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....Laird Research - Economics
Jun 11, 2014
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 . . . . . . . . . . . . . . . . . . . . . . . 23
Chinese Indicators . . . . . . . . . . . . . . . . . . . . . . . . 25
Global Climate Change . . . . . . . . . . . . . . . . . . . . . 26
Where we are now
Welcome to the Laird Report. It’s job is to stick a the pin on theglobal economy’s map that says ”You are here”. We present a com-pendium of economic data from around the world to help figure thisout.
The US slipped into negative GDP territory last quarter (partiallyblamed on the horrible weather). I’m ignoring that fact - I don’t trustGDP as a measure of anything.
In theory, GDP is the value of all final goods and services producedwithin a country over a year. It’s used as a proxy for economic activ-ity and for that reason its closely followed - indeed, the definition ofa recession is tied to real GDP growth rates. 2 quarters of real GDPshrinking = recession.
However, I don’t like it for a bunch of reasons: (1) it’s always late,coming out a couple of months after the fact. (2) it’s not accurate. Ev-
ery indicator has revisions, but I find the GDP to be really egregious.It’s better to consider a large number of targeted (preferably
monthly) measures. The economy is a patient we are examining andthere are may things to consider - employment, money liquidity, inter-est rates, business activity etc. Merging all these things together into asingle number will gloss over things that might stand out on their own.So - for now, I don’t bother tracking GDP in this report.
Formatting Notes The grey bars on the various charts are OECDrecession indicators for the respective countries. In many cases, the lastavailable value is listed, along with the median value (measured fromas 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, Jun 11, 2014
Indicators for US Economy
Leading indicators are indicators that usually change before theeconomy as a whole changes. They are useful as short-term predictorsof the economy. Our list includes the Philly Fed’s Leading Index whichsummarizes 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 inthe system) and consumer sentiment (how consumers are feeling abouttheir own financial situation and the economy in general).
Leading Index for the US
Inde
x: E
st. 6
mon
th g
row
th
−3
−1
12
34
median: 1.42Apr 2014: 1.69
Growth
Contraction
Initial Unemployment Claims
1000
's o
f Cla
ims
per
Wee
k
200
400
600
median: 352.75May 2014: 310.25
Manufacturing Ave. Weekly Hours Worked
Hou
rs
39.0
40.0
41.0
42.0
median: 40.60May 2014: 42.10
ISM Manfacturing − PMI
Inde
x: S
tead
y S
tate
= 5
0
3040
5060
70 median: 53.30May 2014: 55.40
expanding economy
contracting economy
Manufacturers' New Orders: Durable GoodsB
illio
ns o
f Dol
lars
120
160
200
240
median: 182.30Apr 2014: 239.90
ISM Manufacturing: Supplier Deliveries
Inde
x
4050
6070
median: 51.60May 2014: 53.20Slower Deliveries
Faster Deliveries
Capex (ex. Defense & Planes)
Per
cent
cha
nge
(3 m
onth
s)
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
−10
−5
05
median: 0.86Apr 2014: 2.04
Chicago Fed National Activity Index
Inde
x V
alue
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
−4
−2
02
median: 0.08Apr 2014: −0.32
U. Michigan: Consumer Sentiment
Inde
x 19
66 Q
1 =
100
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
5070
9011
0
median: 88.40May 2014: 81.90
www.lairdresearch.com Jun 11, 2014 Page 2
Global Financial Markets
Global Stock Market Returns
Country Index Name Close Date CurrentValue
WeeklyChange
MonthlyChange
3 monthChange
YearlyChange
Corr toS&P500
Corr toTSX
North AmericaUSA S&P 500 Jun 10 1,950.8 1.4% s 2.9% s 3.9% s 18.7% s 1.00 0.75USA NASDAQ Composite Jun 10 4,338.0 2.5% s 4.7% s 0.1% s 24.9% s 0.93 0.71USA Wilshire 5000 Total Market Jun 10 20,686.1 1.7% s 2.9% s 2.7% s 19.4% s 0.99 0.77Canada S&P TSX Jun 10 14,904.4 1.2% s 1.7% s 4.2% s 20.4% s 0.75 1.00Europe and RussiaFrance CAC 40 Jun 10 4,595.0 2.0% s 2.3% s 5.1% s 18.9% s 0.68 0.50Germany DAX Jun 10 10,028.8 1.1% s 3.4% s 8.2% s 20.7% s 0.58 0.47United Kingdom FTSE Jun 10 6,873.6 0.5% s 0.3% s 2.8% s 7.4% s 0.57 0.51Russia Market Vectors Russia ETF Jun 10 26.5 3.5% s 10.2% s 15.9% s 8.3% s 0.44 0.38All Europe Euro Stoxx 50 Jun 04 3,237.9 -0.3% t 2.1% s 3.2% s 17.5% s 0.65 0.50AsiaTaiwan TSEC weighted index Jun 10 9,222.4 1.1% s 4.7% s 6.4% s 13.0% s 0.08 0.08China Shanghai Composite Index Jun 04 2,024.8 -1.2% t -0.1% t -2.3% t -10.9% t -0.02 0.09Japan NIKKEI 225 Jun 10 14,994.8 -0.3% t 6.0% s -0.8% t 11.0% s 0.03 0.13Hong Kong Hang Seng Jun 10 23,315.7 0.1% s 4.7% s 4.7% s 7.9% s 0.09 0.19Korea Kospi Jun 10 2,011.8 0.2% s 2.4% s 2.9% s 4.1% s 0.05 0.10South Asia and AustrailiaIndia Bombay Stock Exchange Jun 10 25,583.7 