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R B C W E A LT H M A N A G E M E N T
GLOBAL INSIGHT
W E E K L Y
J A N UA R Y 9 , 2 0 1 5
A C LO S E R LO O K
Next in Line: Europe’s Crack at Quantitative Easing
Tom Garretson – Minneapolis
Will 2015 finally be the year when we see a broad-based rise in global bond yields? Possibly, but it
begins with the ECB in January as it finally looks set to walk down the path of quantitative easing.
The Long Slog to Here
For some time, we have argued the inevitable end-game
for Europe and the European Central Bank (ECB) was a
quantitative easing (QE) program similar to those pursued in
the U.S. and Japan.
Out of Options: The ECB Can Wait No Longer
3.5%
German 5-Yr Inflation Breakeven
German 10-Yr Yield
France 10-Yr Yield
3.0%
2.5%
For much of last year, European inflation trended strongly
lower, the ECB’s balance sheet contracted at the same time
the Federal Reserve’s expanded, and the euro continued to
strengthen.
2.0%
While the ECB introduced some new easing programs in 2014,
such as targeted bank lending to stimulate the private sector
(TLTROs), it shied away from a more-aggressive strategy on
par with its peers.
0.0%
1.5%
1.0%
0.5%
-0.5%
Jan 2012 Jul 2012 Jan 2013 Jul 2013 Jan 2014 Jul 2014 Jan 2015
Source - RBC Wealth Management, Bloomberg
But now the bank is widely expected to announce a €500B QE
plan at its January 22 meeting.
Legal issues—and Germany—have been the main
impediments for the ECB to this point. But with German
inflation expectations now negative and 10-year bond yields
approaching 0%, as the chart shows, Germany may now have
no choice.
M A R K ET P U L S E
The latest press reports suggest the ECB has yet to decide on
many of the specifics of the QE program, but the size looks
to be set and it may hold the key to the QE’s effectiveness,
regardless of the details.
The January edition of Global Insight is now available. It features
our thoughts about the recent rout in oil prices in the article,
Cheap Oil: Boon or Bane? It also includes expectations for
equities, fixed income, commodities, and currencies in 2015.
Click here for authors’ contact information.
For Important Disclosures, see page 6.
3
4
The loonie spirals even lower
China fast-tracks infrastructure projects
The U.S. Experience
The goal of any QE program is primarily to convince the
markets the central bank is committed to achieving its
objectives, while the mechanics of buying assets facilitate it.
The U.S. has implemented three rounds of QE to date. The first
two had established sizes, with the third being open-ended
until the objectives of full employment and 2% inflation were
in sight, which occurred near the end of 2014.
As the chart shows, the first QE program, and similar to the
other two, actually raised nominal yields to nearly 4% from 2%
on the 10-year Treasury, as market-based measures of inflation
expectations increased.
If successful, we should expect to see a similar pattern
for eurozone yields. However, without an open-ended
commitment to buying assets, doubts may linger in the market
over the ECB’s ability to turn growth and inflation around.
2015 to Be New, or 2014 Redux?
2015 will be a pivotal year for fixed income investors.
Global yields have been driven lower in recent years by
declining inflationary pressures and slowing growth, much to
the confusion of those anticipating higher yields, particularly
in the U.S. But if the ECB successfully lays the groundwork
this month to reverse the negative trends in Europe, then not
only should we see modestly higher yields there, but in North
America as well.
The U.S. Experience: 10-Yr Yield Reaction to QE1
QE1 Announced
QE1
UST 10-Yr Yield
5-Yr Breakeven Inflation
5.0%
10
9
4.0%
8
3.0%
7
6
2.0%
5
1.0%
4
3
0.0%
2
-1.0%
1
-2.0%
0
Oct 2008 Jan 2009 Apr 2009 Jul 2009 Oct 2009 Jan 2010 Apr 2010
Source - RBC Wealth Management, Bloomberg
WWHHATAT’ S’ SMMOOV VI NI NGGMMA AR RK KETETS S
Can the ECB Avoid Another Own-Goal?
At the start of the year, most equity markets slumped and safehaven government bonds rallied again.
European and North American equities initially sold off sharply.
Catalysts included the ongoing crude oil decline, heightened
European deflation fears, and concerns the Greek election could
bring old risks back to the fore.
