The Week at a Glance April 10th, 2015 THE WEEK IN NUMBERS (April 6th – April 10th) Private Wealth Management Research Services Change Week % Change Week Dow Jones Industrial 18,038.50 275.26 1.55% 1.21% 11.55% 15.8 S&P 500 2,099.84 32.88 1.59% 1.99% 14.55% 18.5 Nasdaq Composite 4,992.70 105.77 2.16% 5.42% 23.15% 29.4 15,389.09 362.47 2.41% 5.17% 7.56% 20.1 3,816.76 101.49 2.73% 21.30% 21.06% 22.7 FTSE 100 (UK) 7,089.77 256.31 3.75% 7.98% 6.74% 24.3 DAX (Germany) 12,374.73 407.34 3.40% 26.20% 30.89% 20.6 Nikkei 225 (Japan) 19,907.63 472.55 2.43% 14.08% 39.21% 22.5 Hang Seng 27,272.39 1,996.75 7.90% 15.54% 17.62% 11.5 MSCI World 1,771.86 21.60 1.23% 3.64% 6.99% 18.4 MSCI EAFE 1,895.75 22.88 1.22% 6.81% -1.25% 17.8 Last price Change Week % Change Week S&P TSX Consumer Discretionary 2,027 25.84 1.29% 7.78% 30.79% 25.8 S&P TSX Consumer Staples 4,004 37.66 0.95% 6.33% 47.90% 33.0 S&P TSX Energy 2,763 75.97 2.83% 2.72% -14.71% 22.7 S&P TSX Financials 2,325 51.85 2.28% 1.35% 9.92% 13.2 S&P TSX Health Care 3,054 128.63 4.40% 50.76% 89.46% 80.3 S&P TSX Industrials 2,472 43.49 1.79% 2.49% 23.10% 24.0 S&P TSX Info Tech. 224 12.46 5.89% 16.01% 49.44% 37.9 S&P TSX Materials 2,121 45.61 2.20% 7.22% -5.78% 46.8 S&P TSX Telecom Services 1,295 22.68 1.78% 1.55% 10.16% 16.7 S&P TSX Utilities 2,041 16.93 0.84% 3.98% 6.27% 35.1 COMMODITIES Last price Change Week % Change Week Oil-WTI futures (US$/Barrels) Natural gas futures (US$/mcf) Gold Spot (US$/OZ) CRB Index $51.25 $2.54 $1,206.01 217.19 2.11 -0.17 3.14 1.10 4.29% -6.30% 0.26% 0.51% Curr. Net Change -0.0070 -0.0374 -0.0274 -0.0001 % Change Week -0.87% -3.41% -1.84% -1.04% Contact your Investment S&P/TSX Composite Advisor for more information Dow Jones Euro Stoxx 50 regarding this document. S&P TSX SECTORS CURRENCIES in US$ Cdn$ Euro Pound Yen Source: Bloomberg, NBF Research Last price 0.7940 1.0595 1.4646 0.0083 % Change %Change 1 YTD Year Trailing P/E Last price INDEX % Change %Change 1 YTD Year % Change %Change 1 YTD Year -3.79% -12.01% 1.79% -5.55% -50.44% -45.39% -8.56% -29.98% % Change %Change 1 YTD Year -7.73% -13.17% -12.42% -23.70% -5.98% -12.74% -0.44% -15.54% Trailing P/E NBF 2015E $53.25 $2.80 $1,250.00 NA NBF 4Q 2015E 0.79 1.08 1.50 0.008 Approximate time: 11:30 am For NBF Disclosures, please visit URL: http://www.nbcn.ca/contactus/disclosures.html The Week at a Glance THE WEEK IN NUMBERS FIXED INCOME (April 6th – April 10th) NUMBERS CANADIAN YIELD CURVE Last yield 0.75% 0.58% 0.51% 0.76% 1.34% 2.00% CDA Overnight 3 Month T-Bill 2 Yr Canada Government 5 Yr Canada Government 10 Yr Canada Government 30 Yr Canada Government CANADIAN BOND - TOTAL RETURN DEX Universe Bond Index DEX Short Term Bond Index DEX Mid Term Bond Index DEX Long Term Bond Index Change Week Change YTD in bps in bps 0.0 -25 0.4 -33 1.3 -51 2.8 -58 2.4 -45 4.4 -33 Change Week US YIELD CURVE Last yield 0.25% 0.02% 0.54% 1.37% 1.92% 2.55% U.S. FED Funds 3 Month T-Bill 2 Yr US Bonds 5 Yr US Bonds 10 Yr US Bonds 30 Yr US Bonds -0.39% -0.04% -0.23% -0.95% Change Week Change YTD in bps in bps 0.0 0 1.0 -2 6.4 -12 12.0 -28 8.2 -25 6.9 -20 Change One Year in bps -25 -33 -56 -95 -113 -99 Change Y-T-D 4.05% 1.92% 4.36% 6.73% Change One Year in bps 0 -1 18 -25 -77 -102 CURRENT YIELD CURVE 4.50% 4.00% 3.50% yield 3.00% U.S 2.50% 2.00% 1.50% CANADA 1.00% 0.50% 0.00% 0 5 10 15 20 25 30 Term CANADIAN 5YR SPREADS CAD Housing Trust AAA Province Quebec Province Ontario Canada Corp BBB Canada Corp Bank AA CDN & US 10 YR SPREADS Province Quebec Province Ontario Canada Corp BBB US Finance AA US Corp BBB Sources: Bloomberg & PC Bonds Last spread in basis points (bp) 32 39 51 147 90 Last spread in basis points (bp) 66 75 179 77 163 Change Week Change YTD in bps in bps -0.6 -1.4 0.4 0.2 0.8 -1 -9 -6 2 0 Change Week Change YTD in bps in bps 0.1 0.3 -0.4 0.2 -3.1 -23 -16 -3 0 -4 Change One Year in bps 0 1 -2 33 14 Change One Year in bps -25 -10 6 4 18 The Week at a Glance NBF Economic « & Strategy Group WEEKLY ECONOMIC WATCH - WEEK IN REVIEW CANADA – Employment jumped 28.7K in March according to the Labour Force Survey, easily topping consensus which was looking for no change. The impact of the job gains was offset, however, by a one-tick increase in the participation rate to 65.9%, leaving the jobless rate unchanged at 6.8%. The increase in March employment was due to government (+26.5K) and the private sector (+19.3K) which more than offset declines in self-employment (-17K). But the job gains were entirely part-time (+56.8K), which offset declines in full-time positions (-28.2K). Hours worked fell 0.3% as a result. The goods sector cut 16.5K jobs with declines in manufacturing, agriculture, utilities and construction offsetting surprising gains in resources. Services sector employment rose 45.3K with decent gains in health care, education, finance/insurance/real estate among others, more than offsetting declines in public administration. All told, the employment report was much better than consensus expectations. Unexpected resilience in energy-rich provinces like Alberta and Saskatchewan complemented expected gains in Central Canada. That said, not all is rosy. All of the job gains in March were part-time. The decline in employment in cyclical sectors like manufacturing and construction is also disappointing. Moreover, job creation was tilted towards government, with the private sector not making up for the prior month’s loss. Hours worked grew just 0.3% annualized in Q1, the lowest in a year. That’s consistent with a sharp moderation in GDP growth in the quarter. Housing starts jumped 25.4% to 189.7K in March (from a downwardly revised 151.2K in the prior month). That was well above the 175K expected by consensus. The increase in starts was due to gains in urban areas (+28.1%) which dwarfed the 3.5% drop in rural areas. The increase in urban starts was driven by multis (+48.2%), which more than offset declines for single family homes (-3.4%). On a regional basis in urban areas, there were gains in Ontario (+49.3%), BC (+40.3%), Quebec (+15.8%) and even the Prairies (+12.9%) which offset declines in Atlantic Canada (12.6%) Building permits fell 0.9% in dollar terms in February, as a 5.4% decrease in the value of nonresidential permits dwarfed the 1.5% increase for the residential sector. In real terms, residential permits rose 2.7% due to a 9.4% jump for multis, which more than offset the 6.6% decrease for singles, the latter falling to 1-year low. The Spring edition of the Bank of Canada's Business Outlook Survey (conducted between February 17th and March 12th) showed that the business outlook weakened significantly since the winter. While firms reported an improvement in sales growth over the past 12 months, they were less optimistic about sales over the next year, the corresponding balance of opinion sinking to just 4, the lowest since 2012. Intentions to invest in machinery and equipment remained positive, but the related balance of opinion dropped to 4, the lowest since 2009. Capacity pressures rose slightly from the Winter survey, with 43% of respondents stating either some or significant difficulty in meeting an unexpected increase in demand. But the proportion of respondents facing labour shortages