This publication is a general market commentary and does not constitute a research report. Any reference to a research report or a recommendation is not intended to represent the

whole report and is not itself a research report or recommendation. This commentary is for informational purposes only and does not contain investment advice. This publication may be

wholly or partially based on industry rumour, gossip and innuendo and as such is not to be relied upon as investment advice. Not authorized for distribution into the United States or to U.S.

persons. Canaccord Genuity Wealth Management is a division of Canaccord Corp. Member – Canadian Investor Protection Fund.

Friday, April 20, 2018 Follow us on Twitter @CGWM_MrngCoffee

Overnight Futures Source: Bloomberg

Contract Last Change

S&P/TSX Composite 15,450.00 0.21%

S&P/TSX 60 Index 905.50 -0.17%

S&P 500 2,692.40 0.00%

NASDAQ Composite 6,763.25 -0.27%

Dow Jones Mini 24,607.00 -0.10%

Commodities & Currencies Source: Thomson ONE

Last Change

Change Crude Oil (US$/brrl) 68.32 -0.26%

Gas (US$/mmbtu) 2.70 -2.38%

Gold (US$/oz) 1347.70 -0.43%

Copper (US$/oz) 3.13 -1.01%

Canadian Dollar 0.7895 -0.27%

Bitcoin (US$) 8237.92 0.80%

10-Year Canada 2.24 0.00%

10-Year U.S. 2.92 -0.11%

Volatility Index (VIX) 16.03 2.76% Saddle Up, Jetsetters!

Fed up with limited leg room

onboard airline cabins?

Italian seat manufacturer

Aviointeriors has come up

with a design that allows

passengers to stretch their

legs as much as they want when they

travel without any extra cost. The catch? The seats are so far upright

that they’ll be pretty much standing up. Unveiled at the Aircraft Interiors Expo

2018 in Hamburg, the SkyRider aims to

help airlines squeeze in more passengers

by allowing an “ultra-high density” and

reducing the space between rows. Aviointeriors compares the seating

position to that of a horseback rider,

pointing out that cowboys can sit on

saddles for hours without feeling

uncomfortable.

Before the Bell Source: Thomson Reuters Canadian stock futures were mixed as investors awaited inflation

data and crude prices slipped after U.S. President Donald Trump

criticized OPEC for rising oil prices. U.S. stock futures were little

changed as investors assessed earnings reports from big corporates. The euro weakened as investors trimmed bets before a European

Central Bank meeting next week and the U.S. dollar held generally

firm across the board. Easing political tensions hurt demand for gold.

Stocks to Watch

• Rogers Communications Inc (RCIb). The telecom company’s first-

quarter profit topped analysts' forecasts as it signed up more wireless

postpaid and internet customers. Rogers said it added 95,000 net

postpaid wireless subscribers in the first three months of 2018, up by

35,000 compared with a year earlier.

• Crescent Point Energy Corp (CPG). Proxy advisory firm Institutional

Shareholder Services on Thursday recommended the company’s

shareholders vote for activist investor Cation Capital's two

nominations to the oil and gas producer's board.

• Imperial Oil Ltd (IMO) & TransCanada Corp (TRP). Norway's $1 trillion

sovereign wealth fund will back key proposals at the annual general

meetings next week of three companies in which it holds stakes, the

fund announced.

• National Bank of Canada (NA). JPMorgan Chase has tested a new

blockchain platform for issuing financial instruments with the bank

and other large firms, they said, seeking to streamline origination,

settlement, interest rate payments and other processes.

• General Electric Co (GE). The company’s quarterly profit from

continuing operations more than tripled on Friday, helped by strength

in its aviation and healthcare businesses.

• Facebook Inc (FB). The company’s privacy practices were cleared

by auditing firm PricewaterhouseCoopers LLP in an assessment

completed last year of the period in which data analytics

consultancy Cambridge Analytica gained access to the personal

data of millions of Facebook users.

Friday, April 20, 2018 2018Page 2

Featured in Today’s Canaccord Genuity Global Morning Summary Click here for more

Rating Changes Canada(1) Mosaic Capital Corporation (M-TSXV | C$5.70 | C$ 60.3 M) Revising down Q1 estimates and recommendation Target Price and Estimate Changes Canada(1) Rogers Communications Inc. (RCI.B-TSX | C$57.95 | C$ 29,844 M) Q1/18 beats strongly across the board Vermilion Energy Inc. (VET-TSX | C$46.00 | C$ 6,817 M) Taking advantage of depressed valuations United States(1) Apple (AAPL-NASDAQ | US$172.80 | US$ 877,879 M) Survey work indicates slow iPhone sales ahead of new

product launches Cubic Corporation (CUB-NYSE | US$66.35 | US$ 1,128 M) CGD services sale focuses portfolio, improves margin