2.9% s 8.6% s 16.6% s 31.6% s 0.20 0.19Indonesia Jakarta Jun 10 4,946.1 0.1% s 0.7% s 5.7% s 3.5% s 0.10 0.14Malaysia FTSE Bursa Malaysia KLCI Jun 10 1,876.6 0.2% s 0.6% s 3.0% s 5.0% s 0.09 0.02Australia All Ordinaries Jun 10 5,448.5 -0.2% t 0.4% s 0.3% s 14.7% s -0.03 0.07New Zealand NZX 50 Index Gross Jun 10 5,179.4 0.3% s 0.3% s 1.2% s 15.8% s 0.15 0.28South AmericaBrasil IBOVESPA Jun 10 54,604.0 4.9% s 1.0% s 19.9% s 6.4% s 0.26 0.32Argentina MERVAL Buenos Aires Jun 10 8,158.0 5.8% s 19.2% s 40.9% s 139.0% s 0.25 0.21Mexico Bolsa index Jun 10 43,045.3 2.2% s 2.3% s 11.3% s 5.7% s 0.47 0.43MENA and AfricaEgypt Market Vectors Egypt ETF Jun 10 69.3 6.0% s -0.0% t 2.7% s 82.3% s 0.32 0.26(Gulf States) Market Vectors Gulf States ETF Jun 10 33.0 -4.7% t -2.2% t 10.2% s 35.1% s 0.37 0.23South Africa iShares MSCI South Africa Index Jun 10 69.3 3.4% s -0.0% t 8.3% s 25.7% s 0.62 0.51(Africa) Market Vectors Africa ETF Jun 10 33.4 1.8% s 0.6% s 5.9% s 16.6% s 0.63 0.55CommoditiesUSD Spot Oil West Texas Int. Jun 09 $105.1 2.0% s 4.8% s 3.6% s 9.7% s 0.14 0.25USD Gold LME Spot Jun 11 $1,262.5 1.3% s -2.3% t -6.3% t -7.8% t -0.25 -0.12
Note: Correlations are based on daily arithmetic returns for the most recent 100 trading days.
www.lairdresearch.com Jun 11, 2014 Page 3
S&P 500 Composite Index
The S&P 500 Composite Index is widely regarded as the best singlegauge of the large cap U.S. equities market. A key figure is the valua-tion level of the S&P500 as measured by the Price/Earnings ratio. Wepresent two versions: (1) a 12-month trailing earnings version which
reflects current earnings but is skewed by short term variances and (2)a cyclically adjusted version which looks at the inflation adjusted earn-ings over a 10 year period (i.e. at least one business cycle). Forecastedearnings numbers are estimates provided by S&P.
S&P 500 Profit Margins and Overall Corporate Profit Margins (Trailing 12 months)
Per
cent
63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
02468
101214
02468101214
Per
cent
Total Corporate Profits (% of GDP) − median: 6.2%, Q1/14: 11.0%Net Profit Margin (S&P 500 Earnings / Revenue) − median: 6.6%, Q1/14: 8.9%
S&P Quarterly Earnings (USD$ 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
−5.00 0.00 5.0010.0015.0020.0025.0030.0035.0040.00
−5.00 0.00 5.0010.0015.0020.0025.0030.0035.0040.00
Tech BubbleJapanese Asset Bubble
House BubbleAsian Financial Crisis
US Financial Crisis
Eurozone crisis
Oil Crisis I Oil Crisis II
Gulf WarSavings and Loans Crisis
High Inflation Period
Afganistan/Iraq WarVietnam War
Reported EarningsOperating 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
0
10
20
30
40
50
0
10
20
30
40
50
Mul
tiple
Mul
tiple
12−month P/E ( median = 17.4, Jun = 18.6)10−year CAPE ( median = 19.4, Jun = 24.8)
www.lairdresearch.com Jun 11, 2014 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 marketcap, while the colour is determined by the percentage change in price
over the past month. In addition, companies are sorted according totheir industry group.
AAPL12%
GOOG5.5%
MSFT3.5%
ORCL4.1%
IBM−4.2%
V4.2%
FB7.6%
INTC7.7%
QCOM CSCO
MA
HPQ
EBAY
ACN
TXN
ADP
YHOO
CRM
MUADI
FIS
CA
WFC6.7%
JPM3.9%
BAC5.5%
BRK−A−0.61%
C3.3%
AXP
AIG
USB
GS MS
MET BLK
SPG
PNC
COF
PRU
BK
BEN
ACE
STT MMC
CCI
CME
CB
HCP
VTR
LRF
JNJ4.3%
PFE−4.4%
MRK
GILD
UNH BMY BIIB
LLY
MDT
ABT
AGN
MCK BAX
ACT
ALXN
AET FRX
CI
A
BSX
AMZN DIS
CMCSA
HD
MCD
FOXA
F
NKE
PCLN
GM
SBUX
LOW
DTV
TWC
TJX
VIAB
TGT
YUM
CBS
JCI
CCL
M
DG
XOM0.72%
GE2.4%
CVX1.2%
SLB6.1%
COP
OXY
EOG
HAL
APC
PSX WMB
BHI
PXD
HES VLO
SE
FTI
HP
WMT−3.3%
PG
KO
PM3.1%
PEP4.1%
CVS
MO6.3%
WAG
MDLZ
CL
KRFT
GIS
RAI
EL K
KR
SYY
LO
UTX BA UPS
MMM3.6%
UNP8.5%
HON CAT
LMT
EMR
FDX
GD
ITW
ETN
DE
NSC
RTN
CSX
CMI
IR
DD
DOW
LYB
PX
FCX
ECL
PPG
IP
AA
CF
D SO
EXC
AEP
SRE
PPL
ED
FE
NU
VZ4.9%
T−1.8%
Information Technology
Financials
Health Care
Consumer Discretionary
Energy Consumer Staples
IndustrialsMaterials Utilities
TelecommunicationsServices
<−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 May 01, 2014 to Jun 10, 2014
Average Median Median MedianSector Change P/Sales P/Book P/EInformation Technology 5.9% s 3.2 3.9 23.0Industrials 5.3% s 1.7 3.4 21.9Materials 5.0% s 1.5 3.4 22.4Consumer Discretionary 4.4% s 1.5 4.2 19.4Financials 4.4% s 3.0 1.6 19.0
Average Median Median MedianSector Change P/Sales P/Book P/EEnergy 3.4% s 2.0 1.8 18.4Health Care 3.3% s 3.3 3.7 26.3Consumer Staples 2.3% s 1.9 5.2 20.2Telecommunications Services 2.0% s 1.2 2.0 20.2Utilities -1.5% t 1.4 1.6 18.2
www.lairdresearch.com Jun 11, 2014 Page 5
US Equity Valuations
A key valuation metric is Tobin’s q: the ratio between the marketvalue of the entire US stock market versus US net assets at replacementcost (ie. what you pay versus what you get). Warren Buffet famouslyfollows 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 hasvaluations correct, we can determine the required returns of future es-
