December 2014 Economic Outlook. All data as of November 30, 2014 unless otherwise noted.

Transcription

1 December 2014 Economic Outlook All data as of November 30, 2014 unless otherwise noted.

2 Economic Outlook and Capital Markets Slow growth has characterized the current expansion Real GDP Growth From Past Recessions Indexed to 100 at end of recession Quarters Before and After End of Recession Great Rec Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

3 Economic Outlook and Capital Markets Slow Growth reflected in below average productivity growth Productivity Growth-Recovery From Past Recessions 115 Indexed to 100 at end of recession Quarters Before and After End of Recession Great Rec. Source: Bloomberg, WTIA Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

4 Income growth can t expand without improved productivity Income Growth-Recovery From Past Recessions Indexed to 100 at end of recession Months Before/After Recesssion End Great Rec Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

5 Low wage growth: Inflation has been well contained PCE Price Index CPI ex-food & Energy Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

6 Low wage growth: Job gains in low paying industries Number of Workers Indexed to 100 at Jan 1, Big gains in employment in lower paying jobs Manufacturing Construction Food & Beverage Temporary Leisure Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

7 Declining oil prices bode well for future inflation readings Brent Crude Oil ($/bbl.) $160 $140 $120 $100 $80 $60 $40 $20 $ Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information. Source: Bloomberg, WTIA

8 Global savings from $40/barrel drop in oil exceed $1.3 trillion Annual Savings in $ billions World 1, Asia & Oceania North America United States Europe China Middle East Central & South America Eurasia Japan Africa India Russia Brazil Saudi Arabia Canada Germany Korea, South Mexico Iran France Indonesia United Kingdom Italy Singapore $450 $400 $350 $300 $250 $200 $150 $100 $50 $ Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

9 Beyond oil, many commodities also coming down in price Reuters Continuous Commodity Index (CCI) Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

10 Labor market slack: Non-Boomer participation rate Labor Force Participation Rate Ages Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

11 (%) Economic Outlook and Capital Markets Residual labor slack: unemployment differential still wide Unemployment Rate and U-6 Unemployment Rate % 7.2% 5.6% Unemployment Rate U-6 Unemployment Rate Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

12 Job Openings (000) Economic Outlook and Capital Markets Reducing labor market slack: gains in prospective openings Job Openings (JOLT, 000) 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information. Source: Bloomberg, WTIA

13 (000) Economic Outlook and Capital Markets November report confirms job gains are accelerating Gains in Non-farm payrolls Month Avg Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

14 Manufacturing has provided a strong underpinning Index of Industrial Production Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information. Source: Bloomberg, WTIA

15 Corporate Earnings at record levels and building S&P 500 Index Estimated Earnings Next 12 Months Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information. Source: Bloomberg, WTIA

16 No recession on the horizon Conference Board Index of Leading Indicators Source: Bloomberg, WTIA, NBER Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

17 (%) Economic Outlook and Capital Markets Economic Snapshot--International Urgency for Europe to get a better handle on their economic situation has escalated Real Inflation Adjusted Global Growth Actual 2013 and Projected (1.0) (2.0) Source: Bloomberg, WTIA, Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

18 United States vs Europe-Good vs Bad Deleveraging Consumer Credit Outstanding 3,500 3,100 2,700 2,300 1,900 1,500 5,500 5,000 4,500 4,000 3,500 3,000 U.S. Consumer Credit Outstanding ($ Bil) European Consumer Credit Outstanding ( Bil) Source: Bloomberg, WTIA, Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

19 Y/Y Real GDP Growth Economic Outlook and Capital Markets United States vs Europe--Growth diverged in 2011 Year over Year Real GDP Growth Eurozone United States Source: Bloomberg, WTIA, Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

20 % YoY Economic Outlook and Capital Markets Core Europe leading current slowing German economy turning down German Industrial Production (% Y/Y) IFO Pan German Business Expectations (RHS) Source: Bloomberg, WTIA Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

21 Billions Economic Outlook and Capital Markets ECB looking to add but will it be enough? European Central Bank balance sheet 3,200 2,700 2,200 1,700 1, Source: Bloomberg, WTIA, Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

22 Capital Market Trends U.S. Equities Leading the Way SP 500 Price and PE /15/ /15/ /15/ /15/ /15/2014 LAST_PRICE PE (rhs) = 16. Source: Bloomberg, WTIA, Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

23 October swoon proved to be a correction--at least in U.S. Relative Performance Major Equity Markets Past 2 Years /30/2012 3/31/2013 7/31/ /30/2013 3/31/2014 7/31/2014 Russell 3000 International Developed Markets (EAFE) Emerging Market (MSCI EM Index) Source: Bloomberg, WTIA, Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

24 VIX Index Economic Outlook and Capital Markets Volatility returns to pre-correction levels VIX-Equity Market Volatility Source: Bloomberg, WTIA, Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

25 Relative Valuations using Price to Sales S & P EAFA Emerging Markets Distributions based on daily history from 1/1/ Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

26 Yield (%) Economic Outlook and Capital Markets Flatter yield curve likely as Fed considers policy change U.S. Treasury Yield Curves: historic and prospective Years to Maturity US Trsy 1/31/2014 US Trsy 10/31/2014 Forward Curve 1 year out (as of 10/31) Source: Bloomberg, WTIA Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

27 Municipal Market Remains Attractive 95.6% Tax-Equivalent calculation assumes maximum marginal tax rate of 39.6% plus 3.8% ACA surtax Wilmington Trust Investment Advisors, Inc. All rights reserved. Please see disclosures for important information.

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