SlideShare a Scribd company logo
1 of 27
Download to read offline
....
Laird Research - Economics
November 16, 2015
Where we are now . . . . . . . . . . . . . . . . . . . . . . . . 1
Indicators for US Economy . . . . . . . . . . . . . . . . . . . 2
Global Financial Markets . . . . . . . . . . . . . . . . . . . . 3
US Key Interest Rates . . . . . . . . . . . . . . . . . . . . . . 8
US Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
QE Taper Tracker . . . . . . . . . . . . . . . . . . . . . . . . . 10
Exchange Rates . . . . . . . . . . . . . . . . . . . . . . . . . . 11
US Banking Indicators . . . . . . . . . . . . . . . . . . . . . . 12
US Employment Indicators . . . . . . . . . . . . . . . . . . . 13
US Business Activity Indicators . . . . . . . . . . . . . . . . 15
US Consumption Indicators . . . . . . . . . . . . . . . . . . 16
US Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Global Business Indicators . . . . . . . . . . . . . . . . . . . 19
Canadian Indicators . . . . . . . . . . . . . . . . . . . . . . . 22
European Indicators . . . . . . . . . . . . . . . . . . . . . . . 24
Chinese Indicators . . . . . . . . . . . . . . . . . . . . . . . . 26
Global Climate Change . . . . . . . . . . . . . . . . . . . . . 27
Where we are now
Welcome to the Laird Report. We present a selection of economic
data from around the world to help figure where we are today.
Perhaps there is a new trend in the world: stay at home and shut
out all the noise. In the US, consumers are feeling better about them-
selves, housing prices are on a multi-year winning stretch that have
either recovered or come close in most areas, unemployment is low,
bankruptcies are down – in short, things are looking pretty good at the
local level.
China is still an unknown – and will remain that way for at least
the next year as a ship that big won’t turn very quickly. We can see
exports declining, but retail sales up strongly year over year. The world
may not China’s products but at home, people are spending.
Europe seems to have recovered in most areas – focusing in par-
ticular on unemployment as the biggest issue in the region. Greece
and Spain are still at horrendous levels, but there’s clear improvement
happening. But again, exports are down.
Canada has taken it on the chin, along with Australia and other
export dominated economies – I’m looking at you Brazil. If you need
someone else to buy it (whatever it is: oil, minerals, export goods) it
seems you will see your economy facing headwinds. If you can consume
it domestically, you are feeling fine. Japan, for example, is now offi-
cially in a recession, yet private consumption (60% of Japan’s GDP) is
now up after falling in Q2.
But this raises the question: if there are so many signs of life among
consumers, how are exports and export economies feeling the pinch?
Shouldn’t these move closer together?
Formatting Notes The grey bars on the various charts are OECD
recession indicators for the respective countries. In many cases, the last
available value is listed, along with the median value (measured from
as much of the data series as is available).
Subscription Info For a FREE subscription to this monthly re-
port, please visit sign up at our website: www.lairdresearch.com
Laird Research, November 16, 2015
Indicators for US Economy
Leading indicators are indicators that usually change before the
economy as a whole changes. They are useful as short-term predictors
of the economy. Our list includes the Philly Fed’s Leading Index which
summarizes multiple indicators; initial jobless claims and hours worked
(both decrease quickly when demand for employee services drops and
vice versa); purchasing manager indicies; new order and housing per-
mit indicies; delivery timings (longer timings imply more demand in
the system) and consumer sentiment (how consumers are feeling about
their own financial situation and the economy in general). Red dots
are points where a new trend has started.
Leading Index for the US
Index:Est.6monthgrowth
−3−10123
median: 1.52
Sep 2015: 1.33
Growth
Contraction
Initial Unemployment Claims
1000'sofClaimsperWeek
200400600
median: 349.62
Nov 2015: 267.75
Manufacturing Ave. Weekly Hours Worked
Hours
394041424344
median: 40.60
Oct 2015: 41.80
ISM Manfacturing − PMI
Index:SteadyState=50
3040506070
median: 53.40
Oct 2015: 50.10
expanding economy
contracting economy
Manufacturers' New Orders: Durable Goods
BillionsofDollars
150200250300
median: 184.45
Sep 2015: 231.18
Index of Truck Tonnage
TruckTonnageIndex
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
100120
median: 113.00
Aug 2015: 135.00
Capex (ex. Defence & Planes)
BillionsofDollars
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
40506070
median: 57.80
Sep 2015: 68.83
Chicago Fed National Activity Index
IndexValue
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−4−202
median: 0.08
Sep 2015: −0.37
U. Michigan: Consumer Sentiment
Index1966Q1=100
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
507090110
median: 88.45
Oct 2015: 90.00
www.lairdresearch.com November 16, 2015 Page 2
Global Financial Markets
Global Stock Market Returns
Country Index Name Close Date Current
Value
Weekly
Change
Monthly
Change
3 month
Change
12
month
Change
Corr to
S&P500
Corr to
TSX
North America
USA S&P 500 Nov 13 2,023.0 -3.6% J 1.0% I -2.9% J -0.8% J 1.00 0.81
USA NASDAQ Composite Nov 13 4,927.9 -4.3% J 2.7% I -2.1% J 5.3% I 0.95 0.77
USA Wilshire 5000 Total Market Nov 13 21,043.7 -3.8% J 0.2% I -4.0% J -1.9% J 1.00 0.82
Canada S&P TSX Nov 13 13,075.4 -3.5% J -5.6% J -8.2% J -11.5% J 0.81 1.00
Europe and Russia
France CAC 40 Nov 13 4,808.0 -3.5% J 3.5% I -3.6% J 14.8% I 0.59 0.65
Germany DAX Nov 13 10,708.4 -2.5% J 6.7% I -2.8% J 15.8% I 0.58 0.62
United Kingdom FTSE Nov 13 6,118.3 -3.7% J -3.5% J -6.9% J -7.8% J 0.59 0.68
Russia Market Vectors Russia ETF Nov 13 16.1 -4.7% J -4.2% J -2.0% J -17.7% J 0.71 0.75
Asia
Taiwan TSEC weighted index Nov 13 8,329.5 -4.2% J -2.8% J 0.2% I -7.3% J 0.40 0.50
China Shanghai Composite Index Nov 13 3,580.8 -0.3% J 9.8% I -9.5% J 44.1% I 0.32 0.33
Japan NIKKEI 225 Nov 13 19,596.9 1.7% I 7.5% I -4.8% J 12.7% I 0.40 0.37
Hong Kong Hang Seng Nov 13 22,396.1 -2.1% J -0.9% J -6.8% J -6.8% J 0.41 0.45
Korea Kospi Nov 13 1,973.3 -3.3% J -2.3% J -0.5% J 0.7% I 0.45 0.49
South Asia and Austrailia
India Bombay Stock Exchange Nov 13 25,610.5 -2.5% J -4.6% J -7.0% J -8.3% J 0.48 0.56
Indonesia Jakarta Nov 13 4,472.8 -2.1% J -0.2% J -2.4% J -11.4% J 0.40 0.48
Malaysia FTSE Bursa Malaysia KLCI Nov 13 1,658.9 -1.6% J -3.1% J 2.3% I -8.6% J 0.26 0.37
Australia All Ordinaries Nov 13 5,111.8 -3.0% J -2.3% J -5.1% J -5.7% J 0.35 0.39
New Zealand NZX 50 Index Gross Nov 13 5,989.0 -1.3% J 5.0% I 4.4% I 9.6% I 0.19 0.25
South America
Brasil IBOVESPA Nov 13 46,517.0 -0.9% J -1.8% J -3.1% J -10.3% J 0.62 0.61
Argentina MERVAL Buenos Aires Nov 13 13,182.7 2.4% I 22.5% I 12.9% I 32.9% I 0.66 0.65
Mexico Bolsa index Nov 13 43,617.7 -3.6% J -1.6% J -0.6% J -0.3% J 0.70 0.73
MENA and Africa
Egypt Market Vectors Egypt ETF Nov 13 35.5 -9.7% J -14.8% J -19.6% J -45.1% J 0.34 0.32
(Gulf States) Market Vectors Gulf States ETF Nov 13 23.3 -3.7% J -7.9% J -12.5% J -23.7% J 0.44 0.52
South Africa iShares MSCI South Africa Index Nov 13 52.1 -7.7% J -9.7% J -13.6% J -21.8% J 0.68 0.61
(Africa) Market Vectors Africa ETF Nov 13 19.0 -5.3% J -9.7% J -12.9% J -32.2% J 0.63 0.61
Commodities
USD Spot Oil West Texas Int. Nov 10 $44.2 -7.6% J -6.1% J -1.6% J -42.9% J 0.38 0.55
USD Gold LME Spot Nov 13 $1,083.8 -2.2% J -6.1% J -3.0% J -6.7% J -0.17 -0.05
Note: Correlations are based on daily arithmetic returns for the most recent 100 trading days.
www.lairdresearch.com November 16, 2015 Page 3
S&P 500 Composite Index
The S&P 500 Composite Index is widely regarded as the best single
gauge of the large cap U.S. equities market. A key figure is the valua-
tion level of the S&P500 as measured by the Price/Earnings ratio. We
present two versions: (1) a 12-month trailing earnings version which
reflects current earnings but is skewed by short term variances and (2)
a cyclically adjusted version which looks at the inflation adjusted earn-
ings over a 10 year period (i.e. at least one business cycle). Forecasted
earnings numbers are estimates provided by S&P.
S&P 500 Profit Margins and Overall Corporate Profit Margins (Trailing 12 months)
Percent
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
Percent
Total Corporate Profits (% of GDP) − median: 6.2%, Q2/15: 10.3%
Net Profit Margin (S&P 500 Earnings / Revenue) − median: 6.6%, Q3/15: 8.0%
S&P Quarterly Earnings (USD$ Inflation Adjusted to current prices)
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
−5.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
−5.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Tech Bubble
Japanese Asset Bubble
House BubbleAsian Financial Crisis
US Financial Crisis
Eurozone crisis
Oil Crisis I Oil Crisis II
Gulf War
Savings and Loans Crisis
High Inflation Period
Afganistan/Iraq WarVietnam War
Reported Earnings
Operating Earnings
Trailing P/E Ratios for S&P500
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
0
10
20
30
40
50
0
10
20
30
40
50
Multiple
Multiple
12−month P/E ( median = 17.4, Nov = 22.1)
10−year CAPE ( median = 19.5, Nov = 25.6)
www.lairdresearch.com November 16, 2015 Page 4
S&P 500 Composite Distributions
This is a view of the price performance of the S&P 500 index com-
panies. The area of each box is proportional to the company’s market
cap, while the colour is determined by the percentage change in price
over the past month. In addition, companies are sorted according to
their industry group.
AAPL
+2.5%
GOOG
+17%
MSFT
+18%
FB
+14%
V
+12%
ORCL
+3.3%
INTC
+7%
CSCO
+1.9%
IBM
−8.2%
MA
+6.9%
ACN
TXN
CRM
PYPL
CTSH
ADP
EBAY
ATVI
HPE
HPQ EA
FISV
FIS
MU
XRX
STX
TSS
WU
CSC
BRK−A
+1.1%
WFC
+6.1%
JPM
+7.5%
BAC
+11%
C
+6.6%
GS
USB
+3%
AIG
+4.2%
AXP
MS
+7.7%
SPG
BLK
MET
PNC
BK
SCHW
COF
PSA
PRU
ACE TRV
CME
ICE
CB
BBT
STT
EQR
CCI AFL
MHFI
DFS AVB
STI
HIG
PGR
VNO
VTR
FITB
HCP
WY
ESS
L
RF
O
XL
KEY
JNJ
+7.2%
PFE
+4.5%
MRK
+7.4%
GILD
+4.4%
AGN
+6.1%
AMGN
BMY
+6.8%
UNH
−4.5%
MDT
+8.9%
ABBV
+8.6%
CELG
LLY
ABT BIIB
TMO
MCK
ALXN
AET
ANTM
CI
BDX
VRTX
CAH
MYL
BSX
BXLT
ZTS
CERN
ISRG
DVA
BCR
A
AMZN
+23%
DIS
+12%
HD
CMCSA
+5.4%
NKE
−1.6%
MCD
SBUX
+3.9%
LOW
PCLN FOX
TWX F GM
TWC TGT TJX
CCL
JCI
VFC
LB
AZO VIAB
UA
DG
M
BBY SIG
LEN
RL
TIF
PG
+2.8%
WMT
−12%
KO
+4%
PEP
+4.5%
PM
+5%
MO CVS
WBA KHC
MDLZ
COST RAI
CL
+1.3%
KMB
KR GIS
EL
STZ K
SYY
TSN DPS
MJN
CLX
GE
+20%
MMM
+11%
BA
+9.2%
UPS
+3.2%
UTX
+9.2%
HON
+6.7%
UNP
LMT DHR
FDX
GD
CAT
DAL
RTN
NOC ITW PCP
EMR
LUV
AAL
NSC
CSX
ETN
DE
WM
ROP NLSN
IR
PH
R
XOM
+5.5%
CVX
+13%
SLB
+13%
COP
+7.6%
OXY KMI
PSX EOG
VLO
HAL
WMB
PXD
BHI
DVN
APA
SE
HES
NBL
NOV
TSO
CAM
DOW
DD
LYB
MON
ECL
PX
PPG
SHW
IP
VMC
CF
AA FCX
NEE DUK
D SO
AEP
EXC
PCG
SRE
PPL
PEG
EIX
ED
ES
DTE
FE
ETR
NI
T
+0.75%
VZ
+4.3%
LVLT CTL
Information Technology
Financials
Health Care
Consumer Discretionary
Consumer Staples
Industrials
Energy Materials Utilities
Telecommunications
Services
<−25.0% −20.0% −15.0% −10.0% −5.0% 0.0% 5.0% 10.0% 15.0% 20.0% >25.0%
% Change in Price from Oct 1, 2015 to Nov 13, 2015
Average Median Median Median
Sector Change P/Sales P/Book P/E
Materials 11.0% I 1.2 3.9 21.1
Industrials 8.3% I 1.5 3.6 17.7
Information Technology 8.0% I 3.6 4.5 26.0
Energy 7.6% I 1.6 1.9 19.9
Consumer Discretionary 5.4% I 1.6 3.8 19.2
Average Median Median Median
Sector Change P/Sales P/Book P/E
Financials 5.3% I 3.0 1.6 17.5
Health Care 4.3% I 3.2 3.8 26.3
Telecommunications Services 3.3% I 1.4 1.6 27.6
Consumer Staples 0.8% I 2.2 6.0 24.2
Utilities -1.0% J 1.6 1.6 17.2
www.lairdresearch.com November 16, 2015 Page 5
US Equity Valuations
A key valuation metric is Tobin’s q: the ratio between the market
value of the entire US stock market versus US net assets at replacement
cost (ie. what you pay versus what you get). Warren Buffet famously
follows stock market value as a percentage of GNP, which is highly
(93%) correlated to Tobin’s q.
We can also take the reverse approach: assume the market has
valuations correct, we can determine the required returns of future es-
timated earnings. These are quoted for both debt (using BAA rated
securities as a proxy) and equity premiums above the risk free rate (10
year US Treasuries). These figures are alternate approaches to under-
standing the current market sentiment - higher premiums indicate a
demand for greater returns for the same price and show the level of
risk-aversion in the market.
Tobin's q (Market Equity / Market Net Worth) and S&P500 Price/Sales
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
0.25
0.50
0.75
1.00
1.25
1.50
1.75
0.25
0.50
0.75
1.00
1.25
1.50
1.75
Buying assets at a discount
Paying up for growth
Tobin Q (median = 0.76, Mar = 1.06)
S&P 500 Price/Sales (median = 1.35, Sep = 1.71)
Equity and Debt Risk Premiums: Spread vs. Risk Free Rate (10−year US Treasury)
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Implied Equity Premium (median = 4.2%, Oct = 4.7%)
Debt (BAA) Premium (median = 2.0%, Oct = 3.2%)
www.lairdresearch.com November 16, 2015 Page 6
US Mutual Fund Flows
Fund flows describe the net investments in equity and bond mutual
funds in the US market, as described in ICI’s “Trends in Mutual Fund
Investing” report. Note however that this is only part of the story as
it does not include ETF fund flows - part of the changes are investors
entering or leaving the market, and part is investors shifting to ETF’s
from mutual funds.
US Net New Investment Cash Flow to Mutual Funds
US$billions(monthly)
2007 2008 2009 2010 2011 2012 2013 2014 2015
−40−2002040
Domestic Equity
World Equity
Taxable Bonds
Municipal Bonds
US Net New Investment Cash Flow to Mutual Funds
US$billions(Monthly)
2007 2008 2009 2010 2011 2012 2013 2014 2015
−60−40−200204060
Flows to Equity
Flows to Bonds
Net Market Flows
www.lairdresearch.com November 16, 2015 Page 7
US Key Interest Rates
Interest rates are often leading indicators of stress in the financial
system. The yield curve show the time structure of interest rates on
government bonds - Usually the longer the time the loan is outstanding,