visibility Quest Diagnostics (DGX-NYSE | US$101.50 | US$ 14,109 M) Quest weathers the storms, FY outlook is intact Atlassian Corp. plc (TEAM-NASDAQ | US$62.27 | US$ 15,230 M) Nothing amiss in our view Australia(3) St Barbara Limited (SBM-ASX | A$4.25 | A$ 2,195 M) MarQ'18 report Company Updates Canada(1) Diversified Royalty Corp. (DIV-TSX | C$3.30 | C$ 352 M) Q1 highlights resiliency of the royalty portfolio United States(1) Aspen Technology (AZPN-NASDAQ | US$86.91 | US$ 6,348 M) Runaway train never comin’ back... FQ3 preview Belden (BDC-NYSE | US$69.61 | US$ 3,056 M) Broadcasting better days – Q1 preview and NAB takeaways SPS Commerce (SPSC-NASDAQ | US$65.71 | US$ 1,138 M) Mea culpa: we should have pulled the trigger sooner Industry Updates Canada(1) Oil and Gas, Exploration and Production

British Columbia Land Sale; April 18, 2018 United States(1) Biotechnology – Catalysts in 2018 and beyond for our Biotechnology coverage: April 2018 edition Specialty Pharmaceuticals – Specialty Pharma Catalyst Calendar: April 2018 Restaurants – Casual dining comps building steam; previewing BJRI, EAT, CAKE, RRGB, TXRH; adjusting price

targets

Friday, April 20, 2018 2018Page 3

From the Bond Desk U.S. earnings will continue to be one of the central focusses, and especially so with nothing on the U.S.

economic calendar to close out the week. In Canada, we actually do have some key data this morning with

February Retail Sales (core survey +0.4% / prior +0.9%), and March CPI rounding out the schedule. We just got

a full serving of the Bank of Canada on Wednesday (Q&A / updated MPR), which in some respects arguably

sounded more dovish, so any significant upside/downside surprises here can and will trickle down into short

term rate futures markets that have been pricing in about a coin flip of a hike at the May 30 meeting for a

while now (48%). At the moment, bonds are mixed, but generally slightly better offered while underperforming

in Canada (GOC10s +1.7 bps / US10s +0.4 bps), and credit appears more or less flat as well with CDX basically

unchanged in IG and high yield.

Market Movers Source: Bloomberg

Toronto 52-Week Highs:

Athabasca OIL Corp ATH $1.64

ATS Automation Tooling SYS ATA $18.10

Azimut Exploration INC AZM $0.48

Baytex Energy Corp BTE $4.90

Bengal Energy LTD BNG $0.17

Caledonia Mining Corp PLC CAL $11.93

Copper Creek Gold Corp CPV $0.45

Cypress Development Corp CYP $0.40

Dream Unlimited-Cl A SUB VOT DRM $9.71

Enterprise Group INC E $0.53

Ether Capital Corp ETHC $2.49

Eyecarrot Innovations Corp EYC $0.25

First Energy Metals LTD FE $0.37

Gran Tierra Energy INC GTE $4.06

Husky Energy INC HSE $19.95

Intact Gold Corp ITG $0.46

Intercontinental Gold AND ME ICAU $0.43

Largo Resources LTD LGO $1.90

Namibia Rare Earths INC NRE $0.28

Parex Resources INC PXT $21.09

Pure Gold Mining INC PGM $0.71

Quest Pharmatech INC QPT $0.18

Roots Corp ROOT $12.85

Suncor Energy INC SU $49.01

Tamarack Valley Energy LTD TVE $3.39

WSP Global INC WSP $64.25

Toronto 52-Week Lows:

Adamera Minerals Corp ADZ $0.06

ADF Group INC DRX $1.60

Aldever Resources INC ALD $0.07

Alpha Peak Leisure INC AAP $0.14

Balmoral Resources LTD BAR $0.23

BCE INC BCE $53.02

Breaking Data Corp BKD $1.10

Corsa Coal Corp CSO $1.20

Electrovaya INC EFL $0.19

Ether Capital Corp ETHC $2.00

Gblt Corp GBLT $0.39

Genesis Metals Corp GIS $0.07

H-Source Holdings LTD HSI $0.09

Input Capital Corp INP $1.30

Lomiko Metals INC LMR $0.07

Maple Leaf Foods INC MFI $30.39

Nevada Exploration INC NGE $0.23

Northern Lion Gold Corp NL $0.26

Opawica Explorations INC OPW $0.07

Prospero Silver Corp PSL $0.09

Rockridge Resources LTD ROCK $0.22

Select Sands Corp SNS $0.33

Total Telcom INC TTZ $0.13

Trilogy International Partne TRL $4.60

Zenyatta Ventures LTD ZEN $0.47

Friday, April 20, 2018 2018Page 4

U.S. 52-Week Highs:

