1% in April — and this transcended the problems in the auto sector — on top of 2.3% slide in March, taking Canada into a deficit position of $178 million in what is a vivid sign of a hugely overvalued loonie. U.S. export volumes also dropped 4.3% in April after a 0.5% decline in March, taking the YoY trend down to a new all-time low of -20.4% from -13.8% in March.
Page 5 of 7
June 12, 2009 – BREAKFAST WITH DAVE
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Page 6 of 7
June 12, 2009 – BREAKFAST WITH DAVE
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Page 7 of 7
June 12, 2009 Economics Commentary
MARKET MUSINGS & DATA DECIPHERING
Breakfast with Dave WHILE YOU WERE SLEEPING In the markets, we see that equities are mixed to higher, the dollar is bid, commodities are undergoing some profit-taking, but the big news is the rally in government bonds (see more directly below). What happened was that Japan’s Finance Minister openly defended the U.S. debt market by saying that Japan’s faith in Treasuries is “unshakable” and that current yield levels are “attractive”. We’ve been saying the same thing but the key difference is that Japan actually owns $687 billion of U.S. govies (not far off China’s $768 billion cache). What else was interesting was the 49% indirect bidding share at yesterday’s long bond auction — a proxy for foreign central bank participation. This should help allay fears that Russia’s decision to diversify out of Treasuries into IMF bonds is not a case of follow-the-leader. We also saw on the data front a pretty stinky weed — industrial production in Euroland collapsed a record 21.6% YoY in April (consensus was for a 19.8% decline). INTERESTING SESSION YESTERDAY Nice rally in bonds and for a change, a late-day selloff in equities. Besides valuation and sentiment, the rally looks to be getting exhausted as volume wanes and the S&P 500 struggles with a serious breakout of the January 6 intraday high of 943.85. To recap: •
June 1st:
942.87
•
June
2nd:
944.74
•
June 3rd:
931.76
•
June
4th:
942.46
•
June 5th:
940.09
•
June
8th:
939.14
•
June 9th:
942.43
•
June
10th:
939.15
•
June 11th:
944.89
IN THIS ISSUE • Japan’s Finance Minister openly defended the U.S. debt market … we are seeing a rally in bonds this morning • In four of the past five years, we saw Treasury yield peak in June … could we see a bond rally take hold in the second half of the year if this pattern reasserts itself • The rally in the equity market appears to be getting exhausted • No sails in retail sales • For those who doubt the deflation theme, may we suggest that you read the latest Beige book
Remember, the intra-day high on January 6 was 943.85. Notice the pattern here? There isn’t one — it is a flat, trendless market, and the question is that when it breaks, which direction will it be?
Please see important disclosures at the end of this document.
Gluskin Sheff + Associates Inc. is one of Canada’s pre-eminent wealth management firms. Founded in 1984 and focused primarily on high net worth private clients, we are dedicated to meeting the needs of our clients by delivering strong, risk-adjusted returns together with the highest level of personalized client service. For more information or to subscribe to Gluskin Sheff economic reports, visit www.gluskinsheff.com
June 12, 2009 – BREAKFAST WITH DAVE
Part of the market’s dilemma is sentiment — it’s far too bullish at this juncture, which means that buying power could be diminishing. The latest Investors’ Intelligence survey shows bullish sentiment at 47.7% (versus 42.5% last week) and bearish sentiment all the way down to 23.3% (from 25.3%). There are more than twice as many bulls as there are bears. The whole credit collapse and recession must have been a hoax. Even those in the ‘correction camp’ have thrown in the towel and now total just 29.0% (down from 32.2% a week ago). Net inflows into U.S. equity funds have been positive now for 12 consecutive weeks — $2.83 billion alone last week — another sign of exuberance for the contrarians among us.
Part of the market’s dilemma is sentiment; it is far too bullish at this juncture
Meanwhile, the surge in oil prices, to $72/bbl from the lows, is equivalent to a two-percentage point drag from real GDP growth and on top of that we have seen mortgage rates spare 80 basis points in just the past two weeks to 5.8% and against that backdrop the once-promising refinancing wave has not only been snuffed out but has reversed course. A SEASONAL PEAK IN BOND YIELDS? This may sound uncanny, but in four of the past five years, we saw the yield on the 10-year Treasury note hit the peak right in June, and while the experts each time were lamenting about inflation, fiscal policy, growth and beta-assets, not to mention the oft-called-for end of the secular bull market in bonds, the second quarter selloff that culminated in a classic blow off in June proved to be a great buying opportunity. Consider: • June 14th, 2004: 4.89%. The 10-year note closed the year at 4.24%. • June 26th, 2006: 5.25%. The 10-year note closed the year at 4.71%. • June 12th, 2007: 5.26%. The 10-year note closed the year at 4.04%. • June 13th, 2008: 4.27%: The 10-year note closed the year at 2.25%.