the higher the rate charged. However if a recession is expected, then
the fed cuts rates and this relationship is inverted - leading to negative
spreads where short term rates are higher than long term rates.
Almost every recession in the past century has been preceeded by an
inversion - though not every inversion preceeds a recession (just most
of the time).
For corporate bonds, the key issue is the spread between bond rates
(i.e. AAA vs BAA bonds) or between government loans (LIBOR vs
Fedfunds - the infamous “TED Spread”). Here a spike correlates to an
aversion to risk, which is an indication that something bad is happen-
ing.
US Treasury Yield Curves
ForwardInstantaneousRates(%)
15
16
17
18
19
20
21
22
23
24
25
0.0
0.5
1.0
1.5
2.0
2.5
0.0
0.5
1.0
1.5
2.0
2.5Nov 12, 2015 (Today)
Oct 13, 2015 (1 mo ago)
Aug 12, 2015 (3 mo ago)
12 Nov 2014 (1 yr ago)
3 Month & 10 Yr Treasury Yields
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
0%
1%
2%
3%
4%
5%
6%
7%
0%
1%
2%
3%
4%
5%
6%
7%
10 Yr Treasury
3 Mo Treasury
Spread
AAA vs. BAA Bond Spreads
4%
5%
6%
7%
8%
9%
4%
5%
6%
7%
8%
9%
Percent
AAA
BAA
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
median: 91.00
Nov 2015: 138.00
0
100
200
300
0
100
200
300
Spread(bps)
LIBOR vs. Fedfunds Rate
0%
1%
2%
3%
4%
5%
6%
7%
0%
1%
2%
3%
4%
5%
6%
7%
Percent
3 mos t−bill
LIBOR
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
median: 36.25
Nov 2015: 20.14
0
100
200
300
0
100
200
300
Spread(bps)
www.lairdresearch.com November 16, 2015 Page 8
US Inflation
Generally, the US Fed tries to anchor long run inflation expectations
to approximately 2%. Inflation can be measured with the Consumer
Price Index (CPI) or the Personal Consumption Expenditures (PCE)
index.
In both cases, it makes sense to exclude items that vary quickly like
Food and Energy to get a clearer picture of inflation (usually called
Core Inflation). The Fed seems to think PCI more accurately reflects
the entire basket of goods and services that households purchase.
Finally, we can make a reasonable estimate of future inflation ex-
pectations by comparing real return and normal bonds to construct an
imputed forward inflation expectation. The 5y5y chart shows expected
5 year inflation rates at a point 5 years in the future. Neat trick that.
Consumer Price Index
Percent
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−1%
0%
1%
2%
3%
4%
5%
6%
−1%
0%
1%
2%
3%
4%
5%
6%
US Inflation Rate YoY% (Sep = −0.025%)
US Inflation ex Food & Energy YoY% (Sep = 1.9%)
Personal Consumption Expenditures
Percent(YearoverYear)
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−10123456
PCE Inflation Rate YoY% (Sep = 0.16%)
PCE Core Inflation YoY% (Sep = 1.3%)
5−Year, 5−Year Forward Inflation Expectation Rate
Percent
07
08
09
10
11
12
13
14
15
16
17
18
19
20
−10123456
5 year forward Inflation Expectation
Actual 5yr Inflation (CPI measure)
Actual 5yr Inflation (PCE Measure)
www.lairdresearch.com November 16, 2015 Page 9
QE Taper Tracker
The US has been using the program of Quantitative Easing to pro-
vide monetary stimulous to its economy. The Fed has engaged in a
series of programs (QE1, QE2 & QE3) designed to drive down long
term rates and improve liquidity though purchases of treasuries, mor-
gage backed securites and other debt from banks.
The higher demand for long maturity securities would drive up their
price, but as these securities have a fixed coupon, their yield would be
decreased (yield ≈ coupon / price) thus driving down long term rates.
In 2011-2012, “Operation Twist” attempted to reduce rates without
increasing liquidity. They went back to QE in 2013.
The Fed chairman suggested in June 2013 the economy was recover-
ing enough that they could start slowing down purchases (“tapering”).
The Fed backed off after a brief market panic. The Fed announced in
Dec 2013 that it was starting the taper, a decision partly driven by
seeing key targets of inflation around 2% and unemployment being less
than 6.5%. In Oct 2014, they announced the end of purchases.
QE Asset Purchases to Date (Treasury & Mortgage Backed Securities)
Trillions
0.0
0.5
1.0
1.5
2.0
2.5
0.0
0.5
1.0
1.5
2.0
2.5
QE1 QE2 Operation Twist QE3 TaperTreasuries
Mortgage Backed Securities
Total Monthly Asset Purchases (Treasury + Mortgage Backed Securities)
Billions
−100
−50
0
50
100
150
200
−100
−50
0
50
100
150
200
Month to date Nov 11: $−0.07
Inflation and Unemployment − Relative to Targets
Percent
0
2
4
6
8
10
0
2
4
6
8
10
Target Unemployment 6.5%
Target Inflation 2%
U.S. 10 Year and 3 Month Treasury Constant Maturity Yields
Percent
0
1
2
3
4
5
0
1
2
3
4
5
2008 2009 2010 2011 2012 2013 2014 2015
Short Term Rates:
Once at zero, Fed moved to QE
Long Term Rates:
Moving up in anticipation of Taper?
www.lairdresearch.com November 16, 2015 Page 10
Exchange Rates
10 Week Moving Average CAD Exchange Rates
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
0.620.710.810.901.001.09
USA/CAD
0.550.610.660.720.770.82
Euro/CAD
59.1674.7190.26105.81121.36136.91
Japan/CAD
0.380.440.490.550.610.67
U.K./CAD
0.591.101.602.112.613.12
Brazil/CAD
CAD Appreciating
CAD Depreciating
Change in F/X: Oct 1 2015 to Nov 6 2015
(Trade Weighted Currency Index of USD Trading Partners)
−3.0%
−1.5%
1.5%
3.0%
Euro
3.8%
UK
0.2%
Japan
2.6%
South Korea
−3.7%
China
−1.0%
India
0.4%
Brazil
−5.3%
Mexico
−0.7%
Canada
0.1%
USA
0.4%
Country vs. Average
Appreciating
Depreciating
% Change over 3 months vs. Canada
<−10.0% −8.0% −6.0% −4.0% −2.0% 0.0% 2.0% 4.0% 6.0% 8.0% >10.0%
CAD depreciatingCAD appreciating
ARG
−2.1%
AUS
−1.7%
BRA
−7.9%
CHN
2.0%
IND
0.5%
RUS
−0.5%
USA
1.7%
EUR
−1.4%
JPY
3.8%
KRW
0.0%
MXN
−0.1%
ZAR
−9.3%
www.lairdresearch.com November 16, 2015 Page 11
US Banking Indicators
The banking and finance industry is a key indicator of the health
of the US economy. It provides crucial liquidity to the economy in the
form of credit, and the breakdown of that system is one of the exac-
erbating factors of the 2008 recession. Key figures to track are the
Net Interest Margins which determine profitability (ie. the difference
between what a bank pays to depositors versus what the bank is paid
by creditors), along with levels of non-performing loans (i.e. loan loss
reserves and actual deliquency rates).
US Banks Net Interest Margin
Percent
3.03.54.04.5
median: 3.94
2015 Q2: 2.97
Repos Outstanding with Fed. Reserve
BillionsofDollars
0200400600
median: 57.00
Nov 2015: 277.00
Bank ROE − Assets between $300M−$1B
Percent
051015
median: 12.82
2015 Q2: 9.85
Consumer Credit Outstanding
%YearlyChange
−505101520
median: 7.60
Sep 2015: 7.09
Total Business Loans
%YearlyChange
−2001020 median: 8.61
Oct 2015: 11.08
US Nonperforming Loans
Percent
12345
median: 2.19
2015 Q2: 1.69
St. Louis Financial Stress Index
Index
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
0246
median: 0.092
Nov 2015: −0.88
Commercial Paper Outstanding
TrillionsofDollars
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
1.01.41.82.2
median: 1.33
Nov 2015: 1.05
Residential Morgage Delinquency Rate
Percent
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
246810
median: 2.32
2015 Q2: 5.77
www.lairdresearch.com November 16, 2015 Page 12
US Employment Indicators
Unemployment rates are considered the “single best indicator of
current labour conditions” by the Fed. The pace of payroll growth is
highly correlated with a number of economic indicators.Payroll changes
are another way to track the change in unemployment rate.
Unemployment only captures the percentage of people who are in
the labour market who don’t currently have a job - another measure
is what percentage of the whole population wants a job (employed or
not) - this is the Participation Rate.
The Beveridge Curve measures labour market efficiency by looking
at the relationship between job openings and the unemployment rate.
The curve slopes downward reflecting that higher rates of unemploy-
ment occur coincidentally with lower levels of job vacancies.
Unemployment Rate
Percent
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
median: 6.10
Oct 2015: 5.00
4
5
6
7
8
9
10
11
4
5
6
7
8
9
10
11
Percent
4 5 6 7 8 9 10
2.02.53.03.54.0
Beveridge Curve (Unemployment vs. Job Openings)
Unemployment Rate (%)
JobOpenings(%totalEmployment)
Dec 2000 − Dec 2008
Jan 2009 − Aug 2015
Sep 2015
Participation Rate
Percent
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
6364656667
median: 66.00
Oct 2015: 62.40
Total Nonfarm Payroll Change
MonthlyChange(000s)
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−5000500
median: 165.00
Oct 2015: 271.00
www.lairdresearch.com November 16, 2015 Page 13
There are a number of other ways to measure the health of employ-
ment. The U6 Rate includes people who are part time that want a
full-time job - they are employed but under-utilitized. Temporary help
demand is another indicator of labour market tightness or slack.
The large chart shows changes in private industry employment lev-
els over the past year, versus how well those job segments typically pay.
Lots of hiring in low paying jobs at the expense of higher paying jobs
is generally bad, though perhaps not unsurprising in a recovery.
Median Duration of Unemployment
Weeks
510152025
median: 8.70
Oct 2015: 11.20
(U6) Unemployed + PT + Marginally Attached
Percent
810121416
median: 9.80
Oct 2015: 9.80
4−week moving average of Initial Claims
Jan1995=100
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
50100150200
median: 107.49
Nov 2015: 82.32
Unemployed over 27 weeks
MillionsofPersons
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
01234567
median: 0.79
Oct 2015: 2.09
Services: Temp Help
MillionsofPersons
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
1.52.02.53.0
median: 2.25
Oct 2015: 2.93
−200 0 200 400 600
15
20
25
30
35
40
Annual Change in Employment Levels (000s of Workers)
Averagewages($/hour)
Private Industry Employment Change (Oct 2014 − Oct 2015)
Construction
Durable Goods
Education
Financial Activities
Health Services
Information
Leisure and Hospitality
Manufacturing
Mining and Logging
Nondurable Goods
Other Services
Professional &
Business Services
Retail Trade
Transportation
Utilities
Wholesale Trade
Circle size relative to total employees in industry
www.lairdresearch.com November 16, 2015 Page 14
US Business Activity Indicators
Business activity is split between manufacturing activity and non-
manufacturing activity. We are focusing on forward looking business
indicators like new order and inventory levels to give a sense of the
current business environment.
Manufacturing Sector: Real Output
YoYPercentChange
−1001020
median: 9.23
2015 Q3: 7.25
ISM Manufacturing − PMI
Index
3040506070
Oct 2015: 50.10
manufac. expanding
manufac. contracting
ISM Manufacturing: New Orders Index
Index
304050607080
Oct 2015: 52.90
Increase in new orders
Decrease in new orders
Non−Manufac. New Orders: Capital Goods
BillionsofDollars
40506070
median: 57.80
Sep 2015: 68.83
Average Weekly Hours: Manufacturing
Hours
3940414243
median: 41.10
Oct 2015: 41.80
Industrial Production: Manufacturing
YoYPercentChange
−15−50510
median: 3.11
Sep 2015: 1.58
Total Business: Inventories to Sales Ratio
Ratio
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
1.11.21.31.41.51.6
median: 1.36
Sep 2015: 1.38
Chicago Fed: Sales, Orders & Inventory
Index
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−0.50.00.5
Sep 2015: 0.00
Above ave growth
Below ave growth
ISM Non−Manufacturing Bus. Activity Index
Index
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
35455565
Oct 2015: 63.00
Growth
Contraction
www.lairdresearch.com November 16, 2015 Page 15
US Consumption Indicators
Variations in consumer activity are a leading indicator of the
strength of the economy. We track consumer sentiment (their expec-
tations about the future), consumer loan activity (indicator of new
purchase activity), and new orders and sales of consumer goods.
U. Michigan: Consumer Sentiment
Index1966Q1=100
5060708090110
median: 88.45
Oct 2015: 90.00
Consumer Loans (All banks)
YoY%Change
−10010203040
median: 7.57
Oct 2015: 5.30
Accounting
Change
Deliquency Rate on Consumer Loans
Percent
2.03.04.0
median: 3.46
2015 Q2: 1.96
New Orders: Durable Consumer Goods
YoY%Change
−20020
median: 4.15
Sep 2015: 9.85
New Orders: Non−durable Consumer Goods
YoY%Change
−2001020
median: 4.21
Sep 2015: −12.92
Personal Consumption & Housing Index
Index
−0.40.00.20.4
median: 0.02
Sep 2015: −0.08above ave growth
below ave growth
Light Cars and Trucks Sales
MillionsofUnits
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
10121416182022
median: 14.83
Oct 2015: 18.12
Personal Saving Rate
Percent
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
246810
median: 5.50
Sep 2015: 4.80
Real Retail and Food Services Sales
YoY%Change
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−10−505
median: 2.47
Sep 2015: 2.22
www.lairdresearch.com November 16, 2015 Page 16
US Housing
Housing construction is only about 5-8% of the US economy, how-
ever a house is typically the largest asset owned by a household. Since
personal consumption is about 70% of the US economy and house val-
ues directly impact household wealth, housing is an important indicator
in the health of the overall economy. In particular, housing investment
was an important driver of the economy getting out of the last few
recessions (though not this one so far). Here we track housing prices
and especially indicators which show the current state of the housing
market.
15 20 25 30 35
150200250300
Personal Income vs. Housing Prices (Inflation adjusted values)
NewHomePrice(000's)
Disposable Income Per Capita (000's)
Sep 2015
r2
: 89.5%
Range: Jan 1959 − Sep 2015
Blue dots > +5% change in next year
Red dots < −5% change in next year
New Housing Units Permits Authorized
MillionsofUnits
0.51.01.52.02.5
median: 1.34
Sep 2015: 1.10
New Home Median Sale Price
SalePrice$000's
100150200250300
Sep 2015: 296.90
Homeowner's Equity Level
Percent
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
4050607080
median: 66.50
2015 Q2: 56.30
New Homes: Median Months on the Market
Months
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