ACS Actividades Cons Y Serv ACSAF $42.25

Aegon NV AEGOF $7.45

Alcoa Corp AA $62.35

Alumina LTD AWCMF $2.26

American Express CO AXP $102.96

Anadarko Petroleum Corp APC $67.24

Anta Sports Products LTD ANPDF $5.73

Archer-Daniels-Midland CO ADM $46.08

Bio-Techne Corp TECH $154.55

Booz Allen Hamilton Holdings BAH $41.13

BWX Technologies INC BWXT $70.99

Canadian Tire Corp CDNTF $190.00

Carl Zeiss Meditec AG - CZMWF $66.60

Continental Resources Inc/Ok CLR $64.76

Copart INC CPRT $52.42

Core Laboratories N.V. CLB $122.78

CSX Corp CSX $61.42

DBS Group Holdings LTD DBSDF $23.13

Domino'S Pizza INC DPZ $241.41

Ferguson PLC WOSCF $78.85

GKN PLC GKNNF $6.89

Godaddy INC - Class A GDDY $65.10

Harris Corp HRS $169.28

Heico Corp HEI $92.56

Heico Corp-Class A HEI/A $77.85

Hess Corp HES $58.98

Hexagon Ab-B SHS HXGBF $61.15

Husky Energy INC HUSKF $15.83

Japan Airlines CO LTD JPNRF $38.80

Lundin Petroleum AB LNDNF $28.30

Melco International Develop. MDEVF $3.52

Nasdaq INC NDAQ $87.23

Next PLC NXGPF $73.50

Nibe Industrier Ab-B SHS NDRBF $10.05

NN Group NV NNGPF $47.90

Osaka GAS CO LTD OSGSF $21.15

Oversea-Chinese Banking Corp OVCHF $10.60

Pearson PLC PSORF $10.99

Phillips 66 PSX $110.85

Prada S.P.A. PRDSF $5.10

PTC INC PTC $86.49

RSP Permian INC RSPP $50.00

Schibsted Asa-B SHS SBBTF $28.60

Smurfit Kappa Group PLC SMFTF $45.49

Suncor Energy INC SU $38.87

Swatch Group Ag/The-Br SWGAF $475.45

Swiss Prime Site-Reg SWPRF $94.65

Tesco PLC TSCDF $3.41

Textron INC TXT $65.73

Tokyo GAS CO LTD TKGSF $26.07

Total SA TTFNF $61.40

Transdigm Group INC TDG $330.15

Transocean LTD RIG $12.75

Umpqua Holdings Corp UMPQ $23.22

Watsco INC WSO $192.94

Weir Group Plc/The WEIGF $31.70

Wirecard AG WRCDF $137.75

WPX Energy INC WPX $16.95

WW Grainger INC GWW $309.80

U.S. 52-Week Lows:

Alimentation Couche-Tard -B ANCUF $41.69

Alliance Data Systems Corp ADS $202.00

Altria Group INC MO $56.09

AMP LTD AMLTF $3.20

BCE INC BCE $41.85

Bristol-Myers Squibb CO BMY $51.51

British American Tobacco PLC BTAFF $50.84

Brother Industries LTD BRTHF $23.15

Campbell Soup CO CPB $40.98

Clorox Company CLX $118.92

Flughafen Zurich Ag-Reg UZAPF $209.00

General Mills INC GIS $43.73

Hanesbrands INC HBI $17.42

Harley-Davidson INC HOG $40.53

Hershey Co/The HSY $93.05

Industrivarden Ab-A SHS IDTVF $23.21

Kimberly-Clark Corp KMB $102.16

Pepsico INC PEP $105.08

Philip Morris International PM $83.50

Procter & Gamble Co/The PG $74.20

Proximus BGAOF $31.23

Shanghai Electric GRP CO L-H SIELF $0.37

Yahoo Japan Corp YAHOF $4.12

Friday, April 20, 2018 2018Page 5

Mining Minute’s Thought of the Day A Gold:Silver Ratio Reversion? This is what legendary prospector Yukon Cornelius was talking about when he said, “You're going to stay with me

and we'll all be rich with the biggest silver strike this side of Hudson Bay.” Wondering where to go to play Silver

exposure? Well, the Canaccord Genuity Mining Team has you covered. As the chart below shows, the Gold:Silver

ratio has recently spent significant time above the long-term averages (currently 77.7, down from above 80

recently, and vs. the two-year average of 73.7, the five-year of 71.0, the 10-year of 64.4, and 50.0 since 1950).

