David A. Rosenberg December 13, 2010Chief Economist & Strategist Economic Commentary [email protected]+ 1 416 681 8919MARKET MUSINGS & DATA DECIPHERING Breakfast with Dave WHILE YOU WERE SLEEPING IN THIS ISSUE • While you were slee ping: from an economic data perspective, there was no major earth-shatteringnews today, but the risk- on trade remains in place • One over extended sto ck market: this has indeed been a U.S. stock market in need of good news announcements for its success • Policy discord: The U .S. is busy fighting deflation and easing fiscal policy whereas the emergingmarket countries are busy fighting inflation and moving towards austerity • Perception versus realit y: I have been a secular bond bull and am not yet changing my view of the fixed-income market, but the perception that the economy will grow vigorously is now extremely strongFrom an economic data perspective, there was no major earth-shattering news today, but the risk-on trade remains in place and today’s action is beingunderpinned by the fact that contrary to some expectations, China refrained from raising interest rates in the face of some accelerating inflation numbers and some decent economic rep orts as well. Let ‘er rip. The MSCI Asia Pa cific index is up 0.5% today and the Nikkei jumped 0.8%. In the meantime, U.S. Treasury yields are mak ing fresh six-month highs. Commodities are o n the move — as is the Canadian dollar — wit h copper firming roughly 2% so far today. Gold and oil are following suit. In our opinion, the equity market is overbought and overextended and optimism is reaching extreme levels. Perceptions over the sus tainability of U.S. economic growth are proving tough to break and investors are cheering on the latest round of fiscal easing coming out of the White House. There is growth of course, but ofvery low quality given the level of government intervention and surging public sector debt burdens and is deserving more of single-digit P/E multiples than anything in the 14x areas, which many Wall Street strategists see as fair-value. There is an inverse relationship, over time, between structural government deficits and market multiples and the current trend augurs for lower valuations, not higher. The added perception that the pace of U.S. economic activity is as pervasive as it was this time last year. But when the Fed stopp ed expanding its balance sheet and investors awoke to the deep-rooted problems in Europe, the pace ofgrowth slowed and a healthy dose of caution crept back into the marketplace . Those memories have faded but we would expect to see the U.S. economy to come in below the l ofty expectations that are currently embedded in market valuations. If things were that stro ng beneath the surface we wouldn’ t have needed QE2 or this latest round of fiscal easing. Even the ballyhooed upwardly revised Q3 real GDP data in the U.S. was a bit ofan overstatement. If not for the wealth-effect -induced decline in the savings rate, real GDP growth would have been closer to a 2.0% at an annual rate rather than 2.5% — and in a quarter that historically at this stage of the recovery when it should be at least 4%. What has the growt h bulls all in a tizzy is the downtrend in initial jobless claims. Yet, someone has to e xplain how in the latest week w e could have the level of “insured unemployment” soar 523k to 4.2 million and somehow construe that as something good. 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, visitwww.gluskinsheff.com
David A. Rosenberg December 13, 2010 Chief Economist & Strategist Economic [email protected]+ 1 416 681 8919
MARKET MUSINGS & DATA DECIPHERING
Breakfast with DaveWHILE YOU WERE SLEEPING
IN THIS ISSUE
• While you were sleeping:from an economic dataperspective, there was nomajor earth-shattering news today, but the risk-on trade remains in place
• One over extended stockmarket: this has indeed
been a U.S. stock marketin need of good newsannouncements for itssuccess
• Policy discord: The U.S. isbusy fighting deflation andeasing fiscal policywhereas the emerging market countries are busyfighting inflation andmoving towards austerity
• Perception versus reality: Ihave been a secular bondbull and am not yet
changing my view of thefixed-income market, but
the perception that theeconomy will growvigorously is nowextremely strong
From an economic data perspective, there was no major earth-shattering news
today, but the risk-on trade remains in place and today’s action is being
underpinned by the fact that contrary to some expectations, China refrained
from raising interest rates in the face of some accelerating inflation numbers
and some decent economic reports as well. Let ‘er rip. The MSCI Asia Pacific
index is up 0.5% today and the Nikkei jumped 0.8%. In the meantime, U.S.
Treasury yields are making fresh six-month highs. Commodities are on the move
— as is the Canadian dollar — with copper firming roughly 2% so far today. Gold
and oil are following suit.
