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Quarterly Forecast Fall 2010 Highlights Luc de la Durantaye, CFA First Vice President Asset Quarterly Forecast Fall 2010 Highlights Luc de la Durantaye, CFA First Vice President Asset Allocation and Currency Management Team October 2010 Asset Allocation and Quantitative Team CIBC Global Asset Management Inc. For internal use

Agenda A Global Forecast Highlights B Currency Strategy Highlights CIBC Global Asset Management Inc. Agenda A Global Forecast Highlights B Currency Strategy Highlights CIBC Global Asset Management Inc. For internal use October 14, 2010 1

A. Global Forecast Highlights A-Synchronized Global Recovery § Emerging economies (i. e. mostly emerging A. Global Forecast Highlights A-Synchronized Global Recovery § Emerging economies (i. e. mostly emerging Asia) are moving into their second year of expansion. Australia is the only developed economy that is not trailing behind. § Very cyclical developed economies - such as Canada – have fully (or nearly) recovered the ground lost during the recession. § However, the structurally challenged developed economies - such as Japan, many parts of Europe, the United Kingdom and to a lesser extent the US – are still in the early stages of the recovery. Global Business Cycle: Employment Index: start of recession = 100 • Emerging Asia • BR • AU • MX RECESSION • EU • JP • CN, SW • SD • NW • NZ • U. S. • UK EXPANSION Y 1 RECOVERY EXPANSION Y 2 Source: CIBC Global Asset Management Inc. For internal use October 14, 2010 2

A. Global Forecast Highlights U. S. : Too Early To Remove Fiscal Stimulus? § A. Global Forecast Highlights U. S. : Too Early To Remove Fiscal Stimulus? § In the United States, tax-driven adjustments represent the bulk of the fiscal rebalancing in 2011. § Personal income taxes are projected to rise from 14. 6% of GDP in 2010 to 17. 5% in 2011 (i. e. a 2. 9% contraction). This should represent 312 billion that moves from the US household to the federal government. This represents 2. 74% of current disposable incomes. § Overall revenues are projected to increase by nearly $500 billion. Huge Tax-Driven Adjustments Coming in 2011 Source: CBO estimates CIBC Global Asset Management Inc. For internal use October 14, 2010 3

A. Global Forecast Highlights U. S. : Another Round of Fed Quantitative Easing? § A. Global Forecast Highlights U. S. : Another Round of Fed Quantitative Easing? § The Fed is contemplating another round of quantitative easing. However, the first round of Q. E. wasn’t a success. § Most of the excess liquidity injected by the FED in late 2008 early 2009 still hasn’t found its way to the real economy. U. S. banks still aren’t lending and are keeping the cash on their balance sheet. § The implementation of Basil III will also force banks to raise capital, reducing their incentive to lend. Cumulated Increase in the U. S. monetary base & U. S. commercial banks cash positions Fed Quantitative Easing (monetary base increase) Cash held on the sidelines by U. S. commercial banks Source: CIBC Global Asset Management Inc. For internal use October 14, 2010 4

A. Global Forecast Highlights China: Still Expecting a Soft Landing § The tightening efforts A. Global Forecast Highlights China: Still Expecting a Soft Landing § The tightening efforts deployed by the Bank of China should allow for China to experience a soft landing not a hard one. § There is still a lot of liquidity sloshing around in China. The liquidity injected in 2010 is smaller than in 2009 but still largely exceeds what has typically been injected in China on a yearly basis since the start of the decade. In 2009, domestic credit in China increased by +11. 24 trillion RMBs. In 2010, credit in China rose by 8. 5 trillion RMBs - hardly qualifying as a restrictive policy stance. China’s Tightening Campaign (yearly change in domestic credit) Trillion RMBs (y/y change) 2010 reality check Source : Datastream, CIBC Global Asset Management Inc. estimates CIBC Global Asset Management Inc. For internal use October 14, 2010 5

A. Global Forecast Highlights Canada: A Below Consensus Outlook § Our projections for the A. Global Forecast Highlights Canada: A Below Consensus Outlook § Our projections for the Canadian economy are below consensus. § Real GDP growth is projected to grow by +2. 0% in 2010 and inflation should average +1. 00%. § We believe the Bank of Canada will hesitate, moving at a much slower pace than what many believe. 12 -month Canadian Economic Forecast: CIBC GAM vs. Consensus Inflation Short Rates 2010 y/y % change Real GDP Source: Datastream, CIBC Global Asset Management Inc. calculations CIBC Global Asset Management Inc. For internal use October 14, 2010 6

A. Global Forecast Highlights Canada: Widening Imbalances § Household debt now accounts for more A. Global Forecast Highlights Canada: Widening Imbalances § Household debt now accounts for more than 140% of disposable income – an all-time record high. § The Canadian consumer debt load is now so big that rate hikes today will have a much greater impact on the personal finances of households than they ever did before. § Because its impact will be much more substantial than in the past, the Bank of Canada will need to exercise greater caution in the course of this economic cycle. Assessing just how much tightening will be required will be a difficult task, increasing the odds of a policy mistake. Canadian Household Debt Load (household debt as % of disposable income) Source: CIBC Global Asset Management Inc. For internal use October 14, 2010 7

