HIGHLIGHTS OF THE WEEK

• Worries about the looming fiscal cliff, weak macroeconomic data, and disagreement between European authorities and the IMF regarding Greece’s bail out program casted a shadow over financial markets this week.
• On the data front, declines in both U.S. industrial production and retail sales, as well as an increase in initial jobless claims were the first economic indicators to show the negative impact of superstorm Sandy.
• In all, the additional “noise” in the incoming U.S. data caused by Sandy, a generally weak outlook for global economic momentum, and the political uncertainty stemming from the U.S. fiscal cliff and the Euro zone ongoing crisis set the stage for a somber end of the year for equity markets.

• Risk sentiment has soured significantly, the Canadian dollar slipped below parity and equity markets slid for a second consecutive week.
• Canadian economic growth is expected to clock in at a disappointing sub-1% pace, with most of the weakness concentrated in trade. Manufacturing sales rose 0.4% in September 2012, almost fully led by aerospace products. Excluding this industry, sales were down 0.7%. The existing home market also remained a sore spot with sales down 0.1% in October, a seventh decline in ten months.
• Looking forward, economic growth should pick up to a more healthy 2.0% annualized pace in the final quarter of the year, supported by improving U.S. demand and Canadian consumer spending.