nat gas fin ld (nym $/btu) 2.23 3.57% -21.68% before the … · 2019. 8. 27. · japanese yen rose...

NOT FOR DISTRIBUTION TO THE UNITED STATES. This publication is a general market commentary and is provided for informational purposes only. The author(s) is not a Research Analyst and this communication is not the product of Canaccord Genuity Corp.’s Research Department. It should not be construed as a research report or investment advice.

For important information, please see the Important Disclosures beginning on page 12 of this document.

Tuesday, August 27, 2019

BEFORE THE OPEN Source: Thomson Reuters

Canada's main stock index futures were little changed, mirroring Wall Street futures, amid uncertainty over the U.S.-China trade dispute. European shares were higher, buoyed by a rally in Italian stocks on hopes that a new government will be formed in Rome. Asian equities ended in the positive territory. The Japanese yen rose against the U.S. dollar, while gold prices gained. Oil prices traded in the green.

STOCKS IN THE NEWS Source: Thomson Reuters

Air Canada (AC) & Transat AT Inc (TRZ): Air Canada's planned acquisition of Transat AT raises issues of public interest and will require additional scrutiny, including the impact on airline competition, before it can be approved, Canada's transport minister said on Monday. Transat shareholders overwhelmingly voted last week in favor of Air Canada's C$720 million or C$18-a-share bid for the tour operator. The deal between Canada's largest carrier and Transat, which runs leisure carrier Air Transat, would give Transat a 60% market share of select trans-Atlantic routes to and from Canada and would require domestic and European regulatory approvals. BlackRock Inc (BLK): The asset manager is stepping up opposition to U.S. CEOs who sit on more than one corporate board beside their own, arguing that working as a director takes increasingly more time, a report from BlackRock showed. BlackRock cast votes against 94 chief executives running for re-election to corporate boards outside of their own in this year's proxy season, up from 32 last year. Uber Technologies Inc (UBER): Uber Eats and Japanese convenience store chain Lawson announced a delivery partnership in central Tokyo, seeking to capitalise on growing demand for quick home delivery of food and everyday items. Lawson said it will start selling around 100 products including bento boxes, fried chicken and tissue paper through Uber Eats starting on Thursday, initially for users near its stores in Shinjuku and Shinagawa before a later expansion. Royal bank of Canada (RY) & Toronto-Dominion Bank (TD): The Ontario Securities Commission has issued a notice of hearing to both the banks to settle charges of forex trading malpractices, the Canadian regulator said on Monday. Both banks face charges relating to allegations that their traders used confidential customer information to gain potential advantage in foreign exchange transactions that took place between 2011 and 2013.

THINGS TO KNOW Source: Bloomberg Finance L.P.

Hope for a rebound in the market is fading away as it becomes trivial whether Trump had any calls with China over the last weekend. Deal between Japan and the U.S. is doubtful as the U.S. continues to threaten new tariffs on autos.

STOCKS Source: FactSet (5pm EST)

COMMODITIES & CURRENCIES Source: FactSet (5pm EST)

GLOBAL INDICES Source: FactSet (5pm EST)

TSX SECTORS Source: FactSet (5pm EST)

