World: Major currencies are strengthening vs. the greenbackPerformance of top major currencies vs. the USD

Bloomberg

World: Major currencies are strengthening vs. the greenbackPerformance of top major currencies vs. the USD

Bloomberg

101

102

103

104

105

106

107

108

109

110

111

112

2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4

World: USD is at its weakest level since JulyUSD trade-weighted index vs. a basket of 26 currencies

index

NBF Economics and Strategy (Federal Reserve data via Refinitiv)

-16

-12

-8

-4

0

4

8

12

16

20

24

28

32

36

40

44

2014 2015 2016 2017 2018 2019 2020

USD: Speculators are still longNet long USD positions of leveraged funds

USD (billions)

NBF Economics and Strategy (data via Bloomberg)

-50

-45

-40

-35

-30

-25

-20

-15

-10

-5

0

5

10

15

20

May 2019 Jun 2019 Jul 2019 Aug 2019 Sep 2019 Oct 2019 Nov 2019 Dec 2019

U.S.: Yield curve is positive!Ten-year minus 3-month T-Bill

Basis points

NBF Economics and Strategy (Federal Reserve data via Refinitiv)

6 months before U.S. Recessions

Current

(10/18/2019)Week ago

2-months

ago2007-09 2001 1990-91 1981-82 1980 1973-1975 1970

Recessions

average

S&P 500 (% variation from prior year max) -1% -2% -5% -1% -6% -9% -10% -3% -14% -9% -7%

BBB spread (rise from prior year min) 30 34 45 7 103 52 109 48 6 22 50

Copper price (% variation from prior year max) -12% -12% -13% -6% -3% -35% -36% -14% -2% NA -16%

Oil price (% variation from prior year max) -26% -25% -32% -9% -18% -13% -1% -4% 0% NA -8%

U.S. Dollar (% variation from prior year min) 2.4% 3.0% 3.1% 0% 7% 12% 7% 4% NA NA 6%

Yield curve (10-year minus 3-month) 8 7 -33 20 -36 66 -204 -17 -1 8 -23

Real policy rate (percentage points) -0.10 -0.09 0.22 2.79 4.32 3.95 5.32 2.11 3.50 2.23 3.46

Consumer sentiment (Michigan) 96.0 96.0 89.8 90.4 105.8 89.5 66.9 64.5 77.0 91.5 83.7

SME confidence 101.8 101.8 104.7 97.9 99.3 99.2 95.9 90.2 NA NA 96.5

CEO confidence 34 34 43 44 31 46 58 32 NA NA 42.2

ISM manu. New orders 47.3 47.3 50.8 57.5 48.4 52.5 51.1 46.9 61.0 49.8 52.5

ISM nonmanu. New orders 53.7 53.7 54.1 54.4 59.2 NA NA NA NA NA 56.8

UI Claims 4-week ave. (% variation from prior year min) 6.6% 6.1% 6.7% 3.7% 13.1% 15.9% 5.0% 21.7% 8.8% 16.6% 12.1%

Temp. help services jobs (% variation from prior year max) -0.5% -0.5% -1.3% -2.2% -1.9% NA NA NA NA NA -2.1%

Average hours worked (% variation from prior year max) -0.6% -0.6% -0.9% -0.3% -0.3% -0.6% -0.6% -0.6% -0.3% -0.5% -0.4%

Real consumption (3-month, % ann) 2.3% 2.3% 3.7% 1.3% 5.2% 3.3% 2.0% 5.1% -1.7% 0.6% 2.3%

So

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Ha

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Fin

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Economic and financial indicators 6 months before U.S. recessionsAs of October 18 2019

NBF Economics and Strategy (data via Bloomberg, Refinitiv, FRED)

Industry (ICB) Positive Inline Negative % Positive Inline Negative %

All Securities 74 / 498 58 0 16 3.23% 57 0 17 -3.08%

> Oil & Gas 2 / 28 1 0 1 -2.21% 1 0 1 -0.88%

> Basic Materials 1 / 19 1 0 0 0.24% 1 0 0 12.10%

> Industrials 14 / 87 10 0 4 -0.45% 12 0 2 1.52%

> Consumer Goods 12 / 57 10 0 2 6.00% 6 0 6 1.20%

> Health Care 4 / 52 4 0 0 5.62% 4 0 0 6.55%

> Consumer Services 9 / 67 8 0 1 7.51% 9 0 0 15.56%

> Telecommunications 0 / 4

> Utilities 0 / 28

> Financials 28 / 103 22 0 6 3.40% 22 0 6 -1.08%

> Technology 4 / 53 2 0 2 -9.66% 2 0 2 -38.92%

Sales Growth Earnings Growth

Reported

U.S.: Q3 2019 earnings season

Basis points

Bloomberg

2018 2019 2020 202112 months

forward

S&P 500 23.9 1.6 10.1 10.3 9.1

ENERGY 90.7 -22.7 29.7 6.0 18.9

MATERIALS 25.6 -22.5 15.2 14.2 10.0

INDUSTRIALS 19.8 -0.3 17.3 9.8 14.4

CONS. DISC. 20.4 5.0 12.0 14.0 10.7

CONS. STAP. 11.1 1.1 7.0 7.2 6.0

HEALTH CARE 16.0 8.0 9.5 10.2 9.3

FINANCIALS 28.7 8.3 5.3 7.3 5.8

IT 26.4 0.8 7.7 13.9 8.2

TELECOM 24.0 2.3 12.3 11.4 11.2

UTILITIES 7.3 4.2 5.0 5.2 4.9

REAL ESTATE 5.3 -1.8 -9.8 8.5 -8.4

10/18/2019

S&P 500 composite index: EPS Performance

NBF Economics and Strategy (data via Refinitiv)

https://studiocast.ca/client/bnc/event/6672/en/

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