A. Global Forecast Highlights Canada: Widening Imbalances § So far, the consumer has been A. Global Forecast Highlights Canada: Widening Imbalances § So far, the consumer has been Canada’s only growth engine as net exports have remained a drag on growth. The Canadian trade surplus has almost completely melted away. § Canadian monetary conditions have already substantially tightened via the appreciation of the Canadian dollar on a trade-weighted basis since the start of 2009. § This will badly hurt Canada’s external sector. Canadian Trade Balance: Energy vs. non Energy (as % of GDP) Source: CIBC Global Asset Management Inc. For internal use October 14, 2010 8

B. Currency Strategy Highlights Currency Forecast Summary § The CAD/USD exchange rate is caught B. Currency Strategy Highlights Currency Forecast Summary § The CAD/USD exchange rate is caught between the renewed reflationary efforts of the Federal Reserve which is putting upward pressure on the loonie and its degree of overvaluation which limits future appreciation. § Continued Canadian dollar appreciation contributes to a continued deterioration of the non-energy trade balance and limits the ability of the Bank of Canada to raise interest rates to cool the domestic economy. § We expect the C$ to be broadly unchanged in 12 months but acknowledge the risk that broad U. S. dollar weakness could push the C$ beyond parity at least temporarily. § Over the next 12 months, the U. S. dollar should be weaker on a broad, trade-weighted basis as U. S growth moderates, the Federal Reserve carries out additional quantitative easing and interest rates remain comparatively lower. § Emerging Asian currencies such as the Chinese yuan, Taiwan dollar and the Philippine peso should experience the largest appreciation versus the U. S. dollar. Asian domestic demand strength combined with some political pressure should help Asian policy makers gain confidence to let their currencies appreciate further. § Tensions related to European sovereign issues have had less of an impact on the EUR/USD exchange rate. The European Financial Stability Facility (EFSF) has played its role to contain contagion within the European continent. Markets are now focused on the structural challenges of the U. S. economy which in many respect are greater. The euro should underperform its regional neighbours notably Norway, Sweden and Turkey based on relative weaker domestic demand their relative interest rate advantage to the Eurozone. § Next to the U. S. dollar, the Japanese yen should be one of the poor performing currencies. More than ever, Japan needs an undervalued currency to stimulate exports and to fight growing deflationary pressures. The monetary easing process gathered steam in September, with the Bo. J conducting its first unsterilized foreign exchange intervention to weaken the yen in six years. CIBC Global Asset Management Inc. For internal use October 14, 2010 9

B. Currency Strategy Highlights Competitive Devaluation or Broad Dollar Weakness? § G 3 countries B. Currency Strategy Highlights Competitive Devaluation or Broad Dollar Weakness? § G 3 countries have opened the liquidity tap wide open. § The Fed was initially the most aggressive but the gap closed over the last year. § Another round of Fed Q. E. would again push the U. S. well ahead of the rest of the developed world – pointing to further USD weakness. § Judging from Fed governor Dudley, initial Q. E. could start with a $ 500 billion commitment. Liquidity Injections in the Developed World United States (+$1300 B) Japan (+$891 B) Europe (+$750 B) Second round of QE ? Source: Datastream, CIBC Global Asset Management Inc. For internal use October 14, 2010 10

B. Currency Strategy Highlights Competitive Devaluation or Broad Dollar Weakness? § The structural challenge B. Currency Strategy Highlights Competitive Devaluation or Broad Dollar Weakness? § The structural challenge of the U. S. economy (Fiscal deficit, high unemployment, leveraged consumer) is larger than most economies. This requires an undervalued currency in order to stimulate net exports. § Since the bottom of the financial crisis, free floating currencies have appreciated relative to the U. S. dollar bringing those currencies to overvalued levels. This degree of overvaluation will trigger a reaction from the respective Central banks. § The more managed currencies, predominantly found in Asia, have seen more modest appreciation so far. More political pressure combined with domestic necessity to contain inflation will see more appreciation going forward. Exchange Rates Spot Rate as of March 2009 Spot Rate as of (October 2010) Appreciation (+) Depreciation (-) against U. S. $ (CGAM estimates) Fair Value Overvaluation (+)/ Undervaluation (-) against U. S. $ EUR/USD 1. 26 1. 38 9. 5% 1. 19 15. 2 USD/JPY 97. 56 83. 06 14. 9% 108. 99 27. 2 GBP/USD 1. 40 1. 59 13. 6% 1. 53 -3. 9 CAD/USD 0. 78 0. 98 25. 6% 0. 86 12. 9 AUD/USD 0. 63 0. 97 54% 0. 85 13. 9 USD/CNY 6. 85 6. 69 2. 3% 6. 81 -1. 8 USD/TWD 35. 16 31. 08 11. 6% 26. 36 -16. 5 Source: Bloomberg, CIBC Global Asset Management Inc. For internal use October 14, 2010 11