fell to 21% (from 22% in the last survey), and that’s reflected in hiring intentions which were much weaker than in the winter, with the related balance of opinion falling to 20, the lowest since 2009. Inflation expectations remained low, with roughly two-thirds of firms expecting inflation to be in the bottom half of the BoC’s 1-3% target range. The Bank of Canada's Senior Loan Officer's survey for Q1 (conducted between March 9th and 13th) showed lending conditions tightening from the prior quarter, with the corresponding index moving to 6.7 i.e. the first positive (i.e. tightening conditions) since 2009Q3. With price conditions remaining unchanged, the overall tightening was entirely due to non-price conditions for corporate and commercial borrowers, particularly in the oil and gas sector. The survey reported that lending conditions remained “highly accommodative” for other sectors. Overall, while the Spring survey showed the lowest balance of opinion with regards to hiring and investment since the last recession, most of the weakness is due to the energy patch. In fact, outside of the energy patch, firms are reportedly benefitting from improving U.S. demand and the more competitive Canadian dollar. The BoC says that investment intentions increased and are more widespread in Central Canada and in the services sector. The Week at a Glance NBF Economic « & Strategy Group UNITED STATES – The non-manufacturing ISM index fell to 56.5 in March, from an unrevised 56.9 in the prior month. The business activity index fell again to reach 57.5, a multimonth low. However, both employment and new orders subindices rose in the month. More importantly, all of the major sub-indices remained well in expansion territory, i.e. above 50. Weekly jobless claims data for the week of April 4th showed initial claims rising to 281K (from 267K in the prior week). The more reliable 4-week moving average fell to 282K. Continuing claims for the prior week fell 23K to 2.3 million. The rate of layoffs, based on the 4-week moving average initial claims, is the lowest since mid-2000. That suggests the labour market remains in good shape despite the soft non farm payrolls for March. Hiring potential is also good considering the 5.1 million job openings according to the latest JOLTS report and the expected rebound for GDP growth in Q2. All told, non farm payrolls could return to the 200K+ territory sooner rather than later. The Fed minutes of last March’s meeting were released this week. The downgrades to participants’ forecasts for real GDP were mostly because of the stronger dollar. But the Fed remains confident the economy will grow above potential both this year and next. Participants saw broad-based improvements in the labour market, although many thought that some degree of slack remained, as evidenced by the declining participation rate, the wide measure of the jobless rate, and tepid wage growth. However, a few participants noted that the absence of wage growth may not be a useful yardstick for evaluating slack because of uncertainty regarding trend productivity and long lags between declining jobless rates and the wage response. They added that there may also be compositional changes that could be masking underlying wage pressures. The decision to remove the word “patient” from the forward guidance was supported by the large majority of the participants. Yet there was no consensus about the timing of the rate liftoff. “Several” participants thought that normalization should begin in June, while others, concerned about the negative impact of the strong dollar and low energy prices on inflation, preferred delaying rate hikes to later this year. A couple even thought that rate hikes should be delayed to 2016. Participants thought that it would be helpful to convey to the public a “data-dependent approach” to monetary policy. They thought that normalization could be initiated prior to seeing increases in core or wage inflation. For example, a further improvement in the labour market, a stabilization of energy prices, or a leveling of the dollar would make the FOMC more confident that the 2% inflation target would be achieved. World – The Bank of Japan left monetary policy unchanged at its meeting. With an 8 to 1 majority vote, the central bank decided to continue purchasing Japanese government bonds at a pace of around ¥ 80 trillion/year. The Week at a Glance IN THE NEWS - U.S. and Canadian News th Monday April 6 , 2015 - - - - Expansion at U.S. Service Industries Reassuring Sign for Economy The 56.5 reading in the Institute for Supply Management’s non-manufacturing index was in line with last year’s average and little changed from the prior month’s 56.9. A gauge above 50 shows growth and the March reading matched the median estimate of economists. Dudley Says Pace of Rate Increases Is Likely to Be ‘Shallow’ Pending home sales in February reached their highest level since June 2013. The National Association of Realtors said its pending-home-sales index rose 3.1% to 106.9 after a downward revision to January's numbers. The index is up 12% from February 2012 levels. Bristol to Buy Stake in UniQure Bristol-Myers Squibb Co. agreed to acquire a stake in UniQure NV, maker of the first $1 million drug, in a bet on the promise of gene therapy. Ontario Teachers’ exploring sale or IPO of Alliance Laundry Canada’s third-largest pension plan expects to seek about $250-million in a U.S. IPO, and values the business at about $2-billion. th Wednesday April 8 , 2015 - - - - th - th - - - - Job Openings in U.S. at 14-Year High Signal Companies Upbeat The number of positions waiting to be filled climbed by 168,000 to 5.13 million, the most since January 2001. Dismissals dropped to the lowest level since November 2013. Consumer Credit in U.S. Increases on Jump in NonRevolving Debt The $15.5 billion advance in household credit followed a $10.8 billion gain in January that was smaller than initially reported. A surge in non-revolving loans such as those for automobile purchases and education more than offset the biggest drop in revolving credit since November 2010. Permira, CPPIB to Buy Informatica in Biggest LBO of the Year Private equity firm Permira and the Canada Pension Plan Investment Board agreed to buy Informatica Corp. in a $5.3 billion transaction, the largest leveraged buyout this year. Berkshire to Acquire $560 Million Axalta Stake From Carlyle Berkshire Hathaway Inc. agreed to buy $560 million of stock in Axalta Coating Systems Ltd. from affiliates of Carlyle Group LP as Warren Buffett’s company expands its bets on industrial companies. FedEx Bids $4.8 Billion for TNT FedEx Corp. agreed to buy Dutch parcel-delivery company TNT Express NV for 4.4 billion euros. Click on title to view the full story. Low bar set for Fed rate hike, minutes show The Federal Reserve may be willing to make its first interest rate hike since the financial crisis as early as June, according to minutes from the March meeting. Oil slumps as inventories continue to build U.S. Energy Information Administration said commercial crude inventories, excluding the Strategic Petroleum Reserve, jumped by 10.9 million barrels to 482.4 million in the week ended April 