Chart 1 U.S. Personal Saving Rate and Household Debt (consu plus mortgage) as a % of Disposable Personal Incom 16% 14% 12% 10% 8% 6% 4% Last Points 4Q 2015- Saving Rate, 5.4%; HH Debt, 1 140% 130% 120% 110% 100% 90% 80% 70% 60% 2% Jan-59 Jan-65 Jan-71 Jan-77 Jan-83 Jan-89 Jan-95 Jan-01 Jan-07 Jan-13 50% Saving Rate (SAAR) - left axis Household Debt as a % of Disposable Personal Income - right axis Source: Bureau of Economic Analysis; Federal R
Chart 2 Real GDP Growth During Expansions annualized rates of expansion from NBER trough-to-peak 8% 7% 7.6% 8% 7% 6% 5.6% 6% 5% 4.9% 5.1% 4.3% 4.4% 4.3% 5% 4% 4.0% 3.6% 4% 3% 2.8% 3% 2% 2.1%* 2% 1% 1% 0% 1950 1954 1958 1961 1971 1975 1980 1983 1991 2002 2009 Recession Start Date *Through 1Q 2016 Source: BEA, NBER 0%
Chart 3 Eurozone Real GDP Growth 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% -12.0% Last Point 1Q 2016: Q/Q, 2.2%; Y/Y, 1.6% 6.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 quarter/quarter % change, seas. adj. annual rates year/year % change Source: eurostat 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% -12.0%
Chart 4 Japanese Real GDP Growth 15% 10% 5% 0% -5% -10% -15% -20% Last Points 4Q 2015: Q/Q, -1.1%; Y/Y, 0.8 15% 2007 2008 2009 2010 2011 2012 2013 2014 2015 quarter/quarter % change, seas. adj. annual rates year/year % change 10% 5% 0% -5% -10% -15% -20% Source: Japanese Cabinet Office
450% 400% 350% 300% 250% 200% 150% 100% 50% 0% Chart 5-50% Jan-07 Sep-08 May-10 Jan-12 Sep-13 May-15 Federal Reserve European Central Bank Central Bank Assets change since January 2007 Bank of England Bank of Japan Last Points: April 2016 450% 400% 350% 300% 250% 200% 150% 100% 50% 0% -50% Source: Bloomberg; The Central Bank
Chart 6 S&P 500 Index 2200 2000 1800 1600 1400 1200 1000 800 Last Point 05/12/16: 2,064.11 2200 2000 1800 1600 1400 1200 1000 800 600 Jan-07 Dec-08 Dec-10 Dec-12 Dec-14 600 Source: Thomson Reuters
Chart 7 Historical Fed Committee Forecasts for Real GDP Gro based on central tendency midpoint forecast at first FED meeting of th 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 1.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Actual Real GDP 2011 2012 2013 2014 2015 Note: Longer run forecast used for 2018 forecast made in 2015. Source: Federal Reserve
Chart 8 Corporate Profits and Employee Compensation as a percentage of National Income 68% 67% 66% 65% 64% 63% 62% 61% 60% 59% Last Points 4Q 2015 - Corp. Profits: 12.1%, Employee Comp 15% 58% 1947-I 1959-III 1972-I 1984-III 1997-I 2009-III Compensation of Employees - left axis Corp. Profits with IVA and CCAdj - right axis 14% 13% 12% 11% 10% 9% 8% 7% Source: Bureau of Economic Analys
Chart 9 Real Weekly Wages and Household Incomes year/year percent changes 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% Last Points 2014- Income: -1.5%, Wages: 1. 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% 1980 1985 1990 1995 2000 2005 2010 Avg. Real Weekly Wages of Production and Supervisory Employees Real Median Household Income Source: Bureau of Labor Statistics; Census Bureau -6%
