Muhlenkamp & Company. Webcast November 30, Ron Muhlenkamp, Portfolio Manager Jeff Muhlenkamp, Portfolio Manager Tony Muhlenkamp, President

Transcription

1 Muhlenkamp & Company Webcast November 3, 217 Ron Muhlenkamp, Portfolio Manager Jeff Muhlenkamp, Portfolio Manager Tony Muhlenkamp, President Muhlenkamp & Company, Inc. Intelligent Investment Management 217 All rights reserved.

2 Welcome All participants are in a listen-only mode. We will conduct a question-and-response session after the presentation. This webcast is being recorded. Muhlenkamp & Company, Inc. Intelligent Investment Management

3 Our Checklist: What we observe as the Current State: 1. Consumer Spending Mixed Mixed 2. Business Investment Low Unsure 3. Credit Default/Bank Health Good overall, weak spots haven t gotten worse Unsure 4. Velocity of Money Declining Unsure 5. Inflation Low Inflation Unsure Future Outlook: 6. Federal Reserve and Treasury Raising Short Term Rates Balance sheet reduction. 7. Taxes House passed bill, Senate vote imminent Unsure what the final result will be after reconciliation 8. Regulation Slow improvement Slow improvement 9. Europe & Japan Less worrisome than 6 months ago BOJ printing continues ECB printing slows? 1. China Potentially disruptive Potentially disruptive Source: Muhlenkamp & Company, Inc.

4 U.S. Real GDP (Annual YoY %) Estimated 3 Percent Year Source: Bloomberg; Estimated data OECD

5 Consumer U.S. Consumer Confidence 1995-Oct217 (Monthly) Recessions Index Value Shaded regions = Economic Recessions Source: Conference Board; Data Normalized 1985=1 Year

6 Consumer 5, Monthly Retail Sales Retail Trade and Food Services: U.S. Total Seasonally Adjusted Sales 27-Sep217 45, $ Million 4, 35, 3, 25, Total Sales Total Sales Ex. Auto 2, Jan-27 Jan-28 Jan-29 Jan-21 Jan-211 Jan-212 Jan-213 Jan-214 Jan-215 Jan-216 Jan-217 Date Source: Bloomberg

7 Business 11 Recessions NFIB Small Business Optimism Index 27-Oct217 (Monthly) Index Value Shaded regions = Economic Recessions Year Source: National Federation of Independent Business NFIB; Data Normalized 1986=1

8 Business New Orders for Durable Goods $ Billion - Seasonally Adjusted 1968-Sep217 (Monthly) 35 Recessions $ Billion (Seasonally Adjusted) Shaded regions = Economic Recessions Source: U.S. Census Bureau Year

9 Business 95 Recessions Capacity Utilization: Total Industry 1967-Sep217 (Monthly) 9 85 Percent (%) Jan-67 Jan-7 Jan-73 Jan-76 Jan-79 Jan-82 Jan-85 Jan-88 Jan-91 Jan-94 Jan-97 Jan- Jan-3 Jan-6 Jan-9 Jan-12 Jan-15 Shaded regions = Economic Recessions Date Source: Bloomberg

10 Credit 2,5 Commercial and Industrial Loans by Commercial Banks United States 27-Oct217 (Monthly) Seasonally Adjusted 2, $ Billion 1,5 1, 5 Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Year Source: Federal Reserve Bank of St. Louis

11 Credit 14 Percent of Balance 9+ Days Delinquent by Loan Type 23-Jun217 (Quarterly) Credit Card Student Loan Percent 8 6 Auto Loan Mortgage 8 6 Percent HE Revolving 2 Mar-3 Sep-3 Mar-4 Sep-4 Mar-5 Sep-5 Mar-6 Sep-6 Mar-7 Sep-7 Mar-8 Sep-8 Mar-9 Sep-9 Mar-1 Sep-1 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Source: Federal Reserve Bank of New Date

12 Inflation 6 U.S. CPI Urban Consumers YoY % 1997-Sep217 Non Seasonally Adjusted Percent Fed Target -3 Jan-97 Jan-98 Jan-99 Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Date Source: Bloomberg

13 Velocity Velocity of Money - M2 Money Supply 1959-Sep217 (Quarterly) Velocity of Money = Ratio of monetary aggregate M2 to Nominal GDP Turnover Rate Year Source: Bloomberg

14 6 5 Interest Rates 27-Nov217 3 Year U.S. Treasury Bond 1 Year U.S. Treasury Note U.S. Federal Funds Effective Rate 4 Percent 3 2 inflation Year Source: Bloomberg