3, far exceeding the 3.2 million barrel rise forecast. Oliver confirms Tories' plan for balanced-budget legislation Finance Minister Joe Oliver’s speech to a Toronto business audience confirmed the Conservative government’s plans to bring in balanced budget legislation. Mylan Offers to Buy Drugmaker Perrigo for $28.9 Billion Mylan NV offered to buy fellow drugmaker Perrigo Co. for $28.9 billion, a deal that would create a powerhouse for generic medicine. Thursday April 9 , 2015 Tuesday April 7 , 2015 - Toronto home prices surge 10% as sales activity heats up Average Toronto home prices jumped 10 per cent in March, driven by a sharp rise in the price of detached homes to well over $1-million in the city. - - Jobless Claims in U.S. Over Past Month Dropped to Lowest in Almost 15 Years An average 282,250 workers a week applied for jobless benefits in the month ended April 4, the fewest since June 2000. Another report showed consumer confidence rose last week to an almost eight-year high. Building permits fall in February as new home prices rise The value of Canadian permits issued in the month fell 0.9 percent to $6.11 billion, short of economists' forecasts for a rebound of 5 percent. Brookfield Asset Management buys energy assets in Australia Apache Corp. will exit Australia’s energy industry, selling its assets there to a group of private equity funds managed by Macquarie Capital Group Ltd. and Brookfield Asset Management Inc. for $2.1 billion US. th Friday April 10 , 2015 - - GE to Exit Most Finance as $26.5 Billion of Real Estate Sold General Electric Co. plans to exit the bulk of its lending business, including a $26.5 billion sale of most of its real estate, as Chief Executive Officer Jeffrey Immelt refocuses the company on its industrial roots. Canada Posts Unexpected Jobs Gain in March Employment rose by 28,700 following a loss of 1,000 in February, while the March jobless rate remained at 6.8 percent. Economists projected the jobless rate would rise to 6.9 percent and that employment would be unchanged. The Week at a Glance IN THE NEWS - International News th Monday April 6 , 2015 - - - Greek Plans to Unlock Aid Need Lots of Work The 15-page draft, which was discussed Sunday in Brussels, requires more information and details and was a long way from serving as the basis of a deal. Cyprus to scrap last bailout capital controls Cyprus will scrap the last of the capital controls imposed in the country two years ago when it signed up for a 10 billion euro bailout, its president said Friday. India service activity slows in March The seasonally-adjusted Service Sector Business Activity Index fell to 53.0 from 53.9 in February. The reading marked the eleventh consecutive month of expansion in activity. - th Thursday April 9 , 2015 - th Tuesday April 7 , 2015 - - - - IMF Urges Policies to Boost Demand as Global Recovery Downshifts The world economy’s growth potential won’t soon return to levels seen before 2008 financial crisis as business investment slumps, raising the urgency for officials to find ways to stimulate demand. Russia Rules Out QE, Vows Rate Cuts If Inflation Risks Wane The central bank will continue to reduce its benchmark rate, now at 14 percent, if inflation risks continue to abate, Nabiullina said at the annual meeting of the Association of Russian Banks. The association, which counts 80 percent of the country’s lenders as members, had proposed a quantitative easing program to help the economy. India's central bank keeps key lending rate steady Reserve Bank of India head, Raghuram Rajan, left the bank's overnight lending rate at 7.5%. Nine out of 11 analysts had forecast that he wouldn't change rates. Australia keeps interest rates steady at 2.25% Australia's central bank kept interest rates on hold Tuesday despite expectations for a cut, which pushes back forecasts for the next downward move to May. th Wednesday April 8 , 2015 - - Shell Will Buy BG Group for $70 Billion in Cash, Shares Royal Dutch Shell Plc agreed to buy BG Group Plc for about 47 billion pounds (US$70 billion), making Europe’s largest oil company the pre-eminent player in global natural gas and adding fields in Brazil. German February manufacturing orders fall In adjusted terms, industrial orders were down 0.9% in February from the previous month, disappointing expectations of a 1.5% increase. The ministry, however, revised up significantly the previous month's data, now saying that orders decreased by only 2.6%, compared with a 3.9% dip originally reported. Click on title to view the full story. Bank of Japan maintains monetary easing policy The Bank of Japan board stuck to its majority view that it is still on track to achieve its price goal of 2% inflation at its latest policy meeting, maintaining its key policy of buying ¥80 trillion (US$665 billion) of assets annually in an 8-1 vote. Japan current-account surplus beats estimates The surplus in the current account, the broadest measure of Japan's trade with the rest of the world, stood at Y1.44 trillion in February before seasonal adjustment, the highest since September 2011. That was bigger than a Y1.13 trillion surplus forecast by economists and marked the eighth consecutive month of black ink. - Varoufakis Says Greece Not Looking to Russia to Fix Debt Crisis Greek Finance Minister Yanis Varoufakis said his country isn’t looking outside Europe to resolve its financial crisis, adding that he’s confident of reaching an agreement with European partners this month. Greece pays IMF loan due in April Greece has met the deadline for paying its loan to the International Monetary Fund due in April, a senior finance ministry official said as the country's cash reserves continue to dry up. th Friday April 10 , 2015 - - U.K. Industrial Output Barely Rises as Oil and Gas Declines Total production gained 0.1 percent as energy output declined 3.8 percent. An increase of 0.3 percent had been forecast by economists. Manufacturing rose 0.4 percent amid higher car output. China March consumer inflation steady at 1.4% China's consumer price index rose 1.4% in March from a year earlier, the same as the increase in February. The rise in the key inflation gauge matched the median 1.4% gain forecast by economists.The CPI declined 0.5% in March from February, when it rose 1.2% from the preceding month. The Week at a Glance S&P/TSX WEEKLY PERFORMERS S&P/TSX weekly best performers 16.58% Turquoise Hill Resources Ltd (TRQ) 0 Black Diamond Group Ltd (BDI) 0 14.64% Sierra Wireless Inc. (SW) 0 13.74% Novagold Resources Inc (NG) 0 13.64% Trican Well Service Ltd (TCW) 0 13.04% Bankers Petroleum Ltd (BNK) 0 12.68% Penn West Petroleum Ltd (PWT) 0 12.67% Surge Energy Inc (SGY) 0 10.85% Silver Standard Resources Inc (SSO) 0 10.63% Canexus Corp (CUS) 0 10.20% 0% 2% 4% 6% 8% 12% 10% 14% 16% 18% S&P/TSX weekly worst performers Amaya Inc. (AYA) -3.53% 0 Norbord Inc (NBD) -3.71% 0 Brookfield Renewable Energy Partners LP (BEP.un) -3.97% 0 Interfor Corp. (IFP) -4.08% 0 -5.35% Trilogy Energy Corp (TET) 0 First Majestic Silver Corp (FR) -6.96% 0 Corus Entertainment Inc (CJR.b) -7.07% 0 0 -9.60% Labrador Iron Ore Royalty Corp (LIF) 0 -13.07% Pacific Rubiales Energy Corp (PRE) -14% 0 -8.91% Westjet Airlines