468101214
median: 4.90
Sep 2015: 3.30
US Monthly Supply of Homes
MonthsSupply
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
4681012
median: 5.90
Sep 2015: 5.80
www.lairdresearch.com November 16, 2015 Page 17
US Housing - FHFA Quarterly Index
The Federal Housing Finance Agency provides a quarterly survey
on house prices, based on sales prices and appraisal data. This gener-
ates a housing index for 355 municipal areas in the US from 1979 to
present. We have provided an alternative view of this data looking at
the change in prices from the peak in the 2007 time frame.
The goal is to provide a sense of where the housing markets are
weak versus strong.The colours represent gain or losses since the start
of the housing crisis (defined as the maximum price between 2007-2009
for each city). The circled dots are the cities in the survey, while the
background colours are interpolated from these points using a loess
smoother.
Change from 2007 Peak − Q2 2015
−50%
−40%
−30%
−20%
−10%
0%
10%
20%
30%
40%
50%
Today's Home Prices
Percentage Change from 2007−2009 Peak
Frequency
−75% −50% −25% 0% 25% 50% 75%
Year over Year Change − Q2 2015
−10%
−8%
−6%
−4%
−2%
0%
2%
4%
6%
8%
10%
YoY Change in this quarter
YoY Percent Change
Frequency
−15% −10% −5% 0% 5% 10% 15%
www.lairdresearch.com November 16, 2015 Page 18
Global Business Indicators
Global Manufacturing PMI Reports
The Purchasing Managers’ Index (PMI) is an indicator reflecting
purchasing managers’ acquisition of goods and services. An index read-
ing of 50.0 means that business conditions are unchanged, a number
over 50.0 indicates an improvement while anything below 50.0 suggests
a decline. The further away from 50.0 the index is, the stronger the
change over the month. The chart at the bottom shows a moving av-
erage of a number of PMI’s, along with standard deviation bands to
show a global average.
Global M−PMI − October 2015
<40.0 42.0 44.0 46.0 48.0 50.0 52.0 54.0 56.0 58.0 >60.0
Steady ExpandingContracting
Eurozone
52.3
Global PMI
51.4
TWN
47.8MEX
53.0
KOR
49.1
JPN
52.4
VNM
50.1
IDN
47.8
ZAF
47.5
AUS
50.2
BRA
44.1
CAN
48.0
CHN
48.3
IND
50.7
RUS
50.2
SAU
55.7
USA
54.1
Global M−PMI Monthly Change
<−5.0 −4.0 −3.0 −2.0 −1.0 0.0 1.0 2.0 3.0 4.0 >5.0
PMI Change ImprovingDeteriorating
Eurozone
0.3
Global PMI
0.7
TWN
0.9MEX
0.9
KOR
−0.1
JPN
1.4
VNM
0.6
IDN
0.4
ZAF
−0.4
AUS
−1.9
BRA
−2.9
CAN
−0.6
CHN
1.1
IND
−0.5
RUS
1.1
SAU
−0.8
USA
1.0
Purchase Managers Index (Manufacturing) − China, Japan, USA, Canada, France, Germany, Italy, UK, Australia
04
05
06
07
08
09
10
11
12
13
14
15
3040506070
3040506070
Business Conditions Contracting
Business Conditions Expanding
www.lairdresearch.com November 16, 2015 Page 19
Global Manufacturing PMI Chart
This is an alternate view of the global PMI reports. Here, we look
at all the various PMI data series in a single chart and watch their
evolution over time.
Red numbers indicate contraction (as estimated by PMI) while
green numbers indicate expansion.
Oct13
Nov13
Dec13
Jan14
Feb14
Mar14
Apr14
May14
Jun14
Jul14
Aug14
Sep14
Oct14
Nov14
Dec14
Jan15
Feb15
Mar15
Apr15
May15
Jun15
Jul15
Aug15
Sep15
Oct15
Australia
India
Indonesia
Viet Nam
Taiwan
China
Korea
Japan
South Africa
Saudi Arabia
Turkey
Russia
United Kingdom
Greece
Germany
France
Italy
Czech Republic
Spain
Poland
Ireland
Netherlands
Eurozone
Brazil
Mexico
Canada
United States
Global PMI 52.1 53.1 53.3 53.0 53.2 52.4 51.9 52.2 52.6 52.4 52.6 52.2 52.2 51.8 51.6 51.7 52.0 51.7 51.0 51.2 51.0 51.0 50.7 50.7 51.4
51.8 54.7 55.0 53.7 57.1 55.5 55.4 56.4 57.3 55.8 57.9 57.5 55.9 54.8 53.9 53.9 55.1 55.7 54.1 54.0 53.6 53.8 53.0 53.1 54.1
55.6 55.3 53.5 51.7 52.9 53.3 52.9 52.2 53.5 54.3 54.8 53.5 55.3 55.3 53.9 51.0 48.7 48.9 49.0 49.8 51.3 50.8 49.4 48.6 48.0
50.2 51.9 52.6 54.0 52.0 51.7 51.8 51.9 51.8 51.5 52.1 52.6 53.3 54.3 55.3 56.6 54.4 53.8 53.8 53.3 52.0 52.9 52.4 52.1 53.0
50.2 49.7 50.5 50.8 50.4 50.6 49.3 48.8 48.7 49.1 50.2 49.3 49.1 48.7 50.2 50.7 49.6 46.2 46.0 45.9 46.5 47.2 45.8 47.0 44.1
51.3 51.6 52.7 54.0 53.2 53.0 53.4 52.2 51.8 51.8 50.7 50.3 50.6 50.1 50.6 51.0 51.0 52.2 52.0 52.2 52.5 52.4 52.3 52.0 52.3
54.4 56.8 57.0 54.8 55.2 53.7 53.4 53.6 52.3 53.5 51.7 52.2 53.0 54.6 53.6 54.1 52.2 52.5 54.0 55.5 56.2 56.0 53.9 53.0 53.7
54.9 52.4 53.5 52.8 52.9 55.5 56.1 55.0 55.3 55.4 57.3 55.7 56.6 56.2 56.9 55.1 57.5 56.8 55.8 57.1 54.6 56.7 53.6 53.8 53.6
53.4 54.4 53.2 55.4 55.9 54.0 52.0 50.8 50.3 49.4 49.0 49.5 51.2 53.2 52.8 55.2 55.1 54.8 54.0 52.4 54.3 54.5 51.1 50.9 52.2
50.9 48.6 50.8 52.2 52.5 52.8 52.7 52.9 54.6 53.9 52.8 52.6 52.6 54.7 53.8 54.7 54.2 54.3 54.2 55.8 54.5 53.6 53.2 51.7 51.3
54.5 55.4 54.7 55.9 56.5 55.5 56.5 57.3 54.7 56.5 54.3 55.6 54.4 55.6 53.3 56.1 55.6 56.1 54.7 55.5 56.9 57.5 56.6 55.5 54.0
50.7 51.4 53.3 53.1 52.3 52.4 54.0 53.2 52.6 51.9 49.8 50.7 49.0 49.0 48.4 49.9 51.9 53.3 53.8 54.8 54.1 55.3 53.8 52.7 54.1
49.1 48.4 47.0 49.3 49.7 52.1 51.2 49.6 48.2 47.8 46.9 48.8 48.5 48.4 47.5 49.2 47.6 48.8 48.0 49.4 50.7 49.6 48.3 50.6 50.6
51.7 52.7 54.3 56.5 54.8 53.7 54.1 52.3 52.0 52.4 51.4 49.9 51.4 49.5 51.2 50.9 51.1 52.8 52.1 51.1 51.9 51.8 53.3 52.3 52.1
47.3 49.2 49.6 51.2 51.3 49.7 51.1 51.0 49.4 48.7 50.1 48.4 48.8 49.1 49.4 48.3 48.4 48.9 46.5 48.0 46.9 30.2 39.1 43.3 47.3
56.5 58.4 57.3 56.7 56.2 55.3 57.3 57.0 57.5 55.4 52.5 51.6 53.2 53.5 52.5 53.1 54.1 54.4 51.9 52.0 51.4 51.9 51.6 51.8 55.5
51.8 49.4 48.8 48.0 48.5 48.3 48.5 48.9 49.1 51.0 51.0 50.4 50.3 51.7 48.9 47.6 49.7 48.1 48.9 47.6 48.7 48.3 47.9 49.1 50.2
53.3 55.0 53.5 52.7 53.4 51.7 51.1 50.1 48.8 48.5 50.3 50.4 51.5 52.2 51.4 49.8 49.6 48.0 48.5 50.2 49.0 50.1 49.3 48.0 47.2
56.7 57.1 58.7 59.7 58.6 57.0 58.5 57.0 59.2 60.1 60.7 61.8 59.1 57.6 57.9 57.8 58.5 60.1 58.3 57.0 56.1 57.5 58.7 56.5 55.7
51.5 51.6 50.5 50.3 51.5 50.3 47.4 44.3 46.6 45.9 49.0 50.7 52.7 50.5 50.2 49.8 50.0 51.6 51.5 50.1 49.2 48.9 49.3 47.9 47.5
54.2 55.1 55.2 56.6 55.5 53.9 49.4 49.9 51.5 50.5 52.5 51.7 52.4 52.0 52.0 52.2 51.6 50.3 49.9 50.9 50.1 51.2 51.7 51.0 52.4
50.2 50.4 50.8 50.9 49.8 50.4 50.2 49.5 48.4 49.3 50.3 48.8 48.7 49.0 49.9 51.1 51.1 49.2 48.8 47.8 46.1 47.6 47.9 49.2 49.1
50.9 50.8 50.5 49.5 48.5 48.0 48.1 49.4 50.7 51.7 50.2 50.2 50.4 50.0 49.6 49.7 50.7 49.6 48.9 49.2 49.4 47.8 47.3 47.2 48.3
53.0 53.4 55.2 55.5 54.7 52.7 52.3 52.4 54.0 55.8 56.1 53.3 52.0 51.4 50.0 51.7 52.1 51.0 49.2 49.3 46.3 47.1 46.1 46.9 47.8
51.5 50.3 51.8 52.1 51.0 51.3 53.1 52.5 52.3 51.7 50.3 51.7 51.0 52.1 52.7 51.5 51.7 50.7 53.5 54.8 52.2 52.6 51.3 49.5 50.1
50.9 50.3 50.9 51.0 50.5 50.1 51.1 52.4 52.7 52.7 49.5 50.7 49.2 48.0 47.6 48.5 47.5 46.4 46.7 47.1 47.8 47.3 48.4 47.4 47.8
49.6 51.3 50.7 51.4 52.5 51.3 51.3 51.4 51.5 53.0 52.4 51.0 51.6 53.3 54.5 52.9 51.2 52.1 51.3 52.6 51.3 52.7 52.3 51.2 50.7
53.2 47.7 47.6 46.7 48.6 47.9 44.8 49.2 48.9 50.7 47.3 46.5 49.4 50.1 46.9 49.0 45.4 46.3 48.0 52.3 44.2 50.4 51.7 52.1 50.2
www.lairdresearch.com November 16, 2015 Page 20
OECD International Trade Data
The OECD calculates import and export values for member coun-
tries. Figures are seasonally adjusted and measured in billions of US
dollars. Red lines indicate exports, while blue lines indicate imports.
Green lines indicate the zero level.
The top part of the graph shows the changes in exports and imports
on a year-over-year basis, while the bottom part shows the difference
between exports and imports for that given month (i.e. the trade bal-
ance)
China (Mar 2015)
YoYChange
−40
−20
0
20
40
60
80
Balance
08
09
10
11
12
13
14
15
0
20
40
60
80
100
Germany (Feb 2015)
YoYChange
−40
−20
0
20
Balance
08
09
10
11
12
13
14
15
0
5
10
15
20
25
30
Japan (Feb 2015)
YoYChange
−30
−20
−10
0
10
20
Balance
08
09
10
11
12
13
14
15
−15
−10
−5
0
5
10
South Korea (Feb 2015)
YoYChange
−15
−10
−5
0
5
10
15
Balance
08
09
10
11
12
13
14
15
−4
−2
0
2
4
6
8
10
www.lairdresearch.com November 16, 2015 Page 21
Canadian Indicators
Retail Trade (SA)
YoYPercentChange
−50510
median: 4.68
Aug 2015: 2.84
Total Manufacturing Sales Growth
YoYPercentGrowth
−2001020
median: 3.96
Aug 2015: 0.58
Manufacturing New Orders Growth
YoYPercentGrowth
−30−100102030
median: 4.34
Aug 2015: 1.21
10yr Government Bond Yields
0246810
median: 5.72
Oct 2015: 1.47
Manufacturing PMI
48505254
Oct 2015: 48.00
Sales and New Orders (SA)
YoYPercentChange
−2001020
Sales
New Orders (smoothed)
Tbill Yield Spread (10 yr − 3mo)
Spread(Percent)
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−101234
median: 1.32
Oct 2015: 1.06
Inflation (total and core)
YoYPercentChange
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−101234
median: 1.92
Sep 2015: 1.03
Total
Core
Inventory to Sales Ratio (SA)
Ratio
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
1.31.41.51.6
median: 1.35
Aug 2015: 1.41
www.lairdresearch.com November 16, 2015 Page 22
6.6 6.8 7.0 7.2 7.4 7.6
1.31.41.51.61.71.81.9
Beveridge Curve (Mar 2011 − Jul 2015)
as.numeric(can.bev$ui.rate)
as.numeric(can.bev$vacancies)
Mar 2011 − Dec 2012
Jan 2013 − Jun 2015
Jul 2015
Unemployment Rate
JobVacancyrate(Industrial)
Ownership/Rental Price Ratio
RatioofAccomodationOwnership/RentRatio
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
90100110120130140150
Calgary
Montreal
Vancouver
Toronto
Note: Using prices relative to 2002 as base year
Ownership relatively more
expensive vs 2002
Rent relatively more expensive vs 2002
Unemployment Rate (SA)
Percent
345678910
Canada 7.0%
Alberta 6.6%
Ontario 6.8%
Debt Service Ratios (SA)
Percent
246810
Total Debt: 6.4%
Mortgage: 3.3%
Consumer Debt: 6.1%
Housing Starts and Building Permits (smoothed)
YoYPercentChange
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−40−2002040
Permits
Starts
www.lairdresearch.com November 16, 2015 Page 23
European Indicators
Unemployment Rates
Percentage
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
051015202530
Business Employment Expectations
Index
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−40−20010
Industrial Orderbook Levels
Index
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−60−40−20020
Country Employment
Expect.
Unempl.
(%)
Bond Yields
(%)
Retail
Turnover
Manufacturing
Turnover
Inflation
(YoY %)
Industry
Orderbook
PMI
Series Dates Oct 2015 Oct 2015 Oct 2015 Sep 2015 Sep 2015 Sep 2015 Oct 2015 Oct 2015
France -9.3 J 10.7 J 0.87 J 105.3 J 109.5 J 0.1 K -13.8 I 50.6 K
Germany -1.7 J 4.5 K 0.52 J NA 113.2 J -0.2 J -9.4 I 52.1 J
United Kingdom -3.5 J 5.2 J 1.81 J 114.1 I NA -0.1 J -11.7 J 55.5 I
Italy -0.5 I 11.8 J 1.70 J 101.3 K NA 0.2 J -9.6 I 54.1 I
Greece -20.1 J 24.6 J 7.81 J NA NA -0.8 J -42.6 I 47.3 I
Spain 1.9 J 21.6 J 1.73 J NA NA -1.1 J -3.9 J 51.3 J
Eurozone (EU28) -2.2 J 9.3 J 1.26 J 106.4 I 111.0 I -0.1 J -11.3 I NA
www.lairdresearch.com November 16, 2015 Page 24
Government Bond YieldsLongTermYields%
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
0246810
Economic Sentiment
Index
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
60708090110130
Consumer Confidence
Index
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−100−60−20020
Inflation (Harmonized Prices)
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
median: 1.90
Sep 2015: −0.10−1
0
1
2
3
4
5
6
7
Euro Area
US
Harmonized Inflation: Aug 2015
AUT
0.6%
BGR
−0.9%
DEU
−0.2%
ESP
−1.1%
FIN
−0.7%
FRA
0.1%
GBR
−0.1%
GRC
−0.8%
HRV
−0.5%
HUN
−0.1%
IRL
0.0%
ISL
0.9%
ITA
0.2%
NOR
1.9%
POL
−0.6%
ROU
−1.5%
SWE
0.9%
<−1.0%0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% >7.0%
YoY % Change in Prices
PMI: October 2015
<40.042.0 44.0 46.0 48.0 50.0 52.0 54.0 56.0 58.0>60.0
Steady ExpandingContracting
BRA
44.1
CAN
48.0
DEU
52.1
ESP
51.3
FRA
50.6
GBR
55.5
GRC
47.3
IRL
53.6
ITA
54.1
MEX
53.0
POL
52.2
SAU
55.7
TUR
47.2
USA
54.1
RUS
50.2
PMI Change: Sep − Oct
<−5.0−4.0 −3.0 −2.0 −1.0 0.0 1.0 2.0 3.0 4.0 >5.0
PMI Change ImprovingDeteriorating
CAN
−0.6
DEU
−0.2
ESP
−0.4
FRA
0.0
GBR
3.7
GRC
4.0
IRL
−0.2
ITA
1.4
POL
1.3
TUR
−0.8
USA
1.0
RUS
1.1
www.lairdresearch.com November 16, 2015 Page 25
Chinese Indicators
Tracking the Chinese economy is a tricky. As reported in the Fi-
nancial Times, Premier Li Keqiang confided to US officials in 2007 that
gross domestic product was “man made” and “for reference only”. In-
stead, he suggested that it was much more useful to focus on three alter-
native indicators: electricity consumption, rail cargo volumes and bank
lending (still tracking down that last one). We also include the PMI
- which is an official version put out by the Chinese government and
differs slightly from an HSBC version. Finally we include the Shanghai
Composite Index as a measure of stock performance.
Manufacturing PMI
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
4045505560
Oct 2015: 48.30
Shanghai Composite Index
IndexValue(MonthlyHigh/Low)
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
0100030005000
Nov 2015: 3580.84
Electricity Generated
100MillionKWH(logscale)
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
1000200030005000
Oct 2015: 4454.00
Electricity Generated
Long Term Trend
Short Term Average
Consumer Confidence Index
Index
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
98100102104106108110
median: 103.90
Sep 2015: 105.60
Exports
YoYPercentChange
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
−20020406080
median: 18.40
Oct 2015: −6.90
Retail Sales Growth
YoYPercentChange
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
101520
median: 12.95
Oct 2015: 11.00
www.lairdresearch.com November 16, 2015 Page 26
Global Climate Change
Temperature and precipitation data are taken from the US National
Climatic Data Center and presented as the average monthly anomaly
from the previous 6 months. Anomalies are defined as the difference
from the average value over the period from 1971-2000 for the tem-
perature map and over the 20th century for the global temparature
chart.
Average Temperature Anomalies from Mar 2015 - Aug 2015
<−4.0 −3.0 −2.0 −1.0 0.0 1.0 2.0 3.0 >4.0
Anomalies in Celcius WarmerCooler Anomalies in Celcius
−4 −2 0 2 4
Historic Global Temperature Deviations
DegreesCelciusDeviations
−0.50.00.5
Sep 2015: 0.90
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
www.lairdresearch.com November 16, 2015 Page 27

