Brown Sugar: Deriving Satisfaction through Data Analysis By: Anirban Basu Sage Policy Group, Inc. December 20 th, 2018 On Behalf of The Mid-Atlantic CIO Forum Disclaimer: Any resemblance between the presentation s title and the speaker is purely coincidental.
Get off of My Cloud
Global Monetary Policy Tightening/Easing As of November 2018 The CFR Global Monetary Policy Tracker covers fifty-four large countries mainly those that target inflation in some manner. Tightening policy is indicated in red, loosening in blue. The more a country has raised (lowered) rates, in percentage points, from the most recent trough (peak) in its policy rate, the darker the shade of red (blue). Generally, the policy rate target is the overnight interbank rate, with exceptions indicated. Source: Council on Foreign Relations (CFR), Global Monetary Policy Tracker
Estimated Growth in Output by Select Global Areas 2018 Projected Advanced Economies Euro Area Spain Germany France United Kingdom Italy Japan Australia Canada United States Emerging Market & Developing Economies Sub-Saharan Africa Emerging & Developing Europe Russia Emerging & Developing Asia China India Middle East, North Africa, Afghanistan, & Pakistan Latin America & the Caribbean Mexico Brazil 2018 Proj. Global Output Growth: +3.7% 2017 Growth (Estimate) World: 3.7% Euro Area: 2.4% United States: 2.2% Japan: 1.7% Source: International Monetary Fund: World Economic Outlook Database, October 2018 1.6% 2.0% 2.4% 1.2% 1.9% 1.1% 2.7% 1.4% 2.1% 2.9% 3.2% 3.1% 4.7% 3.8% 1.7% 6.5% 6.6% 1.2% 2.4% 7.3% 1.4% 2.2% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Annual % Change
Baltic Dry Index December 2009 through December 2018 5,000 4,000 3,000 2,000 December 17 th 1,406 1,000 0 Jan. 4, 1985: 1,000 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Apr-18 Aug-18 Dec-18 Source: Quandl.com The Baltic Dry Index (BDI) is a measure of the price of shipping major raw materials such as metals, grains, and fossil fuels by sea. The BDI is a composite of 3 sub-indices, each covering a different carrier size: Capesize, Panamax, and Supramax.
Start Me Up
160 140 120 100 Conference Board Consumer Confidence Index 2005 November 2018 80 60 40 20 November 2018 = 135.7 where 1985 = 100 0 2005 May-08 Dec-08 Jul-09 Feb-10 Sep-10 Apr-11 Nov-11 Jun-12 Jan-13 Aug-13 Mar-14 Oct-14 May-15 Dec-15 Jul-16 Feb-17 Sep-17 Apr-18 Nov-18 Source: Conference Board
NFIB Index of Small Business Optimism: Good Time to Expand 1986-2018 % of respondents who think the next 3 months will be a good time to for small business to expand 35.0 30.0 Nov. 2018: 29% 25.0 20.0 15.0 10.0 5.0 0.0 Nov-86 Nov-87 Nov-88 Nov-89 Nov-90 Nov-91 Nov-92 Nov-93 Nov-94 Nov-95 Nov-96 Nov-97 Nov-98 Nov-99 Nov-00 Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 Nov-18 Source: National Federation of Independent Business (NFIB)
Paint It Black Corporate Profits U.S. Corporate Profits After Tax* $ Billions 2018Q3: $2,000 $2.07 Trillion $1,600 $1,200 $800 $400 $0 1950Q3 1952Q3 1954Q3 1956Q3 1958Q3 1960Q3 1962Q3 1964Q3 1966Q3 1968Q3 1970Q3 1972Q3 1974Q3 1976Q3 1978Q3 1980Q3 1982Q3 1984Q3 1986Q3 1988Q3 1990Q3 1992Q3 1994Q3 1996Q3 1998Q3 2000Q3 2002Q3 2004Q3 2006Q3 2008Q3 2010Q3 2012Q3 2014Q3 2016Q3 2018Q3 Source: U.S. Bureau of Economic Analysis *With Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj); Seasonally Adjusted Annual Rate