timated earnings. These are quoted for both debt (using BAA ratedsecurities as a proxy) and equity premiums above the risk free rate (10year US Treasuries). These figures are alternate approaches to under-standing the current market sentiment - higher premiums indicate ademand for greater returns for the same price and show the level ofrisk-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
0.25
0.50
0.75
1.00
1.25
1.50
0.25
0.50
0.75
1.00
1.25
1.50
Buying assets at a discount
Paying up for growth
Tobin Q (median = 0.75, Mar = 1.11)S&P 500 Price/Sales (median = 1.32, Mar = 1.66)
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
0%
2%
4%
6%
8%
10%
12%
0%
2%
4%
6%
8%
10%
12%Implied Equity Premium (median = 4.2%, May = 5.4%)Debt (BAA) Premium (median = 2.0%, May = 2.3%)
www.lairdresearch.com Jun 11, 2014 Page 6
US Mutual Fund Flows
Fund flows describe the net investments in equity and bond mutualfunds in the US market, as described in ICI’s “Trends in Mutual FundInvesting” report. Note however that this is only part of the story as
it does not include ETF fund flows - part of the changes are investorsentering or leaving the market, and part is investors shifting to ETF’sfrom mutual funds.
US Net New Investment Cash Flow to Mutual Funds
US
$ bi
llion
s (m
onth
ly)
2007 2008 2009 2010 2011 2012 2013 2014
−40
−20
020
40
Domestic EquityWorld EquityTaxable BondsMunicipal Bonds
US Net New Investment Cash Flow to Mutual Funds
US
$ bi
llion
s (M
onth
ly)
2007 2008 2009 2010 2011 2012 2013 2014
−60
−40
−20
020
4060
Flows to EquityFlows to BondsNet Market Flows
www.lairdresearch.com Jun 11, 2014 Page 7
US Key Interest Rates
Interest rates are often leading indicators of stress in the financialsystem. The yield curve show the time structure of interest rates ongovernment bonds - Usually the longer the time the loan is outstanding,the higher the rate charged. However if a recession is expected, thenthe fed cuts rates and this relationship is inverted - leading to negativespreads 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 mostof 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 vsFedfunds - the infamous “TED Spread”). Here a spike correlates to anaversion to risk, which is an indication that something bad is happen-ing.
US Treasury Yield Curves
For
war
d In
stan
tane
ous
Rat
es (
%)
13 14 15 16 17 18 19 20 21 22 23 24
0.0
0.5
1.0
1.5
2.0
2.5
0.0
0.5
1.0
1.5
2.0
2.5Jun 10, 2014 (Today)May 12, 2014 (1 mo ago)Mar 10, 2014 (3 mo ago)10 Jun 2013 (1 yr ago)
3 Month & 10 Yr Treasury Yields
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
0%
1%
2%
3%
4%
5%
6%
7% 10 Yr Treasury3 Mo TreasurySpread
AAA vs. BAA Bond Spreads
4%
5%
6%
7%
8%
9%
4%
5%
6%
7%
8%
9%
Per
cent
AAABAA
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
median: 91.00Jun 2014: 55.00
0100200300
0100200300
Spr
ead
(bps
)
LIBOR vs. Fedfunds Rate
0%
1%
2%
3%
4%
5%
6%
7%
0%
1%
2%
3%
4%
5%
6%
7%
Per
cent
3 mos t−billLIBOR
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
median: 37.00Jun 2014: 18.95
0100200300
0100200300
Spr
ead
(bps
)
www.lairdresearch.com Jun 11, 2014 Page 8
US Inflation
Generally, the US Fed tries to anchor long run inflation expectationsto approximately 2%. Inflation can be measured with the ConsumerPrice Index (CPI) or the Personal Consumption Expenditures (PCE)index.
In both cases, it makes sense to exclude items that vary quickly likeFood and Energy to get a clearer picture of inflation (usually called
Core Inflation). The Fed seems to think PCI more accurately reflectsthe 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 animputed forward inflation expectation. The 5y5y chart shows expected5 year inflation rates at a point 5 years in the future. Neat trick that.
Consumer Price Index
Per
cent
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
−1%
0%
1%
2%
3%
4%
5%
6%
−1%
0%
1%
2%
3%
4%
5%
6%
US Inflation Rate YoY% (Apr = 2.0%)US Inflation ex Food & Energy YoY% (Apr = 1.8%)
Personal Consumption Expenditures
Per
cent
(Ye
ar o
ver
Year
)
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
−1
01
23
45
6
PCE Inflation Rate YoY% (Apr = 1.6%)PCE Core Inflation YoY% (Apr = 1.4%)
5−Year, 5−Year Forward Inflation Expectation Rate
Per
cent
08 09 10 11 12 13 14 15 16 17 18 19
−1
01
23
45
6
5 year forward Inflation ExpectationActual 5yr Inflation (CPI measure)Actual 5yr Inflation (PCE Measure
www.lairdresearch.com Jun 11, 2014 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 aseries of programs (QE1, QE2 & QE3) designed to drive down longterm 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 theirprice, but as these securities have a fixed coupon, their yield would bedecreased (yield ≈ coupon / price) thus driving down long term rates.