Chart 10 Labor Force Participation Rate 68% 67% 66% 65% 64% 63% 62% 61% 60% 59% Last Point April 2016: 62.8% 68% 67% 66% 65% 64% 63% 62% 61% 60% 59% 58% Jan-48 Jan-57 Jan-66 Jan-75 Jan-84 Jan-93 Jan-02 Jan-11 58% Source: Bureau of Labor Statistics
Chart 11 Retail Sales retail trade and food services 1.5% 1.0% 0.5% 0.0% -0.5% Last Point April 2016: M/M, 1.3%; Yr/Yr, 3.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -1.0% Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16-3.0% Month/Month Percent Change - left axis Year/Year Percent Change - right axis Source: U.S. Census Bureau
Chart 12 Chinese Real Gross Domestic Product year/year percent change 16% Last Point 1Q 2016: 6.7% 16% 14% 14% 12% 12% 10% 10% 8% 8% 6% 6% 4% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 4% Source: Bloomberg; Chinese National Bureau of Statis
Chart 13 Chinese Exports year/year percent change 60% 50% 40% 30% 20% 10% 0% -10% -20% Last Point April 2016: -1.8% 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% Jan-07 Sep-08 May-10 Jan-12 Sep-13 May-15-30% Source: China General Administration of Custom
Chart 14 Chinese Total Debt as a Share of GDP includes corporate, household, government and bank debt 250% 240% 230% 220% 210% 200% 190% 180% 170% 160% Last Point 2015: 246.8% 250% 240% 230% 220% 210% 200% 190% 180% 170% 160% 150% 2004 2006 2008 2010 2012 2014 150% Source: Bloomberg
Chart 15 United States Manufacturing Value Added as % share of GDP 17.0% 16.5% 16.0% 15.5% 15.0% 14.5% 14.0% 13.5% 13.0% 12.5% 12.0% Last Point 4Q 2015: 12.0% 17.0% 11.5% 1997 1999 2002 2004 2007 2009 2012 2014 16.5% 16.0% 15.5% 15.0% 14.5% 14.0% 13.5% 13.0% 12.5% 12.0% 11.5% Source: Bureau of Economic Analysis; The World B
Chart 16 G7 and BRIC Personal Consumption to GDP Ratio: 2014 U.S. 68.6% U.K. Brazil Japan Italy India Germany Canada France Russia 64.7% 62.5% 61.1% 61.1% 59.3% 55.9% 55.8% 55.5% 53.0% China 36.5% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% Source: The World Bank
Chart 17 Reuters/Jeffries CRB Index and WTI Crude Oil 240 230 220 210 200 190 180 170 160 Last Points 05/12/16- CRB: 184.39; WTI: $ 65 60 55 50 45 40 35 30 150 Jan-15 Mar-15 May-15 Aug-15 Oct-15 Dec-15 Mar-16 CRB Index - left axis WTI Crude Oil (dollars per barrel) - right axis 25 Source: Thomson Reuters
Chart 18 Iron Ore and Nickel $ per tonne 200 180 160 140 120 100 80 60 40 Last Point 05/12/16: Iron Ore, $54.50; Nickel, $8 50000 45000 40000 35000 30000 25000 20000 15000 10000 20 Jan-07 Sep-08 May-10 Jan-12 Sep-13 May-15 Iron Ore - left axis Nickel - right axis 5000 Source: Thomson Reuters; Bloomber
Chart 19 Real U.S. Commodity Prices CRB Index Deflated by CPI 1400 1200 1000 800 600 400 200 Last Point March 2016: 72.15 1400 1200 1000 800 600 400 200 0 0 1774 1814 1854 1894 1934 1974 2014 Source: Bianco Research, Bureau of Labor Statistics, Historical Statistics of th
10% Chart 20 Brazil and Russia Real GDP Growth year/year percent change Last Points 4Q 2015: Brazil, -5.9%; Russia, -3.8 10% 5% 5% 0% 0% -5% -5% -10% -10% -15% -15% Mar-07 Jun-08 Sep-09 Dec-10 Mar-12 Jun-13 Sep-14 Dec-15 Brazil GDP Russia GDP Source: Brazil Institute of Geography and Statistics; Bloomb
