4 - US Industrial Production - Figure 1. INDUSTRIAL PRODUCTION INDEXES (1992=1) 12 3 Business Week s Production Index* Fed s Industrial Production Index: All Industries 1 12/29 8 2 6 4 1 2 ary durable goods orders led by 145% surge in the volatile aircraft category. 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 * Four-week average. Includes auto, truck, coal, lumber, electric power, rail-freight traffic, crude oil refining, and steel production. Source: Board of Governors of the Federal Reserve System and "Business Week," McGraw-Hill, Inc. 4 Figure 2. INDUSTRIAL PRODUCTION & NEW ORDERS 25 3 2 Business Week s Production Index* (1992=1) New Orders: Durable Goods (billions of dollars, sa) 12/29 2 15 1 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 1 * Four-week average. Includes auto, truck, coal, lumber, electric power, rail-freight traffic, crude oil refining and steel production. Page 4 / March 15, 1999 / Economic Scoreboard www.
Figure 3. - Capacity Utilization - Our Boom-Bust Barometer is up for the fifth straight week as jobless claims drop below 3,. Industrial commodity prices remain extremely weak. 1 Figure 4. CAPACITY UTILIZATION & T-BILL RATE Three Month T-Bill Rate (yearly change) 9 T-bill rate remains below a year ago. Capacity utilization rate at cycle low and falling. 5 Capacity Utilization Rate: Total 8 12/28 7-5 -1 81 82 83 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 6 Page 5 / March 15, 1999 / Economic Scoreboard www.
- Energy Usage - 21 Figure 5. U.S. PETROLEUM USAGE & INDUSTRIAL OUTPUT (million barrels per day, 52-week ma) 13 2 19 Total Petroleum Usage 1/23 12 11 Industrial Production (22=1) 1 18 9 17 8 16 7 Petroleum usage flattening out, coinciding with slowdown in industrial output. Gasoline usage remains on uptrend. 15 155 15 145 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 Source: U.S. Department of Energy and Board of Governors of the Federal Reserve System. Figure 6. US GASOLINE USAGE & INDUSTRIAL OUTPUT (million barrels per day, 52-week ma) 1/19 6 155 15 145 14 14 135 135 13 13 125 125 12 12 115 115 11 11 15 15 1 1 95 95 9 9 85 8 Industrial Production (1992=1) 85 8 75 7 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 75 7 Source: US Department of Energy, Energy Information Administration. Page 6 / March 15, 1999 / Economic Scoreboard www.
37 35 Figure 7. - Commodities - CRB RAW INDUSTRIALS SPOT PRICE INDEX* (1967=1) 37 12/27 35 CRB raw industrials spot price index in free-fall--about to drop into "global recession zone"! 33 31 global boom 33 31 29 29 27 global growth recession zone < GDP <2 27 25 25 23 global recession zone -2 < GDP < 23 21 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 21 * Includes copper scrap, lead scrap, steel scrap, tin, zinc, burlap, cotton, print cloth, wool tops, hides, rosin, rubber, and tallow. Source: The Commodity Research Bureau. Figure 8. Widespread weakness. Page 7 / March 15, 1999 / Economic Scoreboard www.
11 9 Figure 9. WEEKLY PROFITS PROXY (yearly percent change) - Profits - Weekly Profits Proxy* 11 9 7 S&P 5 Reported Earnings Per Share 7 5 5 3 12/3 1 1-1 -1-3 -3 Profits recession. Our Weekly Profits Proxy falling at a 7% clip over the past year, reflecting weak pricing environment. Price component continues to fall at a double-digit pace. Output component growing in flat trend around 4%. -5-7 35 3 8 81 82 83 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 * Business Week s industrial production index multiplied by CRB raw industrials spot price index. Figure 1. WEEKLY PROFITS PROXY COMPONENTS (yearly percent change) -5-7 35 3 25 2 15 1 5-5 -1-15 -2-25 Units* Prices** 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 25 2 15 1 12/3 5-5 -1-15 -2-25 * Business Week s industrial production index. ** CRB raw industrials spot price index. Page 8 / March 15, 1999 / Economic Scoreboard www.