Ltd (WJA) -12% -10% -8% -6% -4% -2% The performance is calculated from the close of Friday’s previous week until Friday 11:30 a.m. of this week. Source: Bloomberg, NBF Research 0% The Week at a Glance NBF RATINGS & TARGET PRICE CHANGES Company Symbol American Hotel Income Properties REIT LP Current Rating Previous Rating Current Target Previous Target Closing Price HOT.UN Restricted Arianne Phosphate DAN Outperform Outperform C$1.65 C$1.95 C$0.69 Artis REIT AX.un Sector Perform Outperform C$16.00 C$16.75 C$14.88 Boardwalk REIT BEI.UN Sector Perform Sector Perform C$65.50 C$68.00 C$60.08 Cdn Apartment Properties REIT CAR.UN Outperform Outperform C$31.50 C$30.50 C$29.87 Conifex Timber Inc. Corus Entertainment Inc. C$10.69 Restricted CFF Outperform Outperform C$9.50 C$10.00 C$7.00 CJR.B Sector Perform Sector Perform C$19.00 C$21.50 C$17.52 DeeThree Exploration Ltd. DTX Outperform Outperform C$8.50 C$7.50 C$6.48 Delphi Energy Corp. DEE Sector Perform Outperform C$1.75 C$1.75 C$1.62 DH Corp. DH Outperform Restricted C$44.00 Restricted C$41.86 Dream Global REIT DRG.UN Outperform Sector Perform C$10.50 C$10.25 C$10.19 Dream Industrial REIT DIR.UN Outperform Outperform C$10.00 C$10.50 C$9.03 Dream Office REIT D.un Sector Perform Sector Perform C$28.25 C$29.00 C$27.42 Genworth MI Canada Inc. MIC Sector Perform Sector Perform C$37.00 C$35.00 C$31.30 Interfor Corp. IFP Outperform Outperform C$22.00 C$25.00 C$16.94 MST.UN Outperform Outperform C$15.50 C$15.00 C$14.48 Milestone Apartments REIT NuVista Energy NVA Restricted NYX Gaming Group Ltd. NYX Outperform Outperform C$7.50 C$6.00 C$5.00 Pattern Energy Group Inc. PEG Outperform Outperform US$33.00 US$32.00 C$37.52 Outperform C$5.50 C$5.25 C$5.22 Pure Industrial RET C$8.07 Restricted AAR.UN Outperform Pure Technologies Ltd. PUR Outperform Seabridge Gold Inc. SEA Outperform Restricted C$14.50 C$0.00 C$7.96 Slate Office REIT SOT.UN Sector Perform Sector Perform C$8.25 C$8.50 C$8.00 Summit Industrial Income REIT SMU.UN Outperform TCN Outperform Outperform C$12.50 C$12.00 C$11.41 WestJet Airlines Ltd WJA Outperform Outperform C$37.00 C$38.00 C$27.10 Whitecap Resources Inc. WCP Outperform Restricted C$18.50 Restricted C$15.07 Tricon Capital Group Inc. C$8.30 C$10.25 C$6.15 C$6.50 The Week at a Glance NBF ACTION IDEAS CALLIDUS CAPITAL CORP. (CBL) CLOSING PRICE: $17.27 $30.00 RATING: OUTPERFORM TARGET PRICE: COMPANY PROFILE Callidus is a specialty asset-based lender, focused on Canadian (and select U.S.) companies whose perceived credit risk is too high for the lending criteria of traditional lenders, and whose capital requirements are too small to access high-yield markets. The company is ~60% owned by Catalyst Capital Group Inc. INVESTMENT HIGHLIGHTS NBF reiterated its Outperform rating and added Callidus Capital to the NBF Action List. With the stock trading at 9.6x 2015 EPS, NBF believes the market undervalues CBL’s exceptionally growth outlook while vastly exaggerating credit risk. NBF believes patience will ultimately be rewarded and that the shares will re-rate, particularly once the market better understands the business model, the growth outlook and particularly CBL’s loss mitigation mechanisms. NBF believes CBL’s superior access to capital (vs. peers) and expertise in lending to distressed medium-sized enterprises will support solid growth on the back of lending opportunities in the United States, expanded product offering (Callidus Lite), longer loan duration, higher average loan sizes, as well as portfolio acquisitions. NBF is forecasting robust loan growth of 33% in 2015 and 36% in 2016, supported by (i) regulated financial institutions looking to offload troubled loans to non-OSFI-regulated vehicles in order to improve capital efficiency (CBL does not have the same regulatory constraints), (ii) a softer Canadian economy on the back of slumping oil prices, and (iii) an underserved market for asset-based lending to distressed medium-sized enterprises. CBL has more than adequate capacity to support this growth. The company has hired ahead of anticipated growth and is among the best capitalized distressed asset-based lenders in the marketplace. In addition to equity financing, CBL has access to revolving credit facilities with commitments from a major global financial institution, two Canadian chartered banks and a Canadian life insurance company. These financial institutions stand ready to increase their commitments, currently totalling US$262.5 million, to ~$800 million. CBL also has a willing lender in the Catalyst Funds, committing a total of US$200 million to CBL to date. Notably funding costs are heading lower, which is not yet reflected in NBF’s or the Street’s estimates. CBL is already generating solid returns, with gross yields of ~20%, marginal funding costs of <4%, an efficiency ratio of <15% and leverage of <2x, ROE is 18%+. NBF expects ROE will expand to 20%-22% and earnings growth of 18%-20% for the next few years, which it believes merits more than a single-digit P/E multiple. NBF believes concerns about the credit quality of the loan portfolio are overstated and do not appropriately reflect the impact of the Catalyst Guarantee, or the rigorous underwriting and credit monitoring processes employed by the company. Moreover, management has a long and successful track record of low realized losses. In addition, for each and every CBL loan outstanding at this time, the collateral value exceeds the value of the loan after giving effect to Catalyst’s loan loss guarantee. NBF thinks the street misinterpreted CBL’s Q4 results, and notes that the magnitude of the negative impact on Q4 earnings was not due to deterioration in credit quality, but only because the company set up a “collective allowance” in the quarter for the first time. VALUATION NBF’s $30.00 price target for CBL is based on a target P/E multiple (on its blended 2015/2016 EPS forecast) of 15.0x. This reflects not only the enviable loan growth outlook and high ROE, but also the company’s low credit risk. The Week at a Glance MANULIFE FINANCIAL CORP. (MFC) CLOSING PRICE: $22.14 RATING: OUTPERFORM TARGET PRICE: $26.00 COMPANY PROFILE Manulife is the largest Canadian Lifeco by market capitalization. The company’s products portfolio includes life insurance, pensions, long-term care, mutual funds, annuities and group benefits. MFC's primary operations are in Canada and the U.S. (following the 2003 acquisition of John Hancock for $11 billion). MFC also has a sizeable presence in various Asian markets. INVESTMENT HIGHLIGHTS NBF reiterated its Outperform rating on Manulife Financial (MFC) and its $26.00 target price in its 1Q f2015 preview. MFC remains its top pick amongst the large-cap, Canadian financial institutions as it is more geared to an accelerating U.S. recovery than any of its domestic banking or life insurance peers. MFC derives half its earnings from its U.S. business. As, and if, the U.S. economic recovery regains its momentum from the last half of f2014, NBF expects MFC’s earnings and valuation will reflect this in a greater degree than its peers. In particular, NBF believes MFC’s focus on U.S. wealth management will underpin MFC’s outperformance. NBF’s positive view on MFC