In our opinion, the equity market is overbought and overextended and optimism
is reaching extreme levels. Perceptions over the sustainability of U.S. economic
growth are proving tough to break and investors are cheering on the latest round
of fiscal easing coming out of the White House. There is growth of course, but of
very low quality given the level of government intervention and surging public
sector debt burdens and is deserving more of single-digit P/E multiples than
anything in the 14x areas, which many Wall Street strategists see as fair-value.
There is an inverse relationship, over time, between structural government
deficits and market multiples and the current trend augurs for lower valuations,
not higher.
The added perception that the pace of U.S. economic activity is as pervasive asit was this time last year. But when the Fed stopped expanding its balance
sheet and investors awoke to the deep-rooted problems in Europe, the pace of
growth slowed and a healthy dose of caution crept back into the marketplace.
Those memories have faded but we would expect to see the U.S. economy to
come in below the lofty expectations that are currently embedded in market
valuations. If things were that strong beneath the surface we wouldn’t have
needed QE2 or this latest round of fiscal easing.
Even the ballyhooed upwardly revised Q3 real GDP data in the U.S. was a bit of
an overstatement. If not for the wealth-effect-induced decline in the savings
rate, real GDP growth would have been closer to a 2.0% at an annual rate rather
than 2.5% — and in a quarter that historically at this stage of the recovery when
it should be at least 4%. What has the growth bulls all in a tizzy is the downtrendin initial jobless claims. Yet, someone has to explain how in the latest week we
could have the level of “insured unemployment” soar 523k to 4.2 million and
somehow construe that as something good.
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,
We have a busy week ahead: U.S. retail sales and inflation data, the Fed
meeting, the German ZEW and Ifo sentiment data, RIM and BestBuy earnings,
President Obama has called for a CEO Summit for Wednesday, and on Thursday
we have the Irish vote over its IMF-led assistance package. Could be ripe for
some renewed volatility.
The latest U.S. fiscal package
has caused most economiststo revise up their real GDP
forecast for Q4 and 2011
Just a word on the U.S. fiscal package that has caused every economists, and
his/her mother, to revise up Q4 and 2011 real GDP forecasts. This could be
very premature based on past U.S. consumer responses to tax relief that is
perceived to be temporary as opposed to permanent (as is the case with this
latest package of goodies).
Remember back in early 2008, President Bush cobbled together, along with
Congress, a $168 billion economic stimulus plan to help reverse the recession.
The bill includes tax rebates, a rescue plan for distressed mortgages, and tax
breaks for small businesses. The first cheques arrived in homes during the last
week of April 2008. Here is what the President declared at that time:
“These rebates will begin reaching American families in May. And when the
money reaches the American people, we expect they will use it to boost
consumer spending, and that will spur job creation, as well.”
For a brief period, the bond market sold off (the U.S. 10-year yield jumped 60
basis points) and the stock market took off for about two months (the Dow
surged around 1,300 points) — led by the consumer discretionary group. This
had to have been the greatest head-fake of all time because of the fact that
these tax cuts (as opposed to the semi-permanent cut in tax rates in 2003 or
the Reagan tax cuts of the mid-1980s) were deemed to be temporary. What
households did instead was save the proceeds. As a result, the savings rate
went from 2.7% in Q1 to 4.8% in Q2 of 2008, and even as real personal
disposable income jumped an epic 9% annual rate, real consumer spending was
flat and real GDP barely expanded (+0.6% at an annual rate).
The stock market run-up in
2008, which was caused by
the Bush economic stimulus
plan, was probably the
greatest head-fake of all time
That was actually the second time that George ‘W’ tried a temporary tax
reduction — to no avail. Go back to the 2001 recession and the government
started to mail out $95 million refund checks in July of that year. Single
individuals got $300, single parents received $500 and married couples saw a
$600 rebate gift from their politicians in Washington, all for the sake of getting
the consumer to spend more. Well, again, it was viewed as a temporary
windfall, and despite all the forecasts at the time for an economic turnaround,
the savings rate doubled to 4.2% in the third quarter of that year and despite afiscally-induced 10.6% surge in real personal disposable income, real GDP
actually ended up contracting at a 1.1% annual rate and the consumer again
was very quiet that quarter (1.8% annualized growth — that’s it).