More Related Content

What's hot

Before the Open June 12 2017
Before the Open June 12 2017Before the Open June 12 2017
Before the Open June 12 2017John Pendrith
 
Before the Open June 26 2017
Before the Open June 26 2017Before the Open June 26 2017
Before the Open June 26 2017John Pendrith
 
Before the Open June 14 2017
Before the Open June 14 2017Before the Open June 14 2017
Before the Open June 14 2017John Pendrith
 
BoyarMiller Breakfast Forum: The Current State of the Capital Markets 2010
BoyarMiller Breakfast Forum: The Current State of the Capital Markets 2010BoyarMiller Breakfast Forum: The Current State of the Capital Markets 2010
BoyarMiller Breakfast Forum: The Current State of the Capital Markets 2010BoyarMiller
 
SGMT Capital September 2016 Investor Letter Final
SGMT Capital September 2016 Investor Letter FinalSGMT Capital September 2016 Investor Letter Final
SGMT Capital September 2016 Investor Letter FinalDavid Smith
 
SGMT Capital May 2016 Investor Letter -Final
SGMT Capital May 2016 Investor Letter -FinalSGMT Capital May 2016 Investor Letter -Final
SGMT Capital May 2016 Investor Letter -FinalDavid Smith
 
Final Project International Financial Management -
Final Project International Financial Management -Final Project International Financial Management -
Final Project International Financial Management -Alaa Sulaiman
 

What's hot (20)

Global Economics Update - September 2015
Global Economics Update - September 2015Global Economics Update - September 2015
Global Economics Update - September 2015
 
World Economics Update - October 2014
World Economics Update - October 2014World Economics Update - October 2014
World Economics Update - October 2014
 
Global Economics Update - January 2015
Global Economics Update - January 2015Global Economics Update - January 2015
Global Economics Update - January 2015
 
Global Economics Update - April 2015
Global Economics Update - April 2015Global Economics Update - April 2015
Global Economics Update - April 2015
 
Global Economics Update 2017-05-16
Global Economics Update 2017-05-16Global Economics Update 2017-05-16
Global Economics Update 2017-05-16
 
Global Economics Update - January 2016
Global Economics Update - January 2016Global Economics Update - January 2016
Global Economics Update - January 2016
 
Global Economics Update - August 2015
Global Economics Update - August 2015Global Economics Update - August 2015
Global Economics Update - August 2015
 
Global Economics Update - October 2015
Global Economics Update - October 2015Global Economics Update - October 2015
Global Economics Update - October 2015
 
Global Economics Update - November 2014
Global Economics Update - November 2014Global Economics Update - November 2014
Global Economics Update - November 2014
 
Global Economics Update - December 2014
Global Economics Update - December 2014Global Economics Update - December 2014
Global Economics Update - December 2014
 
Global economics report 2017 07-17
Global economics report 2017 07-17Global economics report 2017 07-17
Global economics report 2017 07-17
 
The Laird Report - May 14 2014
The Laird Report - May 14 2014The Laird Report - May 14 2014
The Laird Report - May 14 2014
 
The Laird Report - February 8 2014
The Laird Report - February 8 2014The Laird Report - February 8 2014
The Laird Report - February 8 2014
 
Before the Open June 12 2017
Before the Open June 12 2017Before the Open June 12 2017
Before the Open June 12 2017
 
Before the Open June 26 2017
Before the Open June 26 2017Before the Open June 26 2017
Before the Open June 26 2017
 
Before the Open June 14 2017
Before the Open June 14 2017Before the Open June 14 2017
Before the Open June 14 2017
 
BoyarMiller Breakfast Forum: The Current State of the Capital Markets 2010
BoyarMiller Breakfast Forum: The Current State of the Capital Markets 2010BoyarMiller Breakfast Forum: The Current State of the Capital Markets 2010
BoyarMiller Breakfast Forum: The Current State of the Capital Markets 2010
 
SGMT Capital September 2016 Investor Letter Final
SGMT Capital September 2016 Investor Letter FinalSGMT Capital September 2016 Investor Letter Final
SGMT Capital September 2016 Investor Letter Final
 
SGMT Capital May 2016 Investor Letter -Final
SGMT Capital May 2016 Investor Letter -FinalSGMT Capital May 2016 Investor Letter -Final
SGMT Capital May 2016 Investor Letter -Final
 
Final Project International Financial Management -
Final Project International Financial Management -Final Project International Financial Management -
Final Project International Financial Management -
 

Similar to Global Economics Update - November 2015

Weekly market commentary, april 16, 2012
Weekly market commentary, april 16, 2012Weekly market commentary, april 16, 2012
Weekly market commentary, april 16, 2012vilord
 
Qmr q315 2015_mamc
Qmr q315 2015_mamcQmr q315 2015_mamc
Qmr q315 2015_mamcmclean8200
 
Bisonwood Financial Management - Q3 2015 Market Review
Bisonwood Financial Management - Q3 2015 Market ReviewBisonwood Financial Management - Q3 2015 Market Review
Bisonwood Financial Management - Q3 2015 Market ReviewJason Traff
 
Investing for Doctors | Q3 Market Review
Investing for Doctors | Q3 Market ReviewInvesting for Doctors | Q3 Market Review
Investing for Doctors | Q3 Market ReviewLFGmarketing
 
Qmr q315 2015_mamc
Qmr q315 2015_mamcQmr q315 2015_mamc
Qmr q315 2015_mamcmclean8200
 
ClearPath Investment Perspectives - Nov 17 2014
ClearPath Investment Perspectives - Nov  17 2014ClearPath Investment Perspectives - Nov  17 2014
ClearPath Investment Perspectives - Nov 17 2014bcdconna
 
2014q4 Edward Jones Advisory Solutions Market Commentary
2014q4 Edward Jones Advisory Solutions Market Commentary2014q4 Edward Jones Advisory Solutions Market Commentary
2014q4 Edward Jones Advisory Solutions Market CommentaryAllen Parker, CFP ®
 

Similar to Global Economics Update - November 2015 (18)

Global Economics Report - September 2014
Global Economics Report - September 2014Global Economics Report - September 2014
Global Economics Report - September 2014
 
Global Economics Report - August 2014
Global Economics Report - August 2014Global Economics Report - August 2014
Global Economics Report - August 2014
 
Global Economics Update - June 2014
Global Economics Update - June 2014Global Economics Update - June 2014
Global Economics Update - June 2014
 
The Laird Report - April 2014 Edition
The Laird Report - April 2014 EditionThe Laird Report - April 2014 Edition
The Laird Report - April 2014 Edition
 
The Laird Report - January 11 2014
The Laird Report - January 11 2014The Laird Report - January 11 2014
The Laird Report - January 11 2014
 
Weekly market commentary, april 16, 2012
Weekly market commentary, april 16, 2012Weekly market commentary, april 16, 2012
Weekly market commentary, april 16, 2012
 
Vgfa 2013-09
Vgfa 2013-09Vgfa 2013-09
Vgfa 2013-09
 
Agf market outlook
Agf market outlookAgf market outlook
Agf market outlook
 
Q3 Investment Review
Q3 Investment ReviewQ3 Investment Review
Q3 Investment Review
 
Dec2005
Dec2005Dec2005
Dec2005
 
Financial Synergies | Q3 2015 Market Review
Financial Synergies | Q3 2015 Market ReviewFinancial Synergies | Q3 2015 Market Review
Financial Synergies | Q3 2015 Market Review
 
Qmr q315 2015_mamc
Qmr q315 2015_mamcQmr q315 2015_mamc
Qmr q315 2015_mamc
 
Bisonwood Financial Management - Q3 2015 Market Review
Bisonwood Financial Management - Q3 2015 Market ReviewBisonwood Financial Management - Q3 2015 Market Review
Bisonwood Financial Management - Q3 2015 Market Review
 