But as the data above illustrate, after the June peak in yields, the 10-year note, on average, went on to rally 111 basis points (in 2005, it did look as though the bond market was looking to peak in terms of yield into June, but then we had the volatility amidst the Katrina hurricane, which begat a quick rally and then a huge selloff during the fall). So we should be seeing a nice little bond rally take hold in the second half of the year if this pattern reasserts itself. We also ran some correlations and found that the 10-year note yield has the highest relationships with the ‘carry’ (funds rate) at 88%; inflation (68%); fiscal deficits (46%) and the dollar (but with a positive 60% correlation — in other words, bonds tend to rally when the dollar is weak, not the other way around!). So, if the problem for Treasuries is fiscal deficits and the dollar, then we can rest assured that the far more important drivers are the Fed, which is not raising rates any time soon, and inflation, which is hardly going anywhere on a sustained basis, until the dramatic amount of excess capacity gets mopped up and the debt-strained household balance sheet begins to re-expand. Fiscal policy comes in a distant third in the bond yield-determination process and the dollar has the “wrong” sign as far as the inflation-phobes are concerned. Page 2 of 7
June 12, 2009 – BREAKFAST WITH DAVE
But we still have to shake our heads at how fiscal forecasts are made. Not only in the U.S., but in Canada — where a pledged balanced budget a little more than six months ago turns into a $50 billion+ deficit as auto sector bailouts become the intervention du jour. The U.S., though, really takes the cake. In January 2001, believe it or not, the Congressional Budget Office was forecasting budget surpluses of over $800 billion annually from 2009 to 2012. That was under Bill Clinton. Fast forward to Barrack Obama, and we now have projected deficits of $1.2 trillion on average over those three years. That is cause for pause, even for old bond bulls like us.
The U.S. consumer is again benefiting from huge fiscal stimulus…
NO SAILS IN RETAIL SALES The U.S. consumer is yet again, for the first time in two years, benefiting from huge fiscal stimulus (tax relief and extra social security receipts) and yet the ‘core’ retail sales index that feeds directly into GDP was flat as a pancake in May and down at a 4.0% annual rate over the last three months. We have no idea how that gets translated into a ‘green shoot’ unless we want to compare that to the -10.0% trend at the end of 2008 when the post-Lehman collapse economy went into free-fall.
… yet ‘core’ retail sales, which feeds directly in GDP, come in flat as a pancake in May
Much like the tax rebates last year, the stimulus is having very little effect on consumer spending. The message from the retail sales report is that while spending is not collapsing, it is still very soft and there is still a clear trend away from discretionary towards essentials. • Furniture sales fell 0.4% MoM in May and are down in each of the last three
months — a 14.0% annualized collapse.
• Electronics/appliance stores are also under downward pressure after a brief
January-February countertrend bounce — down 0.5% MoM in May, also down three months running, and sliding at a 33.6% annual rate over that time frame.
• Clothing sales did hook up 0.4% in May but that followed two months of big
declines and left the trend since March running at a -9.0% annual rate.
• General merchandise stores (ie, department stores) posted a 0.2% drop, the
third decline in a row (sound familiar?) and running at a -4.8% annual rate over the last three months.
• Sporting goods/music/books sales fell 0.8% in May and off at a 3.3% annual
rate over the last three months.
• Nonstore retail sales (online sales) fell for the fourth month in a row — down
0.4% in May and the three-month trend is at a -5.6% annual rate.
• Restaurants did turn in a 0.2% gain in May but sales here are on a -2.5%
trend over the last three months.
The positives: Food/beverage stores saw retail sales rise 0.4% in May and have advanced at a 2.7% annual rate over the last three months. Pharma stores jumped 0.7% MoM and up at a ripping 8.0% annual rate over the last three months.