Chart 21 Total Oil Output for Non-OPEC and OPEC Countries million barrels per day 60 55 50 45 40 35 30 25 1996 1998 2001 2003 2006 2008 2011 2013 Non-OPEC OPEC Last Points 3Q 2015 - Non-OPEC: 58.68; OPEC: 37.7 60 55 50 45 40 35 30 25 Source: Energy Information Administratio
Chart 22 United States Crude Oil Production million barrels per day 10 9 8 7 6 5 4 Last Points 05/6/16: 8.80 10 9 8 7 6 5 4 3 2 1 0 2000 2001 2002 2004 2005 2006 2008 2009 2010 2012 2013 2014 3 2 1 0 Source: Energy Information Administra
Chart 23 Crude Oil Rotary Rig Count and Average Oil Production Per Rig 1600 1400 1200 1000 800 600 400 200 0 Last Points April 2016: Rigs, 372; Oil Prod., 47 500 2008 2009 2010 2011 2012 2013 2015 Rig Count - left axis Average Oil Production Per Rig (barrels/day) - right axis 450 400 350 300 250 200 150 100 50 0 Source: Bloomberg; Baker Hughes
Chart 24 Oil Breakeven Price for Major Petrostates $ per barrel $250 $200 $208 $250 $200 $150 $150 $100 $50 $52 $58 $68 $70 $76 $89 $93 $96 $98 $105 $100 $50 $0 Kuwait Qatar U.A.E. Iran Current Brent Crude, $/barrel: $48.08 Iraq Venezuela Algeria Saudi Arabia Oman Bahrain Libya *Breakeven price needed in order to balance the national budget. Source: Bloomberg; The Wall Street Journ $0
Chart 25 OPEC Oil Output By Country million barrels per day 12 10 10.3 Last Point: April 2016 12 10 8 8 6 6 4 2 0 Saudi Arabia 4.3 Iraq 3.5 3.0 2.9 2.4 Iran U.A.E. Kuwait Venezuela Angola 1.8 1.7 1.1 Nigeria Algeria Indonesia 0.7 0.7 0.6 0.3 Qatar Ecuador Libya 4 2 0 Source: Bloomberg
Chart 26 Saudi Arabia Foreign Exchange Reserves billion USD 800 700 600 500 400 300 200 100 Last Point March 2016: $587.08 800 700 600 500 400 300 200 100 0 0 2001 2002 2004 2006 2007 2009 2011 2012 2014 2016 Source: Bloomberg; International Monetary F
Chart 27 A Successful Cartel 1. Involves a commodity that can otherwise be left in the ground, avoiding production and inventory costs until it s needed. 2. Its product is so much in demand that buyers are relatively insensitive to price. 3. The commodity has few if any close substitutes. 4. It includes most of the low-cost suppliers and has few meaningful non-cartel competitors. 5. It involves relatively few cartel members, thereby promoting discipline. 6. It's sponsored by governments and even religious authorities that benefit from the cartel and protect it. 7. It operates in a period of strong economic growth and robust demand for the product. 8. It faces few technological improvements in the industry.
Chart 28 Unfavorable Climate for OPEC 1. Alternatives to oil, especially natural gas but also government-subsidized renewables, are growing. 2. Non-OPEC supplies are leaping, notably from Russia and especially American frackers. 3. Infighting among OPEC members has destroyed discipline. 4. Global economic growth is weak, and the ongoing shift from goods production to services in China and elsewhere is curbing oil demand. 5. Conservation is limiting oil demand. 6. Rapid technological advances in fracking, horizontal drilling, deep-water and Arctic drilling, etc. are mushrooming non-opec supplies at low and declining costs.