is also based on Its continued preference of lifecos over the banks as they do not face rising credit costs like the banks, and therefore thinks we may see less severe near term EPS adjustments in the life insurance sector than in the banking sector. MFC appears to have realized actuarial reserve stability, given the results of its annual assumption review in Q3 f2014. A greater contribution from the Standard Life acquisition (closed Feb. 2, 2015) than MFC currently guides may also drive f2015 and f2016 consensus EPS higher. MFC is guiding for $0.03/share accretion in each of the first three years following the acquisition and NBF believes the actual cash contribution will be much greater. NBF believes that a new era has begun at MFC – one in which shareholders will see capital flow back to them (a reversal from the financial crisis years) in the form of increasing dividends, common share repurchases and accretive acquisitions. NBF forecasts share repurchases of Cdn$1 billion annually commencing in early f2016 and extending into f2019. NBF thinks the DBS partnership announced earlier this week fits well with its thesis. DBS Bank Ltd. selected MFC to be the exclusive provider of bancassurance solutions to DBS customers in Singapore, Hong Kong, Indonesia, and China. The agreement will be effective on January 1, 2016 and will last for 15 years. Despite the high cost MFC paid (US$1.2 billion and a 10 percentage point reduction in its MCCSR ratio), NBF views this transaction as strategically advantageous over the longer-term because the partnership gives MFC broader access to an attractive target market – the middle class within the aforementioned developed and emerging Asian economies. Because the transaction does not appear to provide more significant, immediate accretion (core accretion by f2017), NBF does not expect this transaction to be a major catalyst for MFC in the near-term. MFC reports Q1 f2015 results on May 7th. NBF forecasts book value per share will rise $1.15 q/q to $17.57 and EPS (excluding market impacts) of $0.43. It lowered its estimated IFRS EPS to $2.04 from $2.09 in f2015, to $2.38 from $2.45 in f2016 and it introduced its f2017 estimate of $2.71. VALUATION NBF’s $26.00 target price implies a 12 month potential total return of ~20% and is 10.9x our NTM IFRS EPS oneyear from today, a 6% discount to peers. MFC currently trades at 10.8x our forecasted IFRS EPS over the next twelve months (NTM). Meanwhile, NBF’s price target P/B multiple is 1.36x BVPS one year from today, versus a current P/B multiple of 1.34x. The Week at a Glance RICHELIEU HARDWARE LTD. (RCH) CLOSING PRICE: $63.98 RATING: OUTPERFORM TARGET PRICE: $70.00 COMPANY PROFILE Richelieu Hardware is a distributor, importer and manufacturer of speciality hardware and complementary products in Canada and the United States. Distribution activities make up 95% of sales. Kitchen and bathroom cabinet manufacturers are the largest customer. The remaining 5% of revenues stem from Canadian manufacturing subsidiaries. Moreover, Richelieu also supplies a wide scope of hardware retailers. INVESTMENT HIGHLIGHTS NBF reiterated its Outperform rating on Richelieu Hardware and increased its target price to $70.00 (from $65.00) following the release of solid Q1/15 results. The target price increase reflects a multiple expansion (from 20x 2016e EPS to 21x), which is warranted in NBF’s view given RCH’s outlook and implementation of an established growth strategy by a proven management team supported by a clean balance sheet and a growing network of strategically located distribution centres offering a large breadth of innovative products. NBF continues to see RCH as a solid play on a renovation/housing recovery and as a core long-term holding. RCH reported another solid quarter. Sales of $159.3 million (up 17.1% y/y, including internal growth of 12.7%) were ahead of NBF’s $151.1 million estimate as double-digit growth was achieved in both the manufacturers and retailers categories. EBITDA of $15.7 million and EPS (fd) of $0.51 were in line with NBF expectations as EBITDA margin was slightly impacted by recent acquisitions and an evolving sales mix. Sales in Canada of $107.7 million were up 9.4% y/y and its organic growth rate was up 8.2%, as strong gains were achieved in both the manufacturers and retailers markets. U.S. sales increased 23.8% (12.2% internal growth) to US$42.8 million driven by double-digit increases at manufacturers and retailers. RCH’s performance in Canada has been encouraging lately with three consecutive quarters of solid internal growth. Looking ahead, NBF expects continued positive contributions from market penetration initiatives and more favourable market conditions. In the United States, NBF anticipates continued growth momentum driven by Richelieu’s market penetration initiatives and innovative product offering. In addition, the remodeling environment looks positive with the most recent reading (Q4/14) of the NAHB Remodeling Market Index (RMI) at a record high of 60 (up from 57 sequentially) and clearly above the breakeven level of 50. Perhaps more importantly, RMI’s future market conditions index climbed to 60 from 58, illustrating remodelers’ optimism. NBF believes that RCH’s rock-solid balance sheet and expected free cash flow generation will support the implementation of its proven growth strategy based on organic growth initiatives and acquisitions (mostly tuckins). In addition, a healthy financial position provides the flexibility for dividend payments (a 7.1% increase was announced in January) and share repurchases. At the end of Q1/15, the balance sheet was still very healthy with a net cash position of $10.3 million. This was down sequentially from $28.4 million due to an increase in inventory in anticipation of the seasonally strong Q2 and to meet demand in the retailers market where RCH is reaping the benefits of market penetration efforts. NBF expects RCH’s net cash position to increase sequentially in the seasonally stronger Q2 and Q3 as inventory declines. VALUATION NBF’s $70.00 target (was $65.00) reflects an increased multiple of 21x (from 20x) on 2016 EPS estimates, which is consistent with the company’s historical valuation (multiple expansion: three-year average forward multiple of ~18x, one-year average of ~20x and peaks at ~22x). The Week at a Glance WESTJET AIRLINES LTD. (WJA) LAST PRICE: $27.10 RATING: OUTPERFORM $37.00 TARGET PRICE: COMPANY PROFILE WestJet is Canada’s second largest scheduled airline and the low cost leader in the country. Through its WestJet Vacations subsidiary, it is also a major tour operator to sun destinations. INVESTMENT HIGHLIGHTS NBF reiterated its Outperform rating on WestJet Airilnes (WJA) but trimmed its target price by $1.00 to $37.00 to reflect a slightly more conservative view on RASM* trends in 2015. WJA’s stock price fell on Monday after reporting disappointing traffic data. However, NBF remains positive on the stock based on the view that WestJet will benefit from (1) materially lower fuel prices that more than offset f/x headwinds and potential RASM weakness, (2) ongoing market share gains from the growth of Encore, and (3) revenue improvements stemming from