The Silence of the Longs

Ian Pollick: Even in that world, I just don’t think you need bad data to get a couple cuts next year and that’s not priced. And that to me is the opportunity.

Craig Bell: Going back to the Business Outlook Survey, inflation expectations is going to be over 3% next year.

Ian Pollick: Okay.

Craig Bell: It doesn’t get down to 3% two the year after. 

Ian Pollick: Okay.

Craig Bell: And that’s just to get to the top end-

Ian Pollick: Okay, now you’re just annoying me. So let’s just move on.

Ian Pollick: Happy Friday everyone. I am very happy that I’m here with my good friend Craig Bell. Craig, how are you?

Craig Bell: Very well, thank you.

Ian Pollick: The last time that you were on this podcast, it was actually a long time ago. It was in March.

Craig Bell: And is that the last time I was wondering?

Ian Pollick: Because I know why. Because it was pre Jay season and I think we had a market and we dealt on the Jays. What was the market, do you remember?

Craig Bell: I do remember that you opened it with 75-95 which is ridiculous. That’s like 20% of the schedule, and I tightened it to 84-7. And I don’t think we had a deal at the end.

Ian Pollick: We did not, and that’s why I’m not a market maker. But also 89-73 was the season.

Craig Bell: So they exceeded my expectations.

Ian Pollick: Exceeded your expectations. Speaking of exceeding expectations, let’s just start off the episode talking about swap spreads. You know, we’ve had a very big move, particularly in two year spreads over the past really week. And for context here, two year spreads are down ten basis points. And a large part of that is at least I think there’s a lot of cash weakness. There’s not a lot of policing in the front end. But let’s just walk through the curve right. Like obviously twos collapsed fives, small down, tens effectively unchanged and 30s are higher. So my first question to start the episode is what is the dynamic in the cash market that is impacting spreads, or is there something more nefarious in the swap market?

Craig Bell: Oh, I don’t think there’s anything nefarious about it. I mean, I’m not even sure completely that it’s a dynamic in the cash market per se. I mean, let’s start with the long spreads. The long spreads is a function of the 10s30s curve being so flat or so inverted, especially compared to our peers, that people will try to fade that in swap space, and it will add a bit of a lift to long spreads at the margin. Like you say, it hasn’t been a particularly big move in 30s. It tends relatively stable. I think that’s a function, again, unrelated to the shape of our curve, which is to say there’s sort of a two way dynamic to 10s. 10s, I find very rich on the curve, five year, five year at very low levels, cross market to us, so on and so forth. So that generates a pay in tens. The flip side to that is if you look at 5s10s30s butterfly in swaps, you’d want to receive that because of the flatness in 10s bonds. So we do get opposing flows in 10s. So it doesn’t totally surprise me that they’re stable. But we had identified, you know, going back a few weeks and you wrote some very thorough pieces about swap spreads in different parts of the curve. And our conclusion at that time was that spreads were too high. So it doesn’t surprise me that they’re coming in, the speed at which they came in, particularly in the front end. You know, I can think of reasons to explain it after the fact. But, you know, I wouldn’t have thought it would have come in that much that fast.

Ian Pollick: But 10 basis points is a massive move in any spreads, particularly the front end, in such a short period of time.

Craig Bell: Agree. I mean, part of that is we’re through mortgage season. And mortgage season had been pay of two and three year spreads for the most part, as people took that term in their mortgages. That was where we saw the hedging flow from the banks. After the summer that goes a little bit quieter. There is still some seasonality to it. And, you know, and it does happen in the summer. And now people are waiting to see what the end game is for rates overall, you know, and so it’s sort of been a quieter period on that side. I think we’re heading into Bank year-end in a few weeks time. That reduces asset swap activity in the front end. So it takes away a marginal player in swaps.

Ian Pollick: i.e. balance sheets are tighter, they get shut down a little bit as you get into CAD year end, is what you’re trying to say.

Craig Bell: I mean, you know, probably I really couldn’t speak to that, but I just think the- tend to be more stable. People aren’t looking to make big balance sheet changes.

Ian Pollick: Listen, I think you’re seeing it in CORA too. Like that, just deviation from target. That is evidence that you have a need for cash in the system.

Craig Bell: Okay. That’s fair as well.