U.S. Job Openings October 2001 through October 2018 7.0 October 2018: 7.08M Openings Job Openings (Millions) 6.0 5.0 4.0 3.0 2.0 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Oct-18 Source: U.S. Bureau of Labor Statistics
Net Change in U.S. Jobs November 2002 through November 2018 600 400 200 Thousands 0-200 -400-600 -800 November 2018: +155K -1000 Nov-02 Mar-03 Jul-03 Nov-03 Mar-04 Jul-04 Nov-04 Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Source: U.S. Bureau of Labor Statistics
National Nonfarm Employment by Industry Sector, November 2017 v. November 2018 Professional and Business Services 561 Education and Health Services 473 Trade, Transportation, and Utilities Manufacturing Construction Leisure and Hospitality 307 288 282 268 Financial Activities 119 Other Services 65 Mining and Logging 53 Government Information -21 48 All told 2,443K jobs gained -50 50 150 250 350 450 550 Thousands, SA Source: U.S. Bureau of Labor Statistics
U.S. Labor Force Participation: Men Ages 25-34 2000 2018 94% 93% 92% 91% 90% 89% 89.0% 88% 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016Q1 2016Q3 2017Q1 2017Q3 2018Q1 2018Q3 Source: U.S. Bureau of Labor Statistics, Current Population Survey
New York-Newark-Jersey City, NY-NJ-PA MSA Nonfarm Employment by Industry Sector Groups (NSA) October 2017 v. October 2018 Absolute Change Education and Health Services 60,800 Professional and Business Services 19,600 Leisure and Hospitality 11,800 Other Services 7,800 Mining, Logging, and Construction 7,500 Trade, Transportation, and Utilities Manufacturing Government Financial Activities Information -1,200-1,800-2,200 4,900 1,300 NY MSA Total: +108.5K; +1.1% NY Total (SA): +122.8K; +1.3% US Total (SA): +2,504K; +1.7% -10,000 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Source: U.S. Bureau of Labor Statistics
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA Nonfarm Employment by Industry Sector Groups (NSA) October 2017 v. October 2018 Absolute Change Education & Health Services Professional & Business Services 12,200 13,200 Trade, Transportation & Utilities 6,400 Government Mining, Logging, & Construction 4,400 4,400 Financial Activities Other Services Manufacturing Leisure & Hospitality Information -800-1,200 1,700 1,200 2,100 Philly MSA Total: +43.6K; +1.5% PA Total (SA): +92.3K; +1.5% US Total (SA): +2,504K; +1.7% -5,000 0 5,000 10,000 15,000 Source: U.S. Bureau of Labor Statistics
Baltimore-Columbia-Towson MSA Nonfarm Employment by Industry Sector Groups (NSA) October 2017 v. October 2018 Absolute Change Professional and Business Services 12,600 Leisure and Hospitality Education and Health Services 7,300 7,000 Other Services Trade, Transportation, and Utilities 2,400 3,800 Manufacturing Information Government Mining, Logging, and Construction Financial Activities -4,500-1,700-2,100-200 800 Baltimore MSA Total: +25.4K; +1.8% MD Total (SA): +38.5K; +1.4% US Total (SA): +2,504K; +1.7% -6,000-1,000 4,000 9,000 14,000 Source: U.S. Bureau of Labor Statistics