Price Change YTD

S&P TSX 16,098.79 0.38% 12.40%

S&P TSX 60 961.86 0.54% 11.93%

S&P/TSX Venture 583.24 0.22% 4.67%

INK Canadian Insider 10.53 -0.52% 2.93%

S&P 500 2,878.38 1.10% 14.82%

NASDAQ Composite 7,853.73 1.32% 18.36%

Russell 3000 1,688.44 1.06% 14.69%

iShares MSCI ACWI ex U.S. ETF 44.20 0.75% 7.17%

Price Change YTD

Crude Oil WTI (NYM $/bbl) 53.64 -0.98% 15.08%

Nat Gas Fin LD (NYM $/btu) 2.23 3.57% -21.68%

Gold (NYM $/ozt) 1,537.20 -0.03% 17.47%

Silver (NYM $/ozt) 17.64 1.31% 11.52%

High Grade Copper (NYM $/lbs) 2.54 0.53% -3.83%

Lumber (CME $/bft) 363.30 0.94% 5.71%

CAD/USD 0.75 -0.05% 2.77%

Bitcoin USD (CME) 10,330.00 -1.24% 183.01%

10Y Canada Govt Bond (MOD) 145.79 -0.29% 6.02%

10Y US T-Note (BMF) 130.30 0.00% 7.13%

CBOE VIX (CBF) 19.43 -1.27% -47.17%

Price Change YTD

France - CAC 40 5,351.02 0.45% 13.11%

Germany - DAX 11,658.04 0.40% 10.41%

Italy - FTSE MIB 20,676.83 0.99% 12.84%

Japan - Nikkei 225 20,261.04 -2.17% 1.23%

U.K. - FTSE 100 7,094.98 0.00% 5.45%

Shanghai - SSE Composite 2,863.57 -1.17% 14.82%

Price Change YTD

S&P/TSX Energy 1,865.94 0.24% 0.82%

S&P/TSX Materials 2,427.96 -0.09% 20.33%

S&P/TSX Industrials 3,401.67 0.42% 17.88%

S&P/TSX Consumer Discretionary 2,232.11 1.29% 14.75%

S&P/TSX Consumer Staples 5,441.63 0.68% 14.59%

S&P/TSX Health Care 420.61 0.40% 4.25%

S&P/TSX Financials 2,668.33 0.44% 7.86%

S&P/TSX Information Technology 478.15 1.30% 58.12%

S&P/TSX Communication Services 1,533.67 -0.16% 6.16%

S&P/TSX Utilities 2,338.40 0.08% 24.62%

S&P/TSX Real Estate 3,611.22 0.28% 16.62%

2

Tuesday, August 27, 2019 Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.

CANADIAN EQUITIES OF INTEREST Listed Alphabetically by Symbol

Gas sales reach record levels

• CNE reached gas sales of 217 mmcf/d on August 24, representing an 80% increase from Q2/19 average of 120.5 mmcf/d, mainly attributed by the ramp up of transportation capacity from the Promisgas expansion

• Per management, July and first half of August gas sales were ~122 mmcf/d and ~151 mmcf/d, respectively

• CNE guided towards stable gas sales of ~215 mmcf/d for the remainder of the year, translating into Q3/19 average sales rate of ~173 mmcf/d and a ~43.8% QoQ increase

• The company expressed its next focus to be on the construction of a new gas pipeline to transport mmcf/d of gas to Medellin by late 2022

Glencore gets to second base

• In addition to FCC signing a memorandum of understanding with Glencore, and agreeing to a phased approach to recommissioning the refinery, Glencore has agreed to provide a loan facility to recommission and expand the refinery

• Glencore’s loan, at LIBOR +5%, would be secured by a general security agreement and a pledge of the ownership in the refinery

• With regards to the multiple phased approach, Phase 1 includes engineering, field work, metallurgical testing, and is expected to deliver a feasibility study for an expansion to 55t/d feed rate

• Phase 2 targets recommissioning the refinery at 12t/d in late 2020 while Phase 3 targets expansion of the refinery to 55t/d in 2021

2020E (Transmission) allowed ROE could dip once again if rates remain at current levels

• With five weeks left until the end of September, if interest rates remain at current levels it looks like the Ontario Energy Board (OEB) could slightly lower the allowed ROE for Ontario utilities

• The OEB’s annual formula-driven reset considers interest rate changes from the prior year and forecast Government of Canada long bond rates together with A-rated utility bond spreads

• The allowed ROE for Hydro One’s Transmission segment will be reset once again at the end of 2019, effective for the start of 2020

• The reset analysis is conducted using actual average and forecast interest rates during the month of September each year

Dee Valley shows first production

• Monday morning, August 26th, Husky provided an update regarding its Dee Valley thermal project, which is expected to ramp-up to its full production capacity of ~10,000 Bbl/d over the next three to six months

• At Spruce Lake Central, drilling has been completed and construction of the Central Processing Facility is progressing, with first production anticipated in the second half of 2020

• At Spruce Lake North, foundation work and module fabrication is under way, with first oil planned around the end of 2020 while first production at Spruce Lake East is set for around the end of 2021

• Regulatory approval has been received at Edam Central, with first production expected in 2022

Canacol Energy Ltd.* (CNE: $4.46), Net Change: $-0.02, Change: -0.45%

First Cobalt Corp.* (FCC: $0.14), Net Change: $0.01, Change: 8.00%

Hydro One Limited* (H: $24.19), Net Change: $0.04, Change: 0.17%

Husky Energy Inc.* (HSE: $8.91), Net Change: $-0.07, Change: -0.78%

http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx

3


Mixed Q2; medical sales on the horizon

• Khiron reported mixed Q2 results of $2.2M top line revenue and loss of 7.7M adj. EBITDA. Management attributed the reduction in sales to larger shipments to distributors

• Q2 cosmeceutical revenues of $16.7k were low compared to Q1 of $70K, but gross margins on consumer products of 65% remained healthy.