Ian Pollick: So that’s what I think. And it almost feels like you know we’ve talked a lot about supply. Right? And we’ve talked a lot about how the market is not, at least in Canada, appropriately assessing the risk to higher supply. And if we take a step back, let’s call it three months ago. You know, the big news obviously, was the Treasury was starting to talk about a very big refunding announcement. And we had this natural spill-over just given our proximity. But now we are going through our own kind of mini supply cycle. And so 2s have sold off. The auction was upsized. Bill supply, I don’t know if anyone’s paying attention, but bill supply is growing very aggressively. And so I guess the question is, is the move in 2s entirely a function of this supply, or is it a confluence of things like QT hitting end of year with tight cash in the system and more supply?

Craig Bell: I honestly look at it as more of a confluence of things. I don’t think there’s any one thing that contributes to it. If it was a fiscal deterioration or an unexpected amount of supply from the sovereign hitting. To my mind, that would impact 10s and bonds, and we’re definitely not seeing it in the long run.

Ian Pollick: No, we absolutely are not. And so let’s just talk about the long run for a second. Every conversation I’ve had this past week has been some semblance of, “oh my God, I can’t believe this is where it is” and it is where it is, and there’s no levels here. And so there’s no magic level that we have to say, well, this is now done. And so what’s interesting to me is that I want to talk about two things. Just to frame this. One is just the outright richness of the CAD bonds. Number two is this idea that Canada across market duration looks very expensive but curve looks very cheap, five tens bonds being the most obvious, right. So cross market 10s10s very expensive. Cross market 5s10s30s is absolutely a receive., and so what do you do with that type of profile?

Craig Bell: On the chart, it looks like a receive, if you expect it to mean revert. I am very troubled by the idea that it’s a received just because of the richness and the CAD curve. The motivation for your trade, if you’re saying 5s10s30s is cheap is the 10s30s curve.

Ian Pollick: For sure. 

Craig Bell: So you need. If that’s the motivation for your trade-

Ian Pollick: It’s duration.

Craig Bell: approach that more directly. 

Ian Pollick: Yes, but then it’s duration at that point-

Craig Bell: Fair.

Ian Pollick: Right. And so but here’s why I struggle with like we kind of went back and said, well, over the past month. And really it has been over the past month at the long end. And Canada has written like 40 basis points versus dollars. About 70% of that has occurred on days when the US is selling off. About 20% is on days where there’s a twist. So Cat has been rallying as the US sells off and a very, very, very small sliver on outright rally days led by dollars. And so you don’t have to be an economist or a strategist to kind of say, well, with that footprint, you kind of need a rally to remediate this. Do you agree with that or is there a is there a point where it’s just, well, hey, the long ends is too rich and then everyone’s in the trade if they’re not already.

Craig Bell: I mean, this is why it’s such an interesting market and I think it’s going to be such an like the race market is going to be an interesting place for years to come as a result of a lot of these factors. So the most obvious way that it resolves itself is through a rally, because, you know, what are long bonds? We’ll call it 380 around term.

Ian Pollick: Sure.

Craig Bell: I don’t understand the circumstances for success at an outright long and long bonds. Is that telling us the market’s expecting rates to go that low again? Because, I mean, I see structural factors that were put in place that got rates to zero over the course of the last 30 years that are going to be unwinding themselves steadily, probably for the next five, if not 30 years. I don’t see the opportunity to have those periods of zero, one, 2% rates. The bar income-

Ian Pollick: Cataclysmic event, you know your normal course cycle should not need rates that we saw post-financial crisis pre-pandemic.

Craig Bell: Correct? I mean, you could go all the way back to 2001 on that thesis. Really, the obvious scenario is the market rallies rates lower and 30s just stay pinned. But that doesn’t jive with my view of like fiscal deterioration supply that the market isn’t expecting that you were talking about earlier. I mean, all of those things, if you think of the investments that need to be made in health care, education,

Ian Pollick: Energy transition.

Craig Bell: Infrastructure, yeah, energy transition/climate, all of those things, military, we’re not in a period of global cooperation anymore. And there’s no two ways about that, and that’s not something that’s going to resolve itself in the short term. So all of those things need to be paid for- 

Ian Pollick: With bonds. 

Craig Bell: With bonds.

Ian Pollick: I agree, and I think the other thing here too, is that you kind of saw the announcement yesterday, CMS upsizing its November issue, you know, and that’s for different reasons. But, you know, you take that additional CMB supply and notwithstanding whether or not the program gone or not, we’ve already seen additional Canada supply. And, you know, I was saying this earlier, is that the biggest deterioration in this deficit relative to expectations is higher cost to service the public debt. You issue bills, you’re paying more for those bills. I got to issue more bills and more bonds to pay for the stuff that I just issued. And so it is unlikely and very improbable that if the federal government is having issues with its deficit, that the provincial governments are not. And so you get a double whammy where you have more provincial issuance, particularly if you look at where these guys are tracking relative to the fiscal year done. There’s not a lot of stuff that’s hit the market. Like you could really realistically be in for a very big supply shock in Canada.