In 2011-2012, “Operation Twist” attempted to reduce rates withoutincreasing 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 inDec 2013 that it was starting the taper, a decision partly driven byseeing key targets of inflation around 2% and unemployment being lessthan 6.5%. These charts track that progress.
QE Asset Purchases to Date (Treasury & Mortgage Backed Securities)
Trill
ions
0.00.51.01.52.02.5
0.00.51.01.52.02.5
QE1 QE2 Operation Twist QE3 TaperTreasuries
Mortgage Backed Securities
Total Monthly Asset Purchases (Treasury + Mortgage Backed Securities)
Bill
ions
−100−50
050
100150200
−100−50050100150200
Month to date Jun 04: $7.5
Inflation and Unemployment − Relative to Targets
Per
cent
02468
10
0246810
Target Unemployment 6.5%Target Inflation 2%
U.S. 10 Year and 3 Month Treasury Constant Maturity Yields
Per
cent
012345
012345
2008 2009 2010 2011 2012 2013 2014
Short Term Rates:Once at zero, Fed moved to QE
Long Term Rates:Moving up in anticipation of Taper?
www.lairdresearch.com Jun 11, 2014 Page 10
Exchange Rates
10 Week Moving Average CAD Exchange Rates
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
0.62
0.71
0.81
0.90
1.00
1.09
US
A /
CA
D
0.55
0.61
0.66
0.72
0.77
0.82
Eur
o / C
AD
59.
16 7
4.71
90.
2610
5.81
121.
3613
6.91
Japa
n / C
AD
0.38
0.44
0.49
0.55
0.61
0.67
U.K
. / C
AD
0.59
0.98
1.36
1.74
2.12
2.51
Bra
zil /
CA
D
CAD Appreciating
CAD Depreciating
1 Month Change in Rates versus Average
−3.0%
−1.5%
1.5%
3.0%
Euro 1.7%
UK 0.6%
Japan 0.4%
South Korea−1.2%
China−0.1%
India−1.7%
Brazil 0.3%
Mexico−1.3%
Canada−0.1%
USA−0.0%
% 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−5.2%
AUS 1.8%
BRA 2.9%
CHN−1.9%
IND 1.4%
RUS 4.1%
USA−1.8%
EUR−4.0%
JPY−1.0%
KRW2.2%
MXN−0.4%
ZAR−1.1%
www.lairdresearch.com Jun 11, 2014 Page 11
US Banking Indicators
The banking and finance industry is a key indicator of the healthof the US economy. It provides crucial liquidity to the economy in theform 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 differencebetween what a bank pays to depositors versus what the bank is paidby creditors), along with levels of non-performing loans (i.e. loan lossreserves and actual deliquency rates).
US Banks Net Interest Margin
Per
cent
3.5
4.0
4.5
median: 3.952014 Q1: 3.10
Repos Outstanding with Fed. Reserve
Bill
ions
of D
olla
rs
5015
025
0
median: 46.14Jun 2014: 232.95
Bank ROE − Assets between $300M−$1B
Per
cent
05
1015
median: 12.852014 Q1: 8.89
Consumer Credit Outstanding
% Y
early
Cha
nge
−5
05
1015
20
median: 7.07Apr 2014: 5.94
Total Business Loans%
Yea
rly C
hang
e
−20
010
20median: 7.81Apr 2014: 10.00
US Nonperforming Loans
Per
cent
12
34
5
median: 2.392014 Q1: 2.50
St. Louis Financial Stress Index
Inde
x
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
02
46 median: −0.082
May 2014: −1.28
Commercial Paper Outstanding
Trill
ions
of D
olla
rs
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
1.0
1.4
1.8
2.2
median: 1.36Jun 2014: 1.04
Residential Morgage Delinquency Rate
Per
cent
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
24
68
10
median: 2.302014 Q1: 7.79
www.lairdresearch.com Jun 11, 2014 Page 12
US Employment Indicators
Unemployment rates are considered the “single best indicator ofcurrent labour conditions” by the Fed. The pace of payroll growth ishighly correlated with a number of economic indicators.Payroll changesare another way to track the change in unemployment rate.
Unemployment only captures the percentage of people who are inthe labour market who don’t currently have a job - another measure
is what percentage of the whole population wants a job (employed ornot) - this is the Participation Rate.
The Beverage Curve measures labour market efficiency by lookingat 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
Per
cent
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
median: 6.30May 2014: 6.304
56789
1011
4567891011
Per
cent
4 5 6 7 8 9 10
2.0
2.5
3.0
3.5
4.0
Beverage Curve (Unemployment vs. Job Openings)
Unemployment Rate (%)
Job
Ope
ning
s (%
tota
l Em
ploy
men
t)
Dec 2000 − Dec 2008Jan 2009 − Mar 2014Apr 2014
Participation Rate
Per
cent
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
6364
6566
67
median: 66.10May 2014: 62.80
Total Nonfarm Payroll Change
Mon
thly
Cha
nge
(000
s)
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
−50
00
500
median: 161.00May 2014: 217.00
www.lairdresearch.com Jun 11, 2014 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 afull-time job - they are employed but under-utilitized. Temporary helpdemand 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 jobsis generally bad, though perhaps not unsurprising in a recovery.