the maturation of WestJet’s Plus product and the introduction of first bag fees. WestJet reported that its March load factor (% of seats filled) was 81.3%, down from 84.0% last year as capacity growth (+4.8%) outstripped traffic growth (+1.5%). For Q1, the load factor was 81.6%, down 1.5 pts y/y which WJA primarily attributed to aggressive industry capacity growth on sun destinations. NBF expects excess industry capacity issues to ease in Q2 and Q3. Despite the lower load factor the company is standing by its Q1 RASM guidance previously expected to be flat to down slightly. Lower y/y RASM is also consistent with NBF’s weekly fare surveys that show domestic fares trending below year-ago levels. NBF’s fare surveys so far for early April show stability in pricing, but it would not be surprised to see some ongoing RASM weakness into Q2. NBF lowered its Q1 RASM forecast to -1.2% (from -0.3%), lowered its f2015 RASM forecast to +0.1% (from +0.6%) and bumped up its f2016 RASM to +3.7% (from +3.6%). However, NBF believes the significantly lower fuel prices will more than offset the f/x cost headwinds and potential RASM softness and therefore continues to forecast strong earnings growth for upcoming quarters (the current price of jet fuel is Cdn$0.64/liter, significantly below the average of Cdn$0.90/liter WestJet paid in 2014 and the Cdn$0.94/liter it paid in Q2/14). The biggest concern for WJA investors currently is the airline’s exposure to a weakening Western Canadian economy and Alberta in particular (AB represents ~25% of WestJet’s total system departures); however NBF notes that air travel in Alberta appears to have been only modestly impacted so far and it believes demand for air travel in the rest of WestJet’s network remains healthy. That said, if demand does soften, WestJet has flexibility to scale back its capacity growth plans. For instance, the airline could reduce its capacity simply by accelerating the installation of its new in-flight entertainment system this year (which requires the aircraft to be taken out of service for a period of time). Furthermore, if certain regions were to weaken (like Alberta), WestJet has the ability to easily move aircraft into different markets. WestJet continues to have a strong balance sheet with a healthy cash position, f2015 net debt/DBITDAR of 1.3x and debt/capital of 57.8%. With its Q4 2014 results in February, the company also announced an increase in its quarterly dividend to $0.14 from $0.12 (now $0.56/year) VALUATION NBF’s $37.00 target price is based on a 6.0x EV/EBITDAR multiple applied to its forecast for next four quarter EBITDAR. NBF notes that the stock is trading at just 4.6x current year EV/EBITDAR versus the U.S. low cost peer group trading at 6.3x on average. The new stock price implies a 12 month potential total return of ~39%. *RASM = Revenue per Available Seat Mile The Week at a Glance STRATEGIC LIST - WEEKLY UPDATE (April 6th – April 10th) No Changes this Week: Comments Energy (Overweight) Credit Suisse: CS published an update on Canadian Oil & Gas stocks and revised its target prices and estimates to reflect pricing for Q1, equity issuance and other operational updates. CS notes that sector performance has not been pretty, with the stocks still off ~40% from their peak in 2014. Moreover, balance sheet leverage remains a concern while Q1 CFPS could be down ~35% sequentially, even with its above consensus view. While CS’ universe trades at ~70% of its full NAV estimates, near term EV/EBIDAX multiples remain elevated vs. historical averages, particularly at strip pricing. That said, positives are emerging in the supply/demand data that give CS greater comfort in its oil price projections and may underpin better equity performance. ARC Resources (ARX) Maintained Outperform rating and $28.00 target price. Lowered f2015 EPS and CFPS estimates to $0.26 and $2.39 respectively from $0.27 and $2.45. Maintained f2016/f2017 EPS and CFPS estimates of $0.75/$0.95 and $3.10/$3.53 respectively. Reports Q1 f2015 on April 29th. CS forecasts Q1 CFPS of $0.51, above consensus estimate of $0.48. Canadian Natural Resources (CNQ) Maintained Outperform rating and increased target price to $45.00 from $43.00 previously. Increased f2015/f2016/f2017 EPS estimates to $0.58/$2.13/$2.83 from $0.41/$1.92/$2.58. Maintained f2015 CFPS of $5.63 and increased f2016/f2017 CFPS to $7.55/$8.61 from $7.49/$8.44. Reports Q1 f2015 on May 7th. CS forecasts Q1 CFPS of $1.07, below consensus estimate of $1.15. Crescent Point Energy (CPG) Maintained Neutral rating and lowered target price to $31.00 from $32.00 previously. Lowered f2015/f2016/f2017 EPS estimates to $0.29/$0.49/$0.52 from $0.35/$0.53/$0.55. Lowered f2015/f2016/f2017 CFPS estimates to $4.41/$4.78/$4.90 from $4.65/$4.99/$5.09. Reports Q1 f2015 on May 7th. CS forecasts Q1 CFPS of $0.99, in line with consensus. Materials (Market Weight) Credit Suisse: CS revised its metals and mining commodity prices. It also downgraded its CAD/USD FX forecasts to 0.75 long-term, from 0.85. Incorporating revised metal price and F/X assumptions, target prices for Canadian gold equities under coverage decreased an average of 2%, and Canadian base metal equities decreased 4%. Gold – CS maintains its forecast for US$1,250/oz long term, potential for a near term rally: CS is constructive on the gold price until the beginning of June on typical seasonal strength from the India wedding season, combined with the potential for an improvement in long positioning on the Comex following recent weak US economic data. CS becomes more bearish again in June due to lack of physical buying along with potential renewed anticipation of a Fed rate hike. Long term, on balance it sees potential for a stronger USD offset by continued strong physical demand from Asia, Central Bank purchases and tapering mine supply. CS forecasts a gold market deficit by 2016. Base metals: with positive fundamentals, CS is constructive on copper through 2015 but more negative for 2016/2017. CS forecasts a copper price recovery to US$3/lb in 2Q15 from Q1's $2.65/lb average price. Near term, copper prices could be supported by a modest market deficit due to mine disruptions on the supply side and a bolstered demand outlook from China's State Grid. CS’ 2016-2017 copper price forecast is reduced to US$2.71/US$2.49/lb (from US$3.01/US$3.00/lb) in the face of a growing market surplus. Zinc and lead look positive on mine shortages, although the zinc deficit should slow from the 500kt shortfall exhibited in 2014 now that China's refining capacity has picked up. The Week at a Glance Agnico Eagle Mines: (AEM) CS maintained its Outperform rating on Agnico Eagle Mines and the company remains one of its top picks in the gold space for its lower cost assets, operational consistency, strong FCF and organic exploration/growth opportunities. CS significantly increased its f2015/f2016 EPS estimates to US$0.46/US$0.93/US$1.06 from US$0.61/US$0.65/US$0.81 (+98%/+49%/+31%); and increased its NAV by 16% to US$26.363 (from US$23.02). CS increased its target price by 11% to US$42.00 (from US$38.00). The new target price is based on a 60%/40% weighting of its US$43 OpCFa valuation and US$41 NAV