Craig Bell: To my mind, the only question is timing of that. And it’s not so much the timing of the supply. It’s the timing of sort of the realization that there will be supply, that I don’t think people are sensitive enough to now.

Ian Pollick: I agree. So let me ask you this. I just want to get back to the long end for a second. And in particular, I would like to focus on what could be two opposing flows in your market. You’re in a higher rate environment. The asymmetry of liabilities versus rates. Okay, and so, you know, pension funds for example, your liabilities fall faster when rates rise and rates increase. And so, you know, you’re getting this obviously this funding benefit. But at the same time the going concern rate, which is effectively the hurdle is also falling very aggressively. And so one would think that pensions need to own the long end in some way or another. And they have to source that duration, whether it’s through cash bond forwards, TRS, or the swap market. You know, the other side of this is you have, you know, insurance and some of these annuity programs that actively hedge when rates start to rise a lot. And so in your market, when you think about the confluence of these two structural accounts, are we seeing the impact of higher spreads meaning something or are these two flows cancelling it out or have they not really started yet?

Craig Bell: Well, there’s a lot to unpack there. So LDI accounts need to match liabilities. You know, there’s no two ways about it, so is the thesis that, you know the liability is getting shorter. I don’t understand-

Ian Pollick: Like the idea is, is ALM outweigh the need to hedge some of the pre-existing positions, because when you look at some of the, you know, earnings reports from all the big insurers, they do talk about these active gamma programs. There does need to be hedging. And so I guess I’m asking you what is more important right now today. Is it ALM, or is it some of the needs to hedge some of this duration risk.

Craig Bell: I mean it’s a good question. I would have said ALM, except for the fact that it doesn’t explain what’s going on- 

Ian Pollick: No it doesn’t.

Craig Bell: So my instinct on that is running counter to the price action we’ve seen over the last, you know, sharply in the last month, but really over the whole entire course of this year and as we’ve moved into a higher rate regime. So I don’t know where that leaves me. To be honest, I find the long end right now, and I won’t be alone in saying this. A bit of a mystery, a bit of a frustrating, difficult mystery.

Ian Pollick: Yeah, no, listen, I hear you. Let’s just turn this over a little bit, and, you know, one of the dynamics I’d like to talk to you about. It’s a bit more micro in nature, but we rolled to a new benchmark in the tenure sector today. And now there are four bonds between the cheapest to deliver and the benchmark. And so we’ve gone from the triple role to the quad role. The way that I think about it is that when you have such a large distance of bonds, your 5s10s curve is not extending as you roll to the benchmark. But more of that curve in a duration term is made up of your CTD tenure fly or your CTD tenure roll. And so the 5s10s curve is actually now transferring more vol to that five CTD. Because the back end is all dominated by effectively the futures pit. How does that translate into your world, like I understand the cash impact, but are you in a situation where you could have the CTD ten year roll flattening and 5s10s steepening and therefore invoice versus headline spreads do different things because there was a period where that was happening late last year.

Craig Bell: Yeah, I mean any set of circumstances is possible. I don’t see this as being a factor. 

Ian Pollick: Okay.

Craig Bell: Honestly because so there’d be a bit more traffic in swaps connected to the future or the cheapest to deliver bonds. Put another way, we can all do math. We all know how far away that is from the actual ten year point. Is there some type of convexity need so I can see a little more activity in, say, seven and eight year spreads than we had before? But I don’t see it in and of itself. That mismatch or having four rolls instead of three is something that creates any kind of risk.

Ian Pollick: Well, let me ask you this. We’ve often talked about the higher the RV subset in the ten year sector is consistent direction with the level of spreads, right. You have more RV, there’s just more movement in ten year spreads. And so if you now have a bit more of a gap between CTD and 10s and theory, that opens up more RV, because the bonds in between which are sandwiched have to keep up to whatever that bigger curve is doing. And so we get back to our earlier point where, you know, ten year spreads are kind of being there’s two sides of it and they’re very stable. Do you expect this to matter for ten year spreads like for context, my fair value model, which was kind of right on the downside now sees ten year spread for value at 17 basis points. And so I’m wondering if there’s something here that we’re not necessarily thinking about, or overthinking for that matter.