Investing for Doctors | Q3 Market Review
Investing for Doctors | Q3 Market ReviewInvesting for Doctors | Q3 Market Review
Investing for Doctors | Q3 Market Review
 
Qmr q315 2015_mamc
Qmr q315 2015_mamcQmr q315 2015_mamc
Qmr q315 2015_mamc
 
ClearPath Investment Perspectives - Nov 17 2014
ClearPath Investment Perspectives - Nov  17 2014ClearPath Investment Perspectives - Nov  17 2014
ClearPath Investment Perspectives - Nov 17 2014
 
HW3
HW3HW3
HW3
 
2014q4 Edward Jones Advisory Solutions Market Commentary
2014q4 Edward Jones Advisory Solutions Market Commentary2014q4 Edward Jones Advisory Solutions Market Commentary
2014q4 Edward Jones Advisory Solutions Market Commentary
 

Recently uploaded

Juspay Case study(Doubling Revenue Juspay's Success).pptx
Juspay Case study(Doubling Revenue Juspay's Success).pptxJuspay Case study(Doubling Revenue Juspay's Success).pptx
Juspay Case study(Doubling Revenue Juspay's Success).pptxaryan963438
 
Severe Global Financial Crisis Triggered in 2008
Severe Global Financial Crisis Triggered in 2008Severe Global Financial Crisis Triggered in 2008
Severe Global Financial Crisis Triggered in 2008pravanbg1
 
how can I transfer pi coins to someone in a different country.
how can I transfer pi coins to someone in a different country.how can I transfer pi coins to someone in a different country.
how can I transfer pi coins to someone in a different country.DOT TECH
 
How can I sell my pi coins in Indonesia?
How can I  sell my pi coins in Indonesia?How can I  sell my pi coins in Indonesia?
How can I sell my pi coins in Indonesia?DOT TECH
 
Maximize Your Business Potential with Falcon Invoice Discounting
Maximize Your Business Potential with Falcon Invoice DiscountingMaximize Your Business Potential with Falcon Invoice Discounting
Maximize Your Business Potential with Falcon Invoice DiscountingFalcon Invoice Discounting
 
how can i trade pi coins for Bitcoin easily.
how can i trade pi coins for Bitcoin easily.how can i trade pi coins for Bitcoin easily.
how can i trade pi coins for Bitcoin easily.DOT TECH
 
Introduction to Economics II Chapter 28 Unemployment (1).pdf
Introduction to Economics II Chapter 28 Unemployment (1).pdfIntroduction to Economics II Chapter 28 Unemployment (1).pdf
Introduction to Economics II Chapter 28 Unemployment (1).pdfSafa444074
 
how to exchange pi coins for USD in 2024.
how to exchange pi coins for USD in 2024.how to exchange pi coins for USD in 2024.
how to exchange pi coins for USD in 2024.DOT TECH
 
how can I sell my pi coins in China 2024.
how can I sell my pi coins in China 2024.how can I sell my pi coins in China 2024.
how can I sell my pi coins in China 2024.DOT TECH
 
How do I unlock my locked Pi coins fast.
How do I unlock my locked Pi coins fast.How do I unlock my locked Pi coins fast.
How do I unlock my locked Pi coins fast.DOT TECH
 
Will pi network launch in 2024: what's the update.
Will pi network launch in 2024: what's the update.Will pi network launch in 2024: what's the update.
Will pi network launch in 2024: what's the update.DOT TECH
 
where can I purchase things with pi coins online
where can I purchase things with pi coins onlinewhere can I purchase things with pi coins online
where can I purchase things with pi coins onlineDOT TECH
 
Digital Finance Summit 2024 Partners Brochure
Digital Finance Summit 2024 Partners BrochureDigital Finance Summit 2024 Partners Brochure
Digital Finance Summit 2024 Partners BrochureFinTech Belgium
 
is pi Network coin available for sale in 2024
is pi Network coin available for sale in 2024is pi Network coin available for sale in 2024
is pi Network coin available for sale in 2024DOT TECH
 
State Space Tutorial.pptxjjjjjjjjjjjjjjj
State Space Tutorial.pptxjjjjjjjjjjjjjjjState Space Tutorial.pptxjjjjjjjjjjjjjjj
State Space Tutorial.pptxjjjjjjjjjjjjjjjjoshuaclack73
 
how can i make money selling pi coins in 2024
how can i make money selling pi coins in 2024how can i make money selling pi coins in 2024
how can i make money selling pi coins in 2024DOT TECH
 
Indirect tax .pptx Supply under GST, Charges of GST
Indirect tax .pptx  Supply under GST, Charges of GSTIndirect tax .pptx  Supply under GST, Charges of GST
Indirect tax .pptx Supply under GST, Charges of GSTmeghnagandhi5574
 
where can I sell pi coins at the best rate (Market Price)
where can I sell pi coins at the best rate (Market Price)where can I sell pi coins at the best rate (Market Price)
where can I sell pi coins at the best rate (Market Price)DOT TECH
 
how can I sell my pi coins in the United States at the best price
how can I sell my pi coins in the United States at the best pricehow can I sell my pi coins in the United States at the best price
how can I sell my pi coins in the United States at the best priceDOT TECH
 

Recently uploaded (20)

Juspay Case study(Doubling Revenue Juspay's Success).pptx
Juspay Case study(Doubling Revenue Juspay's Success).pptxJuspay Case study(Doubling Revenue Juspay's Success).pptx
Juspay Case study(Doubling Revenue Juspay's Success).pptx
 
Severe Global Financial Crisis Triggered in 2008
Severe Global Financial Crisis Triggered in 2008Severe Global Financial Crisis Triggered in 2008
Severe Global Financial Crisis Triggered in 2008
 
how can I transfer pi coins to someone in a different country.
how can I transfer pi coins to someone in a different country.how can I transfer pi coins to someone in a different country.
how can I transfer pi coins to someone in a different country.
 
How can I sell my pi coins in Indonesia?
How can I  sell my pi coins in Indonesia?How can I  sell my pi coins in Indonesia?
How can I sell my pi coins in Indonesia?
 
Maximize Your Business Potential with Falcon Invoice Discounting
Maximize Your Business Potential with Falcon Invoice DiscountingMaximize Your Business Potential with Falcon Invoice Discounting
Maximize Your Business Potential with Falcon Invoice Discounting
 
how can i trade pi coins for Bitcoin easily.
how can i trade pi coins for Bitcoin easily.how can i trade pi coins for Bitcoin easily.
how can i trade pi coins for Bitcoin easily.
 
Canvas Business Model Infographics by Slidesgo.pptx
Canvas Business Model Infographics by Slidesgo.pptxCanvas Business Model Infographics by Slidesgo.pptx
Canvas Business Model Infographics by Slidesgo.pptx
 
Introduction to Economics II Chapter 28 Unemployment (1).pdf
Introduction to Economics II Chapter 28 Unemployment (1).pdfIntroduction to Economics II Chapter 28 Unemployment (1).pdf
Introduction to Economics II Chapter 28 Unemployment (1).pdf
 
how to exchange pi coins for USD in 2024.
how to exchange pi coins for USD in 2024.how to exchange pi coins for USD in 2024.
how to exchange pi coins for USD in 2024.
 
how can I sell my pi coins in China 2024.
how can I sell my pi coins in China 2024.how can I sell my pi coins in China 2024.
how can I sell my pi coins in China 2024.
 
How do I unlock my locked Pi coins fast.
How do I unlock my locked Pi coins fast.How do I unlock my locked Pi coins fast.
How do I unlock my locked Pi coins fast.
 
Will pi network launch in 2024: what's the update.
Will pi network launch in 2024: what's the update.Will pi network launch in 2024: what's the update.
Will pi network launch in 2024: what's the update.
 
where can I purchase things with pi coins online
where can I purchase things with pi coins onlinewhere can I purchase things with pi coins online
where can I purchase things with pi coins online
 
Digital Finance Summit 2024 Partners Brochure
Digital Finance Summit 2024 Partners BrochureDigital Finance Summit 2024 Partners Brochure
Digital Finance Summit 2024 Partners Brochure
 
is pi Network coin available for sale in 2024
is pi Network coin available for sale in 2024is pi Network coin available for sale in 2024
is pi Network coin available for sale in 2024
 
State Space Tutorial.pptxjjjjjjjjjjjjjjj
State Space Tutorial.pptxjjjjjjjjjjjjjjjState Space Tutorial.pptxjjjjjjjjjjjjjjj
State Space Tutorial.pptxjjjjjjjjjjjjjjj
 
how can i make money selling pi coins in 2024
how can i make money selling pi coins in 2024how can i make money selling pi coins in 2024
how can i make money selling pi coins in 2024
 
Indirect tax .pptx Supply under GST, Charges of GST
Indirect tax .pptx  Supply under GST, Charges of GSTIndirect tax .pptx  Supply under GST, Charges of GST
Indirect tax .pptx Supply under GST, Charges of GST
 
where can I sell pi coins at the best rate (Market Price)
where can I sell pi coins at the best rate (Market Price)where can I sell pi coins at the best rate (Market Price)
where can I sell pi coins at the best rate (Market Price)
 
how can I sell my pi coins in the United States at the best price
how can I sell my pi coins in the United States at the best pricehow can I sell my pi coins in the United States at the best price
how can I sell my pi coins in the United States at the best price
 