Figure 11. - Inventories - Recent movements in short-term business borrowings likely related to credit conditions in global bond markets rather than movements in US business inventories. Growth in inventory investment has been fairly stable in recent months. ***** Chart Not Available ***** Task: SBWCIMTI Invalid calculation element [NFC@PCMLL] 8-17-211-1:24:55 Jobless claims fell 5, last week to 293,. The four-week average dropped to 292,5--the lowest since February 1989! Low claims level consistent with record low inventories-to-sales ratio. 725 7 675 65 625 6 575 55 525 5 475 45 425 4 375 35 325 3 275 25 Figure 12. INVENTORIES & UNEMPLOYMENT CLAIMS Manufacturing & Trade Inventories-To-Sales Ratio Initial Unemployment Claims (4-week average, thousands, sa) 1989 1991 1993 1995 1997 1999 21 23 25 27 29 1.68 1.66 1.64 1.62 1.6 1.58 1.56 1.54 1.52 1.5 1.48 1.46 1.44 1.42 1.4 1.38 1.36 1.34 1.32 1.3 1.28 1.26 12/25 1.24 1.22 1.2 1.18 1.16 1.14 1.12 1.1 1.8 1.6 1.4 1.2 1. Page 9 / March 15, 1999 / Economic Scoreboard www.
Figure 13. - Employment - Labor indicators remain strong as 1999 begins. Jobless claims at decade-low. Conference Board s "jobs plentiful" series at record high, predicting continued strong gains in payroll employment. Figure 14. Page 1 / March 15, 1999 / Economic Scoreboard www.
14 13 Figure 15. UNEMPLOYMENT RATES - Consumer - 14 13 The rate of insured unemployment unchanged at 1.9%, remaining near record low 1.8%. Civilian jobless rate at 28-year low of 4.3%. Drop in Conference Board s "jobs hard to get" series suggests still lower unemployment rate. 12 11 1 9 8 7 6 5 4 3 State-Insured Unemployment Rate* Median Unemployment Duration In Weeks Civilian Unemployment Rate 12 11 1 9 8 7 6 5 4 3 2 1 12/3 2 1 8 81 82 83 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 * Unemployment rate for persons covered by state unemployment insurance programs. All confidence measures remain near record levels. Consumer optimism and healthy jobs growth predicting strong consumer spending through the first half of the year. 14 135 13 125 12 115 11 15 1 95 9 85 8 75 7 65 6 55 5 Figure 16. CONSUMER CONFIDENCE Money/ABC News Consumer Comfort Index Conference Board: Present Situation Index 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 2 19 18 17 16 15 14 13 12 11 12/3 1 9 8 7 6 5 4 3 2 1 Page 11 / March 15, 1999 / Economic Scoreboard www.
Yearly growth rate in weekly personal loans data predicting further pick up in pace of consumer borrowing. 2 18 16 14 12 1 8 - Consumer & Mortgage Credit - Figure 17. CONSUMER CREDIT Personal Loans At All Banks* (52-week percent change) Consumer Credit** (12-month percent change) 2 18 16 14 12 1 8 6 4 6 12/27 4 2 2-2 -2-4 -4-6 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26-6 * Source: Federal Reserve G.19 release. 18 16 Figure 18. REAL ESTATE LOANS (yearly percent change) 18 16 12/27 Growth rate in real estate loans at banks looking toppy despite boom in housing activity. Bankers are probably securitizing mortgages they make and mortgage bankers may be gaining market share. 14 12 1 8 6 At All Banks 14 12 1 8 6 4 4 2 2 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 Page 12 / March 15, 1999 / Economic Scoreboard www.
New Purchase Index breaks lower. Refinancing Index continues to fall. 525 5 475 45 425 4 375 35 325 3 275 25 225 2 175 15 125 1 75 5 1 - Consumer & Mortgage Credit - Figure 19. MORTGAGE APPLICATIONS: NEW PURCHASE INDEX (four-week mvoing average, sa) 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 Source: Mortgage Bankers Association. Figure 2. MORTGAGE APPLICATIONS (March 16, 199=1) 525 5 475 45 12/29 425 4 375 35 325 3 275 25 225 2 175 15 125 1 75 5 1 8 Refinancing Index Four-week moving average Weekly Data 8 6 6 4 4 2 12/29 2 12/29 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 * Source: Mortgage Bankers Association. Page 13 / March 15, 1999 / Economic Scoreboard www.
- G7 Industrial Production - Figure 21. ***** Chart Not Available ***** Task: SBG7CRB KEEP command attempted on missing data 8-17-211-1:24:52 Industrial commodity prices falling at fast clip, predicting weaker production in both G7 and non-g7 economies. Growth in G7 industrial production approaching zero. Figure 22. ***** Chart Not Available ***** Task: SBG7MET KEEP command attempted on missing data 8-17-211-21:16:6 Page 14 / March 15, 1999 / Economic Scoreboard www.
