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MSCI composite index: Price Performance (Total return)

M SCI ACWI M SCI World M SCI USA M SCI Canada M SCI Europe M SCI Pac ific ex Jp M SCI Japan M SCI EM M SCI EM EM EA M SCI EM Latin Americ a M SCI EM Asia 11/12/2021

NBF Economics and Strategy (data via Refinitiv)

M onth to date 1.9 2.0 1.7 3.5 2.7 0.9 2.3 1.7 1.3 1.9 1.8

Quarter to date 7.0 7.6 8.8 9.0 6.6 1.5 1.0 2.6 3.7 -1.5 2.8

Year to date 21.3 24.0 25.5 28.1 23.3 11.3 15.9 3.6 26.9 -2.4 0.8

China: Negative economic surprises put a lid on commodity prices

China CITI economic surprise index and the price of copper

Index (daily)

80

40

0

-40

-80

-120

-160

-200

-240

-280 2020Q1

2020Q2

2020Q3

2020Q4

NBF Economics and Strategy (data via Bloomberg and Refinitiv)

2021Q1

Copper price (right)

USD/Tonnes 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000

Economic surprise index (left)

2021Q2

2021Q3

2021Q4

World: Evolution of the pandemic

Daily new cases per million population by region, 7-day mov. average

1,400

New cases per million

1,300

1,200

1,100

1,000

900

800

700

600

500

400

300

200

100

0 2020Q1

2020Q2

2020Q3

2020Q4

NBF Economics and Strategy (data via Johns Hopkins CSSE)

2021Q1

Canada Israel UK US Euro Zone

2021Q2

2021Q3

2021Q4

World: More growth is expected for corporate earnings

Trailing earnings for the MSCI ACWI and 12-month-forward expectations

44 EPS

42

40

38

36

34

32

30

28

26

24

22

20

18

16 2006

2008

2010

2012

NBF Economics and Strategy (data via Refinitiv)

2014

2016

2018

2020

2022

U.S.: Corporations have pricing power

PPI for final demand and headline CPI

9 % (y/y)

PPI

8

7

CPI 6

5

4

3

2

1

0

-1

-2 2010 2011 2012 2013 2014

NBF Economics and Strategy (data via Fred)

2015

2016

2017

2018

2019

2020

2021

2022

U.S. : Perspective on valuation

S&P 500 earnings yield and 10 years U.S. treasury yield TIP

12

10

8

6

4

2

0

Recessions

US Treasury TIP 10Y curve point

S&P 500 Earnings Yield

Spread

-2

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

NBF Economics and Strategy (data via Refinitiv)

OECD: Excess demand persists for retail sales

Volume retail sales

120 2015 = 100

116

112 4 months

108

104

100

96

62 months

92

88

2008

2010

2012

NBF Economics and Strategy (data from Refinitiv)

2014

2016

2018

2020

2022

U.S.: Participation rate remains a concern

Labour force participation rate of people aged 25-54 (as of October 2021): Canada and the U.S.

89 %

88

87

86

85

84

83

82

81

80

79

1990

1995

2000

2005

2010

NBF Economics and Strategy (data from Statistics Canada, Bureau of Labour Statistics)

2015

2020

Mature phase: Return of equities based on slope of the yield curve

Slope of the U.S. yield curve during the mature phase and average 6-month return following 15.0

%

10.0

5.0

0.0

-5.0

S&P 500 S&P/TSX

-10.0

-15.0

-50 to < 0

NBF Economics and Strategy (data via Refinitiv)

Basis points

> 0 to < 100

>100 bp

S&P/TSX: Foreigners are attracted to Canada

Net foreign purchases of Canadian equities through the first eight months of every year

50 $ billions

40

30

20

10

0

-10

-20

-30

-40

2000

2002 2004 2006 2008

NBF Economics and Strategy (data via Statistics Canada )

2010

2012

2014

2016

2018

2020

2022

S&P/TSX composite index: Price Performance (Total return)

M onth to

date

S&P TSX

3.5

HEALTH CARE

10.4

IT

8.8

M ATERIALS

7.5

CO NS. DISC.

7.2

CO NS. STAP.