It’s completely normal for the majority of economists to get excited over these
periodic fiscal shifts like we saw last week. But as they upgrade their numbers,
what they don’t bother to take into account is the nature of the tax shifts and the
extent they will actually motivate consumers to spend the windfall as opposed to
saving it. The recent history of these transitory tax changes is pretty clear, and
the reaction of the economics community conjures up the memory of Albert
Einstein’s famous definition on insanity: doing the same thing over and over
again and expecting different results. In the lead-up to the temporary tax cuts in
both 2001 and 2008, the consensus was looking for at least 2% growth for the
quarters in which the relief began and acceleration thereafter — much to the
chagrin of the forecasting community. The problem is that there are no lasting
multiplier impacts from these types of fiscal gimmicks that are working their way
through the Senate and House.
It’s completely normal for
economists to get excited overperiodic fiscal shifts, like we
saw last week …
We fail to see how the People’s Bank of China (PBOC) allowing itself to fall
further behind the inflation curve is a good thing, but only time will tell the extent
to which more tightening moves will be required. The inflation problem there
transcends food — credit, real estate and labour costs must be added to the
worry list.
Moreover, the situation in Europe remains fluid, to say the list. Just to show how
incestuous it all is, here we have the just-released update on the BIS data
showing that German banks have massive exposure of $217 billion to Spanish
debt and yet Spanish banks have $98 billion of exposure to Portuguese
sovereign debt. German banks have total exposure of $65 billion to Greece and
France is even larger at $83 billion. Both German and U.K. banks have just
under $190 billion apiece in overall exposure to Ireland and it would be a very
big mistake to assume that the emerald country won’t, at some point, do thelogical thing for its citizenry and demand some “shared sacrifice” out of its
creditors. See Spotlight on Banks’ Exposure in Europe on page C1 of today’s
WSJ for more on this saga.
… But what these economists
don’t take into account is the
nature of the tax shifts, and
the extent they will actually
motivate consumers to spend
this windfall as opposed to
saving it
We remain long-term secular bulls on commodities, but as the charts below
reveal, the net speculative position in gold, oil and copper are far too high right
now for comfort. Oil is at a record high in terms of speculative net longs on the
CHART 1: SPECULATIVE LONG POSITION IN OIL — AT A RECORD HIGH
United States: Noncommercial Long minus Short Position in Oil(contracts of 1,000 barrels, thousands)
10505
225
150
75
0
-75
Source: Haver Analytics, Gluskin Sheff
CHART 2: SPECULATIVE INTEREST IN GOLD AT NEAR-RECORD TOO
United States: Noncommercial Long minus Short Position in Gold
(contracts of 100 troy oz, thousands)
10505
300
200
100
0
-100
Source: Haver Analytics, Gluskin Sheff
We also remain long-term bulls on bonds but the difference between bonds and
commodities is that the former is now the most detested asset class on the
planet — see Dealers See Higher ‘11 Yields (that could have been written a year
ago, and even with the Bernanke/Obama led stock market rally in recent
months, bonds still rivalled stocks in total return terms) on page C2 of the WSJ.
Of the 18 forecasters polled, only one sees the yield on the U.S. 10-year T-notecoming back below the 3% mark next year – 10 forecasters are expecting 3.5%
or higher. Talk about groupthink. Meanwhile, the latest Commitment of Traders
data show that open interest in U.S. Treasury bond contracts are at their lowest
levels in more than five years — another sign of total disinterest in the fixed-
income market. As contrarians, we sort of like that.
Vitaliy Katsenelson, a Denver-based money manager who recently wrote a bible
of a book on investing (we had the honour of reading the manuscript) is featured
on page 14 of Barron’s. He stated that he is looking for a “sideways” market
and screening for “companies that have a lot of cash.” He himself has a ton of
cash too — a 35% cash position and lays out the reason very clearly — nobody
“can win buying an overvalued asset and hoping it will appreciate.” Well, at
least there are a couple of seasoned professional investors out there who
understand what the risks are.
I have been a secular bond bull
and am not yet changing my view of the fixed-income
market, but the perception
that the economy will grow
vigorously is now extremely
strong
PERCEPTION VERSUS REALITY
I have been a secular bond bull and am not yet changing my view of the fixed-
income market, but the perception that the economy will grow vigorously is now
extremely strong. The view that Europe will solve its problems is pervasive and
that the emerging economies will propel global growth despite the need to
tighten policy. I think that the U.S. economy will only grow about 2% next year
and that core inflation will remain on a declining trend. I can see some
European countries having to undergo a debt restructuring causing a rise in risk
premia in general, but the reality is that this will likely take more time to play out
than I had thought before. For the time being, I would expect upward revisions
to Q4 and by extension Q1 2011 GDP and hence earnings; therefore, over the
near-term, it may not be a bad idea, tactically, to lighten up on the bearishness.