With a pending silver catch up trade coming, Dalton Baretto reiterates his preference for Fortuna Silver (FVI) and

Pan American (PAAS), and recently upgraded Coeur Mining (CDE). Baretto also highlights Arizona Mining (AZ) as

a top takeover pick with significant by-product silver production (up to 10Moz/year). The Mining Team would also

highlight Mexican silver developers MAG Silver (MAG) and SilverCrest (SIL)as companies offering excellent silver

price exposure. Other noteworthy names include the very high-grade Yukon developer, Alexco Resources (AXR) and Bear Creek

(BCM), which demonstrates massive leverage to the silver price given its large resource base. For a full copy of

the report and a detailed list of price targets and investment thesis, contact your Canaccord Genuity Investment

Advisor. (h/t Huffman)

Friday, April 20, 2018 2018Page 6

Canadian Equities of Interest Listed Alphabetically by Symbol

BMO Equal Weight Banks Index (ZEB : $27.85), Net Change: -0.14, % Change: -0.50%, Vol: 246,419

Bank OF Montreal* (BMO : $95.01), Net Change: 0.02, % Change: 0.02%, Vol: 954,509 Quest►7

Royal Bank* (RY : $96.63), Net Change: -0.37, % Change: -0.38%, Vol: 1,494,839 Quest►7

Toronto Dominion* (TD : $69.50), Net Change: -0.47, % Change: -0.67%, Vol: 2,471,486 Quest▲9

CIBC* (CM : $110.50), Net Change: -0.32, % Change: -0.29%, Vol: 819,661 Quest▲9

Bank OF Nova Scotia* (BNS : $76.39), Net Change: -0.41, % Change: -0.53%, Vol: 1,320,265 Quest▲8

National Bank* (NA : $59.22), Net Change: -0.20, % Change: -0.34%, Vol: 627,347 Quest▲8

Well, well, well.. Look who finally showed up. It’s FRIDAY! The six U.S. Mega banks (BAC, C, GS, JPM, MS, WFC) have

completed their Q1/18 results this week. For the group, adj. EPS growth was excellent at 34% YoY (helped by lower

U.S. corporate tax rate) with Bank of America (BAC) leading the group with 55% YoY growth. Canaccord Genuity

Financials Analyst Scott Chan says bank earnings surprised across the board, with a 10% beat on average.

Goldman Sachs (GS) was the biggest outlier versus the Street with a 24% beat. Chan notes that Canadian U.S.

operations likely track better (e.g. loan growth, margin, credit trends) with U.S. regional banks results, which

continue to report over the coming weeks. Read-through for the Canadian names: Commercial loan growth is an important earnings driver for BMO (through

BMO Harris), RY (through City National), and CM (through PrivateBank). TD’s main U.S. focus is on the retail side.

Chan says capital market results rebounded and looking at the Canadian banks with the most capital markets

exposure, he expects RY and BMO to show good sequential growth against undemanding Q2 trading comps

when volatility was substantially lower than current levels. Overall, Chan’s outlook is optimistic: Generally, he views Q1 results as robust and this was reiterated on the

company conference calls. The market is used to looking for more based on U.S. banks higher valuation and

strong stock performance. In the near term, loan growth is expected to be modest, with commercial trends

outpacing consumer growth. Margin expansion appears to have slowed in spite of rate hikes, as yield curve

compression and slowing loan growth puts pressure on yields. The Canadian banks earning’s season kicks off next

month.

Click here for more

Canadian Natural Resources* (CNQ : $45.61), Net Change: 0.49, % Change: 1.09%, Vol: 4,242,242 Quest▲10

Husky Energy* (HSE : $19.52), Net Change: -0.26, % Change: -1.31%, Vol: 1,182,603 Quest▲10

Encana* (ECA : $16.07), Net Change: 0.06, % Change: 0.37%, Vol: 6,411,699 Quest►6

Suncor Energy* (SU : $48.57), Net Change: -0.04, % Change: -0.08%, Vol: 2,789,915 Quest▲8

Cenovus Energy* (CVE : $12.70), Net Change: -0.26, % Change: -2.01%, Vol: 7,368,838 Quest▼3

Imperial Oil* (IMO : $37.61), Net Change: 0.03, % Change: 0.08%, Vol: 576,728 Quest►7

With Oil at four-year highs, is it time to get back in?!? Q1/18 reporting for the Oil & Gas Seniors and Royalty

companies begins next week, April 23 with PrairieSky. Canaccord Genuity Oil & Gas Analyst Dennis Fong says Q1

highlights include rising oil prices Q/Q, wider differentials and modest improvements in natural gas (WCS

averaged $47.98/Bbl and AECO averaged $2.08/Mcf). Fong is focused on the ramp-up of major capital projects,

strong downstream margins, and uses of free cash flow (including a focus on dividends). Crack spreads in Midcon

decreased Q/Q to US$17.02 per Bbl (from US$19.56), Gulf Coast weakened Q/Q to US$12.86 (from US$15.66). Fong continues to see strength in the Canadian crack spreads which provides support for IMO and SU. The

improving oil price Q/Q should provide a positive FIFO-LIFO adjustment for SU, CVE and HSE (negative adjustment

for IMO). Heavy oil differentials recently narrowed on what Fong believes was a combination of shut-in volumes

from Cenovus, a turnaround at Syncrude, and improved scheduling on Enbridge’s mainline. However, Fong is