Global Economics Update - November 2015

  • 1. .... Laird Research - Economics November 16, 2015 Where we are now . . . . . . . . . . . . . . . . . . . . . . . . 1 Indicators for US Economy . . . . . . . . . . . . . . . . . . . 2 Global Financial Markets . . . . . . . . . . . . . . . . . . . . 3 US Key Interest Rates . . . . . . . . . . . . . . . . . . . . . . 8 US Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 QE Taper Tracker . . . . . . . . . . . . . . . . . . . . . . . . . 10 Exchange Rates . . . . . . . . . . . . . . . . . . . . . . . . . . 11 US Banking Indicators . . . . . . . . . . . . . . . . . . . . . . 12 US Employment Indicators . . . . . . . . . . . . . . . . . . . 13 US Business Activity Indicators . . . . . . . . . . . . . . . . 15 US Consumption Indicators . . . . . . . . . . . . . . . . . . 16 US Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Global Business Indicators . . . . . . . . . . . . . . . . . . . 19 Canadian Indicators . . . . . . . . . . . . . . . . . . . . . . . 22 European Indicators . . . . . . . . . . . . . . . . . . . . . . . 24 Chinese Indicators . . . . . . . . . . . . . . . . . . . . . . . . 26 Global Climate Change . . . . . . . . . . . . . . . . . . . . . 27 Where we are now Welcome to the Laird Report. We present a selection of economic data from around the world to help figure where we are today. Perhaps there is a new trend in the world: stay at home and shut out all the noise. In the US, consumers are feeling better about them- selves, housing prices are on a multi-year winning stretch that have either recovered or come close in most areas, unemployment is low, bankruptcies are down – in short, things are looking pretty good at the local level. China is still an unknown – and will remain that way for at least the next year as a ship that big won’t turn very quickly. We can see exports declining, but retail sales up strongly year over year. The world may not China’s products but at home, people are spending. Europe seems to have recovered in most areas – focusing in par- ticular on unemployment as the biggest issue in the region. Greece and Spain are still at horrendous levels, but there’s clear improvement happening. But again, exports are down. Canada has taken it on the chin, along with Australia and other export dominated economies – I’m looking at you Brazil. If you need someone else to buy it (whatever it is: oil, minerals, export goods) it seems you will see your economy facing headwinds. If you can consume it domestically, you are feeling fine. Japan, for example, is now offi- cially in a recession, yet private consumption (60% of Japan’s GDP) is now up after falling in Q2. But this raises the question: if there are so many signs of life among consumers, how are exports and export economies feeling the pinch? Shouldn’t these move closer together? Formatting Notes The grey bars on the various charts are OECD recession indicators for the respective countries. In many cases, the last available value is listed, along with the median value (measured from as much of the data series as is available). Subscription Info For a FREE subscription to this monthly re- port, please visit sign up at our website: www.lairdresearch.com Laird Research, November 16, 2015
  • 2. Indicators for US Economy Leading indicators are indicators that usually change before the economy as a whole changes. They are useful as short-term predictors of the economy. Our list includes the Philly Fed’s Leading Index which summarizes multiple indicators; initial jobless claims and hours worked (both decrease quickly when demand for employee services drops and vice versa); purchasing manager indicies; new order and housing per- mit indicies; delivery timings (longer timings imply more demand in the system) and consumer sentiment (how consumers are feeling about their own financial situation and the economy in general). Red dots are points where a new trend has started. Leading Index for the US Index:Est.6monthgrowth −3−10123 median: 1.52 Sep 2015: 1.33 Growth Contraction Initial Unemployment Claims 1000'sofClaimsperWeek 200400600 median: 349.62 Nov 2015: 267.75 Manufacturing Ave. Weekly Hours Worked Hours 394041424344 median: 40.60 Oct 2015: 41.80 ISM Manfacturing − PMI Index:SteadyState=50 3040506070 median: 53.40 Oct 2015: 50.10 expanding economy contracting economy Manufacturers' New Orders: Durable Goods BillionsofDollars 150200250300 median: 184.45 Sep 2015: 231.18 Index of Truck Tonnage TruckTonnageIndex 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 100120 median: 113.00 Aug 2015: 135.00 Capex (ex. Defence & Planes) BillionsofDollars 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 40506070 median: 57.80 Sep 2015: 68.83 Chicago Fed National Activity Index IndexValue 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −4−202 median: 0.08 Sep 2015: −0.37 U. Michigan: Consumer Sentiment Index1966Q1=100 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 507090110 median: 88.45 Oct 2015: 90.00 www.lairdresearch.com November 16, 2015 Page 2
  • 3. Global Financial Markets Global Stock Market Returns Country Index Name Close Date Current Value Weekly Change Monthly Change 3 month Change 12 month Change Corr to S&P500 Corr to TSX North America USA S&P 500 Nov 13 2,023.0 -3.6% J 1.0% I -2.9% J -0.8% J 1.00 0.81 USA NASDAQ Composite Nov 13 4,927.9 -4.3% J 2.7% I -2.1% J 5.3% I 0.95 0.77 USA Wilshire 5000 Total Market Nov 13 21,043.7 -3.8% J 0.2% I -4.0% J -1.9% J 1.00 0.82 Canada S&P TSX Nov 13 13,075.4 -3.5% J -5.6% J -8.2% J -11.5% J 0.81 1.00 Europe and Russia France CAC 40 Nov 13 4,808.0 -3.5% J 3.5% I -3.6% J 14.8% I 0.59 0.65 Germany DAX Nov 13 10,708.4 -2.5% J 6.7% I -2.8% J 15.8% I 0.58 0.62 United Kingdom FTSE Nov 13 6,118.3 -3.7% J -3.5% J -6.9% J -7.8% J 0.59 0.68 Russia Market Vectors Russia ETF Nov 13 16.1 -4.7% J -4.2% J -2.0% J -17.7% J 0.71 0.75 Asia Taiwan TSEC weighted index Nov 13 8,329.5 -4.2% J -2.8% J 0.2% I -7.3% J 0.40 0.50 China Shanghai Composite Index Nov 13 3,580.8 -0.3% J 9.8% I -9.5% J 44.1% I 0.32 0.33 Japan NIKKEI 225 Nov 13 19,596.9 1.7% I 7.5% I -4.8% J 12.7% I 0.40 0.37 Hong Kong Hang Seng Nov 13 22,396.1 -2.1% J -0.9% J -6.8% J -6.8% J 0.41 0.45 Korea Kospi Nov 13 1,973.3 -3.3% J -2.3% J -0.5% J 0.7% I 0.45 0.49 South Asia and Austrailia India Bombay Stock Exchange Nov 13 25,610.5 -2.5% J -4.6% J -7.0% J -8.3% J 0.48 0.56 Indonesia Jakarta Nov 13 4,472.8 -2.1% J -0.2% J -2.4% J -11.4% J 0.40 0.48 Malaysia FTSE Bursa Malaysia KLCI Nov 13 1,658.9 -1.6% J -3.1% J 2.3% I -8.6% J 0.26 0.37 Australia All Ordinaries Nov 13 5,111.8 -3.0% J -2.3% J -5.1% J -5.7% J 0.35 0.39 New Zealand NZX 50 Index Gross Nov 13 5,989.0 -1.3% J 5.0% I 4.4% I 9.6% I 0.19 0.25 South America Brasil IBOVESPA Nov 13 46,517.0 -0.9% J -1.8% J -3.1% J -10.3% J 0.62 0.61 Argentina MERVAL Buenos Aires Nov 13 13,182.7 2.4% I 22.5% I 12.9% I 32.9% I 0.66 0.65 Mexico Bolsa index Nov 13 43,617.7 -3.6% J -1.6% J -0.6% J -0.3% J 0.70 0.73 MENA and Africa Egypt Market Vectors Egypt ETF Nov 13 35.5 -9.7% J -14.8% J -19.6% J -45.1% J 0.34 0.32 (Gulf States) Market Vectors Gulf States ETF Nov 13 23.3 -3.7% J -7.9% J -12.5% J -23.7% J 0.44 0.52 South Africa iShares MSCI South Africa Index Nov 13 52.1 -7.7% J -9.7% J -13.6% J -21.8% J 0.68 0.61 (Africa) Market Vectors Africa ETF Nov 13 19.0 -5.3% J -9.7% J -12.9% J -32.2% J 0.63 0.61 Commodities USD Spot Oil West Texas Int. Nov 10 $44.2 -7.6% J -6.1% J -1.6% J -42.9% J 0.38 0.55 USD Gold LME Spot Nov 13 $1,083.8 -2.2% J -6.1% J -3.0% J -6.7% J -0.17 -0.05 Note: Correlations are based on daily arithmetic returns for the most recent 100 trading days. www.lairdresearch.com November 16, 2015 Page 3
  • 4. S&P 500 Composite Index The S&P 500 Composite Index is widely regarded as the best single gauge of the large cap U.S. equities market. A key figure is the valua- tion level of the S&P500 as measured by the Price/Earnings ratio. We present two versions: (1) a 12-month trailing earnings version which reflects current earnings but is skewed by short term variances and (2) a cyclically adjusted version which looks at the inflation adjusted earn- ings over a 10 year period (i.e. at least one business cycle). Forecasted earnings numbers are estimates provided by S&P. S&P 500 Profit Margins and Overall Corporate Profit Margins (Trailing 12 months) Percent 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 0 2 4 6 8 10 12 14 0 2 4 6 8 10 12 14 Percent Total Corporate Profits (% of GDP) − median: 6.2%, Q2/15: 10.3% Net Profit Margin (S&P 500 Earnings / Revenue) − median: 6.6%, Q3/15: 8.0% S&P Quarterly Earnings (USD$ Inflation Adjusted to current prices) 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 −5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 −5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 Tech Bubble Japanese Asset Bubble House BubbleAsian Financial Crisis US Financial Crisis Eurozone crisis Oil Crisis I Oil Crisis II Gulf War Savings and Loans Crisis High Inflation Period Afganistan/Iraq WarVietnam War Reported Earnings Operating Earnings Trailing P/E Ratios for S&P500 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 0 10 20 30 40 50 0 10 20 30 40 50 Multiple Multiple 12−month P/E ( median = 17.4, Nov = 22.1) 10−year CAPE ( median = 19.5, Nov = 25.6) www.lairdresearch.com November 16, 2015 Page 4
  • 5. S&P 500 Composite Distributions This is a view of the price performance of the S&P 500 index com- panies. The area of each box is proportional to the company’s market cap, while the colour is determined by the percentage change in price over the past month. In addition, companies are sorted according to their industry group. AAPL +2.5% GOOG +17% MSFT +18% FB +14% V +12% ORCL +3.3% INTC +7% CSCO +1.9% IBM −8.2% MA +6.9% ACN TXN CRM PYPL CTSH ADP EBAY ATVI HPE HPQ EA FISV FIS MU XRX STX TSS WU CSC BRK−A +1.1% WFC +6.1% JPM +7.5% BAC +11% C +6.6% GS USB +3% AIG +4.2% AXP MS +7.7% SPG BLK MET PNC BK SCHW COF PSA PRU ACE TRV CME ICE CB BBT STT EQR CCI AFL MHFI DFS AVB STI HIG PGR VNO VTR FITB HCP WY ESS L RF O XL KEY JNJ +7.2% PFE +4.5% MRK +7.4% GILD +4.4% AGN +6.1% AMGN BMY +6.8% UNH −4.5% MDT +8.9% ABBV +8.6% CELG LLY ABT BIIB TMO MCK ALXN AET ANTM CI BDX VRTX CAH MYL BSX BXLT ZTS CERN ISRG DVA BCR A AMZN +23% DIS +12% HD CMCSA +5.4% NKE −1.6% MCD SBUX +3.9% LOW PCLN FOX TWX F GM TWC TGT TJX CCL JCI VFC LB AZO VIAB UA DG M BBY SIG LEN RL TIF PG +2.8% WMT −12% KO +4% PEP +4.5% PM +5% MO CVS WBA KHC MDLZ COST RAI CL +1.3% KMB KR GIS EL STZ K SYY TSN DPS MJN CLX GE +20% MMM +11% BA +9.2% UPS +3.2% UTX +9.2% HON +6.7% UNP LMT DHR FDX GD CAT DAL RTN NOC ITW PCP EMR LUV AAL NSC CSX ETN DE WM ROP NLSN IR PH R XOM +5.5% CVX +13% SLB +13% COP +7.6% OXY KMI PSX EOG VLO HAL WMB PXD BHI DVN APA SE HES NBL NOV TSO CAM DOW DD LYB MON ECL PX PPG SHW IP VMC CF AA FCX NEE DUK D SO AEP EXC PCG SRE PPL PEG EIX ED ES DTE FE ETR NI T +0.75% VZ +4.3% LVLT CTL Information Technology Financials Health Care Consumer Discretionary Consumer Staples Industrials Energy Materials Utilities Telecommunications Services <−25.0% −20.0% −15.0% −10.0% −5.0% 0.0% 5.0% 10.0% 15.0% 20.0% >25.0% % Change in Price from Oct 1, 2015 to Nov 13, 2015 Average Median Median Median Sector Change P/Sales P/Book P/E Materials 11.0% I 1.2 3.9 21.1 Industrials 8.3% I 1.5 3.6 17.7 Information Technology 8.0% I 3.6 4.5 26.0 Energy 7.6% I 1.6 1.9 19.9 Consumer Discretionary 5.4% I 1.6 3.8 19.2 Average Median Median Median Sector Change P/Sales P/Book P/E Financials 5.3% I 3.0 1.6 17.5 Health Care 4.3% I 3.2 3.8 26.3 Telecommunications Services 3.3% I 1.4 1.6 27.6 Consumer Staples 0.8% I 2.2 6.0 24.2 Utilities -1.0% J 1.6 1.6 17.2 www.lairdresearch.com November 16, 2015 Page 5
  • 6. US Equity Valuations A key valuation metric is Tobin’s q: the ratio between the market value of the entire US stock market versus US net assets at replacement cost (ie. what you pay versus what you get). Warren Buffet famously follows stock market value as a percentage of GNP, which is highly (93%) correlated to Tobin’s q. We can also take the reverse approach: assume the market has valuations correct, we can determine the required returns of future es- timated earnings. These are quoted for both debt (using BAA rated securities as a proxy) and equity premiums above the risk free rate (10 year US Treasuries). These figures are alternate approaches to under- standing the current market sentiment - higher premiums indicate a demand for greater returns for the same price and show the level of risk-aversion in the market. Tobin's q (Market Equity / Market Net Worth) and S&P500 Price/Sales 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 0.25 0.50 0.75 1.00 1.25 1.50 1.75 0.25 0.50 0.75 1.00 1.25 1.50 1.75 Buying assets at a discount Paying up for growth Tobin Q (median = 0.76, Mar = 1.06) S&P 500 Price/Sales (median = 1.35, Sep = 1.71) Equity and Debt Risk Premiums: Spread vs. Risk Free Rate (10−year US Treasury) 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Implied Equity Premium (median = 4.2%, Oct = 4.7%) Debt (BAA) Premium (median = 2.0%, Oct = 3.2%) www.lairdresearch.com November 16, 2015 Page 6
  • 7. US Mutual Fund Flows Fund flows describe the net investments in equity and bond mutual funds in the US market, as described in ICI’s “Trends in Mutual Fund Investing” report. Note however that this is only part of the story as it does not include ETF fund flows - part of the changes are investors entering or leaving the market, and part is investors shifting to ETF’s from mutual funds. US Net New Investment Cash Flow to Mutual Funds US$billions(monthly) 2007 2008 2009 2010 2011 2012 2013 2014 2015 −40−2002040 Domestic Equity World Equity Taxable Bonds Municipal Bonds US Net New Investment Cash Flow to Mutual Funds US$billions(Monthly) 2007 2008 2009 2010 2011 2012 2013 2014 2015 −60−40−200204060 Flows to Equity Flows to Bonds Net Market Flows www.lairdresearch.com November 16, 2015 Page 7