Europe’s consumer price index turned negative for the first
time since 2009 (see chart). While this provides the ECB another
incentive to begin outright quantitative easing, it is also a
reminder the central bank’s actions thus far have been largely
ineffective. To RBC Capital Markets’ European economist, this
negative reading is not just about falling oil prices. It mainly
reflects a failure of monetary and fiscal policies.
Equity markets regained some ground mid-week as Greek polls
shifted, showing a narrower lead for the far-left Syriza party.
A coalition government is now more likely, with a center-led
government a possibility. The latter scenarios would greatly
diminish the risk of a Greece exit from the euro.
Stocks also perked up as the Fed minutes expressed confidence
in the U.S. economy and tolerance for low inflation readings.
GLOBAL INSIGHT WEEKLY
Europe’s Headline Inflation Has Turned Negative
Eurozone Consumer Price Indexes (% y/y)
5
CPI Inflation (headline)
CPI Core Inflation
ECB's Inflation Target*
The ECB bases policy on
headline inflation, not core,
which is opposite of the Fed.
4
3
2
1
0.8%
0
-1
2005
-0.2%
2008
2011
2014
* The ECB “aims to maintain inflation rates below, but close to, 2% over the medium
term.”
Source - RBC Wealth Management, Bloomberg; final data points in December 2014
represent flash (estimated) data and are subject to revision. Core inflation excludes
food, energy, alcohol, and tobacco.
January 9, 2015
2
U N I T E D S T AT E S
Kelly Bogdanov – San Francisco
■
■
■
Q4 2014 earnings season is right around the corner. It
unofficially begins January 12, and will pick up pace the
week of January 19. Analysts have lowered estimates
meaningfully. The S&P 500 consensus forecast now stands
at 4.0% y/y growth, down from 6.5% at the beginning of
December and 11.1% in early October. While all sectors
except tech and utilities were trimmed during the past
month, it should be no surprise the energy sector was
slashed due to the plunge in crude oil prices. Analysts are
now expecting a 20.7% y/y decline in Q4 energy earnings
versus a 6.4% y/y gain in early October. It’s standard fare for
estimates to come down ahead of reporting season, but the
Q4 cuts have been larger than recent quarters. Full-year
2015 estimates have also come down (see table).
Persistent dollar strength has created some uncertainty
about Q4 earnings for multinationals. We think that’s a bit
of a red herring. While companies that miss by a penny or
two may blame the strong dollar, it should have been no
surprise to corporate treasury departments that the dollar
had upside risk.
The December jobs report did little to resolve the debate
about the health of the labor market. Job growth was
stronger than expected (252,000 jobs vs. 240,000 consensus)
and gains in the past two months were revised up by 50,000.
There’s no doubt, companies are hiring. The fly in the
ointment, once again, was the lack of wage growth. Average
hourly earnings fell 0.2%, the biggest monthly decline since
1989. This was surprising and does not jibe with strong
job growth and elevated consumer confidence. Another
problem within the report—the labor force participation
rate declined again. These mixed messages have inflamed
the debate about Fed rate hike timing. For the moment,
momentum has shifted back to the doves’ side.
CANADA
Analysts Have Cut Estimates for Most Sectors, Especially Energy
S&P 500 and Sector Consensus Earnings Estimates (% y/y)
Q4 2014
Estimates
DEC 1
JAN 8
DEC 1
JAN 8
S&P 500
6.5%
4.0%
9.8%
7.7%
Consumer Discretionary
8.2%
7.8%
16.9%
16.8%
Consumer Staples
0.1%
-0.1%
7.3%
6.4%
-12.0%
-20.7%
-5.9%
-26.6%
Energy
Financials
8.1%
0.8%
15.5%
17.7%
Health Care
17.5%
17.2%
10.7%
10.4%
Industrials
10.6%
9.9%
9.5%
9.7%
Materials
-0.9%
-1.3%
15.5%
14.2%
Technology
8.4%
9.0%
11.5%
11.2%
Telecommunications
19.6%
13.4%
5.8%
4.8%
Utilities
10.2%
11.0%
2.3%
2.2%
Source - Thomson Reuters I/B/E/S, RBC Wealth Management
expects production to average 152,500 barrels of oil
equivalent, essentially flat versus last year when adjusted
for financing. The company’s guidance illustrates the
difficulty of a supply-side response in the crude oil market
as producers focus reduced spending on their most efficient
production targets.