Friday, April 20, 2018 2018Page 7

concerned as the narrowing was predicated on the back of temporary production shut-ins and that WCS-WTI

basis could widen back to US$20/Bbl after these facilities are brought back online even with crude-by-rail. Fong

expects to receive updates from ECA, SU, IMO and PSK on share buyback programs which were initiated earlier

this year. While CNQ has focused on dividend increases over share buybacks as a method of returning value to

shareholders, the company recently announced approval from the TSX to repurchase up to 61.3 million shares. On average, large-cap production decreased ~5% Q/Q largely due to turnarounds offset partially by ramp-up

of major projects. CNQ is expected to show the greatest Q/Q increase in production on Horizon ramp-up, and

CVE is expected to show the greatest Q/Q decrease in production of 15% due to shut-ins. For major catalysts:

Fong expects ECA to provide additional clarity around its risk mitigation on Permian differentials where he believes

the company is mostly insulated from recent widening Midland-WTI basis. On CVE, he expects the company

could provide additional clarity around its work on crude-by-rail initiatives and its asset sale expectations. Suncor

remains our Top Pick in the large-cap space going into H2/18 as Fong expects Fort Hills ramp-up is proceeding

better than expected with peak production expected by Q3. His pecking order for short-term trading

opportunities in the large-caps: CNQ, HSE, ECA, SU, CVE and IMO.

Click here for more

Canadian Pacific Railway* (CP : $223.48), Net Change: -2.81, % Change: -1.24%, Vol: 645,048 Quest►5

Canadian National Railway* (CNR : $96.48), Net Change: 0.32, % Change: 0.33%, Vol: 1,183,321 Quest►5

Welcome to Canada, where we don’t need pipelines and we don’t need rails. Severe winter weather that left

grain farmers complaining about poor rail service is being blamed for disappointing first-quarter earnings at

Canadian Pacific Railway. CP said it earned $348 million in the first three months of the year, down from $431

million a year ago, despite a 4% increase in revenue to $1.66 billion. However, what had investors talking was the

impending strike action by CP workers. If you missed it, on Wednesday, the Teamsters Canada Rail Conference

and the International Brotherhood of Electrical Workers each gave Canadian Pacific a 72-hour strike notice

informing the company of their plans to strike at 12:01 a.m. eastern time on April 21. That announcement is also

a blow to Western Canadian oil producers, which have been relying on crude by rail as an alternative to the

bottlenecks/controversy surrounding pipelines. Federal Transport Minister Marc Garneau said earlier this week the government is watching the situation because

of its implications for grain and other commodity movements, but remains hopeful the bargaining process will

result in a solution. CP Rail said it presented the Teamsters with new three- and five-year agreement options on

Monday and planned to present the IBEW with three- and five-year options on Wednesday. However, Keith Creel,

CP CEO, said the company will not be “held hostage” in negotiations and is willing to experience the short-term

pain of a strike in order to ensure long-term sustainability. “We can’t take a position that’s going to destroy our

long-term ability to be on solid financial footing, to be able to run this company.… If it means that we have to

experience short-term pain to avoid that long-term damage, then that’s my fiduciary responsibility to all

stakeholders, and we’re going to uphold that.”

WeedMD* (WMD : $1.98), Net Change: 0.40, % Change: 25.32%, Vol: 2,249,648

Hiku Brands Company* (HIKU : $1.68), Net Change: -0.10, % Change: -5.62%, Vol: 1,946,767

Horizons Marijuana Life Sciences(HMMJ : $16.79), Net Change: 0.08, % Change: 0.48%, Vol: 564,408

Today, we rekindle the Great Debate: French Fries are in FACT a great Pizza topping. Happy Cannabis Celebration

Day! Medical cannabis group WeedMD is to merge with Hiku Brands Company in what it called a

"transformational" all-paper deal, which the companies say will create an industry leader. The deal combines

Hiku's portfolio of cannabis brands and experiential retail stores with WeedMD's scalable cannabis production

capabilities. Upon completion of the Transaction, existing Hiku and WeedMD shareholders will own approximately

51.75% and 48.25% of the combined company, respectively. The deal values WeedMD at $2.52, that’s a 60%

premium to WMD’s $1.58 close Wednesday.