  • 8. US Key Interest Rates Interest rates are often leading indicators of stress in the financial system. The yield curve show the time structure of interest rates on government bonds - Usually the longer the time the loan is outstanding, the higher the rate charged. However if a recession is expected, then the fed cuts rates and this relationship is inverted - leading to negative spreads where short term rates are higher than long term rates. Almost every recession in the past century has been preceeded by an inversion - though not every inversion preceeds a recession (just most of the time). For corporate bonds, the key issue is the spread between bond rates (i.e. AAA vs BAA bonds) or between government loans (LIBOR vs Fedfunds - the infamous “TED Spread”). Here a spike correlates to an aversion to risk, which is an indication that something bad is happen- ing. US Treasury Yield Curves ForwardInstantaneousRates(%) 15 16 17 18 19 20 21 22 23 24 25 0.0 0.5 1.0 1.5 2.0 2.5 0.0 0.5 1.0 1.5 2.0 2.5Nov 12, 2015 (Today) Oct 13, 2015 (1 mo ago) Aug 12, 2015 (3 mo ago) 12 Nov 2014 (1 yr ago) 3 Month & 10 Yr Treasury Yields 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 0% 1% 2% 3% 4% 5% 6% 7% 0% 1% 2% 3% 4% 5% 6% 7% 10 Yr Treasury 3 Mo Treasury Spread AAA vs. BAA Bond Spreads 4% 5% 6% 7% 8% 9% 4% 5% 6% 7% 8% 9% Percent AAA BAA 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 median: 91.00 Nov 2015: 138.00 0 100 200 300 0 100 200 300 Spread(bps) LIBOR vs. Fedfunds Rate 0% 1% 2% 3% 4% 5% 6% 7% 0% 1% 2% 3% 4% 5% 6% 7% Percent 3 mos t−bill LIBOR 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 median: 36.25 Nov 2015: 20.14 0 100 200 300 0 100 200 300 Spread(bps) www.lairdresearch.com November 16, 2015 Page 8
  • 9. US Inflation Generally, the US Fed tries to anchor long run inflation expectations to approximately 2%. Inflation can be measured with the Consumer Price Index (CPI) or the Personal Consumption Expenditures (PCE) index. In both cases, it makes sense to exclude items that vary quickly like Food and Energy to get a clearer picture of inflation (usually called Core Inflation). The Fed seems to think PCI more accurately reflects the entire basket of goods and services that households purchase. Finally, we can make a reasonable estimate of future inflation ex- pectations by comparing real return and normal bonds to construct an imputed forward inflation expectation. The 5y5y chart shows expected 5 year inflation rates at a point 5 years in the future. Neat trick that. Consumer Price Index Percent 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −1% 0% 1% 2% 3% 4% 5% 6% −1% 0% 1% 2% 3% 4% 5% 6% US Inflation Rate YoY% (Sep = −0.025%) US Inflation ex Food & Energy YoY% (Sep = 1.9%) Personal Consumption Expenditures Percent(YearoverYear) 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −10123456 PCE Inflation Rate YoY% (Sep = 0.16%) PCE Core Inflation YoY% (Sep = 1.3%) 5−Year, 5−Year Forward Inflation Expectation Rate Percent 07 08 09 10 11 12 13 14 15 16 17 18 19 20 −10123456 5 year forward Inflation Expectation Actual 5yr Inflation (CPI measure) Actual 5yr Inflation (PCE Measure) www.lairdresearch.com November 16, 2015 Page 9
  • 10. QE Taper Tracker The US has been using the program of Quantitative Easing to pro- vide monetary stimulous to its economy. The Fed has engaged in a series of programs (QE1, QE2 & QE3) designed to drive down long term rates and improve liquidity though purchases of treasuries, mor- gage backed securites and other debt from banks. The higher demand for long maturity securities would drive up their price, but as these securities have a fixed coupon, their yield would be decreased (yield ≈ coupon / price) thus driving down long term rates. In 2011-2012, “Operation Twist” attempted to reduce rates without increasing liquidity. They went back to QE in 2013. The Fed chairman suggested in June 2013 the economy was recover- ing enough that they could start slowing down purchases (“tapering”). The Fed backed off after a brief market panic. The Fed announced in Dec 2013 that it was starting the taper, a decision partly driven by seeing key targets of inflation around 2% and unemployment being less than 6.5%. In Oct 2014, they announced the end of purchases. QE Asset Purchases to Date (Treasury & Mortgage Backed Securities) Trillions 0.0 0.5 1.0 1.5 2.0 2.5 0.0 0.5 1.0 1.5 2.0 2.5 QE1 QE2 Operation Twist QE3 TaperTreasuries Mortgage Backed Securities Total Monthly Asset Purchases (Treasury + Mortgage Backed Securities) Billions −100 −50 0 50 100 150 200 −100 −50 0 50 100 150 200 Month to date Nov 11: $−0.07 Inflation and Unemployment − Relative to Targets Percent 0 2 4 6 8 10 0 2 4 6 8 10 Target Unemployment 6.5% Target Inflation 2% U.S. 10 Year and 3 Month Treasury Constant Maturity Yields Percent 0 1 2 3 4 5 0 1 2 3 4 5 2008 2009 2010 2011 2012 2013 2014 2015 Short Term Rates: Once at zero, Fed moved to QE Long Term Rates: Moving up in anticipation of Taper? www.lairdresearch.com November 16, 2015 Page 10
  • 11. Exchange Rates 10 Week Moving Average CAD Exchange Rates 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 0.620.710.810.901.001.09 USA/CAD 0.550.610.660.720.770.82 Euro/CAD 59.1674.7190.26105.81121.36136.91 Japan/CAD 0.380.440.490.550.610.67 U.K./CAD 0.591.101.602.112.613.12 Brazil/CAD CAD Appreciating CAD Depreciating Change in F/X: Oct 1 2015 to Nov 6 2015 (Trade Weighted Currency Index of USD Trading Partners) −3.0% −1.5% 1.5% 3.0% Euro 3.8% UK 0.2% Japan 2.6% South Korea −3.7% China −1.0% India 0.4% Brazil −5.3% Mexico −0.7% Canada 0.1% USA 0.4% Country vs. Average Appreciating Depreciating % Change over 3 months vs. Canada <−10.0% −8.0% −6.0% −4.0% −2.0% 0.0% 2.0% 4.0% 6.0% 8.0% >10.0% CAD depreciatingCAD appreciating ARG −2.1% AUS −1.7% BRA −7.9% CHN 2.0% IND 0.5% RUS −0.5% USA 1.7% EUR −1.4% JPY 3.8% KRW 0.0% MXN −0.1% ZAR −9.3% www.lairdresearch.com November 16, 2015 Page 11
  • 12. US Banking Indicators The banking and finance industry is a key indicator of the health of the US economy. It provides crucial liquidity to the economy in the form of credit, and the breakdown of that system is one of the exac- erbating factors of the 2008 recession. Key figures to track are the Net Interest Margins which determine profitability (ie. the difference between what a bank pays to depositors versus what the bank is paid by creditors), along with levels of non-performing loans (i.e. loan loss reserves and actual deliquency rates). US Banks Net Interest Margin Percent 3.03.54.04.5 median: 3.94 2015 Q2: 2.97 Repos Outstanding with Fed. Reserve BillionsofDollars 0200400600 median: 57.00 Nov 2015: 277.00 Bank ROE − Assets between $300M−$1B Percent 051015 median: 12.82 2015 Q2: 9.85 Consumer Credit Outstanding %YearlyChange −505101520 median: 7.60 Sep 2015: 7.09 Total Business Loans %YearlyChange −2001020 median: 8.61 Oct 2015: 11.08 US Nonperforming Loans Percent 12345 median: 2.19 2015 Q2: 1.69 St. Louis Financial Stress Index Index 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 0246 median: 0.092 Nov 2015: −0.88 Commercial Paper Outstanding TrillionsofDollars 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 1.01.41.82.2 median: 1.33 Nov 2015: 1.05 Residential Morgage Delinquency Rate Percent 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 246810 median: 2.32 2015 Q2: 5.77 www.lairdresearch.com November 16, 2015 Page 12
  • 13. US Employment Indicators Unemployment rates are considered the “single best indicator of current labour conditions” by the Fed. The pace of payroll growth is highly correlated with a number of economic indicators.Payroll changes are another way to track the change in unemployment rate. Unemployment only captures the percentage of people who are in the labour market who don’t currently have a job - another measure is what percentage of the whole population wants a job (employed or not) - this is the Participation Rate. The Beveridge Curve measures labour market efficiency by looking at the relationship between job openings and the unemployment rate. The curve slopes downward reflecting that higher rates of unemploy- ment occur coincidentally with lower levels of job vacancies. Unemployment Rate Percent 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 median: 6.10 Oct 2015: 5.00 4 5 6 7 8 9 10 11 4 5 6 7 8 9 10 11 Percent 4 5 6 7 8 9 10 2.02.53.03.54.0 Beveridge Curve (Unemployment vs. Job Openings) Unemployment Rate (%) JobOpenings(%totalEmployment) Dec 2000 − Dec 2008 Jan 2009 − Aug 2015 Sep 2015 Participation Rate Percent 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 6364656667 median: 66.00 Oct 2015: 62.40 Total Nonfarm Payroll Change MonthlyChange(000s) 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −5000500 median: 165.00 Oct 2015: 271.00 www.lairdresearch.com November 16, 2015 Page 13
  • 14. There are a number of other ways to measure the health of employ- ment. The U6 Rate includes people who are part time that want a full-time job - they are employed but under-utilitized. Temporary help demand is another indicator of labour market tightness or slack. The large chart shows changes in private industry employment lev- els over the past year, versus how well those job segments typically pay. Lots of hiring in low paying jobs at the expense of higher paying jobs is generally bad, though perhaps not unsurprising in a recovery. Median Duration of Unemployment Weeks 510152025 median: 8.70 Oct 2015: 11.20 (U6) Unemployed + PT + Marginally Attached Percent 810121416 median: 9.80 Oct 2015: 9.80 4−week moving average of Initial Claims Jan1995=100 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 50100150200 median: 107.49 Nov 2015: 82.32 Unemployed over 27 weeks MillionsofPersons 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 01234567 median: 0.79 Oct 2015: 2.09 Services: Temp Help MillionsofPersons 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 1.52.02.53.0 median: 2.25 Oct 2015: 2.93 −200 0 200 400 600 15 20 25 30 35 40 Annual Change in Employment Levels (000s of Workers) Averagewages($/hour) Private Industry Employment Change (Oct 2014 − Oct 2015) Construction Durable Goods Education Financial Activities Health Services Information Leisure and Hospitality Manufacturing Mining and Logging Nondurable Goods Other Services Professional & Business Services Retail Trade Transportation Utilities Wholesale Trade Circle size relative to total employees in industry www.lairdresearch.com November 16, 2015 Page 14
  • 15. US Business Activity Indicators Business activity is split between manufacturing activity and non- manufacturing activity. We are focusing on forward looking business indicators like new order and inventory levels to give a sense of the current business environment. Manufacturing Sector: Real Output YoYPercentChange −1001020 median: 9.23 2015 Q3: 7.25 ISM Manufacturing − PMI Index 3040506070 Oct 2015: 50.10 manufac. expanding manufac. contracting ISM Manufacturing: New Orders Index Index 304050607080 Oct 2015: 52.90 Increase in new orders Decrease in new orders Non−Manufac. New Orders: Capital Goods BillionsofDollars 40506070 median: 57.80 Sep 2015: 68.83 Average Weekly Hours: Manufacturing Hours 3940414243 median: 41.10 Oct 2015: 41.80 Industrial Production: Manufacturing YoYPercentChange −15−50510 median: 3.11 Sep 2015: 1.58 Total Business: Inventories to Sales Ratio Ratio 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 1.11.21.31.41.51.6 median: 1.36 Sep 2015: 1.38 Chicago Fed: Sales, Orders & Inventory Index 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −0.50.00.5 Sep 2015: 0.00 Above ave growth Below ave growth ISM Non−Manufacturing Bus. Activity Index Index 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 35455565 Oct 2015: 63.00 Growth Contraction www.lairdresearch.com November 16, 2015 Page 15
  • 16. US Consumption Indicators Variations in consumer activity are a leading indicator of the strength of the economy. We track consumer sentiment (their expec- tations about the future), consumer loan activity (indicator of new purchase activity), and new orders and sales of consumer goods. U. Michigan: Consumer Sentiment Index1966Q1=100 5060708090110 median: 88.45 Oct 2015: 90.00 Consumer Loans (All banks) YoY%Change −10010203040 median: 7.57 Oct 2015: 5.30 Accounting Change Deliquency Rate on Consumer Loans Percent 2.03.04.0 median: 3.46 2015 Q2: 1.96 New Orders: Durable Consumer Goods YoY%Change −20020 median: 4.15 Sep 2015: 9.85 New Orders: Non−durable Consumer Goods YoY%Change −2001020 median: 4.21 Sep 2015: −12.92 Personal Consumption & Housing Index Index −0.40.00.20.4 median: 0.02 Sep 2015: −0.08above ave growth below ave growth Light Cars and Trucks Sales MillionsofUnits 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 10121416182022 median: 14.83 Oct 2015: 18.12 Personal Saving Rate Percent 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 246810 median: 5.50 Sep 2015: 4.80 Real Retail and Food Services Sales YoY%Change 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −10−505 median: 2.47 Sep 2015: 2.22 www.lairdresearch.com November 16, 2015 Page 16
  • 17. US Housing Housing construction is only about 5-8% of the US economy, how- ever a house is typically the largest asset owned by a household. Since personal consumption is about 70% of the US economy and house val- ues directly impact household wealth, housing is an important indicator in the health of the overall economy. In particular, housing investment was an important driver of the economy getting out of the last few recessions (though not this one so far). Here we track housing prices and especially indicators which show the current state of the housing market. 15 20 25 30 35 150200250300 Personal Income vs. Housing Prices (Inflation adjusted values) NewHomePrice(000's) Disposable Income Per Capita (000's) Sep 2015 r2 : 89.5% Range: Jan 1959 − Sep 2015 Blue dots > +5% change in next year Red dots < −5% change in next year New Housing Units Permits Authorized MillionsofUnits 0.51.01.52.02.5 median: 1.34 Sep 2015: 1.10 New Home Median Sale Price SalePrice$000's 100150200250300 Sep 2015: 296.90 Homeowner's Equity Level Percent 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 4050607080 median: 66.50 2015 Q2: 56.30 New Homes: Median Months on the Market Months 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 468101214 median: 4.90 Sep 2015: 3.30 US Monthly Supply of Homes MonthsSupply 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 4681012 median: 5.90 Sep 2015: 5.80 www.lairdresearch.com November 16, 2015 Page 17
