Eric Franco - US Economic and Capital Markets Outlook

This presentation is provided by AllianceBernstein L.P.

April 29, 2006

US Economic and Capital Markets Outlook

Eric FrancoSenior Portfolio Manager

Global Value Equities

NFSA 2006 Annual Seminar

AllianceBernsteinUS Economic and CMO

4.4%

3.7%

0.8%

1.6%

2.7%

4.2%

3.6%3.4%

1999 2000 2001 2002 2003 2004 2005 2006E

US GDP Growth

Source: Consensus Economics, Datastream, EIU, IFO Institute, IMF, MSCI, S&P, World Bank, and Bernstein


US ISM Survey

US ISM Headline

35

45

55

65

75

91 93 95 97 99 01 03 05

Index

Headline

Source: Consensus Economics, Datastream, EIU, IFO Institute, IMF, MSCI, S&P, World Bank, and Bernstein


US Employment Growth Solid

Change in Private Sector Employment thousands, 3 month moving average

(400)

(300)

(200)

(100)

0

100

200

300

400

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

Source: Bloomberg


Service Sector Employment

Source: Bureau of Labor Statistics and Haver Analytics

All Employees: Service Providing Industries

40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

120,000

70 76 82 88 94 00 06

(Thousands)


Office Vacancies Decreasing

Source: CB Richard Ellis and Haver Analytics

National Office Vacancy Rate: Metropolitan Area

7

9

11

13

15

17

19

21

23

86 87 89 90 92 93 95 96 98 99 01 02 04 05


Nonresidential Construction

Source: Census Bureau and Haver Analytics

Private Construction: Nonresidential

120

140

160

180

200

220

240

260

280

300

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

($ Billions)


Total Domestic Sprinklers Shipped 1980–2005

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

80 85 90 95 00 05

Source: National Fire Sprinkler Association


As US Economic Growth Moderates, Other Regions Are Picking Up

3.2%3.6%

2.4%

5.9%

1.6%

3.4%

2.1%

3.4%

2.9%

6.1%

World US Japan Europe Emerging

2005 2006E

Real GDP Growth (%)

Through March 31, 2006Source: Consensus Economics, Datastream, EIU, IFO Institute, IMF, MSCI, S&P, World Bank and Bernstein


IFO Business Climate Survey*

Through March 31, 2006*Pan-Germany, seasonally adjusted, 2000=100Source: Consensus Economics, Datastream, EIU, IFO Institute, IMF, MSCI, S&P, World Bank and Bernstein

80

90

100

110

91 94 97 00 03 06

Index


Average

*Based on trailing 12-month ROE numbers from 1980 through March 2006Source: Factset, I/B/E/S, MSCI and Bernstein

Corporate Profitability Well Above Average Globally

Current

(%)

Highest

(5)

0

5

10

15

20

US EmergingMarkets

Europe Japan

Lowest

Return on Equity*Trailing 12-Month ROE: 1980–Mar 2006


Interest Rates Remain Low

0

2

4

6

8

10

12

90 92 93 95 97 98 00 02 03 05

Per

cent

US

Euro Area

Japan

As of December 31, 2005*Interest rates are 10-year swap rates.Source: Bank of Japan, Bloomberg, Bureau of Labor Statistics (Department of Labor), Bureau of MIC (Japan), Consensus Economics, Eurostat and Bernstein

Ten-Year Interest Rates*


Energy Prices Pose A Risk

As of December 31, 2005*West Texas int. Cushing $/BBLSource: Datastream

Oil Prices*

0

10

20

30

40

50

60

70

86 89 92 95 98 01 04

($/BBL)


Asia Driving Acceleration in Oil Demand Growth

Million Barrels per Day

Source: BP Statistical Review, International Energy Agency (IEA), and AllianceBernstein

All OtherDemand

New AsianDemand

93.2

84.3

76.9

3.6

5.3

3.7

3.7

2000 2005 2010E


3.7

2.1

1.6

Sources of New SupplyMillion Barrels per Day

1999–2005

FSU

Former Soviet Union Largely Met Oil Demand Growth

All Other

OPEC

7.4

Source: BP Statistical Review, International Energy Agency (IEA), and AllianceBernstein


7.8

8.2

8.6

9.0

9.4

9.8

Jan 03 Jun 03 Dec 03 Jun 04 Dec 04 Jun 05 Dec 05

Daily ProductionMil. Barrelsper Day

Source: Russian Energy Ministry

Dec 04 Jun 05

Pattern of Russian Oil Output Unsettling for Most of 2005


All Other Sources of Oil Production Growth Have Stalled

30.4

35.638.2 38.2 38.7 38.8 38.9 38.6

1990 1995 2000 2001 2002 2003 2004 2005

Non-OPEC and Non-FSU Oil Production


Source: BP Statistical Review, IEA, OPEC, and AllianceBernstein


OPEC Spare Capacity Has Declined Dramatically

Through December 31, 2005Source: Bloomberg, Department of Energy, IEA and AllianceBernstein estimates


0

1

2

3

4

5

6

98 99 00 01 02 03 04 05


NetNewProduction

2005–2010EMillion Barrels per Day

Source: BP Statistical Review, IEA, and AllianceBernstein

New Source of Oil Supply Emerging

Europe

U.S.