Friday, April 20, 2018 2018Page 8

Weed MD is the parent of WeedMD Rx, a licensed producer and distributor of medical cannabis and oils under

Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR). The company has a 26,000-square-

foot indoor facility in Aylmer and is currently awaiting another cultivation license for its larger greenhouse facility

in Strathroy, Ontario that will give WeedMD Rx a total of 610,000 square feet of indoor grow area. The new license

and expansion will bolster WeedMD’s cannabis production capacity from 1,500 kilograms to in excess of 50,000

kilograms. The combined entity will be see vertically integrated operations, a growing network of retail stores, a

growing medical business and four scalable production facilities.

U.S. Macro Strategy Early Q1 EPS & tactical outlook solid In his latest report, Canaccord Genuity Chief Market Strategist Tony Dwyer notes Q1/18 EPS estimates are off to

a great start. With 10% of S&P 500 (SPX) companies having reported, Dwyer thinks it’d be good to highlight current

EPS estimates for the benchmark index: ▪ Q1/18 EPS growth is expected to be 19.4%, with 78.8% surpassing consensus. This has been led by double-

digit growth in Financials and Info Tech, coupled with a rebound in Energy and Materials.

▪ The Q1/18 revenue growth estimate is 7.5%, led by Energy, Info Tech and Materials.

▪ Dwyer continues to expect upward revisions as earnings season progresses. Throughout this cycle, EPS

estimates have been revised up a median 3.4% from the beginning of reporting season to the last report. This

suggests Q1/18 should come in at over 21% growth when all is said and done.

Tactical indicators suggest next leg higher has begun. Dwyer’s four key tactical indicators that typically identify

the close proximity of an intermediate-term low all recently hit a level that identify the beginning of the next major

leg higher: ▪ The percentage of stocks above the 10- and 50-day moving averages dropped to 6% and 15%, respectively

in late March.

▪ The VIX jumps to 20 or higher. Currently at 16, but hit 26 on retest.

▪ The SPX weekly stochastic drops to 30 or below. Currently at 36, this indicator hit 23 in early April.

▪ This week's Investor's Intelligence survey showed bulls are at 43.6%. A buy signal is below 45%, and preferably

35%. Absent an inversion of the yield curve that shuts down credit, Dwyer says each intermediate-term correction feels

like the fundamental backdrop is at risk, only to ultimately realize that positive fundamental influences that drive

his core thesis still exist. These include: 1) solid global growth; 2) positive domestic activity driving EPS; 3) capital

spending improvement; 4) real household median incomes jumping with strong employment; and 5) the

demographic-driven push to higher home ownership. Dwyer would add to his overweight sectors of Financials,

Info Tech and Industrials with an intermediate-term time horizon, while underweighting the defensive areas such

as Consumer Staples, Utilities, and Telecom.

Click here for more

U.S. Equities of Interest Listed Alphabetically by Symbol

Apple* (AAPL : US$172.66), Net Change: -5.18, % Change: -2.91%, Vol: 34,564,180 Quest▲10

Intel* (INTC : US$52.14), Net Change: -1.46, % Change: -2.72%, Vol: 24,971,514 Quest▲10

Applied Materials* (AMAT : US$51.16), Net Change: -3.57, % Change: -6.52%, Vol: 23,608,511 Quest▲10

i-Infer. Apple and its suppliers were selling off Thursday after a raft of analysts read a prediction of softer

smartphone sales from Taiwan Semiconductor Manufacturing, driven chiefly by concern about demand for

Friday, April 20, 2018 2018Page 9

iPhones. TMSC predicted that sales for the current quarter will be a billion dollars less than analysts had projected.

That followed a report by the International Monetary Fund earlier this week saying smartphone shipments

declined for the first time, a reminder that the best days may be in the past. Analysts note TSMC is the world’s foremost manufacturer of chips designed by other companies, and its earnings

are a key indicator of demand in a world where chipmakers and electronics manufacturers increasingly

outsource costly production. The company produces the main semiconductor components of the iPhone and

many of the world’s other best-selling smartphones. While TSMC is getting more growth from new customers, such as those seeking powerful chips to mine digital

currencies, it’s confronting a slowdown in demand from smartphone vendors as developed markets get

saturated and replacement cycles lengthen. Apple, which accounts for more than 20% of TSMC’s revenue, may be struggling to attract new customers. Its

forecast of $60-62 billion in March quarter revenue came in below estimates, indicating the iPhone maker may

have sold fewer handsets than analysts were expecting. The company reports results May 1.