Washington, DC-Arlington-Alexandria MSA Nonfarm Employment by Industry Sector Groups (NSA) October 2017 v. October 2018 Absolute Change Professional and Business Services 20,300 Leisure and Hospitality Trade, Transportation, and Utilities 9,700 9,600 Mining, Logging, and Construction Government 6,100 5,400 Other Services Financial Activities Education and Health Services Information Manufacturing 3,300 2,500 1,400 1,200 1,200 DC MSA Total: +60.7K; +1.8% US Total (SA): +2,504K; +1.7% 0 5,000 10,000 15,000 20,000 Source: U.S. Bureau of Labor Statistics
Employment Growth, U.S. States (SA) October 2017 v. October 2018 Percent Change RANK STATE % RANK STATE % RANK STATE % 1 NEVADA 3.4 17 MASSACHUSETTS 1.8 34 MAINE 1.3 2 UTAH 3.3 17 SOUTH CAROLINA 1.8 34 NEW YORK 1.3 2 WASHINGTON 3.3 17 VIRGINIA 1.8 34 RHODE ISLAND 1.3 4 ARIZONA 3.1 21 ALABAMA 1.7 38 MINNESOTA 1.2 4 TEXAS 3.1 21 HAWAII 1.7 38 MISSISSIPPI 1.2 6 COLORADO 2.7 21 NEW JERSEY 1.7 38 NORTH DAKOTA 1.2 6 FLORIDA 2.7 21 SOUTH DAKOTA 1.7 41 DELAWARE 1.1 6 NEW MEXICO 2.7 25 MISSOURI 1.6 41 WISCONSIN 1.1 9 OREGON 2.5 25 NEBRASKA 1.6 43 ILLINOIS 1.0 10 NEW HAMPSHIRE 2.3 27 MONTANA 1.5 43 LOUISIANA 1.0 10 NORTH CAROLINA 2.3 27 PENNSYLVANIA 1.5 45 WEST VIRGINIA 0.9 12 GEORGIA 2.1 29 MARYLAND 1.4 46 INDIANA 0.8 12 IDAHO 2.1 29 IOWA 1.4 47 ARKANSAS 0.7 12 OHIO 2.1 29 KANSAS 1.4 48 KENTUCKY 0.5 12 WYOMING 2.1 29 MICHIGAN 1.4 49 DISTRICT OF COLUMBIA 0.2 16 TENNESSEE 2.0 29 OKLAHOMA 1.4 50 ALASKA 0.1 17 CALIFORNIA 1.8 34 CONNECTICUT 1.3 51 VERMONT -0.9 Source: U.S. Bureau of Labor Statistics U.S. Year-over-year Percent Change: +1.7%
Employment Growth, 25 Largest Metros (NSA) October 2017 v. October 2018 Percent Change Rank MSA % Rank MSA % 1 Orlando-Kissimmee-Sanford, FL 4.4 14 Baltimore-Columbia-Towson, MD 1.8 2 Houston-The Woodlands-Sugar Land, TX 3.9 Washington-Arlington-Alexandria, 14 3 Phoenix-Mesa-Scottsdale, AZ 3.7 DC-VA-MD-WV 4 Seattle-Tacoma-Bellevue, WA 3.6 14 San Diego-Carlsbad, CA 1.8 5 Dallas-Fort Worth-Arlington, TX 3.0 17 Minneapolis-St. Paul-Bloomington, MN-WI 1.7 6 Portland-Vancouver-Hillsboro, OR-WA 2.6 17 San Francisco-Oakland-Hayward, CA 1.7 7 Denver-Aurora-Lakewood, CO 2.5 19 Philadelphia-Camden-Wilmington, 1.5 PA-NJ-DE-MD 7 Riverside-San Bernardino-Ontario, CA 2.5 20 Los Angeles-Long Beach-Anaheim, CA 1.2 9 Charlotte-Concord-Gastonia, NC-SC 2.4 21 Detroit-Warren-Dearborn, MI 1.1 9 Miami-Fort Lauderdale-West Palm Beach, FL 2.4 21 New York-Newark-Jersey City, NY-NJ-PA 1.1 11 Atlanta-Sandy Springs-Roswell, GA 2.2 23 Chicago-Naperville-Elgin, IL-IN-WI 0.9 11 Tampa-St. Petersburg-Clearwater, FL 2.2 23 San Antonio-New Braunfels, TX 0.9 13 Boston-Cambridge-Nashua, MA-NH 1.9 25 St. Louis, MO-IL 0.8 1.8 Source: U.S. Bureau of Labor Statistics, Current Employment Statistics (CES) Survey