• Management mentioned awareness for the Kuida products continues to grow through marketing channels and increased distribution networks with now 190 retail locations for distribution of Kuida subsequent to quarter end

• SG&A expenses (including R&D and excluding finders fees of $1.0M) came in at $8.0M, and balance sheet showed $55.8M in cash with no material debt

Q2/19 first look: slightly better-than-expected quarter

• The company had better-than-forecasted realized gas prices and lower operating costs, in addition to announcing renegotiated commercialization agreements with higher sales prices for oil and gas

• Despite the Topén-3 producing well remained temporarily shut-in while the company continued to negotiate land access, actual production came in with modest increase q/q and y/y at 1,226 boe/d

• ROE reported operating netbacks of $6.74/boe due to higher realized natural gas prices and slightly lower operating costs

• Operating margins were flat q/q at ~15% and a cash balance of ~$5.7M was kept on the balance sheet

US EQUITIES OF INTEREST Listed Alphabetically by Symbol

Well positioned + well managed = perhaps a decade of 20%+ growth

• Avalara’s software automates desultory tasks of calculating sales taxes and has enabled the company to post five consecutive quarters of accelerating revenue growth, with the most recent quarter at +43%

• Running an efficient GTM model leveraging inside sales and partners, Avalara generates an LTV:CAV in the 7-9x range, complemented by a gross churn of less than 5%

• With a focus on mid-market companies with 20-500 employees, Avalara scopes in on roughly around 500,000 companies in market size in the U.S, summing to $8.0B of total available market

• However, Avalara faces nuances overseas as other countries have inherent differences with regards to how taxes are paid and calculated

Could rimegepant prevent a migraine in 4Q

• BHVN filed rimegepant for the acute treatment of migraine in 2Q19, and expects to present top-line data from its migraine prevention Phase 3 trial in 4Q19

• Rimepegant faces tough task inits prevention trial as approved products have shown 1.8-2.5/1.0-2.3 days in placebo-adjusted change from baseline in monthly migraine days (MMD) for chronic/frequent episodic migraine at month-3

• Additionally, as a typical key secondary, approved product show placebo-adj. 13-23%/10% of patients showing a >=50% reduction in MMD for chronic/frequent episodic migraine at month-3

• BHNV previously disclosed its filing with the FDA for rimegepant in Q2/19, but no news has been heard ever since

Khiron Life Sciences Corp.* (KHRN: $1.51), Net Change: $-0.08, Change: -5.03%

Renaissance Oil Corp.* (ROE: $0.13), Net Change: $0.01, Change: 4.00%

Avalara Inc* (AVLR: $86.52), Net Change: $0.45, Change: 0.52%

Biohaven Pharmaceutical Holding Company Ltd.* (BHVN: $38.84), Net Change: $0.30, Change: 0.78%


4


Growing software and subscription revenue driving improving margins

• With software & subscription revenue growing at 18% CAGR since F2015, management intends to achieve longer-term goal of reaching ~$200M of software & subscription revenue, accounting for 40 of total revenue

• The success of Synovia’s school bus fleet management drives opportunities into other public sector verticals, expanding opportunities in the connected car market

• Building off the success of Synovia, management has a pipeline of new opportunities to extend services to track and monitor other assets as part of this customer’s global freight transport and delivery assets

• Due in part to the acquisition of the LoJack brand and CalAmp’s telematics cloud services, Pioneer has partnered with CalAMP to grow both companies’ connected car strategies

Otezla sold to AMGN for ~$13.4B

• Celgene Corp will sell its psoriasis drug Otezla for $13.4 billion in cash to Amgen Inc

• With sales of $1.61B last year from Otezla, Amgen expects sales to at least grow in low double digits in the next five years

• BMY and CELG are now expected to complete their merger, valued at $74-billion, by YE19 after divesting Otezla, related intellectual properties, and employees focused on Otezla to AMGN

• BMY/CELG expects to use these proceeds to deleverage their balance sheet and reduce debt

Leading the way in next-gen software intelligence

• Dynatrace rewrote and relaunched its entire stack in 2014 with a modern suite of tools that monitor the new application and infrastructure stack in order to transition clients to the new platform, which is expected to complete by early 2021