■
Friday’s employment report indicated that December saw
the second consecutive monthly decline in Canadian net
employment with a loss of 4,300 jobs.
■
Yields on Government of Canada bonds continued to trend
lower with the 30-year bond yield trading within 1 basis
point (bp) of the 2012 lows and 30 bps lower than early
December levels.
■
The Canadian dollar (CAD) continues to hit new five-year
lows as oil prices continue to decline. The CAD is down
over 4% relative to the U.S. dollar since the beginning of
December.
■
There is a small divergence occurring in provincial bonds
performance. Spreads on bonds from certain provinces
such as Quebec have moved tighter whereas spreads
on Alberta and British Columbia bonds have moved
approximately 3–6 bps wider over the past several weeks.
Patrick McAllister & Alana Awad – Toronto
■
■
The S&P/TSX Composite declined as the energy sector
resumed its downward trajectory amid WTI crude oil prices
that dipped below $50/bbl. Investors turned to the relative
stability of real estate investment trusts as sovereign bond
yields declined. The S&P/TSX Capped REIT Index recorded
its strongest week in over five years.
Crescent Point Energy announced its 2015 guidance,
which incorporates planned capital investment of
CA$1.45B, a reduction of 28% relative to the prior year.
Despite the substantial spending curtailment, the company
GLOBAL INSIGHT WEEKLY
Full-Year 2015
Estimates
EUROPE
Frédérique Carrier & Davide Boglietti – London
■
European equity markets finished the week lower
with the STOXX Europe 600 Index decreasing by 1.0%
to 337.93. News flow was dominated by disappointing
January 9, 2015
3
macroeconomic data, the continuing political saga in
Greece, and terrorist attacks in Paris. However, conjecture
on the magnitude and specifics of future ECB monetary
policy interventions continued to sustain equity markets.
■
■
■
In January, three linked events will be key for the eurozone:
the preliminary opinion of the European Court of Justice
on the legality of central bank bond purchases (January
14); the ECB’s decision on the size and type of “sovereign”
quantitative easing (QE) measures (January 22); and the
Greek election (January 25).
In RBC Capital Markets’ view, although the ECB’s past
and new potential monetary interventions could provide
economic support to the region, structural impediments to
long-term economic growth will challenge a QE program
to be as successful as that experienced in the U.S.
Santander announced a surprise rights issue of €7.5B in
the market and reduced its dividend policy to strengthen its
Basel III regulatory capital ratios. Although prospects for the
eurozone banking sector’s profitability remain unclear, at
present we consider the move as a company-specific event.
In the U.K., recent trading updates from food retailers Tesco
and Sainsbury were better than the market expected,
suggesting a relatively benign performance over the
Christmas season. Recent improvements in unemployment
data probably also influenced the outcome.
Chinese Composite PMI Improves
Despite Weakness in Manufacturing
56
HSBC China Composite PMI
54
■
Reports suggest China is accelerating 300 infrastructure
projects valued at over $1T in a further economic stimulus.
The manufacturing and non-manufacturing HSBC
Purchasing Managers’ indexes for December told a familiar
story. The Services PMI expanded to 53.4, indicating the
Chinese services sector, which is now bigger than the
manufacturing sector, continues to expand at a reasonable
GLOBAL INSIGHT WEEKLY
53.4
51.4
50
48
Delineates between
expansion and contraction.
49.6
46
Jan 2014 Mar 2014 May 2014 Jul 2014 Sep 2014 Nov 2014
Source - RBC Wealth Management, Bloomberg
clip. This has been the case over the past several years.
The Manufacturing PMI was an underwhelming 49.6, as
downward pricing pressure remains in the sector amid stiff
competition.
■
Standard Chartered (2888.HK), the U.K. bank with
an extensive presence in Asia, including Hong Kong,
announced it is reducing its global work force by
approximately 5%. The bank said it had cut 2,000 jobs in
its retail division in the past three months and will shed
another 2,000 this year. It will also shut its institutional
equity business and eliminate 200 jobs. The bank’s chief
risk officer and chief information officer will also depart.
Disappointing results from the bank over the past year have
significantly impacted its stock, which has declined by over
45% from its 2014 high.
■
Shares of Hong Kong Exchanges and Clearing (388.HK), the
monopoly bourse operator in Hong Kong, traded higher as
Chinese Premier Li Keqiang said that a link between Hong
Kong and Shenzhen to trade stocks should be established
in addition to the Shanghai-Hong Kong Stock Connect
Program which opened last year.