Craig Bell: Listen, I’m prepared to be wrong, but I’m going to say you’re overthinking, okay?

Ian Pollick: You heard it here first. He’s wrong.

Craig Bell: Because. Because. Yeah, well, I’m prepared to be wrong. I’m always prepared. But you know what I mean. The supply story, broadly speaking, overwhelms that. And, you know, you look at the CMB announcement, we’re going to kill it. We’re going to increase it. And then yesterday they came out with some new supply parameters, both on the supply and the fact that it’s a CMB in general. That to me matters more than micro RV in the cheapest to deliver roles. Okay, now-

Ian Pollick: But, that’s at the margin.

Craig Bell: The cash desk would have a different answer. Now, could traffic in those micro roles impact the curve? 5s10s? Yes, but it’s not going to be in my opinion. It’s not going to be, you know, material that’s not creating a ten beat.

Ian Pollick: Okay, Yeah. You know, I agree with that too. Okay. Let’s switch gears here a bit because we’re going to the Bank of Canada next week.

Craig Bell: Yes.

Ian Pollick: So I want to talk to a little bit about that. I guess my first question to you before we talk about the decision is, you know, Macklem said something last week and the question was, look, the yield curve is steepening. Interest rates are higher. Does that matter as a substitute for interest rate hikes? And his answer was no, it does not. And that’s not really the answer you’re getting from the Fed. And obviously the distribution of where debt is held is different in North America. Canada is in the short end, the US is in the long end, and so on the surface., I agree with that. But do you agree with his contention that a 2s5s steepener doesn’t create the type of financial condition tightness that snuffs out inflation.

Craig Bell: No, I don’t, but I would like to hear him expand on that further in future interviews. Or maybe a dialogue box in the MPR or something along those lines, because it’s an interesting contention if taken at face value. The way you explained it, that was what he meant to say. He’s clearly not right. But you know, if what he was trying to say was the curves the level that it is, he has to do his part to keep the curve in that space. I hate to put words in somebody else’s mouth, but that would be my expectation of what he was trying to say. Because if he’s saying that if interest rates are higher, it’s not restricting activity and-

Ian Pollick: Therefore lowering inflation as activity falls, like that’s- I fail to see how ipso facto that works.

Craig Bell: Well particularly out of the mouth of a central banker who controls interest rates at least.

Ian Pollick: So he probably did mean something else. But let’s get down to the guts. So you’ve had a lot of data. Okay. The inflation data was soft, right? There’s no looking through this. Every metric, the headline, the core. The core core. The core. The core core. It was all soft, but the Business Outlook Survey I’ll keep coming back to it. That consumer survey read hawkish that part of the Business Outlook Survey about businesses not normalizing their pricing behaviour very quickly to me supports the idea that this is ultimately a hawkish hold next week.

Craig Bell: Okay. So let’s just go back to your premise. And you know I don’t like disagreeing with you, but what was- sorry remind me, pretend I don’t know what was CPI?

Ian Pollick: CPI was 3.8%, and for the quarter it’s now 3.7% versus the bank’s estimate in the July NPR of 3.3%. So it is above.

Craig Bell: And sorry the bank has a target for CPI. What is that?

Ian Pollick: I believe it’s 2%.

Craig Bell: Okay. So again let’s start over with how low CPI was. I have to stop people at those points every time because inflation is not low. You know-

Ian Pollick: It is declined but it is not low.

Craig Bell: It is declined and it is declining at a slower pace than the bank was expected. Now, is it close enough to what their target was or have the facts on the ground changed materially? I would argue not. So in that sense it’s low, it’s going in the right direction. It’s doing what the bank wants. So I agree directionally with your statement. I just don’t agree that inflation is low.

Ian Pollick: So what do they do next? What’s the message? I don’t think the messaging actually changes all that much.

Craig Bell: I would agree with that. So the bank is by our time and I was saying this going into Jackson Hole, you know, we had the year of hikes and now the job of the central bankers, they all are talking from the same hymn book in the sense that they’re saying, you know, rates are high, we’re in restrictive territory times what’s going to help, but what doesn’t help them, and this is the part that they don’t say out loud, is the market’s expecting cuts. We have to get those cuts out of the curve to let rates go higher. And this is why I have a problem with your Macklem quote. So the economy can slow down and the risk of over tightening is starting to become present. I don’t think they’re there yet, but the more you can keep rates and restrictive territory and let time do the work for you, then the better off you are as a central banker. So their preference at all times is to do nothing from this point on, unless the market believes that they’re going to ease, in which case they can either jawbone the market out of those eases which they’ve been doing successfully, or they can hike. And so the more eases they get priced in, the more likely the bank is to hike. In my mind, in a weird kind of way. But the bottom line is the bank is a buyer of time. And so whatever it can do to not take action, it’s going to try to do.

