Weekly economic review:

Special Edition

Clément Gignac

Senior VP, Chief Economist

Sébastien Mc Mahon, CFA

Senior Portfolio Manager, Diversified Funds & Economist

03/27/2020

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A look at this week’s marketsAt the close on Thursday

Source: iA Economics, data via Bloomberg *WTD/YTD = Week-to-date / Year-to-date

Week-to-date Year-to-date

Canadian Bonds (total return) Local currency In CAD Local currency In CAD

FTSE TMX Universe -0.92% 0.47%

FTSE TMX Long -1.92% -1.26%

Corps -0.97% -3.92%

Equities (total return)

S&P/TSX 12.88% -21.05%

S&P 500 14.12% 11.37% -18.21% -11.72%

MSCI EAFE 9.22% 9.37% -20.21% -16.85%

MSCI Emerging 5.54% 3.48% -19.10% -17.33%

Other Current price Return WTD* Return YTD*

Oil (WTI) 22.60 $ 0.76% -62.99%

USD/CAD 0.7133 $ 2.47% -7.35%

Gold 1 631.34 $ 8.85% 7.52%

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Coronavirus:An update on the situation

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Coronavirus:The effect is being felt in the U.S. data ...

Source : WSJ

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Coronavirus:…and in European data!

Source : WSJ

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Stock markets:A state of capitulation never seen, everything got sold!

Source : Alpine Macro et WSJ

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Wall Street: The fastest debacle ever observed in modern history!

Tuesday: Best day for Dow Jones

since 1933!

Source : CNBC et WSJ

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Wall Street:The index of political uncertainty is rising, the fear in the markets is becoming less extreme

Source : WSJ et CNN Money

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Any signs of hope?

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G-20 Meeting:

Source : Bloomberg

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At the forefront of economic recovery: fiscal and

monetary authorities

Source : WSJ

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Canada: Breaking newsAnnouncement of new extraordinary support measures

Canada:

• Wage subsidy of 75% for SMEs, backdated to March 15

• Backing of emergency bank loans for businesses, up to 40000$, interest free for the first year

• Deferred GST and HST payments for businesses until June

• Deferred tax payments until after Aug. 31, 2020

Measures now exceeding 150 billion dollars

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U.S.:Fiscal package of 2 trillion dollars on the way!

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Fed:Unlimited QE and purchase of corporate credit

Source : Bloomberg et CNBC

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Breaking news:Bank of Canada lowers overnight rate target to ¼ percent

The Bank of Canada is cutting its key interest

target by half a percentage point to 0.25 % in

an unscheduled cut that brings the overnight

target rate to its effective lower bound. This

amounts to 150 bps of easing in just 23 days.

The BoC is also launching two new programs:

1. Commercial Paper Purchase Program

2. Quantitative easing

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U.S.: Soon to be reopen for business?

Source : CNBC

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Wall Street vs Main Street: Lessons from 2008-10Market trough before unemployment peak

Source : iA Economics

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What we’ll be watching next week

• Canada:

GDP Growth Y/Y (last month: 1.9% in December)

Markit Manufacturing PMI Index (last month : 51.8 in february)

• U.S.:

ISM Manufacturing Index (consensus : drop at 46 in march)

ISM Non-Manufacturing Index (last month : 49.2 in february)

Change in employment (consensus: -81K M/M in march)

• Europe:

Inflation CPI Growth M/M (consensus: +0.6% in march)

ISM Manufacturing Index (consensus : 44.7 in march)

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To follow and reach us:

www.ia.ca/economy

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Disclaimer

Opinions expressed in this presentation are based on actual market conditions and may change without prior warning. The aim is in no way to make investment recommendations. The forecasts given in this presentation do not guarantee returns and imply risks, uncertainty and assumptions. Although we are comfortable with these assumptions, there is no guarantee that they will be confirmed.

Industrial Alliance Insurance and Financial Services Inc.