• Dynatrace generates ample cash flow and, in turn, is able to provide insurance against investors’ demand for profits, especially in the case of software companies

• Dynatrace subscriptions account for 80% of trailing revenue and the new Dynatrace annual recurring revenue (ARR) is expected to grow 70%+ over the next twelve months

• Dynatrace is currently ~70% owned by private equity investor Thoma Bravo

Qualcomm wins partial stay from 9th Circuit Court

• Friday, August 23, the 9th Circuit Court granted a partial stay from Judge Koh’s FTC ruling by placing on hold the provisions requiring Qualcomm to grant patent licenses to rival chip suppliers

• The company’s practice of requiring its chip customers to sign a patent license before purchasing new chips will also be granted a partial stay

• QCOM has been and continues to ramp up 5G network builds around the world, complemented by having recently renegotiated for the long-term with the likes of Samsung and LGE

• After the close on Friday, August 23, the company announced the retirement of interim CFO Dave Wise after 23 years at the company, following an unanimously approval for Akash Palkhiwala to become interim CFO

CalAmp Corp.* (CAMP: $9.52), Net Change: $0.06, Change: 0.63%

Celgene Corporation* (CELG: $97.00), Net Change: $3.01, Change: 3.20%

Dynatrace, Inc.** (DT: $23.87), Net Change: $-0.03, Change: -0.13%

QUALCOMM Incorporated* (QCOM: $72.91), Net Change: $-0.61, Change: -0.83%


5


INDUSTRY UPDATE

Market

• WTI (October) is up 1.2% to $54.27 and Brent (October) is up 1.0% to $59.29

• Oil is higher after dropping for a fifth consecutive session on Monday, the longest streak of declines since November 2018

• Iranian officials said they would not negotiate with the US, a rebuff to President Trump who said yesterday he could meet under the right circumstances

• The OPEC+ group's monitoring committee highlighted continued overcompliance with its production targets

• There is increasing attention on Tropical Storm Dorian as it crosses over the Lesser Antilles, but the current cone does not show it venturing far into the Gulf of Mexico

• The weekly US inventory data cycle begins post-close today with APIs report, followed by the official DOE figures Wednesday at 10:30am Eastern

• Consensus is currently looking for a draw, with refinery runs down recently but still high

• China's announced Friday it will apply a tariff to its imports of US crude is unlikely to restrict overall US-Asia crude flows as various other Asian buyers are inclined to pick up any cargoes diverted from Chinese buyers

• US crude has increasingly become a staple for many Asian refineries, with the sharp increase in US crude procurement from South Korea, Taiwan, India, and Thailand more than making up for the slowdown in China's purchases this year.

Iran – Reuters/Bloomberg

• Iran's President Hassan Rouhani said his country will not negotiate with the US until all sanctions imposed on Tehran are lifted, a refusal that comes a day after President Trump said at the G7 he could meet with Rouhani under the right circumstances

• Iranian foreign minister Zarif echoed the refusal, calling a Trump-Rouhani meeting "unimaginable

• The coverage stresses that any meeting would require the blessing of Iran's supreme leader Khamenei, who has the final say in all state matters and has shown little sign of willingness to engage with the US.

Source: FactSet

Software preview: mid-caps on tap

• Salesforce’s results last week calmed investor nerves until another unhinged Tweet sent the market reeling

• Investors wonder how Autodesk is navigating a slowdown in industrial companies and a bit softer outlook for commercial construction

• Zuora has posted two dreadful quarters in a row

• Box has struggled to figure out how to de-risk its guidance over the years Source: Canaccord Geniuty Research

Oil

Enterprise Software


6


THE REIT REVIEW Drop in long-term interest rates should provide additional cash flow growth as mortgages mature Source: Canaccord Geniuty Research

• 10-year GoC yields have declined from 2.6% in October 2018, the highest level in more than four years, to just 1.3%

• Although the current forecast, according to Bloomberg, is for long-term bond yields to increase 50 bps over the next 18 months to 1.8%, this would still be 80 bps below the level of 10-year GoC yields in October 2018 (2.6%)

• According to CMLS Financial, CMHC-insured mortgage spreads over 10-year GoC bond yields are currently ~100 bps and there

would likely be material interest rate savings as REITs refinance maturing mortgages at current interest rates

• Should accommodation (residential and seniors housing) focused REITs refinance maturing debt at current rates, this should translate to, on average, 3.3% of incremental FFO per unit