Page 3 of 7
June 12, 2009 – BREAKFAST WITH DAVE
FOR THOSE WHO DOUBT THE DEFLATION THEME … …may we suggest that you read the latest Fed Beige Book. Specifically, these passages: “With few exceptions, the District Banks reported that prices at all stages of production were generally flat or falling. Manufacturers in Philadelphia, Cleveland, Atlanta, Chicago, Dallas, and San Francisco said that overall input prices were stable or declining, although in Kansas City those declines were said to be moderating. In contrast, Richmond noted that prices of raw materials had increased at a quicker pace … Reports from a number of Districts indicated that pricing at retail remains very soft. The Cleveland and Dallas Districts indicated that retail prices were stable; San Francisco said that they were held down by discounting, and Philadelphia noted that steady input costs were holding retail prices in check. In Kansas City, retail prices were declining and expected to soften further. Richmond's retail prices continued to rise, albeit more slowly than in the past.”
Yes, the equity market is on wheels but for all the talk of it being a leading indicator, sometimes it takes months for reality to catch up to stocks
“Labor market conditions continued to be weak across the country, with wages generally remaining flat or falling. Kansas City, Dallas, and San Francisco reported that businesses were cutting or freezing wages, and Boston cited wage freezes in the retail sector. The Chicago District reported that the downward pressure on wages was abating somewhat there, as firms turned instead to cutting hours or jobs outright to contain labor costs. Firms in the Atlanta and Dallas Districts also reported having to cut hours to reduce costs. In addition, the Boston and San Francisco Districts also mentioned employers' plans to scale back employee benefit programs.” After three years of relentless fiscal largesse, two years of massive interest rate cuts and a year of monumental balance sheet expansion at the Federal Reserve, this is the best we can show for it? Wages and prices “flat or falling”? The monetary base that Arthur Laffer was lamenting in Wednesday’s Wall Street Journal op-ed has been ballooning since last August, and if anything, the deflationary rhetoric in the Beige Book (this one went to early June) has become even louder. The Fed has been boosting the money supply to meet burgeoning demands for cash at all levels of the economy, and it surprised us to see Mr. Laffer’s claim that money demand was subsiding because if that were true, would one and three-month Treasury bill yields still be trading at 7bps and 16 bps respectively? Those are normal levels of T-bill rates that characterize a normal demand for cash? We fail to see it. Yes, yes, the equity market is on wheels but to tell you the truth, for all the talk of it being a leading indicator, sometimes it takes months for reality to catch up to stocks. After all, it was the same stock market in 2002 that took 10 months to figure out the recession was over. It was the same stock market that took 10 months in 2007 to realize that yes indeed, New Century Financial did close its doors and we were in fact in the throes of a major credit collapse.
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June 12, 2009 – BREAKFAST WITH DAVE
The market was so forward-looking that it gave investors less than two months warning in October 2007 that the worst recession in 70 years was on its way in less than two months. LEADING INDICATOR, INDEED Global Trade Flows Reversing Course: After a couple of ‘green shoots’ after global trade finance was revived in the opening months of the year, it seems as though everyone’s exports are taking it on the chin again. The latest data on China’s outbound shipments showed renewed hints of slowing. Same for Korea. German exports plunged 4.8% in April and are off 28.7% from a year ago. Canadian export volumes sank 5.1% in April — and this transcended the problems in the auto sector — on top of 2.3% slide in March, taking Canada into a deficit position of $178 million in what is a vivid sign of a hugely overvalued loonie. U.S. export volumes also dropped 4.3% in April after a 0.5% decline in March, taking the YoY trend down to a new all-time low of -20.4% from -13.8% in March.
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June 12, 2009 – BREAKFAST WITH DAVE
ABOUT US
Gluskin Sheff at a Glance Our mission is to be the pre-eminent wealth management firm in Canada serving high net worth investors PRIVATE CLIENT FOCUS
PERFORMANCE
Gluskin Sheff is an independent wealth management firm focused primarily on high net worth private clients, including entrepreneurs, professionals, family trusts, private charitable foundations and estates. We also benefit from business relationships with a number of institutional investors.
Gluskin Sheff has a 24-year track record of solid investment performance. Clients investing in our GS+A Value Portfolio from inception (January 1, 1991) have achieved a total net return of 688.6% to April 30, 2009, outperforming the 329.8% return of the S&P/TSX Total Return Index over the same period. Our other longer-term investment models also have impressive performance records.
OUR PEOPLE At Gluskin Sheff, having the best people allows us to deliver strong investment performance and the highest level of client service. Our professionals possess the experience, dedication and talent to meet the individual needs of our clients. RISK MANAGEMENT Our unique dual risk management approach focuses on meeting the needs of our clients by preserving their capital, managing risk and delivering strong longterm investment returns through various economic and market cycles.