Median Duration of Unemployment
Wee
ks
510
1520
25 median: 8.60May 2014: 14.60
(U6) Unemployed + PT + Marginally Attached
Per
cent
810
1214
16
median: 9.60May 2014: 12.20
4−week moving average of Initial Claims
Jan
1995
= 1
00
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
5010
015
020
0
median: 108.46May 2014: 95.39
Unemployed over 27 weeks
Mill
ions
of P
erso
ns
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
01
23
45
67
median: 0.77May 2014: 3.37
Services: Temp Help
Mill
ions
of P
erso
ns
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
1.5
2.0
2.5
median: 2.23May 2014: 2.86
0 200 400 600
15
20
25
30
35
Annual Change in Employment Levels (000s of Workers)
Ave
rage
wag
es (
$/ho
ur)
Private Industry Employment Change (1 year)
ConstructionDurable Goods
Education
Financial Activities
Health Services
Information
Leisure and Hospitality
Manufacturing
Mining and Logging
Nondurable GoodsOther Services
Professional &Business Services
Retail Trade
Transportation
Utilities
Wholesale Trade
Circle size relative to total employees in industry
www.lairdresearch.com Jun 11, 2014 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 thecurrent business environment.
Manufacturing Sector: Real Output
YoY
Per
cent
Cha
nge
−15
−5
515
median: 6.642014 Q1: 10.06
ISM Manufacturing − PMI
Inde
x
3040
5060
70
May 2014: 55.40
manufac. expanding
manufac. contracting
ISM Manufacturing: New Orders Index
Inde
x
3040
5060
7080 May 2014: 56.90
Increase in new orders
Decrease in new orders
Non−Manufac. New Orders: Capital Goods
Bill
ions
of D
olla
rs
4050
6070
median: 56.98Apr 2014: 70.13
Average Weekly Hours: Manufacturing
Hou
rs
3940
4142
43
median: 41.10May 2014: 42.10
Industrial Production: Manufacturing
YoY
Per
cent
Cha
nge
−15
−5
05
10
median: 3.23Apr 2014: 3.09
Total Business: Inventories to Sales Ratio
Rat
io
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
1.1
1.2
1.3
1.4
1.5
1.6
median: 1.37Mar 2014: 1.30
Chicago Fed: Sales, Orders & Inventory
Inde
x
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
−0.
50.
00.
5 Apr 2014: 0.00Above ave growth
Below ave growth
ISM Non−Manufacturing Bus. Activity Index
Inde
x
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
3545
5565
May 2014: 62.10
Growth
Contraction
www.lairdresearch.com Jun 11, 2014 Page 15
US Consumption Indicators
Variations in consumer activity are a leading indicator of thestrength of the economy. We track consumer sentiment (their expec-
tations about the future), consumer loan activity (indicator of newpurchase activity), and new orders and sales of consumer goods.
U. Michigan: Consumer Sentiment
Inde
x 19
66 Q
1 =
100
5060
7080
9011
0
median: 88.40May 2014: 81.90
Consumer Loans (All banks)
YoY
% C
hang
e
010
2030
median: 7.13Apr 2014: 2.18
AccountingChange
Deliquency Rate on Consumer Loans
Per
cent
2.5
3.0
3.5
4.0
4.5 median: 3.48
2014 Q1: 2.31
New Orders: Durable Consumer Goods
YoY
% C
hang
e
−30
−10
1030
median: 3.87Apr 2014: 0.76
New Orders: Non−durable Consumer Goods
YoY
% C
hang
e
−20
010
20
median: 3.94Apr 2014: 3.44
Personal Consumption & Housing Index
Inde
x
−0.
40.
00.
2
median: 0.02Apr 2014: −0.12above ave growth
below ave growth
Light Cars and Trucks Sales
Mill
ions
of U
nits
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
1012
1416
1820
22
median: 14.72Apr 2014: 15.96
Personal Saving Rate
Per
cent
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
24
68
10
median: 5.50Apr 2014: 4.00
Real Retail and Food Services Sales
YoY
% C
hang
e
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
−10
−5
05
median: 2.38Apr 2014: 1.63
www.lairdresearch.com Jun 11, 2014 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. Sincepersonal consumption is about 70% of the US economy and house val-ues directly impact household wealth, housing is an important indicatorin the health of the overall economy. In particular, housing investment
was an important driver of the economy getting out of the last fewrecessions (though not this one so far). Here we track housing pricesand especially indicators which show the current state of the housingmarket.
15 20 25 30 35
150
200
250
300
Personal Income vs. Housing Prices (Inflation adjusted values)
New
Hom
e P
rice
(000
's)
Disposable Income Per Capita (000's)
Mar 2014
r2 : 88.4%Range: Jan 1964 − Mar 2014
New Housing Units Permits Authorized
Mill
ions
of U
nits
0.5
1.0
1.5
2.0
2.5
median: 1.36Apr 2014: 1.06
New Home Median Sale Price
Sal
e P
rice
$000
's
100
150
200
250
Mar 2014: 290.00
Homeowner's Equity Level
Per
cent
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
4050
6070
80 median: 66.522014 Q1: 53.64
New Homes: Median Months on the Market
Mon
ths
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
46
810
1214 median: 5.00
Apr 2014: 3.40
US Monthly Supply of Homes
Mon
ths
Sup
ply
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
46
810
12 median: 5.90Apr 2014: 5.30
www.lairdresearch.com Jun 11, 2014 Page 17
US Housing - FHFA Quarterly Index
The Federal Housing Finance Agency provides a quarterly surveyon house prices, based on sales prices and appraisal data. This gener-ates a housing index for 355 municipal areas in the US from 1979 topresent. We have provided an alternative view of this data looking atthe 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 startof the housing crisis (defined as the maximum price between 2007-2009for each city). The circled dots are the cities in the survey, while thebackground colours are interpolated from these points using a loesssmoother.