Unemployment Rates, 25 Largest Metros (NSA) October 2018 Rank MSA UR Rank MSA UR 1 Minneapolis-St. Paul-Bloomington, MN-WI 2.1 14 Atlanta-Sandy Springs-Roswell, GA 3.4 2 Boston-Cambridge-Nashua, MA-NH 2.6 15 Seattle-Tacoma-Bellevue, WA 3.5 2 San Francisco-Oakland-Hayward, CA 2.6 16 New York-Newark-Jersey City, NY-NJ-PA 3.6 4 Orlando-Kissimmee-Sanford, FL 2.7 17 Baltimore-Columbia-Towson, MD 3.8 5 St. Louis, MO-IL (1) 2.8 17 Houston-The Woodlands-Sugar Land, TX 3.8 6 Tampa-St. Petersburg-Clearwater, FL 2.9 17 Portland-Vancouver-Hillsboro, OR-WA 3.8 7 Denver-Aurora-Lakewood, CO 3.0 Philadelphia-Camden-Wilmington, 20 3.9 8 San Antonio-New Braunfels, TX 3.1 PA-NJ-DE-MD 9 Washington-Arlington-Alexandria, 3.2 20 Phoenix-Mesa-Scottsdale, AZ 3.9 DC-VA-MD-WV 9 Charlotte-Concord-Gastonia, NC-SC 3.2 22 Chicago-Naperville-Elgin, IL-IN-WI 4.0 9 Dallas-Fort Worth-Arlington, TX 3.2 23 Riverside-San Bernardino-Ontario, CA 4.1 9 Miami-Fort Lauderdale-West Palm Beach, FL 3.2 24 Los Angeles-Long Beach-Anaheim, CA 4.2 13 San Diego-Carlsbad, CA 3.3 25 Detroit-Warren-Dearborn, MI 4.4 Source: U.S. Bureau of Labor Statistics, Current Employment Statistics (CES) Survey. Note: 1. Area boundaries do not reflect official OMB definitions. U.S. Unemployment Rate : 3.7%
Gimme Shelter
Architecture Billings Index November 2008 through November 2018 60.0 55.0 50.0 45.0 40.0 35.0 November 2018: 54.7 30.0 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 May-18 Aug-18 Nov-18 Source: The American Institute of Architects
60.0 Architecture Billings Index by U.S. Region November 2018 56.8 55.0 54.7 53.1 50.0 50.5 49.0 45.0 U.S. Northeast Midwest South West Source: The American Institute of Architects
National Nonresidential Construction Spending by Subsector October 2015 v. October 2018 Lodging Office Commercial Amusement and Recreation Transportation Educational Health Care Public Safety Water Supply Highway and Street Conservation and Development Power Communication Sewage and Waste Disposal Manufacturing Religious -18.1% -19.1% -7.4% 8.8% 5.9% 5.8% 4.9% 4.7% 3.8% 2.8% 20.7% 18.4% 36.3% 30.4% 30.2% Total Nonresidential Construction: +11.7% 50.2% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 3-year % Change Source: U.S. Census Bureau
Commercial/Multifamily Offshore Investment Sales Volumes Reach New Heights in 2015/16 $60 Foreign investment increases 85.1% in 2015 $50 Billions of $US $40 $30 $20 $10 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Cross-border investment remained elevated in 2016: Although down relative to a record 2015, offshore investment levels still exceeded the pre-2015 high in 2007. Source: Jones Lang LaSalle; Real Capital Analytics Note: Among transactions larger than $5.0 million
Foreign Investment in U.S. Commercial Real Estate Top Destination Markets, 2017 New York City Washington, D.C. San Francisco Los Angeles Houston Boston Chicago Dallas Atlanta Seattle 2017 Deals ($Billions) $5.0 $4.5 $3.5 $3.2 $2.7 $2.4 $2.0 $1.7 $1.5 $9.0 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 Source: Real Capital Analytics; Colliers International
19 th Nervous Breakdown