  • 18. US Housing - FHFA Quarterly Index The Federal Housing Finance Agency provides a quarterly survey on house prices, based on sales prices and appraisal data. This gener- ates a housing index for 355 municipal areas in the US from 1979 to present. We have provided an alternative view of this data looking at the change in prices from the peak in the 2007 time frame. The goal is to provide a sense of where the housing markets are weak versus strong.The colours represent gain or losses since the start of the housing crisis (defined as the maximum price between 2007-2009 for each city). The circled dots are the cities in the survey, while the background colours are interpolated from these points using a loess smoother. Change from 2007 Peak − Q2 2015 −50% −40% −30% −20% −10% 0% 10% 20% 30% 40% 50% Today's Home Prices Percentage Change from 2007−2009 Peak Frequency −75% −50% −25% 0% 25% 50% 75% Year over Year Change − Q2 2015 −10% −8% −6% −4% −2% 0% 2% 4% 6% 8% 10% YoY Change in this quarter YoY Percent Change Frequency −15% −10% −5% 0% 5% 10% 15% www.lairdresearch.com November 16, 2015 Page 18
  • 19. Global Business Indicators Global Manufacturing PMI Reports The Purchasing Managers’ Index (PMI) is an indicator reflecting purchasing managers’ acquisition of goods and services. An index read- ing of 50.0 means that business conditions are unchanged, a number over 50.0 indicates an improvement while anything below 50.0 suggests a decline. The further away from 50.0 the index is, the stronger the change over the month. The chart at the bottom shows a moving av- erage of a number of PMI’s, along with standard deviation bands to show a global average. Global M−PMI − October 2015 <40.0 42.0 44.0 46.0 48.0 50.0 52.0 54.0 56.0 58.0 >60.0 Steady ExpandingContracting Eurozone 52.3 Global PMI 51.4 TWN 47.8MEX 53.0 KOR 49.1 JPN 52.4 VNM 50.1 IDN 47.8 ZAF 47.5 AUS 50.2 BRA 44.1 CAN 48.0 CHN 48.3 IND 50.7 RUS 50.2 SAU 55.7 USA 54.1 Global M−PMI Monthly Change <−5.0 −4.0 −3.0 −2.0 −1.0 0.0 1.0 2.0 3.0 4.0 >5.0 PMI Change ImprovingDeteriorating Eurozone 0.3 Global PMI 0.7 TWN 0.9MEX 0.9 KOR −0.1 JPN 1.4 VNM 0.6 IDN 0.4 ZAF −0.4 AUS −1.9 BRA −2.9 CAN −0.6 CHN 1.1 IND −0.5 RUS 1.1 SAU −0.8 USA 1.0 Purchase Managers Index (Manufacturing) − China, Japan, USA, Canada, France, Germany, Italy, UK, Australia 04 05 06 07 08 09 10 11 12 13 14 15 3040506070 3040506070 Business Conditions Contracting Business Conditions Expanding www.lairdresearch.com November 16, 2015 Page 19
  • 20. Global Manufacturing PMI Chart This is an alternate view of the global PMI reports. Here, we look at all the various PMI data series in a single chart and watch their evolution over time. Red numbers indicate contraction (as estimated by PMI) while green numbers indicate expansion. Oct13 Nov13 Dec13 Jan14 Feb14 Mar14 Apr14 May14 Jun14 Jul14 Aug14 Sep14 Oct14 Nov14 Dec14 Jan15 Feb15 Mar15 Apr15 May15 Jun15 Jul15 Aug15 Sep15 Oct15 Australia India Indonesia Viet Nam Taiwan China Korea Japan South Africa Saudi Arabia Turkey Russia United Kingdom Greece Germany France Italy Czech Republic Spain Poland Ireland Netherlands Eurozone Brazil Mexico Canada United States Global PMI 52.1 53.1 53.3 53.0 53.2 52.4 51.9 52.2 52.6 52.4 52.6 52.2 52.2 51.8 51.6 51.7 52.0 51.7 51.0 51.2 51.0 51.0 50.7 50.7 51.4 51.8 54.7 55.0 53.7 57.1 55.5 55.4 56.4 57.3 55.8 57.9 57.5 55.9 54.8 53.9 53.9 55.1 55.7 54.1 54.0 53.6 53.8 53.0 53.1 54.1 55.6 55.3 53.5 51.7 52.9 53.3 52.9 52.2 53.5 54.3 54.8 53.5 55.3 55.3 53.9 51.0 48.7 48.9 49.0 49.8 51.3 50.8 49.4 48.6 48.0 50.2 51.9 52.6 54.0 52.0 51.7 51.8 51.9 51.8 51.5 52.1 52.6 53.3 54.3 55.3 56.6 54.4 53.8 53.8 53.3 52.0 52.9 52.4 52.1 53.0 50.2 49.7 50.5 50.8 50.4 50.6 49.3 48.8 48.7 49.1 50.2 49.3 49.1 48.7 50.2 50.7 49.6 46.2 46.0 45.9 46.5 47.2 45.8 47.0 44.1 51.3 51.6 52.7 54.0 53.2 53.0 53.4 52.2 51.8 51.8 50.7 50.3 50.6 50.1 50.6 51.0 51.0 52.2 52.0 52.2 52.5 52.4 52.3 52.0 52.3 54.4 56.8 57.0 54.8 55.2 53.7 53.4 53.6 52.3 53.5 51.7 52.2 53.0 54.6 53.6 54.1 52.2 52.5 54.0 55.5 56.2 56.0 53.9 53.0 53.7 54.9 52.4 53.5 52.8 52.9 55.5 56.1 55.0 55.3 55.4 57.3 55.7 56.6 56.2 56.9 55.1 57.5 56.8 55.8 57.1 54.6 56.7 53.6 53.8 53.6 53.4 54.4 53.2 55.4 55.9 54.0 52.0 50.8 50.3 49.4 49.0 49.5 51.2 53.2 52.8 55.2 55.1 54.8 54.0 52.4 54.3 54.5 51.1 50.9 52.2 50.9 48.6 50.8 52.2 52.5 52.8 52.7 52.9 54.6 53.9 52.8 52.6 52.6 54.7 53.8 54.7 54.2 54.3 54.2 55.8 54.5 53.6 53.2 51.7 51.3 54.5 55.4 54.7 55.9 56.5 55.5 56.5 57.3 54.7 56.5 54.3 55.6 54.4 55.6 53.3 56.1 55.6 56.1 54.7 55.5 56.9 57.5 56.6 55.5 54.0 50.7 51.4 53.3 53.1 52.3 52.4 54.0 53.2 52.6 51.9 49.8 50.7 49.0 49.0 48.4 49.9 51.9 53.3 53.8 54.8 54.1 55.3 53.8 52.7 54.1 49.1 48.4 47.0 49.3 49.7 52.1 51.2 49.6 48.2 47.8 46.9 48.8 48.5 48.4 47.5 49.2 47.6 48.8 48.0 49.4 50.7 49.6 48.3 50.6 50.6 51.7 52.7 54.3 56.5 54.8 53.7 54.1 52.3 52.0 52.4 51.4 49.9 51.4 49.5 51.2 50.9 51.1 52.8 52.1 51.1 51.9 51.8 53.3 52.3 52.1 47.3 49.2 49.6 51.2 51.3 49.7 51.1 51.0 49.4 48.7 50.1 48.4 48.8 49.1 49.4 48.3 48.4 48.9 46.5 48.0 46.9 30.2 39.1 43.3 47.3 56.5 58.4 57.3 56.7 56.2 55.3 57.3 57.0 57.5 55.4 52.5 51.6 53.2 53.5 52.5 53.1 54.1 54.4 51.9 52.0 51.4 51.9 51.6 51.8 55.5 51.8 49.4 48.8 48.0 48.5 48.3 48.5 48.9 49.1 51.0 51.0 50.4 50.3 51.7 48.9 47.6 49.7 48.1 48.9 47.6 48.7 48.3 47.9 49.1 50.2 53.3 55.0 53.5 52.7 53.4 51.7 51.1 50.1 48.8 48.5 50.3 50.4 51.5 52.2 51.4 49.8 49.6 48.0 48.5 50.2 49.0 50.1 49.3 48.0 47.2 56.7 57.1 58.7 59.7 58.6 57.0 58.5 57.0 59.2 60.1 60.7 61.8 59.1 57.6 57.9 57.8 58.5 60.1 58.3 57.0 56.1 57.5 58.7 56.5 55.7 51.5 51.6 50.5 50.3 51.5 50.3 47.4 44.3 46.6 45.9 49.0 50.7 52.7 50.5 50.2 49.8 50.0 51.6 51.5 50.1 49.2 48.9 49.3 47.9 47.5 54.2 55.1 55.2 56.6 55.5 53.9 49.4 49.9 51.5 50.5 52.5 51.7 52.4 52.0 52.0 52.2 51.6 50.3 49.9 50.9 50.1 51.2 51.7 51.0 52.4 50.2 50.4 50.8 50.9 49.8 50.4 50.2 49.5 48.4 49.3 50.3 48.8 48.7 49.0 49.9 51.1 51.1 49.2 48.8 47.8 46.1 47.6 47.9 49.2 49.1 50.9 50.8 50.5 49.5 48.5 48.0 48.1 49.4 50.7 51.7 50.2 50.2 50.4 50.0 49.6 49.7 50.7 49.6 48.9 49.2 49.4 47.8 47.3 47.2 48.3 53.0 53.4 55.2 55.5 54.7 52.7 52.3 52.4 54.0 55.8 56.1 53.3 52.0 51.4 50.0 51.7 52.1 51.0 49.2 49.3 46.3 47.1 46.1 46.9 47.8 51.5 50.3 51.8 52.1 51.0 51.3 53.1 52.5 52.3 51.7 50.3 51.7 51.0 52.1 52.7 51.5 51.7 50.7 53.5 54.8 52.2 52.6 51.3 49.5 50.1 50.9 50.3 50.9 51.0 50.5 50.1 51.1 52.4 52.7 52.7 49.5 50.7 49.2 48.0 47.6 48.5 47.5 46.4 46.7 47.1 47.8 47.3 48.4 47.4 47.8 49.6 51.3 50.7 51.4 52.5 51.3 51.3 51.4 51.5 53.0 52.4 51.0 51.6 53.3 54.5 52.9 51.2 52.1 51.3 52.6 51.3 52.7 52.3 51.2 50.7 53.2 47.7 47.6 46.7 48.6 47.9 44.8 49.2 48.9 50.7 47.3 46.5 49.4 50.1 46.9 49.0 45.4 46.3 48.0 52.3 44.2 50.4 51.7 52.1 50.2 www.lairdresearch.com November 16, 2015 Page 20
  • 21. OECD International Trade Data The OECD calculates import and export values for member coun- tries. Figures are seasonally adjusted and measured in billions of US dollars. Red lines indicate exports, while blue lines indicate imports. Green lines indicate the zero level. The top part of the graph shows the changes in exports and imports on a year-over-year basis, while the bottom part shows the difference between exports and imports for that given month (i.e. the trade bal- ance) China (Mar 2015) YoYChange −40 −20 0 20 40 60 80 Balance 08 09 10 11 12 13 14 15 0 20 40 60 80 100 Germany (Feb 2015) YoYChange −40 −20 0 20 Balance 08 09 10 11 12 13 14 15 0 5 10 15 20 25 30 Japan (Feb 2015) YoYChange −30 −20 −10 0 10 20 Balance 08 09 10 11 12 13 14 15 −15 −10 −5 0 5 10 South Korea (Feb 2015) YoYChange −15 −10 −5 0 5 10 15 Balance 08 09 10 11 12 13 14 15 −4 −2 0 2 4 6 8 10 www.lairdresearch.com November 16, 2015 Page 21
  • 22. Canadian Indicators Retail Trade (SA) YoYPercentChange −50510 median: 4.68 Aug 2015: 2.84 Total Manufacturing Sales Growth YoYPercentGrowth −2001020 median: 3.96 Aug 2015: 0.58 Manufacturing New Orders Growth YoYPercentGrowth −30−100102030 median: 4.34 Aug 2015: 1.21 10yr Government Bond Yields 0246810 median: 5.72 Oct 2015: 1.47 Manufacturing PMI 48505254 Oct 2015: 48.00 Sales and New Orders (SA) YoYPercentChange −2001020 Sales New Orders (smoothed) Tbill Yield Spread (10 yr − 3mo) Spread(Percent) 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −101234 median: 1.32 Oct 2015: 1.06 Inflation (total and core) YoYPercentChange 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −101234 median: 1.92 Sep 2015: 1.03 Total Core Inventory to Sales Ratio (SA) Ratio 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 1.31.41.51.6 median: 1.35 Aug 2015: 1.41 www.lairdresearch.com November 16, 2015 Page 22
  • 23. 6.6 6.8 7.0 7.2 7.4 7.6 1.31.41.51.61.71.81.9 Beveridge Curve (Mar 2011 − Jul 2015) as.numeric(can.bev$ui.rate) as.numeric(can.bev$vacancies) Mar 2011 − Dec 2012 Jan 2013 − Jun 2015 Jul 2015 Unemployment Rate JobVacancyrate(Industrial) Ownership/Rental Price Ratio RatioofAccomodationOwnership/RentRatio 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 90100110120130140150 Calgary Montreal Vancouver Toronto Note: Using prices relative to 2002 as base year Ownership relatively more expensive vs 2002 Rent relatively more expensive vs 2002 Unemployment Rate (SA) Percent 345678910 Canada 7.0% Alberta 6.6% Ontario 6.8% Debt Service Ratios (SA) Percent 246810 Total Debt: 6.4% Mortgage: 3.3% Consumer Debt: 6.1% Housing Starts and Building Permits (smoothed) YoYPercentChange 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −40−2002040 Permits Starts www.lairdresearch.com November 16, 2015 Page 23
  • 24. European Indicators Unemployment Rates Percentage 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 051015202530 Business Employment Expectations Index 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −40−20010 Industrial Orderbook Levels Index 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −60−40−20020 Country Employment Expect. Unempl. (%) Bond Yields (%) Retail Turnover Manufacturing Turnover Inflation (YoY %) Industry Orderbook PMI Series Dates Oct 2015 Oct 2015 Oct 2015 Sep 2015 Sep 2015 Sep 2015 Oct 2015 Oct 2015 France -9.3 J 10.7 J 0.87 J 105.3 J 109.5 J 0.1 K -13.8 I 50.6 K Germany -1.7 J 4.5 K 0.52 J NA 113.2 J -0.2 J -9.4 I 52.1 J United Kingdom -3.5 J 5.2 J 1.81 J 114.1 I NA -0.1 J -11.7 J 55.5 I Italy -0.5 I 11.8 J 1.70 J 101.3 K NA 0.2 J -9.6 I 54.1 I Greece -20.1 J 24.6 J 7.81 J NA NA -0.8 J -42.6 I 47.3 I Spain 1.9 J 21.6 J 1.73 J NA NA -1.1 J -3.9 J 51.3 J Eurozone (EU28) -2.2 J 9.3 J 1.26 J 106.4 I 111.0 I -0.1 J -11.3 I NA www.lairdresearch.com November 16, 2015 Page 24
  • 25. Government Bond YieldsLongTermYields% 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 0246810 Economic Sentiment Index 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 60708090110130 Consumer Confidence Index 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −100−60−20020 Inflation (Harmonized Prices) 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 median: 1.90 Sep 2015: −0.10−1 0 1 2 3 4 5 6 7 Euro Area US Harmonized Inflation: Aug 2015 AUT 0.6% BGR −0.9% DEU −0.2% ESP −1.1% FIN −0.7% FRA 0.1% GBR −0.1% GRC −0.8% HRV −0.5% HUN −0.1% IRL 0.0% ISL 0.9% ITA 0.2% NOR 1.9% POL −0.6% ROU −1.5% SWE 0.9% <−1.0%0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% >7.0% YoY % Change in Prices PMI: October 2015 <40.042.0 44.0 46.0 48.0 50.0 52.0 54.0 56.0 58.0>60.0 Steady ExpandingContracting BRA 44.1 CAN 48.0 DEU 52.1 ESP 51.3 FRA 50.6 GBR 55.5 GRC 47.3 IRL 53.6 ITA 54.1 MEX 53.0 POL 52.2 SAU 55.7 TUR 47.2 USA 54.1 RUS 50.2 PMI Change: Sep − Oct <−5.0−4.0 −3.0 −2.0 −1.0 0.0 1.0 2.0 3.0 4.0 >5.0 PMI Change ImprovingDeteriorating CAN −0.6 DEU −0.2 ESP −0.4 FRA 0.0 GBR 3.7 GRC 4.0 IRL −0.2 ITA 1.4 POL 1.3 TUR −0.8 USA 1.0 RUS 1.1 www.lairdresearch.com November 16, 2015 Page 25
  • 26. Chinese Indicators Tracking the Chinese economy is a tricky. As reported in the Fi- nancial Times, Premier Li Keqiang confided to US officials in 2007 that gross domestic product was “man made” and “for reference only”. In- stead, he suggested that it was much more useful to focus on three alter- native indicators: electricity consumption, rail cargo volumes and bank lending (still tracking down that last one). We also include the PMI - which is an official version put out by the Chinese government and differs slightly from an HSBC version. Finally we include the Shanghai Composite Index as a measure of stock performance. Manufacturing PMI 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 4045505560 Oct 2015: 48.30 Shanghai Composite Index IndexValue(MonthlyHigh/Low) 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 0100030005000 Nov 2015: 3580.84 Electricity Generated 100MillionKWH(logscale) 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 1000200030005000 Oct 2015: 4454.00 Electricity Generated Long Term Trend Short Term Average Consumer Confidence Index Index 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 98100102104106108110 median: 103.90 Sep 2015: 105.60 Exports YoYPercentChange 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 −20020406080 median: 18.40 Oct 2015: −6.90 Retail Sales Growth YoYPercentChange 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 101520 median: 12.95 Oct 2015: 11.00 www.lairdresearch.com November 16, 2015 Page 26
  • 27. Global Climate Change Temperature and precipitation data are taken from the US National Climatic Data Center and presented as the average monthly anomaly from the previous 6 months. Anomalies are defined as the difference from the average value over the period from 1971-2000 for the tem- perature map and over the 20th century for the global temparature chart. Average Temperature Anomalies from Mar 2015 - Aug 2015 <−4.0 −3.0 −2.0 −1.0 0.0 1.0 2.0 3.0 >4.0 Anomalies in Celcius WarmerCooler Anomalies in Celcius −4 −2 0 2 4 Historic Global Temperature Deviations DegreesCelciusDeviations −0.50.00.5 Sep 2015: 0.90 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 www.lairdresearch.com November 16, 2015 Page 27