• According to CMLS Financial, commercial mortgage spreads over 10-year GoC bond yields are currently ~180 bps

• For commercial REITs (including office, industrial and retail REITs), maturing mortgages can be refinanced at rates that are, on average, 120 bps lower than current in-place interest rates (4.1%), which should translate to, on average, 2.5% of incremental FFO per unit

Long-term bond yields expected to remain low

Financing costs for CMHC-insured debt should decline

Commercial mortgage rates at lowest level in two years


7


MORNING INK REPORT Is the winning cannabis business model starting to emerge? Source: INK Research

• Canopy is geared towards the wholesale market and has made big investments to supply the broad Canadian markets.

• In contrast, XLY has invested in cultivation facilities and agreements as part of its strategy to secure supply for its consumer products

• In July, UK-based Imperial Brands announced it plans to invest about $123 million into Auxly

• As part of the deal, Auxly would get access to Imperial's vapour business and an exclusive development partnership for cannabis products globally

• That move also contrasts to Canopy which received a major investment from alcohol drinks maker Constellation Brands (Mixed; STZ) some time ago

• On August 19th, Canopy Growth (WEED) senior officer David Bigioni acquired 95,000 common shares on a direct ownership basis at a price of $8.91 through an exercise of options. He sold the same amount of common shares at a price of $36.421 through the public market on the same day

• Canopy Growth has above median ownership (direct & indirect holdings) by Officers and Directors compared to other large-cap stocks in the Healthcare sector according to SEDI filings as of August 24th, 2019

(NOTE: Canaccord Genuity Corp. acted as financial advisor and provided fairness opinion to Acreage Holdings Inc. in its proposed transaction with Canopy Growth Corp.)

Company Highlight: Capony Growth (WEED)

Canopy Growth (WEED) Chart

Source: INK Research


https://urldefense.proofpoint.com/v2/url?u=https-3A__www.inkresearch.com_login-5Ffrm.php-3Fredir-5F-3Dhttp-3A__www.inkresearch.com_inkpage.php-3Fpageid-3D3-2526ticker-3DWEED&d=DwMFaQ&c=4rgkdqSai4rap5G8sVNZuw&r=cUzJ01qV1oSR8SGj4IkbmUYT7E0ikeiOiankIX8meAM&m=95XyD62E3q2G-2QULse5Xhu3YA4v2TE_o6EuM6qbQbk&s=dY-m0ilv4cUQqPwnOaU91M-w2jAB7ziNcXX09AZE714&e=

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MARKET MOVERS Source: FactSet

CANADA 52-Week Highs CANADA 52-Week Lows

TSE Total 52-Week Highs 24 TSE Total 52-Week Lows 22

TSXV Total 52-Week Highs 8 TSXV Total 52-Week Lows 14

Barrick Gold Corporation ABX 25.49 Advantage Oil & Gas Ltd. AAV 1.45

Agnico Eagle Mines Limited AEM 82.28 Baytex Energy Corp. BTE 1.62

Alacer Gold Corp. ASR 5.87 Currency Exchange International, Corp. CXI 19.00

Dream Industrial Real Estate Investment Trust DIR.U 12.49 Freehold Royalties Ltd. FRU 6.91