As I mentioned above, I am not changing my view, but think of it as a company
lifting the bottom end of its revenue forecast.
I continue to see these as primary downside risks, but again, likely not
immediate threats:
1. The U.S. Treasury market becomes unglued.
2. Further sharp increases in energy prices.
3. Renewed fiscal problems in Europe.
4. Bad inflation news out of emerging markets.
5. U.S. state & local cutbacks become more severe.
6. Latest down-leg in home prices accelerates.
Let’s examine each one of these.
The U.S. Treasury market
The bond market has clearly overreacted to the so-called fiscal stimulus. This is
a clear case of perception and reality going through a temporary separation.The market perceived this to be a stimulus, but all the government has done is
to ensure that there is no federal withdrawal in 2011. Fine. This means that
Treasury borrowings will be about the same next year as it was in 2010. As far
as we can tell, the yield on the 10-year T-note ranged between 2.4% and 4.0% in
2010, so there is no reason to believe there will be a breakout from that range
The perception is that the U.S. economy will now grow strongly; that Europe will
solve its problems and that emerging economies will continue to propel global
growth. But the reality is that the U.S. economy is going nowhere without
government life support. This remains an extremely fragile recovery with few
organic underpinnings.
We believe that the U.S. economy will barely expand 2% next year and that
deflation will remain the primary risk. Some European countries will default
causing a sharp rise in risk premia — witness the sharp erosion in the Spanish
bond market last week. Moody’s just said it is putting 10 Portuguese banks
under review for possible downgrade. In the wake of the Fitch downgrade,
Ireland’s CDS spreads (550bps) now trade above the Ukraine! And the Ukraine
has a B rating, not BBB as Ireland still clings to, but not for long.
Meanwhile, the typical investor has totally taken his/her eye off the ball as it
pertains to the prospect of a deflationary shock coming from the other side of
the Atlantic. There is apparently a very heavy debt refinancing calendar in
Europe in the first quarter of the new year and of course there is also the Irish
election (have a look at Debt Refinancing Sparks Fears of Deeper Euro Crisis on
page 3 of today’s FT). The eurozone has to refinance a record $750bln of debt
in 2011, and this pressure is likely to force Portugal into the unenviable position
in following Ireland and Greece on the road towards emergency funding.
Headline risk from that part of the world promises to usher in a heightened
period of volatility and safe-haven movements in various asset markets and
currencies, which is why now is the time to buy insurance against a possible
market correction, to expect a reversal in the bond yield run-up and flows into
currencies like the U.S. dollar and the Swiss franc during the first quarter. Butstart planning now. There is no better signpost of what is to come than the
litany of growth upgrades from the economics community, which is the hallmark
of a market top.
The good news for the bond market actually comes from a survey cited on page
15 of the weekend FT — conducted by Knight Capital — which found that 54% of
respondents believed the backup in yields was due to U.S. fiscal fears. These
fears are unwarranted as far as what they mean for providing anything more
than a brief lift to growth, and remember, this new Congress is going to be chock
full of folks who are fiscal hawks and who also want to rein in a Federal Reserve
that has likely gone way too far in pursuing its multiple mandates. Only 29% of
the respondents see the increase in yields as having anything to do with
inflation, and it was equally encouraging to see consumer inflation expectationsrecede a notch in last Friday’s University of Michigan Consumer Sentiment
survey for December. Without inflation, any bond selloff will prove to be
temporary, not to mention a great opportunity to add some more income to the
As an aside, and we have mentioned this repeatedly, our long-standing SIRP
theme is not exclusive to bonds, but also hybrids, royalties, MLPs, trusts, REITS
and income-equity. After all, 299 U.S. companies in Q3 boosted their dividend
payouts, up 56% from a year ago (just 35 companies cut, a 74% slide).
Bad inflation news out of emerging markets
Meanwhile, inflation is becoming more entrenched in the emerging market world
— China’s CPI jumped 1.1% MOM in November, which was well above expected
and pushed the headline YoY rate to a 48-month high of 5.1% (consensus was
at 4.7%). The YoY trend in producer prices just spiked to 6.1% from 5.0% in
October, and is nearly 2% now even after stripping food out. This comes right
after the government raised banking sector reserve requirements for the third
time in the past month; however, it is increasingly becoming obvious that more
aggressive action is going to be required such as interest rate hikes and
currency appreciation. The concerns that the PBOC is behind the inflation curve,
and will have to clamp down that much more on growth, is singularly the most
pronounced risk for the commodity price outlook for the coming year.
