Verus Monthly Market Insights

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1 January 2017 January 2017 Canadian stocks climb through January, with a strong push in the sector The S&P/TSX Composite Index gained 0.64% through the month of January on a price only basis. With 249 stocks in the Index at month end, 126 appreciated, while 123 declined and 1 was left unchanged. There was 1 constituent removed from the index through January. The small-cap and mid-cap indices underperformed the broader index, while the large-cap index outperformed. The, Consumer Discretionary, Consumer Staples, Healthcare and Energy sectors declined, while the remaining 6 sectors advanced through the month of January. 12.0% 2017 Index Returns (price only) January YTD S&P/TSX Composite 0.64% 0.64% S&P/TSX % 1.02% S&P/TSX Completion -0.46% -0.46% S&P/TSX SmallCap 0.42% 0.42% Top 10 Point Contributors Royal Bank of Canada (+39.7) Bank of Nova Scotia (+27.5) Toronto-Dominion Bank (+24.4) Barrick Gold Corp. (+22.1) Goldcorp Inc. (+17.9) Teck Resources Ltd. (+17.7) First Quantum Minerals Ltd. (+16) Manulife Financial Corp. (+15.6) Bank of Montreal (+13.4) Rogers Communications Inc. (+12.7) Top 10 Point Detractors Suncor Energy Inc. (-44.8) Canadian Natural Resources Ltd (-29) Cenovus Energy Inc. (-16.1) Crescent Point Energy Corp. (-12.6) Tourmaline Oil Corp. (-10.3) Seven Generations Energy Ltd. (-10) Enbridge Inc. (-7.9) Imperial Oil Ltd. (-7.6) ARC Resources Ltd. (-7.5) Peyto Exploration & Development Corp. (-6) January 2017 Monthly S&P/TSX Composite Index Performance by Sector (Price only) 10.0% 9.3% 8.0% 6.0% 4.0% 2.0% 0.0% Telecom 2.7% 1.9% 1.2% S&P/TSX Composite 0.6% Industrials 0.5% InfoTech 0.3% -2.0% -0.5% Cons. Discretionary -0.6% Cons. Staples -1.5% -4.0% Healthcare -3.5% -6.0% -8.0% Source: Bloomberg Energy -5.6% 1 VERUS MONTHLY MARKET INSIGHTS

2 Sector Monthly price-only Monthly total 35.43% of S&P/TSX Composite +1.89% +2.34% Notable Movement Of the sector s 27 constituents at month end, 15 advanced and 12 retreated. Contributing the most points to the sector through the month of January was Royal Bank of Canada (RY, +3.88%). Fairfax Financial Holdings Ltd. (FFH, -4.21%) was the largest laggard in the sector in January. Energy 20.11% of S&P/TSX Composite 12.82% of S&P/TSX Composite Industrials 8.87% of S&P/TSX Composite Consumer Discretionary 4.93% of S&P/TSX Composite -5.61% -5.53% +9.27% +9.32% +0.51% +0.51% -0.65% -0.52% 41 of the Energy sector s 50 constituents declined through the month of January, while 8 rose and 1 was left unchanged. Detracting the most points from the sector through January was Suncor Energy Inc. (SU, -8.06%). Cameco Corp. (CCO, %) contributed the most point to the sector through month end. CCO plunged in mid-january, after the company said that 2016 results would be significantly below expectations, but the stock was able to regain its footing on comments by CFO Grant Isaac stating his optimism on the uranium market. The sector saw 42 of its 56 constituent s rise through January, while 14 retreated. Barrick Gold Corp. (ABX, %) contributed the most points to the sector through January, as the stock followed the price of gold higher. Detracting the most points from the sector was New Gold Inc. (NGD, %). NGD plummeted near the end of the month, after the company provided an update on its Rainy River project where the company increased its capex. 14 of the Industrials sector s 26 constituents gained through the month of January, while 12 retreated. Canadian Pacific Railway Ltd. (CP, +2.74%) added the most points to the sector through January. The biggest laggard in the sector through January was Ritchie Bros Auctioneers Inc. (RBA, -7.40%), after the stock received a rating downgrade at BofAML, citing weakness in auction volumes through Q4. The Consumer Discretionary sector saw 13 of its 22 constituents fall through the month of January, while 10 advanced. There was 1 constituent removed from the sector by month end. Magna International Inc. (MG, -3.45%) detracted the most points from the sector through January, as threats from Donald Trump targeted German car manufacturers. According to Bloomberg, about 32% of the company s 2015 revenue was split by German car manufacturers Daimler, Volkswagen and BMW. The biggest point contributor through January was Shaw Communications Inc. (SJR.B, +4.56%). 2 VERUS MONTHLY MARKET INSIGHTS