Eldorado Gold Corporation ELD 12.20 Fiera Capital Corporation Class A FSZ 9.93

Equinox Gold Corp. EQX 8.70 Great Canadian Gaming Corporation GC 39.07

Franco-Nevada Corporation FNV 127.98 Kelt Exploration Ltd. KEL 2.51

First Majestic Silver Corp. FR 14.50 MAV Beauty Brands, Inc. MAV 4.25

Green Thumb Industries Inc. GTII 10.73 Methanex Corporation MX 40.25

Lundin Gold Inc. LUG 8.51 NexGen Energy Ltd. NXE 1.53

Novagold Resources Inc NG 9.91 TransGlobe Energy Corporation TGL 1.75

Orca Exploration Group Inc. Class B ORC.B 6.75 TORC Oil & Gas Ltd. TOG 3.15

Pan American Silver Corp. PAAS 23.28 Vermilion Energy Inc. VET 18.62

Silvercorp Metals Inc. SVM 5.29 Canopy Growth Corporation WEED 33.16

Wheaton Precious Metals Corp WPM 38.39 West Fraser Timber Co. Ltd. WFT 45.55

U.S. 52-Week Highs U.S. 52-Week Lows

NASDAQ Total 52-Week Highs 59 NASDAQ Total 52-Week Lows 36

NYSE Total 52-Week Highs 117 NYSE Total 52-Week Lows 30

Agree Realty Corporation ADC 73.30 3M Company MMM 156.12

Carbon Black, Inc. CBLK 26.17 American Airlines Group, Inc. AAL 25.19

Clarivate Analytics Plc CCC 17.55 Annaly Capital Management, Inc. NLY 8.76

Crown Castle International Corp CCI 147.59 Continental Resources, Inc. CLR 28.31

Genesee & Wyoming, Inc. Class A GWR 110.67 Credicorp Ltd. BAP 200.78

IDACORP, Inc. IDA 109.01 DuPont de Nemours, Inc. DD 64.26

PennyMac Financial Services, Inc. PFSI 28.76 Fox Corporation Class A FOXA 32.08

Phillips 66 Partners LP PSXP 54.08 Franklin Resources, Inc. BEN 25.93

Roku, Inc. Class A ROKU 143.01 Freeport-McMoRan, Inc. FCX 8.84

Royal Gold, Inc. RGLD 131.67 Genuine Parts Company GPC 87.82

SBA Communications Corp. Class A SBAC 264.99 Halliburton Company HAL 17.50

Sempra Energy SRE 141.79 Occidental Petroleum Corporation OXY 42.13

Turning Point Therapeutics, Inc. TPTX 54.03 Regeneron Pharmaceuticals, Inc. REGN 284.73

WEC Energy Group Inc WEC 94.26 TD Ameritrade Holding Corporation AMTD 42.92

Wendy's Company WEN 21.53 Vornado Realty Trust VNO 59.46


9


ASSET CLASS PERFORMANCE Source: FactSet *All numbers presented on the table below is based on total return

As of: 08/26/2019

Index Price Daily Weekly Monthly YTD 1 Yr. 3 Yr. 5 Yr. 10 Yr.

S&P TSX 16,098.79 0.38% -1.26% -2.61% 12.40% -1.57% 6.34% 3.67% 7.06%

S&P TSX 60 961.86 0.54% -1.28% -2.61% 11.93% -1.00% 7.32% 4.54% 7.01%

S&P/TSX Venture 583.24 0.22% 2.35% -1.63% 4.67% -18.01% -10.20% -10.48% -6.85%

INK Canadian Insider 10.53 -0.52% -1.73% -4.40% 2.93% -16.26% -1.65% - -

S&P 500 2,878.38 1.10% -1.55% -4.87% 14.82% 0.13% 12.12% 9.79% 13.17%

NASDAQ Composite 7,853.73 1.32% -1.86% -5.72% 18.36% -1.16% 15.85% 12.71% 15.82%

Russell 3000 1,688.44 1.06% -1.58% -5.12% 14.69% -1.27% 11.70% 9.29% 13.07%

iShares MSCI ACWI ex U.S. ETF 44.20 0.75% -0.23% -5.49% 7.17% -5.79% 2.59% -1.59% 1.51%

China - SSE 2,863.57 -1.17% -0.68% -2.75% 14.82% 4.91% -1.86% 5.62% -0.22%

France - CAC 40 5,351.02 0.45% -0.38% -4.62% 13.11% -1.50% 9.94% 7.56% 7.67%

Germany - DAX 11,658.04 0.40% -0.49% -6.13% 10.41% -5.94% 3.26% 3.99% 7.76%

Italy - FTSE MIB 20,676.83 0.99% -0.19% -5.32% 12.84% -0.31% 11.09% 3.64% 2.76%

Japan - Nikkei 225 20,261.04 -2.17% -1.47% -6.45% 1.23% -10.36% 9.53% 7.49% 8.67%

U.K. - FTSE 100 7,094.98 0.00% -0.31% -6.11% 5.45% -6.19% 5.53% 4.92% 7.80%

Australia - ASX 200 6,440.10 -1.27% -0.42% -5.20% 14.06% 3.09% 9.89% 7.35% 8.40%

Saudi Arabia - TASI 8,257.86 -2.22% -3.59% -6.36% 5.51% 4.97% - - -

Commodity Price Daily Weekly Monthly YTD 1 Yr. 3 Yr. 5 Yr. 10 Yr.