Chart 29 Annual Average Oil Demand for OECD and Non-OECD Countr million barrels per day 60 Last Points 2015: OECD, 46.39; Non-OECD, 48.28 60 50 50 40 40 30 30 20 20 10 10 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0 OECD Non-OECD Source: The Wall Street Journal; Bloomberg
Chart 30 World Crude Oil Supply and Demand million barrels per day 2.5 2.0 1.5 1.0 0.5 0.0-0.5-1.0-1.5-2.0 Last Points 4Q 2015: Ex. Supply, 1.7; Demand, 95.5; Su 100 2001 2002 2003 2004 2006 2007 2008 2009 2011 2012 2013 2014 Excess Supply - left axis Demand - right axis Supply - right axis 95 90 85 80 75 Source: Bloomberg; International Energy Age
Chart 31 Commercial Crude Oil Inventory weekly U.S. ending stocks 550 500 450 400 350 300 250 Last Points 05/6/16: Inventory: 539.9; Yr/Yr: 1 30% 25% 20% 15% 10% 5% 0% 200 Jan-14 Apr-14 Aug-14 Dec-14 Mar-15 Jul-15 Nov-15 Crude Oil Inventory (million barrels) - left axis Year/Year Percent Change - right axis -5% Source: Energy Information Administra
Chart 32 Crude Oil Storage Capacity Utilization Cushing, OK 90% 80% 70% 60% 50% 40% 30% Last Points 05/6/16: Shell, 77.3%; Working, 9 90% 80% 70% 60% 50% 40% 30% 20% Mar-11 Oct-11 May-12 Dec-12 Jul-13 Feb-14 Sep-14 Apr-15 Nov-15 Tank Net Available Shell Storage Capacity Utilization Tank Working Storage Capacity Utilization Note: Net available shell includes idle (not working) capacity. 20% Source: Energy Information Administrat
Chart 33 WTI Crude Oil Futures Curve 05/12/16 close prices; dollars per barrel 58 58 56 56 54 54 52 52 50 50 48 48 46 46 Jun-16 Feb-18 Oct-19 Jun-21 Feb-23 Oct-24 Source: Bloomberg
65 Chart 34 Total Crude Oil Storage in Amsterdam-Rotterdam-Antwerp Region million barrels Last Point 05/6/2016: 55.79 65 60 60 55 55 50 50 45 45 40 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Jan-15 May-15Sep-15 Jan-16 40 Source: Bloomberg
Stronger U.S. Dollar Stronger U.S. Dollar Chart 35 Chinese Yuan Per U.S. Dollar 6.60 6.55 6.50 6.45 6.40 6.35 6.30 6.25 6.20 08/11/15: People's Bank of China lowers yuan reference rate Last Point 05/12/16: 6.514 6.60 6.55 6.50 6.45 6.40 6.35 6.30 6.25 6.20 6.15 6.15 Jan-15 Mar-15 May-15 Jul-15 Oct-15 Dec-15 Feb-16 May-16 Source: Bloomberg
Chart 36 Chinese Trade Balance and Capital Flow billion USD 150 100 50 0-50 -100-150 -200 Last Points 03/16: Cap. Flow, -$44.3; 04/16: Balance, $45.5 70 Jan-10 Sep-10 May-11 Jan-12 Sep-12 May-13 Jan-14 Sep-14 May-15 Monthly Capital Flow - left axis Trade balance - right axis 50 30 10-10 -30-50 -70-90 Source: Bloomberg
Chart 37 Chinese Foreign Exchange Reserves billion USD 4000 3500 3000 2500 2000 1500 1000 500 Last Point April 2016: $3,219.67 4000 3500 3000 2500 2000 1500 1000 500 0 Jan-00 Sep-01 May-03 Jan-05 Sep-06 May-08 Jan-10 Sep-11 May-13 Jan-15 0 Source: Bloomberg
Stronger U.S. Dollar Stronger U.S. Dollar Chart 38 Brazilian Real and Russian Ruble Exchange Rates 4.2 4.0 3.8 3.6 3.4 3.2 3.0 2.8 2.6 2.4 2.2 Last Points 05/12/16: Real: 3.485; Ruble: 64.711 85 2.0 30 Dec-13 May-14 Oct-14 Feb-15 Jul-15 Dec-15 Apr-16 80 75 70 65 60 55 50 45 40 35 BRL/USD - left axis RUB/USD- right axis Source: Thomson Reuters
Stronger U.S. Dollar Chart 39 Mexican Peso and WTI Crude Oil 20.0 19.0 18.0 17.0 16.0 15.0 14.0 13.0 Last Points 05/12/16 - Pesos/$:17.964; WTI: $46.70 110 100 90 80 70 60 50 40 30 12.0 20 Jan-14 May-14 Oct-14 Feb-15 Jul-15 Dec-15 Apr-16 Mexican Pesos per U.S. Dollar - left axis WTI Crude Oil ($/barrel) - right axis Source: Thomson Reuters
