1. The Great Disappointment By Avery Shenfeld, Chief Economist & Managing Director September 2010

2. |2|2 The Great Disappointment

3. |3|3 Lopsided Growth is Nothing New

4. |4|4 OECD Fiscal Withdrawals

5. |5|5 Odds of US Recession in Coming Two Quarters

6. |6|6 US Savings Rate Driven by Net Worth

7. |7|7 US Core CPI: Slowest in a Half Century

8. |8|8 Change in Inflation During Deep Output Gaps Is Proportional to Initial Inflation Rate: Deflations Rare Source: A. Meier, “Still Minding the Gap—Inflation Dynamics during Episodes of Persistent Large Output Gaps”

9. |9|9 Inflation Below Fed Target Points to QE Ahead

10. | 10 Canada Comes Down to Earth

11. | 11 Canadian Dollar Rich Relative to Commodities

12. | 12 Stimulus Withdrawal a Major Drag

13. | 13 Unprecedented Debt: Beginning to Constrain Households?

14. | 14 Debt Service Burden Reflects Low Rates

15. | 15 House Prices Had Overshot “Fair Value” Source: IMF, CREA, CIBC Calculations

16. | 16 TSX Not Expensive By Most Metrics

17. | 17 Canadian Core CPI vs Output Gap

18. | 18 Economic Forecast

19. | 19 Interest & Exchange Rate Forecast

20. | 20 Summing Up Global recovery – sub-par growth, but backing off fiscal tightening and low rates prevents double dip US consumer held back by deleveraging and low income gains – need a tax cut extension Canada has a roughly half percent growth edge vs. US: 2.3% vs 1.9% next yr Bond yields will rise gradually; Treasuries outperform Canada’s Equity markets will be choppy – hit by earnings disappointments, but market is ahead of analysts in bracing for slow growth