3 Telecommunications Services 4.93% of S&P/TSX Composite Consumer Staples 3.76% of S&P/TSX Composite 3% of S&P/TSX Composite 2.84% of S&P/TSX Composite Information Technology 2.74% of S&P/TSX Composite Healthcare 0.57% of S&P/TSX Composite +2.67% +2.67% -1.45% -1.42% -0.48% -0.11% +1.20% +1.43% +0.26% +0.26% -3.50% -3.40% The Telecommunications Services sector saw 3 of its 4 constituents advance through the month of January. The largest point contributor in the sector through January was Rogers Communications Inc. (RCI.b, +9.0%), after the company reported earnings on the 26 th that were above estimates. Manitoba Telecom Services Inc. (MBT, -1.05%) was the lone detractor through month end. Of the Consumer Staples 11 constituents at month end, 5 gained and 6 retreated. Detracting the most points from the sector in January was Alimentation Couche-Tard Inc. (ATD.B, -2.09%). Maple Leaf Foods Inc. (MFI, +6.08%) was the largest point contributor through January. The sector saw 12 of its 22 constituents fall through January, while the remaining 10 advanced. RioCan REIT (REI.UN, -1.89%) was the largest point detractor at the end of January. Milestone Apartments REIT (MST.UN, %) contributed the most points to the sector in January, as the stock saw a large climb near the end of the month after it was reported that Starwood Capital Group had agreed to buy the company. 11 of the sector s 14 constituents rose through the month, while the remaining 3 declined. Adding the most points to the sector through January was Fortis Inc. (FTS, +0.92%). Brookfield Renewable Partners LP (BEP.UN, -1.63%) was the largest point detractor at month end. The Information Technology sector saw 6 of its 12 constituents gain through January, while the remaining 6 members retreated. Open Text Corp. (OTEX, +7.43%) was the largest point contributor in the sector through January. The biggest laggard in the sector was CGI Group Inc. (GIB.A, -2.90%). The Healthcare sector saw 3 of its 5 constituents fall through the month of January, while the remaining 2 rose. Valeant Pharmaceuticals International Inc. (VRX, -7.76%) was the biggest point detractor in the sector through January. It was announced mid-month that the company had agreed to sell approximately $2.1 billion in assets in two separate deals. Adding the most points to the sector through January was Chartwell Retirement Residences (CSH.UN, +4.14%). 3 VERUS MONTHLY MARKET INSIGHTS