Jay Roberts – Hong Kong
The MSCI AC Asia Pacific Index, which recorded flat 2014
performance, started 2015 on a weaker footing as Asian
equities traded down in sympathy with the U.S.
HSBC China Manufacturing PMI
52
A S I A PA C I F I C
■
HSBC China Services PMI
January 9, 2015
4
M A R K ET S C O R E C A R D
Data as of January 9, 2015
Equities (local currency)
Level
S&P 500
1 Week
MTD
YTD
12 Mos
Govt Bonds (bps chg)
Yield
1 Week
MTD
YTD
12 Mos
2,044.81
-0.7%
-0.7%
-0.7%
11.2%
U.S. 2-Yr Tsy
0.561%
-10.4
-10.4
-10.4
13.2
17,737.37
-0.5%
-0.5%
-0.5%
7.9%
U.S. 10-Yr Tsy
1.950%
-16.0
-22.1
-22.1
-101.5
NASDAQ
4,704.07
-0.5%
-0.7%
-0.7%
13.2%
Canada 2-Yr
0.950%
-5.1
-6.2
-6.2
-14.8
Russell 2000
1,185.68
-1.1%
-1.6%
-1.6%
2.4%
Canada 10-Yr
1.661%
-8.3
-12.7
-12.7
-102.5
S&P/TSX Comp
14,384.92
-2.5%
-1.7%
-1.7%
5.5%
U.K. 2-Yr
0.401%
-1.7
-4.5
-4.5
-16.5
FTSE All Share
3,502.48
-0.6%
-0.9%
-0.9%
-2.3%
U.K. 10-Yr
1.600%
-11.8
-15.6
-15.6
-138.3
Dow Industrials (DJIA)
STOXX Europe 600
337.93
-1.0%
-1.3%
-1.3%
2.9%
Germany 2-Yr
-0.119%
-0.8
-2.1
-2.1
-33.2
9,648.50
-1.2%
-1.6%
-1.6%
2.4%
Germany 10-Yr
0.492%
-0.6
-4.9
-4.9
-142.3
23,919.95
0.3%
1.3%
1.3%
5.0%
3,285.41
1.6%
1.6%
1.6%
62.0%
Nikkei 225
17,197.73
-1.5%
-1.5%
-1.5%
8.3%
India Sensex
27,458.38
-1.5%
-0.1%
-0.1%
32.6%
3,338.44
-1.0%
-0.8%
-0.8%
6.1%
Brazil Ibovespa
48,840.25
0.7%
-2.3%
-2.3%
-1.0%
Mexican Bolsa IPC
42,382.41
0.6%
-1.8%
-1.8%
1.9%
Commodities (USD)
Price
MTD
YTD
German DAX
Hang Seng
Shanghai Comp
Singapore Straits Times
Gold (spot $/oz)
12 Mos
U.S. Dollar Index
Rate
1 Week
MTD
YTD
12 Mos
91.95
0.9%
1.9%
1.9%
13.5%
CAD/USD
0.84
-0.7%
-2.1%
-2.1%
-8.7%
USD/CAD
1.19
0.7%
2.2%
2.2%
9.5%
EUR/USD
1.18
-1.3%
-2.1%
-2.1%
-13.0%
GBP/USD
1.52
-1.1%
-2.7%
-2.7%
-8.0%
AUD/USD
0.82
1.4%
0.3%
0.3%
-7.8%
USD/CHF
1.01
1.3%
2.0%
2.0%
11.8%
1,222.42
2.8%
3.2%
3.2%
-0.5%
USD/JPY
118.50
-1.7%
-1.1%
-1.1%
13.1%
16.52
4.9%
5.2%
5.2%
-15.7%
EUR/JPY
140.31
-3.0%
-3.1%
-3.1%
-1.6%
Silver (spot $/oz)
Copper ($/ton)
1 Week
Currencies
6,175.75
-2.3%
-3.0%
-3.0%
-14.7%
EUR/GBP
0.78
-0.3%
0.6%
0.6%
-5.4%
Oil (WTI spot/bbl)
48.36
-8.2%
-9.2%
-9.2%
-47.2%
EUR/CHF
1.20
-0.1%
-0.2%
-0.2%
-2.7%
Oil (Brent spot/bbl)
49.92
-11.5%
-12.9%
-12.9%
-53.1%
USD/SGD
1.33
0.1%
0.6%
0.6%
4.9%
2.96
-1.3%
2.6%
2.6%
-26.0%
USD/CNY
6.21
0.0%
0.1%
0.1%
2.5%
322.16
1.2%
-0.1%
-0.1%
-6.3%
USD/BRL
2.63
-2.3%
-0.9%
-0.9%
10.1%
Natural Gas ($/mmBtu)
Agriculture Index
Source - Bloomberg. Note: Equity returns do not include dividends, except for the German DAX. Bond yields in local currencies. Copper and Agriculture Index data as of Thursday’s close.
