1. How Scary Is It?
By Avery Shenfeld, Chief Economist & Managing Director
November 2011

2. Canadian Growth Resumes
After Disruptions in Autos and Energy
108 Monthly GDP Index Nearly 3% Q3
107
106
105
104
103
102
101
100
99
98
Jun-09 Oct-09 Feb-10 Jun-10 Oct-10 Feb-11 Jun-11
C anada US
| 2

3. Food Inflation Could Also Ease
in Lagged Response to Commodity Trend
210 2005=100 1982-84=100 235
190
225
170
150 215
130
110 205
90
195
70
50 185
05 06 07 08 09 10 11
World C ommodity Price Index: Food (L)
US C PI: Food (R)
Source: Bureau of Labour Statistics, Statistics Canada, CIBC
| 3

4. Europe’s Economies Look Recession Bound
65 Expansion/C ontraction
60 Threshold
55
50
45
40
Italy
35 France
30 Germany
25
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
| 4

5. Bond Indigestion: From Moussaka to Lasagna
10-year Italian bond spreads, bps 500 foreign claims/exposures of
500 reporting banks (US$, bns)
450
400
400
350
300
300
250
200 200
150
100 100
50
0 0
France Germany Spain United
Kingdom
Exposure to Greece Exposure to Italy
| 5

6. EFSF: Who Will Guarantee the Guarantors? (L)
French Ratings Risk in Further Expansion (R)
Rest of Europe Italy,
10 % of French GDP
Spain
Expanded
23% EFSF
30% 8
Original
6
EFSF
20%
4
27%
2
France Germany
0
Fr EFSF French Deficit
Share of EFSF € 780bn guarantee Guarantee (2012)
commitments C ommitment
| 6

7. Eurozone Banks Cutting Back on Lending
Due to Capital Shortages
net % of banks reporting increases in
15%
capital or liquidity positions as a
contributor to net tightening of credit
standards
10%
5%
0%
Q4 2010 Q1 2011 Q2 2011 Q3 2011
| 7

8. Obama Seeks to Delay Fiscal Tightening
600 US$, bns
Other
500
Expiring in Infrastructure
400 2012
State and Local
Transfers
300
3.5% of Employer Payroll
GDP* Tax C ut
200 1.8% of Expensing of
GDP Investments
100 Unemployment
Insurance
0 Payroll Tax Holiday
Prev. Stimulus American Jobs for Employees
Act
*Of which 3% is for 2012
| 8

9. US Consumers: Where’s the Deleveraging?
US light vehicle sales
9 (SAAR-mn units)
US personal savings rate (%) 18
8 8-mon.
"C ash for C lunkers" high
16
7
6 14
5
12
4
3 10
2
8
1
0 6
Jan-06 Jan-09 Sep-11 Jan-07 Jan-10 Sep-11
| 9

10. Gasoline and Food Inflation Should Ease
in Response to Commodity Trend
2005=100 1982-84=100
210 235
190
225
170
150 215
130
110 205
90
195
70
50 185
05 06 07 08 09 10 11
World C ommodity Price Index: Food (L) US C PI: Food (R)
Source: Bureau of Labour Statistics, Statistics Canada, CIBC
| 10

11. Slack Keeps Fed On Hold Through 2013;
Fed Extending Term to Anchor Long Rates
6 % decline in non-farm payrolls from peak
4
2
0
-2
-4
-6
2008-11
-8 recession /recovery
-24 -18 -12 -6 0 6 12
Months from Employment Trough
1948 1953 1958 2007-
| 11

12. A Twist Not Worth Shouting About
140 inde xe s 600
Negative or near-negative equity
120 500
100
400
80
300
28%* 60
200
40
Positive 100
20
Equity
0 0
Aug-03
Aug-05
Aug-07
Aug-09
Aug-11
Mortga ge Applica tions for Home P urcha se (R)
US P e nding Home Sa le s (L)
| 12

13. Global Growth Disappointments
A Challenge to Pace of Equities Rally
World GDP, % chg (at purchasing power parity)
5.5 US 1.9*
US 1.7 C hina 8.3
5.0 C hina 9.3 EZ 0.4
EZ 1.6 Jpn 2.5
Jpn -0.2
4.5
4.0
3.5
3.0
2010A 2011F 2012F
Actual/C IBC Forecast IMF Forecast (June '11)
Source: IMF, CIBC
*Assumes US extends payroll tax cut and extended jobless benefits | 13

14. Emerging Markets Now the Drivers
For Commodities Rallies
BIC (Brazil, India, C hina) Share of Total C onsumption
60%
40%
20%
0% Refined
Primary
Petroleum
Coal
Copper
Nickel
Note: latest coal data as of 2009; petroleum
1990's data as of 2010; nickel and copper data as
Today of 2011 Q2, copper data excludes Brazil
Source: EIA, CRU, WBMS | 14

15. Higher Prices Restrained Oil Demand
US Ve hicle s Mile s China's Auto Sales
Driv e n
140 y/y % chg
3.0 y/y % chg 120
2.0 100
1.0 80
60
0.0
40
-1.0
20
-2.0 0
-3.0 -20
Aug- Nov- Feb- May- Aug- Feb- Oct- Jun- Feb-
10 10 11 11 11 2009 2009 2010 2011
| 15

16. The Continental Divide
Output Ga p Em ploy me nt/
Popula tion Ra tio
4
%
65 %
2
64
0 63
62
-2 61
-4 60
59
-6 58
57
-8
56
-10 55
01 03 05 07 09 11 01 03 05 07 09 11
C anada US C anada US
| 16