Stronger U.S. Dollar Stronger U.S. Dollar Chart 40 Euro and Yen Exchange Rates 1.00 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.40 75 Jul-12 Apr-13 Jan-14 Oct-14 Jul-15 May-16 USD/EUR - left axis (inverted) JPY/USD - right axis Last Points 05/12/16 - USD/EUR: 1.138; JPY/USD: 109.0 130 125 120 115 110 105 100 95 90 85 80 Source: Thomson Reuters
Chart 41 Producer Price Index year/year percent change 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 United States Eurozone Japan Last Points 04/16: U.S., 0.0%; 03/16: Japan, -3.8%; EZ, 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% Source: Bloomberg; Bureau of Labor Statis
Chart 42 Chinese Producer Price Index 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% Last Points April 2016: M/M, 0.7%; Yr/Yr, -3.4 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -1.5% Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16-8.0% Month/Month Percent Change - left axis Year/Year Percent Change - right axis Source: Bloomberg
6% 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% Chart 43 U.S. Personal Consumption Expenditures Implicit Price Defla year/year percent change Last Points March 2016 - Goods: -1.8%; Services: 6% -5% Jan-07 Sep-08 May-10 Jan-12 Sep-13 May-15 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% Goods Services Source: Bureau of Economic Analysis
Chart 44 PCE Deflator seasonally-adjusted 1.0% Last Point March 2016 - M/M: 0.1%; Y/Y: 0.8% 6.0% 0.5% Fed Target: 2.0% 3.0% 0.0% 0.0% -0.5% -3.0% -1.0% -6.0% -1.5% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Month/Month % Change - left axis Year/Year % Change - right axis -9.0% Source: Bureau of Economic Analysis
Chart 45 Japanese CPI and Real GDP year/year percent change 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% Last Points 4Q 2015- GDP: 0.8%; CPI: 0.3% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% 1981 1985 1989 1993 1997 2001 2005 2009 2013 Real GDP Consumer Price Index -10% Source: Japanese Cabinet Office
1. Short commodities Chart 46 Investment Themes 2. Short crude oil and related securities 3. Long the dollar vs. euro and yen, commodity currencies and developing economy currencies 4. Short emerging market stocks and bonds 5. Short junk bonds 6. Long 30-year Treasuries 7. Short U.S. stocks
Chart 47 10-Year Sovereign Bond Yields Country as of 05/12/16 Yield Spread vs. Treasurys Switzerland -0.31-2.05 Japan -0.10-1.85 Germany 0.13-1.62 Netherlands 0.21-1.53 Denmark 0.37-1.38 Finland 0.42-1.33 France 0.48-1.27 Austria 0.52-1.22 Belgium 0.52-1.22 Ireland 0.86-0.89 Canada 1.30-0.45 Norway 1.31-0.44 United Kingdom 1.53-0.22 Italy 1.54-0.21 Spain 1.59-0.16 United States 1.75 -- Australia 2.43 0.68 Portugal 3.27 1.52 Greece 7.39 5.64 Source: Financial Times
Chart 48 Comparative Stock and Bond Performances 35000 30000 25000 20000 15000 10000 5000 Last Points April 2016 - Stocks: 4,527; Bonds: 28,6 35000 30000 25000 20000 15000 10000 5000 0 Oct-81 Oct-86 Oct-91 Oct-96 Oct-01 Oct-06 Oct-11 25 Year Zero Coupon Bond (Oct-81=100) 28,666 or 17.8% Annual Return S&P 500 Total Return (July-82=100) 4,527 or 12.0% Annual Return Source: Bianco Research & Haver Analytic 0