15 Fed Assets on the Federal Reserve's Balance Sheet 27-Aug QE1 begins QE2 begins QE3 begins Dollars (Trillion) Direct Holdings Emergency facilities Securities held outright 1/3/27 6/3/27 11/3/27 4/3/28 9/3/28 2/3/29 7/3/29 12/3/29 5/3/21 1/3/21 3/3/211 8/3/211 1/3/212 6/3/212 11/3/212 4/3/213 9/3/213 2/3/214 7/3/214 12/3/214 5/3/215 1/3/215 3/3/216 8/3/216 1/3/217 6/3/217 Date Source: Board of Governors of The Federal Reserve System

16 6 Assets on the Bank of Japan's Balance Sheet 27-Nov217 Trillion Yen Treasury Discount Bills Foreign Currency Assets J-REITs Equity ETF Corporate Bonds Commercial Paper Stocks Japanese Gov. Securities Year Source: Japan Marco Advisors

17 Other assets General government debt denominated in euro Securities of euro area residents denominated in euro Other claims on euro area credit institutions denominated in euro Lending to euro area credit institutions related to monetary policy operations Claims on non-euro area residents denominated in euro Claims on euro area residents denominated in foreign currency Claims on non-euro area residents denominated in foreign currency Gold and gold receivables European Central Bank Assets on Balance Sheet 27-Nov217 5,, 4,5, 4,, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, (EUR millions) Year Source: European Central Bank

18 Taxes and Regulation Changing the rules: which rules, how much change? Political Promises Repeal Obamacare Roll back regulations Tax Cuts Business Personal Renegotiate trade deals NAFTA Trans-Pacific Partnership (TPP) Relations with Germany and China Progress so far Dead Progress being made mostly by cabinet members. House Bill passed, Senate vote imminent. NAFTA re-negotiations continue. China discussions have been altered by North Korea nuclear developments. So far change has been limited to reduced regulations. Movement on Legislation slow. Potential for big changes in trade relationships less than it appeared 3 months ago.

19 1,6 S&P 5 Index Sales and Earnings per Share* (Yearly) 18 1,4 * Estimated ,2 14 Dollars per Share 1, Dollars per Share 4 2 Sales per Share Earnings per Share (Left Axis) (Right )Axis NOTE: The S&P 5 Index is a widely recognized, unmanaged index of common stock prices. You cannot invest directly in an index. Past performance of EPS growth is not an indicator of future earnings growth. * Source: Bloomberg: forward estimates Year

20 S&P 5 Index (Yearly) 35 * Estimated Price/Earnings Ratio P/E Ratio (Right Axis) Price/Sales Ratio (Left Axis) Price/Earnings Ratio Price/Sales Ratio Price/Sales Ratio Year NOTE: The S&P 5 Index is a widely recognized, unmanaged index of common stock prices. You cannot invest directly in an index. Past performance of EPS growth is not an indicator of future earnings growth * Source: Bloomberg: forward estimates

21 $19, NYSE Investor Credit vs. S&P 5 Index /3/217 Credit Balance calculated as the sum of Free Credit Cash Accounts and Credit Balances in Margin Accounts minus Margin Debt 2,5 $14, $9, August 2 October 27 2, $4, -$1, -$6, -$11, -$16, -$21, -$26, Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Millions 1,5 1, S&P 5 Index June 27 Tech Bubble Investors Have Negative Credit Balance Investors Have Positive Credit Balance S&P 5 Index (Right Axis) 5 Source: Bloomberg Source: Bloomberg Date NOTE: The S&P 5 Index is a widely recognized, unmanaged index of common stock prices. You cannot invest directly in an index.

22 25 S&P Case-Shiller U.S. National Home Price NSA Index (Left Axis) vs. U.S. New Privately Owned Housing Units Started Total SAAR (Right Axis) 2-Sept217 (Monthly) 3, /25/2 1/21/22 7/17/25 4/12/28 1/7/211 1/3/213 6/29/216 Index - (January 2=1) 2,5 2, 1,5 1, 5 Units-Thousand S&P Case-Shiller U.S. National Home Price NSA Index (Left Axis) U.S. New Privately Owned Housing Units Started Total SAAR (Right Axis) Date Source: Bloomberg

23 Questions and Responses Click on the orange arrow in the upper right-hand corner of your screen to open the control panel where you may submit questions. For some devices, look for the question mark at the top or bottom of your screen. We will contact you if we did not have time to respond to your question during the event. Muhlenkamp & Company, Inc. Intelligent Investment Management The comments made during this webcast are opinions and are not intended to be investment advice or a forecast of future events.

24 Muhlenkamp & Company, Inc. Intelligent Investment Management