1. Living In A Risky World CFA Victoria, May 11, 2017
Martin Barnes Economic Advisor BCA Research

2. The Fed's Economic Forecasts Vs. Outcomes
MADE
FORECAST CHANGE
IN REA L GD P
OVER
NEXT 4 QUARTERS
ACTUA
CHANGE IN
REA
NEXT 4 QUARTERS*
PEAK- T
O-TROUGH %
DRO
IN GDP*
DECEMBER 1969
1.4%
-1.2%
-1.5%
NOVEMBER 1973
2.4%
-4.9%
-7.8% JU Y
1981
0.9%
-1.9%
-2.5%
1990
1.9%
-0.8%
MARCH 2001
2.6%
-0.3%
DECEMBER 2007
1.3%
-0.5%
-4.2%
* THESE CALCULATIONS ARE BASED ON THE GDP DATA AVAILABLE AT THE TIME, NOT CURRENTLY PUBLISHED GDP
DATA WITH REVISIONS AND CHANGES TO DEFINITIONS ETC. 2

3. The Ghastly Performance Of Active Fund Managers
Share of U.S. equity funds underperforming benchmark
Large-cap
88%
85%
92%
MID-cap
90%
96%
95%
SMALL-cap
97%
93%
Data as of end Source: S&P Dow Jones Indices
5 years
10 years
15 years 3

4. Lots Of Things To Worry About
The economic cycle and bull market are getting old
China: A very unbalanced economy
Europe: Brexit and ongoing problems with the single currency
The Trump administration: Will they start a trade war?
Geopolitics: North Korea, Middle East, Russia 4

5. Inflation And Wage Growth Are Tame5

6. No Reason To Expect A Near-Term Recession6

7. China's Remarkable Credit Boom1 2 3 4 5 6 7 8 9 J A P N
U.S.
CHINA
SEVEN-YEAR CHANGE IN PRIVATE DEBT-TO-GDP
RATIO % 7

8. UK Trade With The EU: An Unbalanced Picture10 20 30 40 50
EXPORTS
IMPORTS
TRADE WITH THE EU AS % OF TOTAL
UK TRADE 5 10 15 20 25 30
EXPORTS
IMPORTS
TRADE WITH THE UK AS % OF TOTAL
EU TRADE 8

9. The Case For Infrastructure Spending In The U.S.9

10. Not Clear That The U.S. Needs More Military Spending10

11. The U.S. Is A Low-Tax Country11

12. Canada’s Housing Boom 12

13. Consumers Are Deep in Hock13

14. Secular Stagnation Ahead?14

15. The Past Is Not A Guide To The Future
COMPOUND % RETURNS ($Can.)
THE P
AST
THE FUTURE
PORTFOLIO
WEIGHT
CANAD A
EQUITIES
9.6
5.0 30
U.S. EQUITIES 1
1.5
3.5 20
OTHER DEVELOPED EQUITIES
5.5 10
EM EQUITIES
11.9
7.5 5
10-YEAR GOVT. BONDS
8.5
CORPOR
TE BONDS
9.5
3.0 T O L
PORTFOLIO*
9.8
3.7
100
INFL
TION
2.8
2.0
TOTAL PORTFOLIO REAL RETURN
6.8
1.7
*BASED ON WEIGHTS IN FINAL COLUMN