4 January 2017 U.S. stocks advance through the month of January, as Energy and Telecoms struggle The S&P 500 index gained 1.79% through the month of January on a price only basis. Out of the 505 stocks in the index at month end, 330 rose, while 177 declined and 1 was left unchanged. 3 constituents were added and 3 were removed during the month. The Dow Jones Industrial Average and Russell 2000 indices underperformed the S&P 500, while the NASDAQ Composite outperformed. The Energy, Telecom and sectors declined, while the remaining 8 sectors advanced through the month of January Index Returns (price only) January YTD S&P % 1.79% Dow Jones Industrial Average 0.51% 0.51% NASDAQ Composite 4.30% 4.30% Russell % 0.35% Top 10 Point Contributors Facebook Inc. (+4.2) Apple Inc. (+3.42) Amazon.com Inc. (+3.37) Microsoft Corp. (+2.3) Comcast Corp. (+1.8) CSX Corp. (+1.13) Procter & Gamble Co. (+1.09) Walt Disney Co. (+1.09) Broadcom Ltd. (+1.05) Visa Inc. (+1.02) Top 10 Point Detractors Exxon Mobil Corp. (-3.1) Verizon Communications Inc. (-2.1) QUALCOMM Inc. (-2) General Electric Co. (-1.95) Bristol-Myers Squibb Co. (-1.8) Chevron Corp. (-1.4) Citigroup Inc. (-1.2) JPMorgan Chase & Co. (-0.7) Johnson & Johnson (-0.6) Pfizer Inc. (-0.5) 6.0% 5.0% 4.0% January 2017 Monthly S&P 500 Index Performance by Sector (Price Only) 4.6% Info Tech 4.3% Cons. Discretionary 4.2% 3.0% 2.0% 1.0% 0.0% -1.0% Healthcare 2.2% S&P % Cons. Staples Industrials 1.5% 1.4% 1.2% 0.1% -0.1% -2.0% -3.0% -4.0% -5.0% Source: Bloomberg Telecom -3.5% Energy -3.6% 4 VERUS MONTHLY MARKET INSIGHTS

5 Sector Information Technology 21.27% of S&P 500 Index 14.56% of S&P 500 Index Health Care 13.65% of S&P 500 Index Consumer Discretionary 12.31% of S&P 500 Index Industrials 10.23% of S&P 500 Index Consumer Staples 9.34% of S&P 500 Index Energy 7.21% of S&P 500 Index Monthly price-only Monthly total +4.34% +4.41% +0.12% +0.23% +2.15% +2.25% +4.18% +4.24% +1.37% +1.41% +1.45% +1.65% -3.64% -3.60% Notable Movement Of the 67 constituents at month end, 51 gained through January, while the remaining 17 declined. There was 1 constituent removed from the sector through the month. Contributing the most points to the sector in January was Facebook Inc. (FB, +13.3%). QUALCOMM Inc. (QCOM, %) detracted the most points from the sector in January, after the company ran into legal trouble with Apple Inc. accusing QCOM of monopolizing the market for chips for wireless devices. Of the Financial sector s 63 constituents, 38 advanced through January, while the remaining 25 declined. Wells Fargo & Co. (WFC, +2.21%) contributed the most points to the sector through months end. The biggest laggard and point detractor in the sector through January was Citigroup Inc. (C, -6.06%). The Health Care sector saw 46 of its 60 constituents advance through the month of January, while 16 declined. 2 constituents were added, while 2 were removed from the sector during the month. Contributing the most points to the advance was Merck & Co Inc. (MRK, +5.30%). Bristol-Myers Squibb Co. (BMY, %) was the sectors largest point detractor through the month, after the company announced that it would not seek accelerated approval for a combinations of two drugs to treat lung cancers. 58 of the Consumer Discretionary sector s 86 constituents advanced through the month of January, while the remaining 27 constituents retreated and 1 was left unchanged. Amazon.com Inc. (AMZN, +9.82%) was the sectors largest point contributor through January. The biggest laggard in the sector was Target Corp. (TGT, %), after the company cut its Q4 earnings forecast after sales were hurt by disappointing customer traffic. The Industrials sector saw 52 of its 69 constituents gain through the month of January, while the remaining 17 retreated. CSX Corp. (+29.11%) was the largest point contributor in the sector through January, as the stock saw a major boost mid-month after it was reported that former Canadian Pacific Railway Ltd. CEO Hunter Harrison would be teaming up with an activist investor to target the company. Detracting the most points in the sector was General Electric Co. (GE, %). The stock lost its footing near the end of the month, after reporting sales that came in below expectations Of the Consumer Staples sector s 37 constituents at month end, 20 rose, while 17 declined. Contributing the most points in the sector through January was Procter & Gamble Co. (PG, +4.19%), after the company reported earnings on the 20 th that came in above most analysts estimates. Wal-Mart Stores Inc. (WMT, -3.44%) was the biggest laggard in the sector through months end. 28 of the Energy sector s 36 constituents fell through the month of January, while the remaining 8 advanced. Detracting the most points in the sector through January was Exxon Mobil Corp. (XOM, -7.06%). The stock struggled through January, as the company planned the exit of its CEO Rex Tillerson, as he prepares to be confirmed as the U.S. secretary of state, and after the company reported that it would more than double its resources in the Permian Basin. Kinder Morgan Inc. (KMI, +7.87%) was the sectors largest point contributor through the month of January. 5 VERUS MONTHLY MARKET INSIGHTS