CLIENT SERVICE At Gluskin Sheff, our clients are our most important asset. Serving them is a core value maintained throughout the Company. Clients receive individual attention and investment advice customized to their specific investment objectives and risk profile. INVESTMENT PHILOSOPHY Our investment decisions are based on “bottom-up” research that looks for companies with a history of long-term growth and stability, a proven track record, shareholder-minded management and a share price below our estimate of intrinsic value.
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June 12, 2009 – BREAKFAST WITH DAVE
IMPORTANT DISCLOSURES Copyright 2009 Gluskin Sheff + Associates Inc. (“Gluskin Sheff”). All rights reserved. This report is prepared for the use of Gluskin Sheff clients and subscribers to this report and may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of Gluskin Sheff. Gluskin Sheff reports are distributed simultaneously to internal and client websites and other portals by Gluskin Sheff and are not publicly available materials. Any unauthorized use or disclosure is prohibited.
and, in some cases, investors may lose their entire principal investment. Past performance is not necessarily a guide to future performance. Levels and basis for taxation may change.
Gluskin Sheff may own, buy, or sell, on behalf of its clients, securities of issuers that may be discussed in or impacted by this report. As a result, readers should be aware that Gluskin Sheff may have a conflict of interest that could affect the objectivity of this report. This report should not be regarded by recipients as a substitute for the exercise of their own judgment and readers are encouraged to seek independent, third-party research on any companies covered in or impacted by this report.
Materials prepared by Gluskin Sheff research personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Gluskin Sheff. To the extent this report discusses any legal proceeding or issues, it has not been prepared as nor is it intended to express any legal conclusion, opinion or advice. Investors should consult their own legal advisers as to issues of law relating to the subject matter of this report. Gluskin Sheff research personnel’s knowledge of legal proceedings in which any Gluskin Sheff entity and/or its directors, officers and employees may be plaintiffs, defendants, co-defendants or coplaintiffs with or involving companies mentioned in this report is based on public information. Facts and views presented in this material that relate to any such proceedings have not been reviewed by, discussed with, and may not reflect information known to, professionals in other business areas of Gluskin Sheff in connection with the legal proceedings or matters relevant to such proceedings.
Individuals identified as economists do not function as research analysts under U.S. law and reports prepared by them are not research reports under applicable U.S. rules and regulations. Macroeconomic analysis is considered investment research for purposes of distribution in the U.K. under the rules of the Financial Services Authority. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other financial instrument or any derivative related to such securities or instruments (e.g., options, futures, warrants, and contracts for differences). This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Any decision to purchase or subscribe for securities in any offering must be based solely on existing public information on such security or the information in the prospectus or other offering document issued in connection with such offering, and not on this report. Securities and other financial instruments discussed in this report, or recommended by Gluskin Sheff, are not insured by the Federal Deposit Insurance Corporation and are not deposits or other obligations of any insured depository institution. Investments in general and, derivatives, in particular, involve numerous risks, including, among others, market risk, counterparty default risk and liquidity risk. No security, financial instrument or derivative is suitable for all investors. In some cases, securities and other financial instruments may be difficult to value or sell and reliable information about the value or risks related to the security or financial instrument may be difficult to obtain. Investors should note that income from such securities and other financial instruments, if any, may fluctuate and that price or value of such securities and instruments may rise or fall
Foreign currency rates of exchange may adversely affect the value, price or income of any security or financial instrument mentioned in this report. Investors in such securities and instruments effectively assume currency risk.
Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice or to be used by anyone to provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional. The information herein (other than disclosure information relating to Gluskin Sheff and its affiliates) was obtained from various sources and Gluskin Sheff does not guarantee its accuracy. This report may contain links to third-party websites. Gluskin Sheff is not responsible for the content of any third-party website or any linked content contained in a third-party website. Content contained on such third-party websites is not part of this report and is not incorporated by reference into this report. The inclusion of a link in this report does not imply any endorsement by or any affiliation with Gluskin Sheff. All opinions, projections and estimates constitute the judgment of the author as of the date of the report and are subject to change without notice. Prices also are subject to change without notice. Gluskin Sheff is under no obligation to update this report and readers should therefore assume that Gluskin Sheff will not update any fact, circumstance or opinion contained in this report. Neither Gluskin Sheff nor any director, officer or employee of Gluskin Sheff accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.
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