6.5

BANKS

3.2

FINANCIALS

2.9

TELECO M

1.8

INDUSTRIALS

1.3

REAL ESTATE

0.5

UTILITIES

0.3

ENERGY

-0.5

11/12/2021

NBF Economics and Strategy (data via Refinitiv)

Quarter to date 8.7 3.7 13.3 13.8 7.1 5.0 9.1 8.2 1.7 10.2 6.9 0.8 8.2

Year to date 27.7 2.0 36.1 6.9 17.7 19.2 36.3 35.0 21.1 22.3 34.5 6.9 52.4

S&P/TSX: Valuation remains attractive

12-month-forward P/Es for the S&P 500 and the S&P/TSX

26 P/E ratio

24

22

20

18

16

14

12

10

8

6

4

2

0

-2

-4 1990

1995

2000

NBF Economics and Strategy (data via Refinitiv)

2005

2010

2015

S&P 500

S&P/TSX Differential

US-CA

2020

Canada: A bullish outlook

12-month forward EPS estimates for the S&P/TSX

1,400 EPS

1,300

1,200

1,100

1,000

900

800

700

600

2006

2008

2010

NBF Economics and Strategy (data via Refinitiv)

2012

2014

2016

2018

2020

2022

U.S.: Global restocking activity has yet to begin

Real Manufacturing and Trade inventories

2,260,000 USD (millions)

2,240,000

2,220,000

2,200,000

2,180,000

2,160,000

2,140,000

2,120,000

2,100,000

2,080,000

2,060,000

2,040,000

2016

2017

NBF Economics and Strategy (data via Fred)

2018

2019

2020

2021

NBF Asset Allocation

Equities

Benchmark

NBF

Change (pp)

(%) Recommendation (%)

Canadian Equities

20

25

U.S. Equities

20

18

Foreign Equities (EAFE) 5

3

Emerging markets

5

5

Fixed Income

45

42

Cash

5

7

Total

100

100

NBF Economics and Strategy

Index Level S&P/TSX

NBF Market Forecast

Canada

Actual Nov-12-21

21,769

Q42022 (Est.) Target

22,500

Assumptions

Level:

Earnings *

Dividend

PE Trailing (implied)

1270 533 17.1

10-year Bond Yield

1.68

* Before extraordinary items, source Thomson

NBF Economics and Strategy

Q42022 (Est.) 1375 577 16.4

Q42022 (Est.) 2.10

Index Level S&P 500

NBF Market Forecast

United States

Actual Nov-12-21

4,683

Q42022 (Est.) Target

4,750

Assumptions

Level:

Earnings *

Dividend

PE Trailing (implied)

197 60 23.7

10-year Bond Yield

1.58

* S&P operating earnings, bottom up.

Q42022 (Est.) 212 64 22.4

Q42022 (Est.) 2.15

NBF Fundamental Sector Rotation - November 2021

Name (Sector/Industry)

Recommendation S&P/TSX weight

Energy Energy Equipm ent & Services Oil, Gas & Consumable Fuels

Overweight Overweight Overweight

Materials Chem icals Containers & Packaging Metals & Mining * Gold Paper & Forest Products

Overweight Market Weight Overweight Overweight Overweight Market Weight

Industrials Capital Goods Commercial & Professional Services Trans portation

Market Weight Overweight Underweight Market Weight

Consumer Discretionary Automobiles & Components Consumer Durables & Apparel Consumer Services Retailing

Market Weight Underweight Overweight Market Weight Market Weight

Consumer Staples Food & Staples Retailing Food, Beverage & Tobacco

Market Weight Market Weight Market Weight

Health Care

Market Weight

Health Care Equipment & Services

Market Weight

Pharmaceuticals, Biotechnology & Life Sciences Market Weight

Financials Banks Diversified Financials Ins urance

Market Weight Market Weight Market Weight Market Weight

Information Technology

Underweight

Telecommunication Services

Market Weight

Utilities

Underweight

Real Estate

Underweight

* Metals & Mining excluding the Gold Sub-Industry for the recommendation.

13.0% 0.0% 13.0%

11.8% 1.7% 0.5% 2.5% 6.5% 0.5%

11.6% 2.3% 3.2% 6.1%

3.6% 1.1% 0.6% 0.7% 1.1%

3.6% 2.9% 0.6%

1.0% 0.2% 0.8%

31.6% 21.2% 4.7% 5.7%

12.0%

4.6%

4.3%

3.0%

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