Crude Oil WTI (NYM $/bbl) 53.64 -0.98% -4.45% -4.45% 15.08% -24.52% 4.03% -10.59% -2.82%

Nat Gas Fin LD (NYM $/btu) 2.23 3.57% 0.90% 2.57% -21.68% -23.34% -8.48% -10.78% -2.61%

Gold (NYM $/ozt) 1,537.20 -0.03% 1.69% 7.40% 17.47% 23.42% 5.05% 3.65% 4.98%

Silver (NYM $/ozt) 17.64 1.31% 4.14% 7.59% 11.52% 15.16% -1.84% -1.87% 2.15%

High Grade Copper (NYM $/lbs) 2.54 0.53% -2.23% -5.27% -3.83% -7.80% 6.96% -4.40% -1.16%

Lumber (CME $/bft) 363.30 0.94% -2.31% 8.87% 5.71% -18.36% 4.66% 0.79% 7.29%

Miscellaneous Price Daily Weekly Monthly YTD 1 Yr. 3 Yr. 5 Yr. 10 Yr.

CAD/USD 0.75 -0.05% -0.03% -0.80% 2.77% -1.89% -1.03% -3.78% -1.89%

Bitcoin USD (CME) 10,330.00 -1.24% -3.86% 5.80% 183.01% 56.16% - - -

10Y Canada Govt Bond (MOD) 145.79 -0.29% -0.29% 1.98% 6.02% 8.96% -0.39% 1.05% 1.84%

10Y US T-Note (BMF) 130.30 0.00% -0.11% 2.42% 7.13% 8.12% -0.27% 0.67% -

CBOE VIX (CBF) 19.43 -1.27% 7.47% 41.75% -47.17% -0.26% 8.70% 7.63% -3.69%

All prices are in local currencies

Price Return CAGR


10


MACRO-EVENT SCHEDULE Source: Bloomberg Finance L.P.

EARNINGS Source: TMX Money

August 26-30 Event Actual Estimate

Monday US Durable Goods Orders 2.1% 1.2%

Tuesday US Conf. Board Consumer Confidence - 129.0

Wednesday US MBA Mortgage Applications - -

Thursday US Initial Jobless Claims - 215k

US GDP Annualized QoQ - 2.0%

US Wholesale Inventories MoM - 0.2%

US GDP Price Index - 2.4%

US Pending Home Sales MoM - 0.0%

Friday CA Quarterly GDP Annualized - 3.0%

US Personal Income - 0.3%

US Personal Spending - 0.5%

CA GDP MoM - 0.1%

US MNI Chicago PMI - 47.9

US U. of Mich. Sentiment - 92.3

CANADA

Company Ticker Exchange Period Time Est.EPS

Bank of Montreal BMO TSE Q3 2019 BO 2.49

Bank of Nova Scotia BNS TSE Q3 2019 BO 1.83

USA

Company Ticker Exchange Period Time Est.EPS

Autodesk Inc. ADSK NASDAQ Q2 2020 AC 0.33

American Woodmark Corporation AMWD NASDAQ Q1 2020 BO 1.93

Momo Inc. MOMO NASDAQ Q2 2019 BO 0.57

Phibro Animal Health Corporation PAHC NASDAQ Q4 2019 AC 0.34

Catalent Inc. CTLT NYSE Q4 2019 BO 0.62

Eaton Vance Corporation EV NYSE Q3 2019 BO 0.87

Heico Corporation HEI NYSE Q3 2019 AC 0.53

Hewlett Packard Enterprise Company HPE NYSE Q3 2019 AC 0.40

J. Jill Inc. JILL NYSE Q2 2020 BO -0.09

Lannett Co Inc LCI NYSE Q4 2019 AC 0.21


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MOST READ NEWS Source: Bloomberg Finance L.P.

1) U.S. Stock Futures Edge Higher; Treasuries Advance: Markets Wrap 2) Export Slump Pushes German Economy to the Brink of Recession 3) Trump Shifts Tone on China But Not Tactics as Deal Grows Distant 4) Iran Spurns U.S. Talks as Rouhani Says No to Photo-Op With Trump 5) The World's Best-Performing Hedge Fund Is Up 278% This Year 6) Pension World Reels From ‘Financial Vandalism’ of Falling Yields 7) Libor Undertakers Wanted: Wall Street Braces for Benchmark’s End 8) Time to Buy Equities Again Is Fast Approaching, Says JPMorgan 9) Italian Coalition Talks Stumble, Raising Risk of Early Elections 10) Deutsche Bank, Reeling From Global Job Cuts, Hires in India