GrafTech International* (EAF : US$14.45), Net Change: -0.55, % Change: -3.67%, Vol: 12,878,034

The Morning Coffee's exclusive supplier of graphite electrodes. GrafTech International went public Thursday, April

19, at a price of $15 per share — well under the targeted range of $21-24 per share from the maker of graphite

electrode products used in the production of steel. The company sold 35 million shares, slightly fewer than the

37.8 million shares originally planned. At $15 per share, the offering raised $525 million, which was well below the

$800 million previously estimated by GrafTech's owner, Brookfield Asset Management (BAM). The IPO pricing gives

GrafTech a market value of around $4.5 billion. For the unfamiliar, GrafTech’s electrode products are used in the production of electric arc furnace, or EAF, steel

and other ferrous and non-ferrous metals. Reuters noted the underwhelming IPO investor reception illustrates that

concerns about the volatility of its business persist, even as steel tariffs announced by U.S. President Donald Trump

last month were expected to buoy its fortunes. Brookfield bought GrafTech for around $1.3 billion, including debt in 2015, when the steel industry was struggling

with a slump in prices due to record exports by China. All the net proceeds from the IPO will go to an affiliate of

Brookfield and Brookfield Business Partners LP (BBU.UN).

Netflix* (NFLX : US$332.50), Net Change: -1.94, % Change: -0.58%, Vol: 8,398,209 Quest▲9

It’s like streaming a movie at home except you’re in a big dark room with strangers unwrapping tinfoil. Netflix, the

global streaming giant that has dramatically changed the TV industry and clashed with movie theatre owners,

may be ready to move onto the big screen in a new and surprising way – by owning cinemas. The LA Times reports

Netflix has explored the idea of buying movie theaters in Los Angeles and New York that would enable it to screen

a growing pipeline of feature films and documentaries. Netflix executives considered acquiring Los Angeles-

based Landmark Theatres, the circuit co-owned by Mark Cuban, but recently backed off the idea, according to

people familiar with the situation. One of the people said Netflix decided not to pursue a deal because

executives believed the sale price for Landmark was too high. Although no cinema deal has materialized, the idea of Netflix buying a theatre chain would certainly mark a new

phase in the company’s rapid ascent to become one of the most powerful players in the entertainment industry.

Netflix has attracted its 125 million subscribers worldwide by releasing dozens of original films and TV shows

annually on its fast-growing streaming service, bypassing the traditional theatrical market, as well as the cable

bundle. No one expects Netflix to purchase one of the giant domestic theater operators. Instead, it's more likely to pursue

a deal with a smaller player that would give it a foothold in key industry markets. An obvious choice would be

Friday, April 20, 2018 2018Page 10

Landmark, which hired an investment bank this month to explore options after potential buyers expressed interest

in doing a deal, according to people familiar with the situation.

Pier 1 Imports* (PIR : US$2.73), Net Change: -0.73, % Change: -21.10%, Vol: 7,452,708 Quest▼2

Not everybody likes wicker, it turns out. Pier 1 Imports had a Thursday to forget after the company reported sales

that missed analysts' expectations, also ceasing its dividend payouts. Net income was $15.1 million, or $0.19 a

share, for the fiscal fourth quarter, compared with $26.6 million, or $0.33 per share, a year ago. Excluding one-

time charges, Pier 1 earned $0.21a share, a penny above the analysts’ average expectation. Net sales dropped

roughly 3% to $512.2 million, falling short of the estimate for $537.5 million, as same-store sales fell 7.5% for the

period, which included one more week than in 2017. As such, the home furnishings retailer is halting its dividend payments to investors, hoping to enable “the company

to allocate greater resources toward implementing its three-year strategic plan to drive sales and earnings growth

and increase shareholder value.” Pier 1 laid out a plan, running through 2021, targeting niche groups of shoppers,

refining the merchandise in stores and creating new ads. According to CEO Alasdair James, the plan will also “pressure profitability” in the near term. “However, these

investments are expected to drive sales growth and profitability in fiscal 2020 and 2021 and are necessary to help

us return the business to a sustainable growth trajectory.” Analysts note that not only is Pier 1 competing with Amazon (AMZN), Walmart (WMT) and Target (TGT) for home

decor, but specialty shops such as Restoration Hardware (RH), Wayfair (W), Crate and Barrel and Pottery Barn are

increasingly crowding the market.