NaturalGasLiquids

Caspian Sea

Canada

Brazil

Africa

5.20.9

1.6

1.5

1.9

0.8

0.5

1.0


7.8

8.2

8.6

9.0

9.4

9.8

Jan 03 Jun 03 Dec 03 Jun 04 Dec 04 Jun 05 Dec 05

Russian Oil Production Has Turned Up Again

Daily ProductionMil. Barrelsper Day

Source: Russian Energy Ministry


0

1

2

3

4

5

6

1998 2000 2002 2004 2006E 2008E 2010E

OPEC Spare Capacity to Turn Back Up

Source: Bloomberg, Department of Energy, IEA and AllianceBernstein estimates



Transportation Fuels Drive Oil Demand

Share of Oil Consumption Growth

Source: Environmental Protection Agency and AllianceBernstein estimates

65%

9%

24%

3%1%

RoadTransport

AirTransport

Rail Transport

IndustrialProduction/

Process

Other

<


Electric Power Far More Efficient than Mechanical Power

14%Energyto Wheels

0%

Loss toIdle

Loss toResistance

14%

Loss toDriveline

6%

Energyto Wheels

Loss toDriveline

6%

Loss toAtmosphere

63%

17%

Loss toIdle

80%

Electric Power6× More Efficient

Loss toAtmosphere

0%

EnergyInput 100%

100%

Excludes accessories which consume 2% of power inputSource: EPA and AllianceBernstein estimates

EnergyInput


Accelerate with motor

Cruise with engine

Shut down at idle

Motor Generator

during deceleration

Sources of Hybrid Power Efficiency

Current Hybrid

High-energy density battery

Access electric power grid off peak

Extend electric-mode range

from 2 miles to 30 miles

Shift 2/3 of miles driven

to electricity

Plug-In Hybrid

+

Source: AllianceBernstein estimates


6,200

4,700

1,850

AverageVehicle

CurrentHybrids

Plug-InHybrids

Energy Consumed per Mile*(BTUs)

*Energy consumed within the vehicleSource: AllianceBernstein estimates

Fuel Efficiency of Hybrids Has Potential to Be Transformational

Miles per Gallon 20 26 ~80


0

10

20

30

79 82 85 88 91 94 97 00 03 06

Rat

io (

×)

Average

Through March 31, 2006Source: S&P and Bernstein

Price/Forward Earnings

0

3

6

9

12

15

60 66 72 78 84 90 96 02

Rat

io (

×)

Price/Cash Flow

0

1

2

3

60 66 72 78 84 90 96 02

Rat

io (

×)

Price/Sales

0

1

2

3

4

5

60 66 72 78 84 90 96 02

Rat

io (

×)

Price/Book

US Equities Remain Reasonably Priced

S&P 500

06 06

06


8.6×

11.2×

MSCI EAFE S&P 500

Current valuations do not guarantee future results.As of June 30, 2005The unmanaged Standard & Poor’s (S&P) 500 Stock Index includes 500 US stocks and is a common measure of the performance of the overall US stock marketThe unmanaged MSCI EAFE® Index (Europe, Australasia, Far East) is a free float-adjusted market-capitalization index that is designed to measure developed-marketequity performance, excluding the US and CanadaSource: MSCI and Standard & Poor's

Price/BookPrice/Cash Flow

2.1×

2.8×

MSCI EAFE S&P 500

Foreign Stocks Are Attractively Priced Today


(×)

0.5

0.6

0.7

0.8

0.9

1.0

1.1

80 82 84 86 88 90 92 94 96 98 00 02 04 06

Average

Europe Closing Valuation Gap with US

Price/Cash Flow Relative to US

Data smoothed on a trailing three-month basis; through March 31, 2006Source: MSCI, Worldscope, and Bernstein


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

80 82 84 86 88 90 92 94 96 98 00 02 04 06

Average

(×)Price/Cash Flow Relative to US

Data smoothed on a trailing three-month basis; through March 31, 2006Source: MSCI, Worldscope, and Bernstein

Japan Closing Valuation Gap with US


Currency Moves Often Large and Sustained

U.S. Dollar vs. Major CurrenciesU.S. Dollar vs. Major Currencies

Historical analysis does not guarantee future results.US trade-weighted index through March 31, 2005Source: Datastream and IMF

40

60

80

100

120

140

160

180

80 83 86 89 92 95 98 01 05

Index

(44)%

(28)%

+56%

+40%


U.S. Current Account Deficit Largest Financial Imbalance in the World

U.S. Current Account as % of GDP(4 Quarter Moving Average)

Through March 31, 2005Source: Bureau of Economic Analysis, US Department of Commerce and Bernstein

(%)

(7)

(6)

(5)

(4)

(3)

(2)

(1)

0

1

2

70 76 82 87 93 99 05

Surplus

Deficit


US Runs a Deficit in Every Product Category With Every Region

By Product By Region

Through November 2004*Includes Venezuela and Indonesia.Source: Department of Commerce

2004 US Trade Deficit Composition

Capital Goods 2%Miscellaneous 2%

Agricultural Goods 1%

Pacific Rim44%

North America

17%

Latin America

6%

Other5%

Western Europe

17%

OPEC*11%

Consumer Goods

41%

Petroleum25%

Autos22%

Industrial Supplies

7%

Date post:	17-Nov-2014
Category:	Documents
Upload:	bpfanpage
View:	485 times
Download:	4 times

Eric Franco - US Economic and Capital Markets Outlook

Documents