Change from 2007 Peak − Q1 2014
−50%
−40%
−30%
−20%
−10%
0%
10%
20%
30%
40%
50%
Today's Home Prices
Percentage Change from 2007−2009 Peak
Fre
quen
cy
−75% −50% −25% 0% 25% 50% 75%
Year over Year Change − Q1 2014
−10%
−8%
−6%
−4%
−2%
0%
2%
4%
6%
8%
10%
YoY Change in this quarter
YoY Percent Change
Fre
quen
cy
−15% −5% 5% 15%
www.lairdresearch.com Jun 11, 2014 Page 18
Global Business Indicators
Global PMI Reports
The Purchasing Managers’ Index (PMI) is an indicator reflectingpurchasing managers’ acquisition of goods and services. An index read-ing of 50.0 means that business conditions are unchanged, a numberover 50.0 indicates an improvement while anything below 50.0 suggests
a decline. The further away from 50.0 the index is, the stronger thechange over the month. The chart at the bottom shows a moving av-erage of a number of PMI’s, along with standard deviation bands toshow a global average.
Global PMI − May 2014
<40.0 42.0 44.0 46.0 48.0 50.0 52.0 54.0 56.0 58.0 >60.0
Steady ExpandingContracting
Eurozone52.2
Global PMI52.2
TWN52.4MEX
51.9
KOR49.5
JPN49.9
VNM52.5
IDN52.4
ZAF44.3
AUS49.2
BRA48.8
CAN52.2
CHN49.4
IND51.4
RUS48.9
SAU57.0
USA56.4
Global 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−1.2
Global PMI0.3
TWN0.1MEX
0.1
KOR−0.7
JPN0.5
VNM−0.6
IDN1.3
ZAF−3.1
AUS 4.4
BRA−0.5
CAN−0.7
CHN 1.3
IND 0.1
RUS 0.4
SAU−1.5
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
3040
5060
70
3040
5060
70
Business Conditions Contracting
Business Conditions Expanding
www.lairdresearch.com Jun 11, 2014 Page 19
Global PMI Chart
This is an alternate view of the global PMI reports. Here, we lookat all the various PMI data series in a single chart and watch theirevolution over time.
Red numbers indicate contraction (as estimated by PMI) whilegreen numbers indicate expansion.
May
12
Jun
12
Jul 1
2
Aug
12
Sep
12
Oct
12
Nov
12
Dec
12
Jan
13
Feb
13
Mar
13
Apr
13
May
13
Jun
13
Jul 1
3
Aug
13
Sep
13
Oct
13
Nov
13
Dec
13
Jan
14
Feb
14
Mar
14
Apr
14
May
14
Australia
India
Indonesia
Vietnam
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 50.3 49.7 48.8 48.7 48.7 48.9 49.6 50.0 51.5 50.9 51.2 50.4 50.6 50.6 50.8 51.6 51.8 52.1 53.1 53.3 53.0 53.2 52.4 51.9 52.2
52.5 52.5 51.4 51.5 51.1 51.0 52.8 56.1 55.8 54.3 54.6 52.1 52.3 52.0 53.7 53.1 52.8 51.8 54.7 55.0 53.7 57.1 55.5 55.4 56.4
54.7 54.8 53.1 53.0 52.4 51.4 50.4 50.4 50.5 51.7 49.3 50.1 53.2 52.4 52.0 52.1 54.2 55.6 55.3 53.5 51.7 52.9 53.3 52.9 52.2
55.2 55.9 55.2 55.1 54.4 55.5 55.6 57.1 55.0 53.4 52.2 51.7 51.7 51.3 49.7 50.8 50.0 50.2 51.9 52.6 54.0 52.0 51.7 51.8 51.9
49.3 48.5 48.7 49.3 49.8 50.2 52.2 51.1 53.2 52.5 51.8 50.8 50.4 50.4 48.5 49.4 49.9 50.2 49.7 50.5 50.8 50.4 50.6 49.3 48.8
45.1 45.1 46.5 46.3 46.1 45.4 46.8 46.1 47.9 47.9 46.8 46.7 48.3 48.8 50.3 51.4 51.1 51.3 51.6 52.7 54.0 53.2 53.0 53.4 52.2
47.6 48.9 48.9 49.7 50.7 48.9 48.2 49.6 50.2 49.0 48.0 48.2 48.7 48.8 50.8 53.5 55.8 54.4 56.8 57.0 54.8 55.2 53.7 53.4 53.6
51.2 53.1 53.9 50.9 51.8 52.1 52.4 51.4 50.3 51.5 48.6 48.0 49.7 50.3 51.0 52.0 52.7 54.9 52.4 53.5 52.8 52.9 55.5 56.1 55.0
48.9 48.0 49.7 48.3 47.0 47.3 48.2 48.5 48.6 48.9 48.0 46.9 48.0 49.3 51.1 52.6 53.1 53.4 54.4 53.2 55.4 55.9 54.0 52.0 50.8
42.0 41.1 42.3 44.0 44.5 43.5 45.3 44.6 46.1 46.8 44.2 44.7 48.1 50.0 49.8 51.1 50.7 50.9 48.6 50.8 52.2 52.5 52.8 52.7 52.9
47.6 49.4 49.5 48.7 48.0 47.2 48.2 46.0 48.3 49.9 49.1 49.5 50.1 51.0 52.0 53.9 53.4 54.5 55.4 54.7 55.9 56.5 55.5 56.5 57.3
44.8 44.6 44.3 43.6 45.7 45.5 45.1 46.7 47.8 45.8 44.5 45.5 47.3 49.1 50.4 51.3 50.8 50.7 51.4 53.3 53.1 52.3 52.4 54.0 53.2
44.7 45.2 43.4 46.0 42.7 43.7 44.5 44.6 42.9 43.9 44.0 44.4 46.4 48.4 49.7 49.7 49.8 49.1 48.4 47.0 49.3 49.7 52.1 51.2 49.6
45.2 45.0 43.0 44.7 47.4 46.0 46.8 46.0 49.8 50.3 49.0 48.1 49.4 48.6 50.7 51.8 51.1 51.7 52.7 54.3 56.5 54.8 53.7 54.1 52.3
43.1 40.1 41.9 42.1 42.2 41.0 41.8 41.4 41.7 43.0 42.1 45.0 45.3 45.4 47.0 48.7 47.5 47.3 49.2 49.6 51.2 51.3 49.7 51.1 51.0
45.9 48.4 45.2 49.6 48.1 47.3 49.2 51.2 50.5 47.9 48.6 50.2 51.3 52.9 54.8 57.2 56.3 56.5 58.4 57.3 56.7 56.2 55.3 57.3 57.0