valuation. CS’ OpCFa valuation is based on 19x (was 18.0x) its FY15/16E average OpCFa of US$2.24. Its NAV valuation is based on 1.45x (was 1.60x) its DCF of $31.79, and it deducts net debt and corporate adjustments of US$5.16 at par. *OpCFa= adjusted operating cash flow per share Lundin Mining Corp. (LUN) Credit Suisse: CS significantly lowered its f2015/f2016/f2017 EPS estimates to US$0.42/US$0.46/US$0.32 from US$0.61/US$0.65/US$0.61 (-32%/-29%/-48%) respectively. CS maintained its Outperform rating and lowered its target price by C$1.00 to C$7.00. The target price is based on 50/50 weighting of 1.0x its base case net asset value per share (NAVPS) of C$7.57 (was C$6.71) and 4.0x FY15/16 EV/EBITDA (adjusted for the Tenke Fungurume Mine). NAVPS is based on Credit Suisse long-term copper, zinc, and nickel price assumptions. NBF: NBF reiterated its Outperform rating and C$6.75 target price on Lundin after the company announced a revised reserve update at Candelaria including a maiden reserve estimate at two additional deposits (Susana and Damiana). Overall copper reserves are up 12% and after adjusting for mining depletion and refined economic parameters, open pit reserves are up ~24% from the previous reserve estimate dated December 31, 2013. Overall, NBF is impressed with the magnitude of reserve addition given the relatively short time span since the acquisition of Candelaria (closed on November 3, 2014). Updated reserves have the potential to extend the current mine life beyond 2034 (NBF Estimates) and may have the added benefit of modestly improving operating costs. However, NBF willl wait until release of the company’s updated resource estimate in July and a revised mine plan at Candelaria in Q3 before revising its long-term operating assumptions. NBF continues to view Lundin as a lower-risk (operationally) and financially stable alternative within the base metals sector. The shares are currently trading at a discounted 0.81x NAV compared to multi-mine peers at 0.89x and 4.1x EV/2015E CF, compared to NBF peers at 8.5x. Financials (Market Weight) Manulife Financial (MFC) NBF: Manulife announced that DBS Bank Ltd. has selected MFC to be the exclusive provider of bancassurance solutions to DBS customers in Singapore, Hong Kong, Indonesia, and China. MFC will make an initial payment of US$1.2 billion to DBS, which will be funded through internal resources. MFC will also make continuing, variable payments to DBS based on the success of the partnership. NBF understands from MFC that these payments will not be material. MFC states that the initial payment will reduce its MCCSR by 10 points, but expects the transaction to be accretive to MFC’s Core EPS by f2017. The agreement will be effective on January 1, 2016 and will last for 15 years. Subsequent to the DBS announcement NBF published its Canadian Lifecos 1Q f2015 earnings preview. NBF decided to change its approach for earnings forecasts for the Life Insurance sector. It permanently shelved its forecasts of each life insurer’s own definitions of “core” or “operating” earnings. Instead NBF will forecast IFRS net income to common shareholders (on a per share basis) and make that its primary EPS forecast item. NBF will also forecast its definition of core earnings (expected profit, strain from new business and earnings on surplus from the Sources of Earnings statement). In addition, NBF also places a greater emphasis on movements in the shareholders’ equity account to understand each company’s relative effectiveness in returning capital to shareholders and growing book value. Taken in total, NBF considers this approach to provide the most comprehensive and consistent means to value Canadian life insurance companies. MFC reports Q1 f2015 results on May 7th. NBF forecasts book value per share will rise $1.15 q/q to $17.57 and EPS (excluding market impacts) of $0.43. It lowered its estimated IFRS EPS to $2.04 from $2.09 in f2015, to $2.38 from $2.45 in f2016 and it introduced its f2017 estimate of $2.71. MFC was the least generous Canadian The Week at a Glance life insurer in returning capital to shareholders in f2014. In fact, one of the reasons NBF favours MFC stems from the company’s latent financial flexibility to return more capital to common shareholders in coming years. NBF sees MFC as one of the Canadian large-cap financial institutions most geared to an accelerating U.S. recovery – approximately half of the company’s balance sheet and earnings are related to its U.S. businesses. In particular, it believes MFC’s focus on U.S. wealth management will underpin MFC’s outperformance relative to peers as, and if, the U.S. economy picks up momentum. MFC is NBF’s top pick in Life Insurance companies and is rated Outperform with a $26.00 target price. Credit Suisse: Credit Suisse reiterated its Outperform rating and target Price of $26.00. MFC is Credit Suisse Top lifeco pick. The deal with DBS Bank further supports Credit Suisse’s view of stronger relative earnings growth due to higher contribution from faster growing markets such as Asia. Element Financial Corp. (EFN) Credit Suisse: EFN recently revised its 2015 outlook for finance assets & operating leases upwards by $2.6 billion or 21% and now projects it will finish the year with $16.9 billion in total assets. Credit Suisse believes the updated outlook reflects EFN's increased confidence in its ability to execute on acquisition based growth in the coming quarters. Credit Suisse reiterated its Outperform rating and raised its target price to $20.00 from $17.50. It remains positive on EFN for the following reasons: 1) management's ability to execute on organic / inorganic growth opportunities; 2) improving financial performance with ROE expected to increase by 310 bps by end of 2015; 3) favourable geographic mix with 75% of 2015E originations expected to come from the faster growing U.S. economy. Industrials (Market Weight) WestJet Airlines Ltd (WJA) NBF: NBF maintained its Outperform rating on WestJet, but trimmed its target to $37.00 from $38.00 as it takes a slightly more conservative view on RASM trends in 2015. It believes that the company will benefit from (1) materially lower fuel prices that more than offset f/x headwinds and potential RASM weakness, (2) ongoing market share gains from the growth of Encore, and (3) revenue improvements stemming from the maturation of WestJet’s Plus product and the introduction of first bag fees. Source: NBF Research, Veritas Research, Credit Suisse Research, Bloomberg, Thomson One The Week at a Glance NBF STRATEGIC LIST NBF Strategic List (April 10, 2015) WEIGHT* (%) Ticker Consumer Discretionary Gildan Activewear GIL Thomson Reuters Corp. TRI Consumer Staples Empire Company Ltd. EMP'A George Weston Ltd. WN Energy AltaGas Ltd. ALA ARC Resources Ltd. ARX Can. Natural Resources Ltd. CNQ Crescent Point Energy Corp. CPG Enbridge Inc. ENB Inter Pipeline Ltd. IPL Financials Bank of Montreal BMO Cdn. Apartment Properties REITCAR.un Element Financial Corp. EFN H&R REIT HR.un Manulife Financial Corp. MFC Royal Bank of Canada RY Toronto Dominion Bank TD Health Care Industrials TransForce Inc. TFI WestJet Airlines Ltd. WJA Information Technology CGI Group Inc. GIB.A DH