THE LAST DROP: “Our greatest weakness lies in giving up. The most certain way to succeed is always to try just one more time”

— Thomas A. Edison


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Appendix: Important Disclosures While this product is drawn from sources believed to be reliable, the accuracy and completeness of the information contained herein is not guaranteed. Any reference to a research report or a recommendation is not a solicitation to purchase or sell any security and it does not consider the individual investment objectives, financial situation, suitability or risk tolerance of any person or corporation. Accordingly, investors should obtain advice based on their own specific circumstances before making any investment decision. Canaccord Genuity Wealth Management is a division of Canaccord Genuity Corp. Member – Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC).

Quest®: Canaccord Genuity’s proprietary online valuation and analytical tool which combines consensus market figures with the Quest® Discounted Cash Flow (DCF) Valuation Model.

Quest® triAngle is Canaccord Genuity’s proprietary 15-factor, stock-picking tool, which systematically measures Value, Quality and Momentum and presents the results in a simple, easy to understand score. It takes a multi-pronged approach to Value, Quality and Momentum using five factors for each component, which adds more consistency of performance unlike a reliance on one single measure. It uses a mix of historic and forecast data, and combines absolute valuation data with comparisons relative to history. The triAngle is designed to generate stock ideas and provide a consistent framework for analysis of portfolio holdings.

Quest® Methodology

Quest® is an analytical tool that involves use of a set of proprietary quantitative algorithms and value calculations to derive a number of corporate performance and valuation metrics, including assigning a Default Quest® value per share and generating a triAngle Score, which is a relative ranking based on a number of operational and valuation metrics. These algorithms and value calculations are consistently applied to all the companies included in the Quest® database. Third-party data (including consensus earnings estimates) are systematically translated into a number of default variables and incorporated into the algorithms. The source financial statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics of firm performance. These adjustments provide consistency when analyzing a single company across time, or analyzing multiple companies across industries or national borders. As the third-party data are updated, the triAngle Score generated by Quest®, and the Default Quest® value per share may change. The default variables may also be adjusted by the user to produce alternative values, any of which could occur. Additional information about the Quest® methodology is available on request.

Canaccord Genuity Quest® Disclosures

Quest® is at this stage registered in the UK and in the USA, and common law trade mark rights are asserted in other jurisdictions. Quest® is non-independent research and is a marketing communication under the FCA Conduct of Business rules. All rights reserved. Quest®, CITN®, Companies in the News™, CFROC®, and triAngle™ are all trademarks of Canaccord Genuity Limited. E&OE. © Canaccord Genuity Limited. For important information and company-specific Quest® disclosures please see Important Disclosures at the following website (provided as a hyperlink if this report is being read electronically): https://disclosuresquest.canaccordgenuity.com/. Please note that analyst data and Quest® data may differ due to different sources and calculation methods. The Quest® platform may be found at the following website www.canaccordquest.com

* Canaccord Genuity and its affiliated companies may have a Corporate Finance or other relationship with the company and may trade in any of the Designated Investments mentioned herein either for their own account or the accounts of their customers, in good faith and in the normal course of market making. The authors have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate Finance activities, or to coverage contained in the Morning Coffee.

** Dynatrace currently is, or in the past 12 months was, a client of Canaccord Genuity or its affiliated companies. During this period, Canaccord Genuity or its affiliated companies provided investment banking services to Dynatrace. In the past 12 months, Canaccord Genuity or its affiliated companies have received compensation for Investment Banking services from Dynatrace. In the past 12 months, Canaccord Genuity or any of its affiliated companies have been lead manager, co-lead manager or co-manager of a public offering of securities of Dynatrace or any publicly disclosed offer of securities of Dynatrace or in any related derivatives. Canaccord Genuity or one or more of its affiliated companies is a market maker or liquidity provider in the securities of Dynatrace or in any related derivatives. Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Banking services from Dynatrace in the next three months.

Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. (CF : TSX)

The recommendations and opinions expressed in this research report accurately reflect the Investment Analyst’s personal, independent and objective views about any and all the Designated Investments and Relevant Issuers discussed herein.

Canaccord Genuity (Australia) Limited is the Australian affiliate of global capital markets group Canaccord Genuity Group Inc. (CF : TSX). The recommendations and opinions expressed in this research report accurately reflect the Analyst’s personal, independent and objective views about any and all the designated investments and relevant issuers discussed herein.


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