Market Updates and Insights Team Delta August 1, 2012

Global and Canadian economic conditions have led bank to keep target overnight rate at 1% European developments seem to suggest a contraction will occur In China and emerging markets, growth is slowing more rapidly than expected Global growth expected to be 3.1% in 2012 and 2013, expected to rise to 3.5% in 2014 (assumes Euro crisis will be contained) Bank of Canada – Monetary Policy Report – July 2012

Poor earnings continue European instability Fed anticipation Pending economic data Source: CBOE Volatility: The Primary Feature

ECB President Mario Draghi pledges The ECB is ready to do whatever it takes to preserve the Euro. And believe me, it will be enough. Spanish and Italian yields had risen to alarming levels but then fell sharply following Draghis reassuring comments Draghi to the Rescue!

Major Indices Rally

Source: XE.com Source: Kitco.com EURO and Gold Climb

déjà vu? Is the S&P 500 headed for a correction? Implications: Investment timing and positioning of current holdings Considerations: Election year, deteriorating macro fundamentals Déjà vu?

Tuesday the 24 th :Canadian Retail Sales - Measures sales volume in the retail industry Tuesday the 31 st : Canadian GDP - A measure of overall productivity in Canada Economic turmoil in the EU continues Economic Indicators

Down 0.5% in April, showing that consumer spending has been steadily cut back in the most recent months. This may have a drag down effect on equities. Implications for our holdings? Unclear, it may have little to no effect on our holdings that are delta hedged. Decreased business activity may result in higher volatility in the equity markets, and may allow retail based hedge funds to excel. Retail Sales

April results released, GDP grew more than expected (0.3%), led by a boom in the mining industry. Positive implication for our Sprott holding which is based focused on the precious metals and mining industry. May results turned up soft compared to expectations, year over year GDP growth was 2.4% compared to the expected 2.6%. Canadian GDP

Internationally, the Euro saw vows of protection from the European Central Bank, Germany and France. This may have had a stabilizing effect on the market, and major indices climbed modestly during the week. Implication: Reduced volatility? Or a small stabilization in the eye of the storm? May have helped in the rally this week. International Economic Data

Sandy Weill (ex-Citi chief) has called for a break-up of large banks. Comments come 13 years after the repeal of Glass-Steagall (originally passed after the Great Depression) which forced a separation of financial activity. Comments are significant considering Sandy Weill is the architect of Citigroup and a champion of the repeal during the 1990s Separation of investment banking from commercial banking that was in place in the US before the 1990s. Avoid the Too Big to Fail scenario again. Break Up The Big Banks - Summary

Calls for reforms in place that would improve upon Glass- Steagall Reform would mean a radical restructuring of JPMorgan Chase, Bank of America, and Citigroup Rival proposals have fallen short in the past –US Volcker Rule: Bans banks from trading on their own account rather than on behalf of a customer –UKs Vicker Commission: Proposed banks to keep their retail operations separate. Other senior bankers such as Phil Purcell (former CEO of Morgan Stanley) have called for banks to be split up. Break Up The Big Banks - Whats Next?

Thank You Conclusion ~ Comments ~ Questions