Let's Talk Charts August 30, 2017 Canada's equity market lagging world markets Chart of the Day S&P/TSX Composite MSCI World 90 This chart compares the relative performance of the S&P/TSX Composite with the MSCI World Index (quoted in local currency) Canada's S&P/TSX Composite reached its peak on February 21 st of this year and has been on a downtrend since. This is in sharp contrast to world markets which have been on a continuous climb in 2017. The US equity market, in particular, is charging ahead and is led by the technology sector, which only has a 3% weighting in Canada. Reasons for the underperformance of Canadian equities are the strong CAD and the larger weighting of Financials (34%), Energy (19%) and Materials (12%) in the index, which all continue to be laggards. Our DT 15 stock portfolio consists of 15 carefully selected international stocks and has a year-todate performance of 21.76% as at July 31, 2017, outperforming the MSCI World Index as well as the S&P/TSX composite significantly. www.dynamictree.com 2017 Dynamic Tree Asset Management. All Rights Reserved. 1/8
World Equity Indices World Equity Indices MSCI World Euro Stoxx 50 World markets continue their uptrend 135 World Equity Indices MSCI World Euro Stoxx 50 World markets are on an 8-year bull market beginning March 2009 European markets are down since May, but the Euro is up This chart compares the relative performance of the MSCI World Index with the Euro Stoxx 50 (quoted in local currency) 125 North American Equity Indices Asian Equity Indices Asian markets on an upward trend S&P/TSX Composite S&P 500 90 This chart compares the relative performance of the S&P/TSX Composite with the S&P 500 (quoted in local currency) Nikkei 225 Shanghai Shenzen CSI 300 but short of Japan's Nikkei 90 This chart compares the relative performance of the Nikkei 225 with the Shanghai Shenzen CSI 300 (quoted in local currency) 75 55 but for how much longer? 35 This chart compares relative performance of the MSCI World Index with the Euro Stoxx 50 (quoted in local currency) 125 180 160 140 80 60 European Equity Indices FTSE DAX European markets are up in 2017 Swiss Market Index 90 Major Equity Indices S&P/TSX Composite S&P 500 Swiss Market Index The US S&P 500 is significantly outperforming the rest of the world over a 10 -year period but Europe has lost momentum in the last few months This chart compares the relative performance of the FTSE with the DAX and SMI (quoted in local currency) 40 This chart compares the relative performance of the S&P/TSX Composite with the S&P 500 and SMI (quoted in local currency) www.dynamictree.com 2017 Dynamic Tree Asset Management. All Rights Reserved. 2/8
World Currencies EURCAD EURCAD EUR / $ CAD The Euro increased against EUR / $ CAD 1.55 the CAD although the CAD 1.75 has been strong vs. many 1.50 other currencies 1.65 1.45 1.40 1.35 1.30 This chart shows the amount of Canadian dollars required to purchase 1 Euro 1.55 1.45 1.35 1.25 Over a 10-year time period EURCAD is flat 1.15 This chart shows the amount of Canadian dollars required to purchase 1 Euro CADCHF CADCHF $ CAD / CHF $ CAD / CHF 0.80 0.78 0.76 0.74 0.72 0.70 0.68 This chart shows the amount of Swiss Francs required to purchase 1 Canadian dollar 1.30 1.10 0.90 0.80 0.70 Long-term uptrend of CHF is continuing CHF still seen as a safe haven 0.60 This chart shows the amount of Swiss Francs required to purchase 1 Canadian dollar EURUSD EURUSD EUR / $ USD we may see some EUR / $ USD profit taking in the 1.25 near-term 1.15 1.10 1.05 EURUSD broke $ for the first time since Jan 2015 0. This chart shows the amount of US dollars required to purchase 1 Euro 1.70 1.60 1.50 1.40 The USD has been trending up over the last 10-years will the USD ever make it 1:1 to the Euro? 1.30 1.10 0.90 This chart shows the amount of US dollars required to purchase 1 Euro www.dynamictree.com 2017 Dynamic Tree Asset Management. All Rights Reserved. 3/8
Interest Rates USD 1 Year Interest Rate Weekly Values: Rolling 12-Months USD 10 Year Interest Rate % % 1.60 1.40 0.80 USD rates on an uptrend but the pace has slowed 0.60 This chart shows the 1 year interest rate swap in the United States 2.80 2.60 2.40 2.20 1.80 1.60 1.40 Long-term rates are not following the uptrend of short-term rates This chart shows the 10 year interest rate swap in the United States EURO 1 Year Interest Rate EURO 10 Year Interest Rate % % -0.15-0.17-0.19-0.21 but we believe rates will soon begin to rise -0.23 Euro short-term -0.25 rates are still -0.27 falling This chart shows the 1 year interest rate swap in the European Union 1.10 0.90 0.70 0.50 0.30 Euro long-term rates are beginning to rise an indication of stronger economic growth in Europe 0.10 This chart shows the 10 year interest rate swap in the European Union CAD 1 Year Interest Rate USD 1 Year Interest Rate % % 1.55 6.00 1.45 CAD rates are 1.35 moving up 5.00 and are now at sharply par with US 1.25 4.00 rates 1.15 3.00 1.05 0. 0.85 0.75 This chart shows 1 year interest rate swap in Canada After many years of declining US shortterm rates they are on the rise again but the pace may be slower than many think 0.00 This chart shows the 1 year USD interest rate swap over a 10-year period www.dynamictree.com 2017 Dynamic Tree Asset Management. All Rights Reserved. 4/8