17. Canada Sees 2.1% Growth in 2012
But it Will Take Low Rates to Get There
GDP growth (s.a.a.r.) Forecast %
6.0% 5.0
4.0%
4.0
2.0%
0.0% 3.0
-2.0% 2.0
-4.0%
1.0
-6.0%
-8.0% 0.0
Q1-07 Q1-08 Q1-09 Q1-10 Q1-11 Q1-12
Real GDP Growth (L) Overnight Interest Rate (R)
| 17

18. Consumers Reduced Debt Appetite
Slows Retail Sales: Low Rates Needed for Longer
10% y/y chg y/y 20%
16%
6% 12%
8%
2% 4%
0%
-2% -4%
-8%
-6% -12%
- 03 - 04 - 05 - 06 - 07 - 08 - 09 - 10 - 11
n n n n n n n n n
Ja Ja Ja Ja Ja Ja Ja Ja Ja
Real Retail Consumption (L) Consumer Credit (R)
| 18

19. Debt Service Costs Unthreatening
If Overnight Rates Contained to 2% in 2013
% of personal disposable income
11
10
9
8
7
6
5
89
91
93
95
97
99
01
03
05
07
09
11
13
4-
4-
4-
4-
4-
4-
4-
4-
4-
4-
4-
4-
4-
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
| 19

20. Outlook for Investment Spending Still Favourable
Equipment Spending Plans, Balance of Opinion
40 (%-pts)
30
20
10
0
-10
-20
-30
-40
98:Q3
99:Q2
00:Q1
00:Q4
01:Q3
02:Q2
03:Q1
03:Q4
04:Q3
05:Q2
06:Q1
06:Q4
07:Q3
08:Q2
09:Q1
09:Q4
10:Q3
11:Q2
Source: Bank of Canada Business Outlook Survey
| 20

21. Housing Easing But Not Crashing
260 '000 units, SAAR
240
220
193
200 190 191
180
160
140
120
100
80
20 F
F
00
01
02
03
04
06
07
08
09
10
05
11
12
20
20
20
20
20
20
20
20
20
20
20
20
| 21

22. Commodities Drive C$; C$ Strengthens
later in 2012, Also Helped by BoC Hikes
US$/bbl US¢/C$
120 108
110
104
100
90 100
80
96
70
Arrows denote BoC rate hikes
60 92
Apr-10 Aug-10 Dec-10 Apr-11 Aug-11
Crude Oil (WTI) Canadian Dollar
| 22

23. Bond Yields Drift Higher;
Remain Low By Historical Standards
C anada
6 10-yr bond yields (%)
US
Forecast
5
4
3
2
1
Dec00 Dec04 Dec08 Dec12
| 23

24. Fiscal Credentials:
Canada’s Earlier Hard Work Paid Dividends
General Government Debt, % (2011)
250
Gross
200 Net
150
100
128
50 101
79 75 72
55
35
General Government Net Debt, % of GDP
0 175 Fcst
JPN ITA FRA UK US GER CAN 150
125
100
75
50
25
0
1990 95 00 05 10 15
CAN US UK FRA GER JPN ITA
| 24

25. West is Best in 2012
Real GDP Growth, Y/Y % Chg
4.0
3.5
2011 2012
3.0
2.5
2.0
1.5
1.0
0.5
0.0
BC A lta Sask Man Ont Qué NB NS PEI N&L
| 25

26. Ontario’s Slower Path Back to Balance
$billions
15
Forecasts
10
5 2013/14
0
-5
-10
-15
-20 Return to Budget Balance
Fiscal Year Years to Go
-25 BC
Alta
2013/14
2013/14
3
3
1
FY88 91 94 97 00 03 06 09 12 15
Sask
Man
NA
2014/15
NA
4
Ont 2017/18 7
Qué 2013/14 3
Ontario Sum of Remaining Provinces NB 2014/15 4
NS 2013/14 3
PEI 2013/14 3
2
N&L NA NA
Federal 2014/15 4
Based on 2010 Budgets
1. General Revenue Fund in surplus
2. Budget balanced in 2010/11
| 26

27. Demand for Liquidity Sees Non-Ontario Names
Underperform on Relative Basis
30-Year N.I. Roll to Ontario, bps
35
30
25
20
15
10
5
0
-5
-10
Jul-07 Apr-08 Jan-09 Oct-09 Jul-10 Apr-11
British Columbia Québec Manitoba New Brunswick
| 27

28. TSX Forward PE Low by Historical Standards,
Matching US
17
16
15
14
13
12
11
10 Valuation gap
9 closed
8
Jan-07 May-10
TSX C omposite S&P 500
| 28

29. Analysts However Cutting 2012 Earnings
Expectations
9
Ratio of Downgrades to Upgrades
8
7
6
5 last
4 observation
Normal = 1.5:1 Oct-11
3
2.1
2
1
0
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
| 29

30. Equity Markets to See Below-Consensus Earnings
40 TSX 12-mo fwd earnings,
% chg from year ago
30
20 +17%
10 +13%
0
-10
-20
-30
-40
Dec- Apr- Aug- Dec- Apr- Aug- Dec- Apr- Aug-
08 09 09 09 10 10 10 11 11
Predicted by CIBC Earnings Indicator Bottom up Consensus
Source: Thomson Reuters, CIBC
| 30

31. Quality Dividend Stocks Should Outperform
105 Total Return, April 5=100
+
100 -1%
95
90 -11%
85
*S&P/TSX Canadian Dividend Aristocrats
80
5-Apr 3-May 31-May 28-Jun 26-Jul 23-Aug 20-Sep 18-Oct
High Quality Dividend Sto cks* TSX Co mpo site
| 31