Ian Pollick: Well, it’s interesting because you kind of heard from Powell & Co that they said, look we think that higher interest rates could be a substitute for rate hikes, and so what if you get into this world where given the steepness of the curve and given that the back end is the main pivot point right now. So you’re either bull flattening or bear steepening, if you start to bull flatten in longer term rates fall then it exaggerates the flattening because by definition that means the front end has to actually price in more. And so when you think about the Bank of Canada and you think about the fed and you think of where core and SOFRs are, do you believe that the first interest rate cutting candidate is not until the first quarter of 2025? Like, am I crazy being like, I get higher for longer? And to be clear, we are in higher for longer right now. But I cannot believe that the first cut that this market has priced in is in 2025. There is zero room for error.

Craig Bell: All that tells me is that the market believes the soft landing scenario and can I believe it? Absolutely I can. It seems a little bit further out. Maybe, but why would you put it any earlier? Everybody is expecting activity to slow down at least. So going back to the Business Outlook Survey that you mentioned, consumers, you know, surprisingly healthy, a little bit more downbeat on the business survey. You know, everybody’s expecting this slowdown, this recession. The mortgage resets are going to bite this and that. And the other thing, but the bank doesn’t cut because of economic slowdowns. The bank’s mandate is inflation.

Well, so here’s where I’m going to differ from you. I agree with you in normal circumstances. But today what they have told us is that the fact that they had to interest rates so far above neutral that, I actually believe where everyone’s losing the plot here is that you do not need bad data for the Bank of Canada to normalize interest rates, to be on top of what they believe to be neutral. And they’ve even said, look, we will keep QT going even as we’re cutting rates, as long as the rates that we’re cutting are above that neutral rate, because it is not stimulative, it is not adding stimulus to the economy. It’s just normalizing the policy rate. So it’s not overly restrictive. And so even in that world, I just don’t think you need bad data to get a couple of cuts next year. And that’s not priced. And that to me is the opportunity.

Craig Bell: Going back to the business outlook survey, inflation expectations are going to be over 3% next year. 

Ian Pollick: Okay.

Craig Bell: It doesn’t get down to 3% to the year after- 

Ian Pollick: Okay.

Craig Bell: And that’s just to get to the top end- 

Ian Pollick: Okay, now you’re just annoying me. So let’s just move on, okay? Let’s just talk about the next two weeks favourite trades as we go into and out of CAD bank year end into the Bank of Canada. What are your thoughts? What do you like?

Craig Bell: I mean, Bank of Canada. I’m not looking as a particularly shocking event, priced for what, 25%, 30%, 35% of a hike. I think that’s about fair. It’s not going to be too disruptive if they don’t go. The surprise would obviously be the go, but I’ll attach a low-

Ian Pollick: I think it’s a low probability outcome.

Craig Bell: You know, so I don’t see a lot of excitement around the Bank of Canada. The higher for longer message might start to sink in. But to your point, there’s you know, we’re already talking 18 months before the first piece is priced in. How far out are you really going to push that. And you know, so I don’t see anything really in the front end. The actions all in the back end. And when are you going to fade this 10s30s and how are you going to fade it? Let’s say in my book, we’ve tried to take the other side of that a few times this year, and-. 

Ian Pollick: Well, in March we were talking about how flat the curve was. Just to be clear, I was listening to our last podcast and we were complaining about 10s bonds.

Craig Bell: Yeah, that doesn’t surprise me.

Ian Pollick: Right? Like-

Craig Bell: But I think, you know, what’s the catalyst? And I think it’s going to be the fiscal story, both from the sovereign and from the provinces as that works through. I don’t see how the long run can hold on. So you would asked a question earlier about, you know, does it take a rally to normalize 10s bonds? That’s the most obvious scenario. But we could get a really messy repricing of our long end as it loses support. Whatever this congestion point is that is so supportive of our long end, whether it was LDI accounts covering, you know, gaps that they weren’t hedging when rates were at zero or what have you. Once that’s out of the way, long bonds can go a long way.