Commodities Gold Gold $ USD / Oz. $ USD / Oz. 1400 Gold at 2017 highs 1900 1350 1700 1300 1500 1250 1300 0 0 0 on rising geopolitical tensions and a weaker USD 0 This chart shows the price of Gold in USD 0 900 700 500 This chart shows the price of Gold in USD Despite positive momentum prices are still well below the 2011 peak $ USD / B 56 54 52 50 48 46 44 42 40 WTI Crude Oil Oil up again from its June low of $42 This chart shows the price of crude oil in USD $ USD / B 160 140 80 60 40 WTI Crude Oil However, we see no sustainable uptrend for oil at this point 20 This chart shows the price of crude oil in USD $ USD / Oz. 315 2 275 255 235 215 1 Copper Copper is accelerating its uptrend 175 Nicknamed "Dr. Copper", its price can give insights into the health of the global economy $ USD / Oz. 500 450 400 350 300 250 200 150 Copper Copper's uptrend reflects a strong global economy This chart shows the price of copper in USD www.dynamictree.com 2017 Dynamic Tree Asset Management. All Rights Reserved. 5/8
Macro Economic Data North American CPI % Quarterly Values; Rolling 3-Years European CPI % Quarterly Values; Rolling 3-Years % CANADA however, the FED is waiting % USA 3.00 to see higher inflation 3.00 before increasing interest 2.50 rates further US inflation on the rise 1.50 0.50 0.00 Sep-14-0.50 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 This chart compares the consumer price index between Canada and the US 0.00 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 - - United Kingdom Germany Switzerland European inflation too low to justify interest rate hikes This chart compares the consumer price index between the United Kingdom, Germany and Switzerland % 7.50 7.00 6.50 6.00 5.50 5.00 4.50 North American Unemployment Rate % Quarterly Values; Rolling 3-Years CANADA USA US unemployment at its lowest levels since 2007 is it time for the FED to act? 4.00 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 This chart compares the unemployment rate between Canada and the US Real GDP Growth by Country Rolling Quarterly Figures % 7.00 6.00 5.00 4.00 3.00 European Unemployment Rate % Quarterly Values; Rolling 3-Years United Kingdom Germany Switzerland Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 This chart compares the unemployment rate between The United Kingdom, Germany and Switzerland Real GDP Growth by Region Rolling Quarterly Figures United Kingdom Australia Germany USA Canada Japan China Strong economic growth reported around the world Europe North America Asia & Pacific 0.00 4.00 6.00 8.00 This chart shows the quarterly real GDP % growth per country on an annualized basis % 0.00 4.00 6.00 % This chart shows the quarterly real GDP % change per region on an annualized basis www.dynamictree.com 2017 Dynamic Tree Asset Management. All Rights Reserved. 6/8
World Comparison World Map Real GDP % Growth of Selected Countries Rolling Quarterly Figures Country Ranking GDP % Growth China 1 6.90 Japan 2 4.00 Canada 3 3.71 USA 4 2.60 Germany 5 2.10 Australia 6 1.70 United Kingdom 7 1.70 Switzerland 8 0.90 Brazil 9-0.35 This world map compares the real GDP % growth per country on an annualized basis Equity Indices Heatmap Relative Performance 52 Weeks as at Friday, August 25th, 2017 World 12.10% Germany 13.89% Europe 11.65% Great Britain 7.35% Asia Pacific 16.14% Switzerland 7.38% USA 12.07% China 14.53% Canada 1.76% Japan 14.93% This heatmap shows the relative 52 week performace of the MSCI World, the EURO Stoxx 50, MSCI Asia Pacific, S&P 500, SPTSX Composite, DAX, FTSE, Swiss Market Index, Shanghai Shenzen CSI 300 and NIKKEI 225 www.dynamictree.com 2017 Dynamic Tree Asset Management. All Rights Reserved. 7/8
Disclaimer This document is provided for informational purposes only and Dynamic Tree Asset Management AG (Dynamic Tree) expressly disclaims any responsibility or liability for, including any financial or other losses or damages of any kind that may arise from any use of this document. None of the information contained in this document is intended to provide, nor should be construed as, investment, financial, legal, tax or other advice and should not be relied upon as such. Dynamic Tree does not provide legal or tax advice and makes no representations as to the investment returns that may be achieved and/or the tax treatment that may be realized in general or by a particular person and/or client. Each person and/or client should consult their own legal and tax advisers regarding these issues. Certain of the information contained in this document has been obtained or prepared from publicly available documents and other sources prepared by third parties, and Dynamic Tree has relied on such information as published and did not audit or independently verify the accuracy of such information. Dynamic Tree makes no representations or warranties as to the accuracy or completeness of such information or any conclusions derived from such information. Certain information contained in this document may also constitute forward-looking information and/or forward-looking statements (collectively, Forward Information). Such Forward Information includes estimates, plans, expectations, intentions, opinions, forecasts, projections, guidance or any other statements that are not statements of fact, including global and industry economic conditions, policies, price forecasts and other similar considerations. Although Dynamic Tree believes that the assumptions and expectations in such Forward Information are reasonable, it cannot and does not give any assurance that such assumptions and expectations are correct, and may involve risks and uncertainties outside of Dynamic Tree s control that may cause actual results to differ materially from those expressed in this document. www.dynamictree.com 2017 Dynamic Tree Asset Management. All Rights Reserved. 8/8