53.2 51.0 52.0 51.0 52.4 52.9 52.3 50.0 52.0 52.0 50.8 50.6 50.4 51.7 49.2 49.4 49.4 51.8 49.4 48.8 48.0 48.5 48.3 48.5 48.9
50.2 51.4 49.4 50.0 52.2 52.5 51.6 53.1 54.0 53.5 52.3 51.3 51.1 51.2 49.8 50.9 54.0 53.3 55.0 53.5 52.7 53.4 51.7 51.1 50.1
59.8 57.0 58.9 58.1 58.5 58.9 58.0 57.3 56.6 56.6 57.5 58.7 56.7 57.1 58.7 59.7 58.6 57.0 58.5 57.0
47.1 49.5 47.4 49.1 53.6 49.3 50.5 50.4 51.6 52.2 56.5 49.1 51.5 51.6 50.5 50.3 51.5 50.3 47.4 44.3
50.7 49.9 47.9 47.7 48.0 46.9 46.5 45.0 47.7 48.5 50.4 51.1 51.5 52.3 50.7 52.2 52.5 54.2 55.1 55.2 56.6 55.5 53.9 49.4 49.9
51.0 47.2 49.4 47.5 45.7 47.4 48.2 50.1 49.9 50.9 52.0 52.6 51.1 49.4 47.2 47.5 49.7 50.2 50.4 50.8 50.9 49.8 50.4 50.2 49.5
50.4 50.2 50.1 49.2 49.8 50.2 50.6 51.5 50.4 50.4 51.6 50.4 49.2 48.2 47.7 50.1 50.2 50.9 50.8 50.5 49.5 48.5 48.0 48.1 49.4
50.5 49.2 47.5 46.1 45.6 47.8 47.4 50.6 51.5 50.2 51.2 50.7 47.1 49.5 48.6 50.0 52.0 53.0 53.4 55.2 55.5 54.7 52.7 52.3 52.4
48.3 46.6 43.6 47.9 49.2 48.7 50.5 49.3 50.1 48.3 50.8 51.0 48.8 46.4 48.5 49.4 51.5 51.5 50.3 51.8 52.1 51.0 51.3 53.1 52.5
48.1 50.2 51.4 51.6 50.5 51.9 51.5 50.7 49.7 50.5 51.3 51.7 51.6 51.0 50.7 48.5 50.2 50.9 50.3 50.9 51.0 50.5 50.1 51.1 52.4
54.8 55.0 52.9 52.8 52.8 52.9 53.7 54.7 53.2 54.2 52.0 51.0 50.1 50.3 50.1 48.5 49.6 49.6 51.3 50.7 51.4 52.5 51.3 51.3 51.4
42.4 47.2 40.3 45.3 44.1 45.2 44.3 44.3 40.2 45.6 44.4 36.7 43.8 49.6 42.0 46.4 51.7 53.2 47.7 47.6 46.7 48.6 47.9 44.8 49.2
www.lairdresearch.com Jun 11, 2014 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 USdollars. 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 importson a year-over-year basis, while the bottom part shows the differencebetween exports and imports for that given month (i.e. the trade bal-ance)
China
YoY
Cha
nge
−40−20
02040
Bal
ance
08 09 10 11 12 13 14
−100
10203040
US
YoY
Cha
nge
−60−40−20
02040
Bal
ance
08 09 10 11 12 13 14
−80−60−40−20
0
Canada
YoY
Cha
nge
−15−10−5
05
10
Bal
ance
08 09 10 11 12 13 14
−20246
Germany
YoY
Cha
nge
−40
−20
0
20
Bal
ance
08 09 10 11 12 13 14
05
1015202530
JapanYo
Y C
hang
e
−30−20−10
01020
Bal
ance
08 09 10 11 12 13 14
−10−5
05
10
South Korea
YoY
Cha
nge
−15−10−5
05
1015
Bal
ance
08 09 10 11 12 13 14
−4−2
0246
India
YoY
Cha
nge
−10−5
05
1015
Bal
ance
08 09 10 11 12 13 14
−15−10−5
0
Australia
YoY
Cha
nge
−6−4−2
0246
Bal
ance
08 09 10 11 12 13 14
−2−1
01234
Eurozone
YoY
Cha
nge
−80−60−40−20
02040
Bal
ance
08 09 10 11 12 13 14
−100
1020
www.lairdresearch.com Jun 11, 2014 Page 21
Canadian Indicators
Unemployment rate
Per
cent
67
89
1011 median: 7.40
May 2014: 7.00
Permits issued for Dwelling
YoY
Per
cent
Cha
nge
−50
050
100
May 2014: NA
Retail Sales
YoY
Per
cent
Cha
nge
−5
05
10
median: 4.28Mar 2014: 3.65
Inflation rate
YoY
Per
cent
Cha
nge
in C
PI
−1
01
23
45
median: 1.68Apr 2014: 1.79
Consumer Confidence
6070
8090
100
median: 94.35Apr 2014: 87.30
Housing Prices
YoY
Per
cent
Cha
nge
−5
05
1015 median: 1.84
Mar 2014: 1.37
Money Supply (M2)
YoY
Per
cent
Cha
nge
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
05
1015 median: 5.88
Apr 2014: 4.89
PMI: Manufacturing
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
4050
6070
median: 56.50May 2014: 52.20
Retail Sales Performance
YoY
Per
cent
Cha
nge
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
−5
05
10
median: 4.28Mar 2014: 3.65
www.lairdresearch.com Jun 11, 2014 Page 22
European Indicators
Unemployment Rates
Per
cent
age
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
05
1015
20
Business Employment Expectations
Inde
x
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
−40
−20
010
Volume of Retail Sales (ex−cars)
Inde
x (J
an 2
010
= 1
00)
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
6070
8090
110
130
Manufacturing Turnover
Inde
x (J
an 2
010
= 1
00)
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
6070
8090
110
130
Building Permits
Inde
x (J
an 2
010
= 1
00)
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
010
020
030
040
050
0
Industrial Orderbook Levels
Inde
x
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
−60
−40
−20
020
Country EmploymentExpect.