U.S. state & local government
With regard to state and local governments, the pressure is going to be more
intense with respect to funding as the “Build America Bond” program draws to a
close. Much of last year’s fiscal stimulus went into state government coffers
and that source of assistance is now gone. The sector has laid off 250,000
people in the past year and more is to come as this crucial 13% chunk of the
economy moves further into downside mode.
Latest down-leg in home prices accelerates
It’s perplexing that the latest down-leg in U.S. home prices has gone virtuallyunnoticed by the media and the markets. The Case-Shiller index is down in each
of the past three months and there is still roughly two years’ of unsold inventory
overhanging the market once the “shadow” foreclosure backlog is included.
Meanwhile, as we saw in the latest UofM consumer sentiment survey, demand
is dormant as homebuying intentions slipped in December to a level that can
only be described as anaemic. Mortgage applications remain near decade-low
levels and part of this reflects lingering caution among private lenders who are
still maintaining fairly stringent credit guidelines — have a look at Housing Shaky
as Lenders Tighten on page A4 of the WSJ. Interesting enough, the banks are
once again sending out credit cards en masse — perhaps because borrowers
this cycle have ensured that they stay current on their plastic even as they fall
behind on their mortgage payments — see Lenders Return to Big Mails on CreditCards on the front page of today’s NYT.
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 theprudent stewardship of our clients’ wealth through the delivery of strong, risk-adjustedinvestment returns together with the highest level of personalized client service. OVERVIEW
As of September 30, 2010, the Firmmanaged assets of $5.8 billion.
Gluskin Sheff became a publicly tradedcorporation on the Toronto Stock Exchange (symbol: GS) in May 2006 andremains 49% owned by its senior
management and employees. We havepublic company accountability andgovernance with a private company commitment to innovation and service.
Our investment interests are directly aligned with those of our clients, asGluskin Sheff’s management andemployees are collectively the largestclient of the Firm’s investment portfolios.
We offer a diverse platform of investmentstrategies (Canadian and U.S. equities,Alternative and Fixed Income) andinvestment styles (Value, Growth and
Income).1
The minimum investment required toestablish a client relationship with theFirm is $3 million.
PERFORMANCE
$1 million invested in our CanadianEquity Portfolio in 1991 (its inceptiondate) would have grown to $9.1 million
2
on September 30, 2010 versus $5.9 millionfor the S&P/TSX Total Return Indexover the same period.
$1 million usd invested in our U.S.Equity Portfolio in 1986 (its inceptiondate) would have grown to $11.8 millionusd
2on September 30, 2010 versus $9.6
million usd for the S&P 500 TotalReturn Index over the same period.
INVESTMENT STRATEGY & TEAM
We have strong and stable portfoliomanagement, research and client serviceteams. Aside from recent additions, ourPortfolio Managers have been with theFirm for a minimum of ten years and wehave attracted “best in class” talent at all
levels. Our performance results are thoseof the team in place.
Our investment interests are directlyaligned with those of our clients, as Gluskin
She ff ’s management and employees are collectively the largest client of the Firm’sinvestment portfolios.
$1 million invested in our
Canadian Equity Portfolio
in 1991 (its inception
date) would have grown to
$9.1 million2 on
September 30, 2010
versus $5.9 million for the
S&P/TSX Total Return
Index over the same
period.
We have a strong history of insightfulbottom-up security selection based onfundamental analysis.
For long equities, we look for companies with a history of long-term growth andstability, a proven track record,shareholder-minded management and ashare price below our estimate of intrinsic
value. We look for the opposite inequities that we sell short.
For corporate bonds, we look for issuers
with a margin of safety for the paymentof interest and principal, and yields whichare attractive relative to the assessedcredit risks involved.
We assemble concentrated portfolios -our top ten holdings typically representbetween 25% to 45% of a portfolio. In this
way, clients benefit from the ideas in which we have the highest conviction.
Our success has often been linked to ourlong history of investing in under-followed and under-appreciated smalland mid cap companies both in Canada
and the U.S.
PORTFOLIO CONSTRUCTION
For further information,
please contact
questions@gluskinshe ff .com
In terms of asset mix and portfolioconstruction, we offer a unique marriagebetween our bottom-up security-specificfundamental analysis and our top-downmacroeconomic view.