Corp. DH Materials Agnico Eagle Resources Ltd. AEM Lundin Mining Corp. LUN Telecom Services Rogers Communications RCI'B TELUS Corp T Utilities Canadian Utilities Ltd. CU Northland Power Inc. NPI ADDITION ADDITION DATE PRICE 21-May-14 $ 27-Feb-14 $ 29.09 38.31 1-Apr-15 31-Jul-12 $ $ 90.80 59.25 30-Oct-13 17-Dec-14 31-Jul-12 3-Oct-12 21-Jan-15 5-Jun-13 $ $ $ $ $ $ 38.19 26.82 27.35 43.00 59.87 23.71 4-Mar-15 11-Feb-15 3-Sep-14 20-Aug-14 26-Mar-14 19-Jun-13 31-Jul-12 $ $ $ $ $ $ $ 76.27 26.97 14.10 23.36 21.42 60.69 39.46 11-Feb-15 $ 22-Oct-14 $ 29.36 30.65 22-Aug-12 $ 4-Feb-15 $ 25.83 38.64 17-Dec-14 $ 17-Dec-14 $ 27.00 5.35 27-Nov-14 $ 31-Jul-12 $ 45.84 31.31 31-Jul-12 8-May-13 35.00 19.43 $ $ LAST YIELD Strategic PRICE (%) BETA List 6.3 EQY_DVD_YLD EQY_BETA $ 38.78 0.8 1.0 3.2 $ 52.75 3.2 0.8 3.2 3.7 $ 93.91 1.2 0.5 1.9 $ 106.29 1.6 0.7 1.9 24.8 $ 41.84 4.2 0.8 4.1 $ 22.49 5.3 1.2 4.1 $ 40.72 2.3 1.6 4.1 $ 30.59 9.0 1.2 4.1 $ 62.80 3.0 0.8 4.1 $ 31.05 4.7 0.8 4.1 35.2 $ 78.13 4.1 0.8 5.0 $ 29.96 3.9 0.6 5.0 $ 17.58 0.0 0.9 5.0 $ 23.61 5.7 0.7 5.0 $ 22.18 2.8 1.4 5.0 $ 79.32 3.9 0.9 5.0 $ 55.23 3.7 0.9 5.0 8.5 $ 30.57 2.2 1.0 4.3 $ 27.01 2.1 0.8 4.3 3.6 $ 55.98 0.0 0.8 1.8 $ 42.38 3.0 0.8 1.8 11.4 $ 37.58 1.1 1.1 5.7 $ 5.10 0.0 2.0 5.7 4.4 $ 43.30 4.4 0.7 2.2 $ 43.21 3.7 0.7 2.2 2.1 $ 40.53 2.9 0.7 1.1 $ 17.40 6.2 0.7 1.1 SPTSX NOTES** 6.5 3.8 21.4 34.6 4.9 8.4 2.4 11.0 4.7 2.2 Source: Bloomberg, Thomson One (Priced April 10, 2015 at 10:30 am EDT) * Individual position weights reflect an adjustment for Health Care. The Health Care weighting has been reallocated to sectors rated "overweight" with any remaining weight reallocated proportionally to the remaining sectors. As such, the individual position weights will exceed the total sector weights and may not sum to 1 **R = Restricted Stocks - Stocks placed under restriction while on The NBF Strategic List will remain on the list, but noted as Restricted in accordance with compliance requirements The Week at a Glance WEEK AHEAD THE ECONOMIC CALENDAR (April 13th – April 17th) U.S. Indicators Date Time Release 14-Apr 14-Apr 14-Apr 14-Apr 14-Apr 14-Apr 14-Apr 14-Apr 14-Apr 14-Apr 14-Apr 14-Apr 08:30 08:30 08:30 08:30 08:30 08:30 08:30 08:30 08:30 08:30 09:00 10:00 Retail Sales Advance MoM Retail Sales Ex Auto MoM Retail Sales Ex Auto and Gas Retail Sales Control Group PPI Final Demand MoM PPI Ex Food and Energy MoM PPI Ex Food, Energy, Trade MoM PPI Final Demand YoY PPI Ex Food and Energy YoY PPI Ex Food, Energy, Trade YoY NFIB Small Business Optimism Business Inventories 15-Apr 15-Apr 15-Apr 15-Apr 15-Apr 15-Apr 07:00 08:30 09:15 09:15 09:15 10:00 MBA Mortgage Applications Empire Manufacturing Industrial Production MoM Capacity Utilization Manufacturing (SIC) Production NAHB Housing Market Index 15-Apr 15-Apr 15-Apr 14:00 16:00 16:00 U.S. Federal Reserve Releases Beige Book Net Long-term TIC Flows Total Net TIC Flows 16-Apr 16-Apr 16-Apr 16-Apr 16-Apr 16-Apr 16-Apr 16-Apr 16-Apr 08:30 08:30 08:30 08:30 08:30 08:30 09:45 09:45 10:00 Housing Starts Housing Starts MoM Building Permits Building Permits MoM Initial Jobless Claims Continuing Claims Bloomberg Consumer Comfort Bloomberg Economic Expectations Philadelphia Fed Business Outlook 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 08:30 08:30 08:30 08:30 08:30 08:30 08:30 10:00 10:00 10:00 10:00 10:00 10:00 CPI MoM CPI Ex Food and Energy MoM CPI YoY CPI Ex Food and Energy YoY CPI Index NSA CPI Core Index SA Real Avg Weekly Earnings YoY U. of Mich. Sentiment U. of Mich. Current Conditions U. of Mich. Expectations U. of Mich. 1 Yr Inflation U. of Mich. 5-10 Yr Inflation Leading Index Period Previous Consensus Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Feb -0.60% -0.10% -0.20% 0.00% -0.50% -0.50% 0.00% -0.60% 1.00% 0.70% 98 0.00% 1.00% 0.70% 0.70% 0.40% 0.20% 0.10% --0.90% 1.00% -98.2 0.30% Apr 10 Apr Mar Mar Mar Apr 0.40% 6.9 0.10% 78.90% -0.20% 53 -6.5 -0.20% 78.70% 0.00% 56 Feb Feb -$27.2B $88.3B --- Mar Mar Mar Mar Apr 11 Apr 4 Apr 12 Apr Apr 897K -17.00% 1092K 3.00% 281K 2304K 47.9 51.5 5 1040K 15.90% 1080K -2.00% ----5 Mar Mar Mar Mar Mar Mar Mar Apr P Apr P Apr P Apr P Apr P Mar 0.20% 0.20% 0.00% 1.70% 234.722 240.247 2.60% 93 105 85.3 3.00% 2.80% 0.20% 0.20% 0.20% 0.10% 1.70% ---93.9 ----0.30% Period Previous Consensus Apr 10 55 -- Mar Mar Mar 0.10% 4.40% 167.52 0.00% --- Feb Mar Apr 15 -1.70% 1.00% 0.75% --0.75% Mar Mar Mar Mar Mar Mar Mar Feb Feb Feb 0.90% 1.00% 125.4 0.60% 2.10% 0.20% 0.10% -1.70% -1.80% 5.73B 0.50% 1.00% -0.30% 2.10% ------ Canadian Indicators Date Time 13-Apr 10:00 Bloomberg Nanos Confidence 14-Apr 14-Apr 14-Apr 08:30 08:30 08:30 Teranet/National Bank HPI MoM Teranet/National Bank HPI YoY Teranet/National Bank HP Index 15-Apr 15-Apr 15-Apr 08:30 09:00 10:00 15-Apr 10:00 Manufacturing Sales MoM Existing Home Sales MoM Bank of Canada Rate Decision Bank of Canada Releases Monetary Policy Report 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 17-Apr 08:30 08:30 08:30 08:30 08:30 08:30 08:30 08:30 08:30 08:30 CPI NSA MoM CPI YoY Consumer Price Index CPI Core MoM CPI Core YoY CPI SA MoM CPI Core SA MoM Retail Sales MoM Retail Sales Ex Auto MoM Int'l Securities Transactions Source : Bloomberg Release The Week at a Glance S&P/TSX QUARTERLY EARNINGS CALENDAR th Monday April 13 , 2015 None th Tuesday April 14 , 2015 COMPANY* Shaw Communications Inc Performance Sports Group Ltd SYMBOL SJR.b PSG th Wednesday April 15 , 2015 None th Thursday April 16 , 2015 None th Friday April 17 , 2015 None Source: Bloomberg, NBF Research *Companies of the S&P/TSX index expected to report. Stocks from the Strategic List are in Bold. EPS ESTIMATE 0.39 0.098 The Week at a Glance S&P500 INDEX QUARTERLY EARNINGS CALENDAR th Monday April 13 , 2015 None th Tuesday April 14 , 2015 COMPANY* CSX Corp Fastenal Co Intel Corp Johnson & Johnson JPMorgan Chase & Co Linear Technology Corp M&T Bank Corp Wells Fargo & Co SYMBOL CSX FAST INTC JNJ JPM LLTC MTB WFC EPS ESTIMATE 0.447 0.42 0.405 1.539 1.41 0.529 1.769 0.977 SYMBOL BAC SCHW DAL NFLX PNC PGR SNDK USB EPS ESTIMATE 0.297 0.231 0.477 0.633 1.713 0.426 0.712 0.763 SYMBOL ADS AXP BLK C GS KEY KMI MAT PBCT PM PPG SLB SHW UNH GWW EPS ESTIMATE 3.423 1.364 4.536 1.394 4.215 0.265 0.231 -0.091 0.199 1.016 2.344 0.922 1.44 1.346 3.152 th Wednesday April 15 , 2015 COMPANY* Bank of America Corp Charles Schwab Corp/The Delta Air Lines Inc Netflix Inc PNC Financial Services Group Inc/The Progressive Corp/The SanDisk Corp US Bancorp/MN th Thursday April 16 , 2015 COMPANY* Alliance Data Systems Corp American Express Co BlackRock Inc Citigroup Inc Goldman Sachs Group Inc/The KeyCorp Kinder Morgan Inc/DE Mattel Inc People's United Financial Inc Philip Morris International Inc PPG Industries Inc Schlumberger Ltd Sherwin-Williams Co/The UnitedHealth Group Inc WW Grainger Inc The Week at a Glance th Friday April 17 , 2015 COMPANY* Comerica Inc General Electric Co Honeywell International Inc Seagate Technology PLC SYMBOL CMA GE HON STX EPS ESTIMATE 0.729 0.302 1.394 1.055 Source: Bloomberg, NBF Research * Companies of the S&P500 index expected to report. Stocks from the Credit Suisse U.S. Focus List are in Bold.
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