Ian Pollick: They can use the word long twice in one sentence. That’s good. Okay, so that is so your trade is some semblance of fading the richest in the back end. Now remember, as you get out of the bank, you go into the Treasury refunding announcement on the first. And so what worries me is that even in a world where long bond like ten bonds can steepen cross market can actually get richer. If this is another very aggressive announcement on issuance, we wrote about it. We think most the DV one bill actually in the belly, but we could be wrong here. And you could have another August scenario where the Treasury refunding and the recommendations are all about terming out the debt even more, right.

Craig Bell: Absolutely.

Ian Pollick: It feels like this is an orderly. It does also feel like this is an inconsistent picture of what should be a stable and liquid market, at least in the long end.

Craig Bell: Okay.

Ian Pollick: And that to me is me calling out the need for additional supply back there.

Craig Bell: I mean, there’s clearly a demand for it. I don’t know why it’s not being met.

Ian Pollick: Last thing, any tinfoil hat thoughts.

Craig Bell: I guess unresolved questions in my mind. The immigration story. How does that play out? Our economics team here at the bank have been doing great work on this. They put out a piece yesterday talking about, you know, definitely contributing to housing inflation, but it’s not obvious that it’s contributing to inflation in other parts of the market or the conclusions, at least on what the impact of immigration is going to be on economic activity isn’t clear. And it’s different by region, so starting points matter. How that plays out, that story and how the data, because we don’t really have a good understanding of it.

Ian Pollick: Oh there’s no, there’s no precedence behind this. Right.

Craig Bell: So the fiscal side of things is something that I’m always obsessed about and confused about. And I have been since 2020 just because of the spending involved. And I don’t understand how there hasn’t, you know, yields haven’t gone way higher than they have just based on the supply concerns. So those are my two big not tinfoil hats but sort of back of my mind how things work out scenarios.

Ian Pollick: Okay, I hear you from my perspective. There’s a couple of things. Number one is I think about if you are really in this world where you have higher, longer term interest rates, what is the real impact here outside of you and I sitting at this trading desk, and I think it means that the demand for bank credit starts to shift into the shadow sector again. And so you can build up these vulnerabilities as bank lending is too punitive for people or, or pushes people away, depending on the capital. And so you’re redirecting where bank credit is being grown from. The other thing that’s on my mind too is again, when are we going to get a better picture of what the supply footprint looks like? Is it coming from the sub sovereign or the sovereign? What is the order and what’s that ranking look like? Look, we’ve taken up a lot of time. I hope everyone has a great weekend ahead. Craig, always great to see you. Thank you very much for being on the show. For our listeners, remember, there are no bonds harmed, particularly long bonds, in the making of this podcast.

Disclaimer: The information and data contained herein has been obtained or derived from sources believed to be reliable, without independent verification by CIBC Capital Markets and, to the extent that such information and data is based on sources outside CIBC Capital Markets, we do not represent or warrant that any such information or data is accurate, adequate or complete. Notwithstanding anything to the contrary herein, CIBC World Markets Inc. (and/or any affiliate thereof) shall not assume any responsibility or liability of any nature in connection with any of the contents of this communication. CIBC World Markets Inc. or its affiliates may engage in trading strategies or hold positions in the issuers, securities, commodities, currencies or other financial instruments discussed in this communication and may abandon such trading strategies or unwind such positions at any time without notice. CIBC Capital Markets is a trademark brand name under which different legal entities provide different services under this umbrella brand. Products and/or services offered through CIBC Capital Markets include products and/or services offered by the Canadian Imperial Bank of Commerce and various of its subsidiaries. For more information about these legal entities, and about the products and services offered by CIBC Capital Markets, please visit www.cibccm.com. Speakers on this podcasts are not Research Analysts and this communication is not the product of any CIBC World Markets Inc. Research Department nor should it be construed as a Research Report. Speakers on this podcast do not have any actual, implied or apparent authority to act on behalf of any issuer mentioned. The commentary and opinions expressed herein are solely those of the individual(s), except where the speaker expressly states them to be the opinions of CIBC World Markets Inc. Speakers may provide short-term trading views or ideas on issuers, securities, commodities, currencies or other financial instruments but investors should not expect continuing analysis, views or discussion relating to these instruments discussed herein. Any information provided herein is not intended to represent an adequate basis for investors to make an informed investment decision and is subject to change without notice. CIBC World Markets Inc. or its affiliates may engage in trading strategies or hold positions in the issuers, securities, commodities, currencies or other financial instruments discussed in this communication and may abandon such trading strategies or unwind such positions at any time without notice.