Dollar Index measures USD vs. six major currencies. Currency rates reflect market convention (CAD/USD is the exception). Currency returns quoted in terms of the first currency in each
pairing. Data as of 9:39 pm GMT 1/9/15.
Examples of how to interpret currency data: CAD/USD 0.84 means 1 Canadian dollar will buy 0.84 U.S. dollar. CAD/USD -8.7% return means the Canadian dollar fell 8.7% vs. the U.S.
dollar year to date. USD/JPY 118.50 means 1 U.S. dollar will buy 118.50 yen. USD/JPY 13.1% return means the U.S. dollar rose 13.1% vs. the yen year to date.
U P CO M I N G EV E N TS
MON, JAN 12
WED, JAN 14, cont.
FRI, JAN 16
China Trade Balance ($49B)
Eurozone Industrial Prod. (0% m/m)
Eurozone CPI (-0.2% y/y, Core 0.8% y/y)
U.S. Q1 earnings season begins
U.S. Retail Sales Advance (0.1% m/m)
Germany CPI final (0.2% y/y)
BoC Senior Loan Officer Survey
U.S. Retail Sales Ex Auto Gas (0.3% m/m)
U.S. CPI (0.7% y/y, Core 1.8% y/y)
TUE, JAN 13
U.S. Retail Sales Control (0.3% m/m)
U.S. Inflation Expect. U. of Michigan
U.K. CPI (0.7% y/y, Core 1.3% y/y)
THU, JAN 15
THU, JAN 22
U.K. RPI (0.1% m/m, 1.6% y/y)
Eurozone Trade Balance (€20B)
ECB meeting
WED, JAN 14
Germany 2014 GDP (1.5% y/y)
SUN, JAN 25
European Court ruling on bond purchases
Canada Existing Home Sales
Greece parliamentary elections
All data reflect Bloomberg consensus forecasts where available
GLOBAL INSIGHT WEEKLY
January 9, 2015
5
AUTHORS
Tom Garretson – Minneapolis, United States
[email protected]; RBC Capital Markets, LLC.
Kelly Bogdanov – San Francisco, United States
[email protected]; RBC Capital Markets, LLC.
Patrick McAllister – Toronto, Canada
Distribution of Ratings
For the purpose of ratings distributions, regulatory rules require member firms
to assign ratings to one of three rating categories - Buy, Hold/Neutral, or Sell regardless of a firm’s own rating categories. Although RBC Capital Markets, LLC
ratings of Top Pick (TP)/Outperform (O), Sector Perform (SP) and Underperform (U)
most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings
are not the same because our ratings are determined on a relative basis (as
described below).
[email protected]; RBC Dominion Securities Inc.
Alana Awad – Toronto, Canada
[email protected]; RBC Dominion Securities Inc.
Frédérique Carrier – London, United Kingdom
[email protected]; Royal Bank of Canada Investment Management (UK) Ltd.
Davide Boglietti – London, United Kingdom
[email protected]; Royal Bank of Canada Investment Management (UK) Ltd.
Jay Roberts – Hong Kong, China
[email protected]; RBC Dominion Securities Inc.
D I S C LO S U R E S A N D D I S C L A I M E R
Analyst Certification
All of the views expressed in this report accurately reflect the personal views of the
responsible analyst(s) about any and all of the subject securities or issuers. No
part of the compensation of the responsible analyst(s) named herein is, or will be,
directly or indirectly, related to the specific recommendations or views expressed by
the responsible analyst(s) in this report.
Important Disclosures
In the U.S., RBC Wealth Management operates as a division of RBC Capital Markets,
LLC. In Canada, RBC Wealth Management includes, without limitation, RBC
Dominion Securities Inc., which is a foreign affiliate of RBC Capital Markets, LLC.