6 3.15% of S&P 500 Index 2.92% of S&P 500 Index 2.83% of S&P 500 Index Telecommunication Services 2.52% of S&P 500 Index +1.21% +1.25% +4.59% +4.64% -0.12% -0.06% -3.50% -2.48% contributor through the month of January. 21 of the 28 constituents in the sector rose, while the remaining 7 retreated through the month of January. NextEra Energy Inc. (NEE, +3.57%) was the sectors largest point contributor through months end. Detracting the most points from the sector through January was SCANA Corp. (SCG, -6.25%). 22 of the sectors 25 constituents rose, while 3 declined through January. Freeport-McMoRan Inc. (FCX, %) was the largest point contributor to the sector through January, as the stock followed the price of copper as it rose steadily throughout the month. Air Products & Chemicals Inc. (APD, -2.82%) was the sectors largest point detractor, after the company ran into a speed bump in relation to its takeover of Yingde Gases Group Co. The sector saw 11 of its 29 constituents advance through the month, while the remaining 18 declined. The biggest laggard in the sector through January was Prologis Inc. (PLD, -7.46%). Equinix Inc. (EQIX, +7.71%) was the sectors largest point contributor through months end. 2 of the 5 constituents in the Telecom sector fell through January, while the remaining 3 advanced. Verizon Communications Inc. (VZ, -8.19%) was the largest point detractor in the sector through January, as the company reported earnings that came in below estimates and news broke that VZ had approached Charter Communications Inc. about a potential takeover. Contributing the most points to the sector through month end was CenturyLink Inc. (CTL, +8.75%). 6 VERUS MONTHLY MARKET INSIGHTS

7 Important Disclosures This material does not include or constitute an investment recommendation, and is not intended to take into account the particular investment objectives, financial conditions, or needs of individual clients. Before acting on this material, you should consider whether it is suitable for your particular circumstances and talk to your investment advisor. This report has been prepared by members of the ScotiaMcLeod Portfolio Advisory Group. ScotiaMcLeod is the full service retail division of Scotia Capital Inc General Disclosures The Scotia Wealth Portfolio Advisory Group prepares this report by aggregating information obtained from various sources as a resource for Scotia Wealth Advisors and their clients. Information may be obtained from the Equity Research and Fixed Income Research departments of the Global Banking and Markets division of Scotiabank. Information may be also obtained from the Foreign Exchange Research and Scotia Economics departments within Scotiabank. In addition to information obtained from members of the Scotiabank group, information may be obtained from the following third party sources: Standard & Poor s, Valueline, Morningstar CPMS and Bloomberg. The information and opinions contained in this report have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. While the information provided is believed to be accurate and reliable, neither Scotia Capital Inc., which includes the Scotia Wealth Management Portfolio Advisory Group, nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Neither Scotia Capital Inc. nor its affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. This report is provided to you for informational purposes only. This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation or particular needs of any specific person. Investors should seek advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Nothing contained in this report is or should be relied upon as a promise or representation as to the future. The pro forma and estimated financial information contained in this report, if any, is based on certain assumptions and management s analysis of information available at the time that this information was prepared, which assumptions and analysis may or may not be correct. There is no representation, warranty or other assurance that any projections contained in this report will be realized. Opinions, estimates and projections contained in this report are our own as of the date hereof and are subject to change without notice. Copyright 2012 Scotia Capital Inc. All rights reserved 7 VERUS MONTHLY MARKET INSIGHTS