Gross Domestic Product 1990Q3 through 2018Q3* % Change from Preceding Period (SAAR) 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% 2018Q3: +3.5% 1990Q3 1991Q3 1992Q3 1993Q3 1994Q3 1995Q3 1996Q3 1997Q3 1998Q3 1999Q3 2000Q3 2001Q3 2002Q3 2003Q3 2004Q3 2005Q3 2006Q3 2007Q3 2008Q3 2009Q3 2010Q3 2011Q3 2012Q3 2013Q3 2014Q3 2015Q3 2016Q3 2017Q3 2018Q3 Source: U.S. Bureau of Economic Analysis *2 nd Estimate
Conference Board Leading Economic Indicators Index August 2007 through October 2018 1.5% One-month Percent Change 1.0% 0.5% 0.0% -0.5% -1.0% October 2018: 112.1 where 2016: 100-1.5% Aug-07 Mar-08 Oct-08 May-09 Dec-09 Jul-10 Feb-11 Sep-11 Apr-12 Nov-12 Jun-13 Jan-14 Aug-14 Mar-15 Oct-15 May-16 Dec-16 Jul-17 Feb-18 Sep-18 Source: Conference Board
Total U.S. Debt Volume by Select Loan Types, Index 1991Q1=100 400 350 300 Auto Mortgage 250 200 Credit Card 150 100 50 0 1999Q3 2000Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016Q1 2016Q3 2017Q1 2017Q3 2018Q1 2018Q3 Source: New York Fed Consumer Credit Panel/Equifax
Global Debt Reaches All Time Highs (IIF) According to the International Institute of Finance (IIF), global debt has reached an all-time high in 2016; At $247 trillion as of 2018Q1, global debt including household, government, and corporate now represents 318% of global GDP; Last year the IMF warned of risks to the global economy: sheer size of debt could set the stage for an unprecedented private deleveraging process that could thwart the fragile economic recovery Sources: 1. Institute of International Finance (IFF), Global Debt Monitor. 2. Business Insider. 3. The Telegraph. 4. Reuters.
50 Shiller Price-Earnings Ratio, 1980-2018 40 30 Nov. 2018: 30.18 20 10 0 Nov-80 Nov-81 Nov-82 Nov-83 Nov-84 Nov-85 Nov-86 Nov-87 Nov-88 Nov-89 Nov-90 Nov-91 Nov-92 Nov-93 Nov-94 Nov-95 Nov-96 Nov-97 Nov-98 Nov-99 Nov-00 Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 Nov-18 Source: Robert J. Shiller Data used in his book, "Irrational Exuberance" Princeton University Press.
Shattered! --- Bitcoin Price, 2014-2018 $20,000 $16,000 12/17/2018: $3.5K $12,000 $8,000 $4,000 $0 12/1/14 2/1/15 4/1/15 6/1/15 8/1/15 10/1/15 12/1/15 2/1/16 4/1/16 6/1/16 8/1/16 10/1/16 12/1/16 2/1/17 4/1/17 6/1/17 8/1/17 10/1/17 12/1/17 2/1/18 4/1/18 6/1/18 8/1/18 10/1/18 12/1/18 Source: CoinMarketCap.com
Time is on My Side, at least in the Near-Term 2018 best year since 05...; Global economy better than it was - - still; Job opportunities abundant; Corporate profitability elevated; Consumer and business confidence have been surging...; And now tax cuts, including major reductions in corporate taxes... What could go wrong?; A lot can go wrong that s always true first there are the Black Swan threats: I m forever blowing bubbles, pretty bubbles in the air, they fly so high, nearly reach the sky, and like my dreams, they fade and die ; Where are all the pretty bubbles? Equity markets? U.S. bond market? Commercial real estate? Bitcoin? 2018 better than fine 1 st half of 2019 might be, too, but beyond that, potential deleveraging cycle prompted by a repricing of assets Bad!!!!
Thank You Please follow me on Twitter -- @sageanirban Please look for updates of information at www.sagepolicy.com. Please contact us when you require economic research & policy analysis.