Philip Morris* (PM : US$85.64), Net Change: -15.80, % Change: -15.58%, Vol: 45,327,895 Quest▼3

Up in smoke. Philip Morris posted its worst day since 2008 after the company behind Marlboro reported

disappointing revenues, as growth in its heated tobacco devices slowed and cigarette demand continued to

decline. Net earnings fell to $1.56 billion, or $1.00 a share, in the three months ended March 31, compared with

$1.59 billion, or $1.02 a share, in the year ago period. But that still that topped the analysts’ estimate for $0.90 a

share. And looking ahead, the company lifted its full-year earnings per share guidance to $5.25-5.40 a share,

reflecting a lower full-year tax rate of about 26% and a more favourable exchange rate. But investors soured on the stock despite a guidance boost after Philip Morris said shipments of heated tobacco

units, which the company has been betting on for growth, more than doubled from a year ago but were down

from the December quarter, while cigarette shipments fell 5.3% in the first quarter from a year ago. Combined

shipments of cigarettes and its heated tobacco units fell 2.3% year over year. Indeed, optimism around new products had been bolstered by iQos’ early success in Japan. While growth rates

there were hampered by supply chain issues, demand would rise to meet higher supply once those problems

were solved, Philip Morris previously said. That didn’t happen. IQos sales growth slowed in the first quarter, proving

it might not be so easy for smokers to quit cigarettes after all. ¯\_(ツ)_/¯

Qualcomm* (QCOM : US$52.52), Net Change: -2.71, % Change: -4.91%, Vol: 18,672,770 Quest►5

NXP Semiconductor* (NXPI : US$107.17), Net Change: -5.78, % Change: -5.12%, Vol: 12,247,894 Quest▲9

From the land that built walls before it was trendy. Given the recent sell-off in Qualcomm and NXP shares amid

the U.S. and China trade war issues, Canaccord Genuity Tech Analyst Michael Walkley believes the market has

started to anticipate a lower probability that China will approve Qualcomm’s bid for NXP. Wednesday night,

Qualcomm and NXP, at the request of MOFCOM, agreed to extend the end date of their purchase agreement

from April 25 to July 25. Further, it appears Chinese regulators have indicated competitive issues delayed the

approval. Ironically, the White House enabled Qualcomm to remain independent from Broadcom (AVGO) with

the recent Presidential Order, but the current growing trade tensions with China have diminished Qualcomm’s

ability to close the accretive NXP deal.

Friday, April 20, 2018 2018Page 11

Walkley is lowering his near-term Qualcomm estimates due to the sluggish smartphone market trends during

1H/18, but remains bullish on the name, given his belief the underlying fundamental value remains compelling,

especially if Qualcomm eventually closes the NXP acquisition, or even completes a large share repurchase

program with the cash on its balance sheet earmarked for NXP. Walkley believes Qualcomm could reach a potential licensing settlement with Huawei over the coming months

and, should this occur with NXP closing, then Qualcomm could generate roughly $6.00 in F19 earnings. Further,

should Huawei settle, then all major OEMs but Apple (AAPL) would be settled for licensing. Walkley believes this

could improve Qualcomm’s chance to eventually settle with Apple, making Qualcomm’s F19 non-GAAP EPS

target of $6.75-7.50 potentially achievable. Ahead of Qualcomm’s earnings report on April 25, Walkley has

reduced his near-term estimates due to his lowered 1H/C2018 smartphone sell-through estimates.

Click here for more

Coffee Beans Coal, which fuelled the world’s biggest economies for more than a century, is increasingly losing out to

renewables. The latest example of how one of the dirtiest fossil fuels is being squeezed out of the market came

this week in Britain, which went for a record 55 hours without its any of its power plants producing electricity by

burning coal. No coal was used for power generation by stations in the U.K. between 10:25 p.m. in London on

Monday until 5:10 a.m. on Thursday. At the same time, wind turbines produced more power. The government

aims to switch off all coal plants by 2025 and has given renewables priority access to the grid. (Bloomberg) Sean Gibson loves KFC (YUM) gravy. He loves it so much, he wants to bathe in it. “It is a life long dream of mine

to bathe in KFC gravy,” Gibson, from Felling U.K., told local reporters. “I love KFC gravy and it would a pleasure.”

But his “life long dream” won’t come cheap. The 18-year-old reckons it will cost £475 to buy enough finger lickin’

brown stuff to fill an entire tub and he wants strangers to pay for it. Gibson has turned to GoFundMe. So far, he’s

actually raised £300. (BBC) If bitcoin can't recover $8,600 soon, bitcoin “miners” will likely find it unprofitable to keep creating the

cryptocurrency, Morgan Stanley (MS) analysts say. Bitcoin traded slightly higher near $8,200 on Thursday,

according to CoinDesk. It has struggled to recover in the last few months after tumbling from a record high above

$19,000 in mid-December. That break-even level is assessed using a very low electricity cost (US$0.03 kW/h).

(CNBC)

Friday, April 20, 2018 2018Page 12

Expected Earnings Source: Thomson Reuters

No major companies are scheduled to report for the day.

THE LAST DROP: Twitter went down in parts of the U.S. So between that and people deleting Facebook, MySpace

was like, "We're back, baby!"

- Jimmy Fallon

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. How the triAngle score is calculated * 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. 1. 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. 3. 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.