Page 11 of 12
Notes:Unless otherwise noted, all values are in Canadian dollars.
1. Not all investment strategies are available to non-Canadian investors. Please contact Gluskin Sheff for information specific to your situation.
2. Returns are based on the composite of segregated Value and U.S. Equity portfolios, as applicable, and are presented net of fees and expenses.
Copyright 2010 Gluskin Sheff + Associates Inc. (“Gluskin Sheff”). All rights
reserved. This report is prepared for the use of Gluskin Sheff clients andsubscribers to this report and may not be redistributed, retransmitted ordisclosed, in whole or in part, or in any form or manner, without the expresswritten consent of Gluskin Sheff. Gluskin Sheff reports are distributedsimultaneously to internal and client websites and other portals by GluskinSheff and are not publicly available materials. Any unauthorized use ordisclosure is prohibited.
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 beregarded by recipients as a substitute for the exercise of their own judgmentand readers are encouraged to seek independent, third-party research onany companies covered in or impacted by this report.
Individuals identified as economists do not function as research analystsunder U.S. law and reports prepared by them are not research reports underapplicable U.S. rules and regulations. Macroeconomic analysis isconsidered 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 aninvitation to make an offer, to buy or sell any securities or other financialinstrument or any derivative related to such securities or instruments (e.g.,options, futures, warrants, and contracts for differences). This report is notintended to provide personal investment advice and it does not take intoaccount the specific investment objectives, financial situation and theparticular needs of any specific person. Investors should seek financialadvice regarding the appropriateness of investing in financial instrumentsand implementing investment strategies discussed or recommended in thisreport and should understand that statements regarding future prospectsmay not be realized. Any decision to purchase or subscribe for securities inany offering must be based solely on existing public information on suchsecurity or the information in the prospectus or other offering documentissued in connection with such offering, and not on this report.
Securities and other financial instruments discussed in this report, orrecommended by Gluskin Sheff, are not insured by the Federal DepositInsurance Corporation and are not deposits or other obligations of anyinsured depository institution. Investments in general and, derivatives, inparticular, involve numerous risks, including, among others, market risk,counterparty default risk and liquidity risk. No security, financial instrumentor derivative is suitable for all investors. In some cases, securities andother financial instruments may be difficult to value or sell and reliableinformation about the value or r isks related to the security or financialinstrument may be difficult to obtain. Investors should note that incomefrom such securities and other financial instruments, if any, may fluctuateand that price or value of such securities and instruments may rise or fall
and, in some cases, investors may lose their entire principal investment.
Past performance is not necessarily a guide to future performance. Levelsand basis for taxation may change.
Foreign currency rates of exchange may adversely affect the value, price orincome of any security or financial instrument mentioned in this report.Investors in such securities and instruments effectively assume currencyrisk.
Materials prepared by Gluskin Sheff research personnel are based on publicinformation. Facts and views presented in this material have not beenreviewed by, and may not reflect information known to, professionals inother business areas of Gluskin Sheff. To the extent this report discussesany legal proceeding or issues, it has not been prepared as nor is itintended to express any legal conclusion, opinion or advice. Investorsshould consult their own legal advisers as to issues of law relating to thesubject matter of this report. Gluskin Sheff research personnel’s knowledgeof legal proceedings in which any Gluskin Sheff entity and/or its directors,officers and employees may be plaintiffs, defendants, co—defendants orco—plaintiffs with or involving companies mentioned in this report is basedon public information. Facts and views presented in this material that relate
to any such proceedings have not been reviewed by, discussed with, andmay not reflect information known to, professionals in other business areasof Gluskin Sheff in connection with the legal proceedings or mattersrelevant to such proceedings.
Any information relating to the tax status of financial instruments discussedherein is not intended to provide tax advice or to be used by anyone toprovide tax advice. Investors are urged to seek tax advice based on theirparticular circumstances from an independent tax professional.
The information herein (other than disclosure information relating to GluskinSheff and its affiliates) was obtained from various sources and GluskinSheff 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 reportand is not incorporated by reference into this report. The inclusion of a linkin this report does not imply any endorsement by or any affiliation withGluskin Sheff.
All opinions, projections and estimates constitute the judgment of theauthor 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 noobligation to update this report and readers should therefore assume thatGluskin 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 consequentialdamages or losses arising from any use of this report or its contents.