This report has been prepared by RBC Capital Markets, LLC. which is an indirect
wholly-owned subsidiary of the Royal Bank of Canada and, as such, is a related
issuer of Royal Bank of Canada. Alana Awad, Patrick McAllister, and Jay Roberts,
employees of RBC Wealth Management USA’s foreign affiliate RBC Dominion
Securities Inc.; and Davide Boglietti and Frédérique Carrier, employees of RBC
Wealth Management USA’s foreign affiliate Royal Bank of Canada Investment
Management (UK) Limited; contributed to the preparation of this publication.
These individuals are not registered with or qualified as research analysts with
the U.S. Financial Industry Regulatory Authority (“FINRA”) and, since they are not
associated persons of RBC Wealth Management, they may not be subject to NASD
Rule 2711 and Incorporated NYSE Rule 472 governing communications with subject
companies, the making of public appearances, and the trading of securities in
accounts held by research analysts.
In the event that this is a compendium report (covers six or more companies), RBC
Wealth Management may choose to provide important disclosure information
by reference. To access current disclosures, clients should refer to http://www.
rbccm.com/GLDisclosure/PublicWeb/DisclosureLookup.aspx?EntityID=2 to view
disclosures regarding RBC Wealth Management and its affiliated firms. Such
information is also available upon request to RBC Wealth Management Publishing,
60 South Sixth St, Minneapolis, MN 55402.
References to a Recommended List in the recommendation history chart may
include one or more recommended lists or model portfolios maintained by RBC
Wealth Management or one of its affiliates. RBC Wealth Management recommended
lists include the Guided Portfolio: Prime Income (RL 6), the Guided Portfolio: Large
Cap (RL 7), the Guided Portfolio: Dividend Growth (RL 8), the Guided Portfolio:
Midcap 111 (RL9), the Guided Portfolio: ADR (RL 10), and the Guided Portfolio:
Global Equity (U.S.) (RL 11). RBC Capital Markets recommended lists include the
Strategy Focus List and the Fundamental Equity Weightings (FEW) portfolios. The
abbreviation ‘RL On’ means the date a security was placed on a Recommended
List. The abbreviation ‘RL Off’ means the date a security was removed from a
Recommended List.
GLOBAL INSIGHT WEEKLY
Rating
Distribution of Ratings - RBC Capital Markets, LLC Equity Research
As of December 31, 2014
Investment Banking Services
Provided During Past 12 Months
Count
Percent
Count
Percent
Buy [Top Pick & Outperform]
Hold [Sector Perform]
Sell [Underperform]
897
686
112
52.92
40.47
6.61
290
137
6
32.33
19.97
5.36
Explanation of RBC Capital Markets, LLC Equity Rating System
An analyst’s “sector” is the universe of companies for which the analyst provides
research coverage. Accordingly, the rating assigned to a particular stock represents
solely the analyst’s view of how that stock will perform over the next 12 months
relative to the analyst’s sector average. Although RBC Capital Markets, LLC ratings of
Top Pick (TP)/Outperform (O), Sector Perform (SP), and Underperform (U) most closely
correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are not the same
because our ratings are determined on a relative basis (as described below).
Ratings:
Top Pick (TP): Represents analyst’s best idea in the sector; expected to provide
significant absolute total return over 12 months with a favorable risk-reward ratio.
Outperform (O): Expected to materially outperform sector average over
12 months.
Sector Perform (SP): Returns expected to be in line with sector average over
12 months.
Underperform (U): Returns expected to be materially below sector average over
12 months.
Risk Rating:
As of March 31, 2013, RBC Capital Markets, LLC suspends its Average and Above
Average risk ratings. The Speculative risk rating reflects a security’s lower level of
financial or operating predictability, illiquid share trading volumes, high balance
sheet leverage, or limited operating history that result in a higher expectation of
financial and/or stock price volatility.
Valuation and Price Target Impediments
When RBC Wealth Management assigns a value to a company in a research report,
FINRA Rules and NYSE Rules (as incorporated into the FINRA Rulebook) require that
the basis for the valuation and the impediments to obtaining that valuation be
described. Where applicable, this information is included in the text of our research
in the sections entitled “Valuation” and “Price Target Impediment”, respectively.
The analyst(s) responsible for preparing this research report received compensation
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January 9, 2015
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