Alternative Facts. Benjamin Tal. February 2017

Transcription

1 Alternative Facts Benjamin Tal February 217

2 US Manufacturing Jobs Were Falling Way Before China Entered WTO 1 25.% Share of Manufacturing Employment in Total Employment 2.% 15.% China entered WTO 1.% 5.%.% Source: BLS, CIBC

3 Not All is Well in US Labour Market % Participation Rate % 27 Wks+ Unemployment Rate Source: BLS, CIBC

4 Americans Receiving Disability Benefits mn mn People receiving disability benefits Production workers Source: SSDP, CIBC

5 Canada: Share of Low-Paying Jobs - Rising 4 61% Share of Below Average Wage Jobs 6% 59% 58% 57% 56% 55% Source: Statistics Canada, CIBC

6 Surprise Indexes Show 217 Starting Strong Economic Surprise Index readings at Start of Year Major Economies Developing Source: Bloomberg, Citi, CIBC

7 Slower Speed Limits: GDP Bar is Lower for Full Employment Potential GDP (Real, %) Canada United States Euro area China (Right)

8 E China: Growth Less Reliant on Investment Recently (L), Credit to Non-Financials Rising Fast (R) 7 1 Contribution to GDP Growth (%) 25 Total Credit to Private Non-Financials (% GDP) 8 Avg Avg Consumption Investment 1 5 China World Source: NBS, BIS, CIBC

9 China s Export Dependence on US Picking Up Again (L), But Canada and Mexico Have More to Lose Than China (R ) 8 24% 22% China Exports to US (% of total China exports) 3 25 Share of Exports to the US in GDP 2% 2 18% % 5 14% Canada Mexico China Source: BIS, NBS, CIBC

10 Shale Marginal Supplier in the Medium Term 9 Production (mn bbl/d) 12 Cdn Oil Sands 1 Global Oil Demand Middle East North American Shale $/bbl Source: BP, CIBC

11 Energy CapEx Returns (L), While Production Set for Strong 17 & 18 (R ) 1 1 Oil and Gas Industries: Capital Expenditures (C$ bn) 3 Canadian Crude Prod Growth (K bbl/d) ~1% Growth per Annum E 17F 18F Source: Statistics Canada, CIBC

12 1/1/216 1/17/216 1/24/216 1/31/216 11/7/216 11/14/216 11/21/216 11/28/216 12/5/216 Not Exactly Green 11 It s freezing and snowing in New York We Need Global Warming! Donald Trump S&P5 Alternative Energy Index Nov 8 election date

13 The Power of the Pen 12 Kill TPP Infrastructure Deregulation Energy Keystone Personal tax cuts Corporate tax cuts Cash repatriation Building a Wall Trade Easy Difficult

14 The Infrastructure Bonanza 13 3,, 2,5, 2,, 1,5, 1,, 5, Estimated infrastructure job creation per year Total US job creation in 216 Source: CIBC

15 Windfall from Income Tax Cuts Will Boost Savings Not Consumption 14 8 Distribution of Windfall from Income Tax Changes (%) 8 7 Uses of Income Tax Windfall (%) Top 1% Rest Cons. Savings Source: Department of the Treasury Internal Revenue Service, CIBC

16 Cash Repatriation Positive for Valuations Not So Much for Employment Change for Top 15 Companies Receiving 24 Repatriation Holiday (%) Repatriation Tax Holiday Stock Repurchases Employment Source: US Senate Staff Report, CIBC

17 Trump Is Not Reagan 16

18 He Simply Can t Pay For It $ Trillion Revenue lost from tax cuts in the coming decade (Brookings) Maximum borrowing allowed in the coming decade

19 Tax Equivalent Tariff 18 Top 1% income deciles Source: CEA, CIBC Bottom 1%.%.5% 1.% 1.5% 2.% % of after tax income

20 US Auto Exports At Risk From Trade War With China 19 2 Share of China in US Exports (%) 1 Chg in Annual US Auto Exports Since 28 ($ bn) Autos Total Total To China To ROW Source: Trademap, CIBC

21 The Mexican Peso is Down by 15% Already 2.55 MXN/USD Sep-16 Oct-16 Dec-16 Jan-17 Source: Bloomberg, CIBC

22 Mar- Nov-2 Jul-5 Mar-8 Nov-1 Jul-13 Mar-16 Mexico Has Also Gained Market Share (L) Cdn Plants Near Full Capacity; Investment Needed to Lift Exports(R) 21 25% Proportion of US Goods Imports (% 12mma) 9 Cdn Manufacturing Capacity Use (%) 2% 85 15% 8 1% 5% % Canada Mexico Avg Last Expansion Source: BEA, Statistics Canada, CIBC

23 Government CapEx Tracking Slow Pace (L), Despite Commitments for Significant New Infrastructure Dollars (R ) 22 4 Change in General Gov't Cap Ex From Year-Ago (C$ Bn) 7 Social, Transist, Green & Trade Infrastructure (New Spending, C$ bn) Q4 16Q1 16Q2 16Q3 Source: Statistics Canada, CIBC

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