B. Currency Strategy Highlights Canadian Dollar: Broad US dollar weakness forces Canadian dollar higher B. Currency Strategy Highlights Canadian Dollar: Broad US dollar weakness forces Canadian dollar higher § The Canadian dollar remains overvalued against the U. S. dollar based on our proprietary measure. § U. S. Central Bank efforts to stimulate its economy has the potential to generate broad U. S. dollar weakness that could sweep the Canadian dollar higher along with other cyclical currencies. § Continued Canadian dollar strength will complicate the Bank of Canada’s objective to rebalance the domestic economy by cooling the real estate market while supporting the external sector. § Further interest rate hikes will be put on hold to offset C $ strength. Canadian Dollar Valuation Net Foreign Investment in Canada (12 -Month Moving Sum, C$ Billion) C$ overvalued C$ undervalued Source: Datastream, CIBC Global Asset Management Inc. calculations CIBC Global Asset Management Inc. For internal use October 14, 2010 12

B. Currency Strategy Highlights The Euro/USD: winner by default? § Earlier this year the B. Currency Strategy Highlights The Euro/USD: winner by default? § Earlier this year the euro found strong support around our fair value estimate of 1. 20 in the midst of the European sovereign tension. Since then attention has shifted to the accumulating weakness of the U. S economy. § The European Financial Stability Facility (EFSF) has played an important role to contain contagion within the European continent and lending support to the currency. Recent data from the IMF has shown that foreign investor continued to invest in the Eurozone during the crisis, demonstrating that the desire to diversify away from the US dollar is stronger. The euro would win by default. § Fiscal consolidation in Europe remains a priority and will continue to be a challenge bringing periods of Euro volatility. § Peripheral countries such as Norway, Sweden and Turkey are showing stronger recoveries which should lead these currencies to strengthen relative to the Euro. EUR / USD Euro overvalued Euro undervalued Source: CIBC Global Asset Management Inc. For internal use October 14, 2010 13

B. Currency Strategy Highlights Strategy for the next 12 months Fixed Income : Government B. Currency Strategy Highlights Strategy for the next 12 months Fixed Income : Government Bond Underweight/ Corporate Overweight § The Federal Reserve is increasingly leaning towards added monetary stimulus in the form of quantitative easing as they continue to undershoot both of their growth and inflation mandate objective. § Looser U. S. monetary policy is exported around the globe as weakness in the U. S. dollar is forcing other Central Banks to ease their monetary policies in the face of appreciating currencies. § The Bank of Canada is likely on hold until year-end and may only raise rates once within the next 12 months. We continue to recommend a fully invested strategy. Although the recent bond rally has diminished the attractiveness of Canadian bonds over a 12 -month period. § Corporate bonds are still expected to finish in first place but with a smaller lead over government bonds. § We retain a small underweight in international bonds but anticipate a more muted outlook for the Canadian dollar relative to a basket of foreign currencies given the loonie’s recent appreciation. Equity : Overweight § Equity markets should find support from low bond yield, high liquidity provided by Central Banks and slow but steady growth outlook. Many segments of equity markets provide dividend yields that are higher than government bond yields. In addition, corporate activity to reduce cash drag is pointing to increased M&A activity, share buybacks and increased dividend payments. § Emerging market bond yields followed the U. S. Treasury bonds lower providing ample support to their domestic economic expansion and corporate earnings growth. Emerging market equity valuation is also favorable relative to many developed markets supporting our strong overweight. § Structural challenges faced by the U. S economy means that economic activity will remain subdued for an extended period of time. The U. S. equity market is not undervalued enough in our view to compensate for the lack of growth expectations. § While European equities are cheaper, the European growth outlook will decelerate over the coming 12 months and fiscal challenges in the Eurozone provide additional investment risk. Japanese growth is also expected to be lackluster while Japanese stock valuations remain unattractive. CIBC Global Asset Management Inc. For internal use October 14, 2010 14

This presentation is provided for general informational purposes only and does not constitute investment This presentation is provided for general informational purposes only and does not constitute investment advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. The information contained in this presentation has been obtained from sources believed to be reliable and is believed to be accurate at the time of publishing, but we do not represent that it is accurate or complete and it should not be relied upon as such. All opinions and estimates expressed in this presentation are as of the date of publication unless otherwise indicated, and are subject to change. CIBC Global Asset Management Inc. uses multiple investment styles for its various investment platforms. The views expressed in this document are the views of the Global Asset Allocation team and may differ from the views of other teams. © 2010 CIBC Global Asset Management Inc. operates under the name of CIBC Asset Management in Canada and is a member of the CIBC Group of Companies. CIBC Asset Management is a Registered Trademark of CIBC / CIBC Global Asset Management Inc. licensee. CIBC Global Asset Management Inc. For internal use October 14, 2010 15