Unempl.(%)
Bond Yields(%)
RetailTurnover
ManufacturingTurnover
BuildingPermits
IndustryOrderbook
PMI
Series Dates May 2014 Apr 2014 May 2014 Apr 2014 Apr 2014 Apr 2014 May 2014 May 2014� France -11.2 10.4 1.84 105.7 109.6 70.87 -21.7 49.6� Germany -1.7 5.2 1.33 101.9 113.3 133.46 -7.1 52.3� United Kingdom 5.6 6.6 2.27 105.55 105.76 NA 1.5 57� Italy -5.6 12.6 3.13 92.84 98.84 NA -20.5 53.2� Greece -12.2 26.6 6.39 74.37 98.45 16.25 -25.9 51� Spain -6.5 25.1 2.94 81.72 98.77 53.4 -14.3 52.9� Eurozone -3.6 10.4 2.93 99.77 109.24 NA -13.3 NA
www.lairdresearch.com Jun 11, 2014 Page 23
Government Bond YieldsLo
ng T
erm
Yie
lds
%
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
02
46
810
Economic Sentiment
Inde
x
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
6070
8090
110
130
Consumer Confidence
Inde
x
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
−10
0−
60−
200
20Production of Total Industry: Dec 2013
<−10.0%−7.5%−5.0%−2.5% 0.0% 2.5% 5.0% 7.5%>10.0%
YoY % Difference increasingdecreasing
AUT 0.44%
DEU 3.86%
ESP 2.39%
FIN−3.84%
FRA 0.71%
GBR 1.89%
GRC−1.77%
HUN 4.64%
IRL−6.86%
ITA−0.87%
NOR−2.71%
POL 4.68%
RUS 0.09%
SWE−2.91%
Inflation: Dec 2013
AUT 1.9%
DEU 1.4%
ESP 0.3%
FIN 1.6%
FRA 0.7%
GBR 2.0%
GRC−1.7%
HUN 0.4%
IRL 0.2%
ITA 0.7%
NOR 2.0%
POL 0.7%
SWE 0.1%
<−1.0%0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% >7.0%
YoY % Change in Prices
PMI: May 2014
<40.042.0 44.0 46.0 48.0 50.0 52.0 54.0 56.0 58.0>60.0
Steady ExpandingContracting
BRA48.8
CAN52.2
DEU52.3
ESP52.9
FRA49.6
GBR57.0
GRC51.0
IRL55.0
ITA53.2
MEX51.9
POL50.8
SAU57.0
TUR50.1
USA56.4
PMI Change: Apr − May
<−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−0.7
DEU−1.8
ESP 0.2
FRA−1.6
GBR−0.3
GRC−0.1
IRL−1.1
ITA−0.8
POL−1.2
TUR−1.0
USA 1.0
www.lairdresearch.com Jun 11, 2014 Page 24
Chinese Indicators
Tracking the Chinese economy is a tricky. As reported in the Finan-cial Times, Premier Li Keqiang, confided to US officials in 2007 thatgross 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 anddiffers slightly from an HSBC version. Finally we include the ShanghaiComposite 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
4045
5055
60
May 2014: 49.40
Shanghai Composite Index
Inde
x V
alue
(M
onth
ly H
igh/
Low
)
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
1000
2000
3000
4000
5000
6000
May 2014: 2005.18
Electricity Generated
100
Mill
ion
KW
H (
log
scal
e)
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
1000
2000
3000
5000
Apr 2014: 4250.00
Electricity GeneratedLong Term TrendShort Term Average
Consumer Confidence Index
Inde
x
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
9810
010
210
410
610
8
median: 102.95Apr 2014: 104.80
Exports
YoY
Per
cent
Cha
nge
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
−20
020
4060
80
median: 19.40May 2014: 6.95
Retail Sales Change
YoY
Per
cent
Cha
nge
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
1015
20
median: 13.20Apr 2014: 11.90
www.lairdresearch.com Jun 11, 2014 Page 25
Global Climate Change
Temperature and precipitation data are taken from the US NationalClimatic Data Center and presented as the average monthly anomalyfrom the previous 6 months. Anomalies are defined as the difference
from the average value over the period from 1961-1990 for precipitationand 1971-2000 for temperature.
Average Temperature Anomalies from Aug 2013 - Feb 2014
<−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
Average 6 month Precipitation Anomalies from Aug 2013 - Feb 2014
<−40.0 −30.0 −20.0 −10.0 0.0 10.0 20.0 30.0 >40.0
Anomalies in millimeters WetterDrier Anomalies in millimeters
−40 −20 0 20 40
www.lairdresearch.com Jun 11, 2014 Page 26