- G7 Industrial Production - 65 6 55 Figure 23. YIELD CURVE & PRODUCTION Yield Curve* (52-weeks ahead) 16 14 5 45 4 Industrial Production (yearly percent change) 12 1 35 3 8 25 2 15 6 4 1 5 2 6/9-5 -1-2 Flattish global yield curves forecasting slower global growth in 1999. -15-2 -25 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 * 1-year government bond yield minus 3-month Treasury bill. Figure 24. -4-6 Page 15 / March 15, 1999 / Economic Scoreboard www.
Figure 25. - G7 Interest Rates - US money rates looking toppy. G4 rates falling. Figure 26. Temporary backup in global bond yields. Fundamentals remain bullish. Global deflationary pressures should push yields lower. Page 16 / March 15, 1999 / Economic Scoreboard www.
Short-term interest rates flat to down in most industrial economies. UK rates down sharply. 9 8 7 6 5 4 3 2 8. 7.5 7. 6.5 6. 5.5 5. 4.5 4. 3.5 - G7 Interest Rates - Figure 27. THREE-MONTH EURO RATES Canada Japan UK Germany 1995 1996 1997 1998 1999 2 21 22 23 24 12/27 2.5 2. 1.5 1..5 12/27. -.5 12/27 Global bond yields remain on steep downtrends--except in Japan. However, Japan s Ministry of Finance recently announced measures to curb the rise in long-term bond yields. 1.5 1. 9.5 9. 8.5 8. 7.5 7. 6.5 6. 5.5 5. 4.5 9.5 9. 8.5 8. 7.5 7. 6.5 6. 5.5 5. 4.5 4. 3.5 Figure 28. GOVERNMENT BOND YIELDS* Canada Japan UK Germany 12/27 1995 1996 1997 1998 1999 2 21 22 23 24 1995 1996 1997 1998 1999 2 21 22 23 24 * 1-year maturities 8. 7.5 7. 6.5 6. 5.5 5. 4.5 4. 3.5 Page 17 / March 15, 1999 / Economic Scoreboard www.
Figure 29. - Stock Prices - Global stock markets hovering at or near record highs. 15 14 13 12 11 1 9 8 7 6 Figure 3. S&P 5 INDEX (Wednesday closing price, ratio scale) 15 12/29 14 13 12 11 1 9 8 7 6 5 5 4 4 3 3 2 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 2 Page 18 / March 15, 1999 / Economic Scoreboard www.
Figure 31. - Stock Prices - Ditto. Figure 32. Stock markets in this region vulnerable given severe recessions in several economies. Page 19 / March 15, 1999 / Economic Scoreboard www.
There s still plenty of liquidity. M3 exceeds $6 trillion. 11.2 1.7 1.2 9.7 9.2 8.7 8.2 7.7 7.2 Figure 33. M3 & WEEKLY LIQUID ASSETS COUNTER (trillion dollars, sa) 3.8 3.2 2.6 2. 1.4.8 - Liquidity - MONEY MARKET MUTUAL FUNDS 3.2 12/28 2.6 19981999221223242526272829.8 3.8 2. 1.4 3/13 3/13 11.2 1.7 1.2 9.7 9.2 8.7 8.2 7.7 7.2 6.7 6.2 M3 6.7 6.2 5.7 5.7 5.2 4.7 WLAC* 5.2 4.7 4.2 4.2 3.7 3.7 3.2 2.7 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 3.2 2.7 * Sum of other checkable deposits, total savings deposits, money market deposit accounts, money market mutual funds, and small and large time deposits. Central bank holdings of US Treasury securities looking toppy after turning up recently. 32 3 28 26 24 22 2 18 16 14 12 1 8 6 4 2 Figure 34. FOREIGN OFFICIAL DOLLAR RESERVES (Monthly) (billion dollars, nsa) FRODOR US Treasuries US Treasuries Plus US Federal Agency Securities US Federal Agency Securities 2 52 54 56 58 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 Source: Board of Governors of the Federal Reserve System. Jul Jul Jul 32 3 28 26 24 22 2 18 16 14 12 1 8 6 4 Information herein is believed to be reliable and has been obtained from sources believed to be reliable, but its accuracy and completeness cannot be guaranteed. Opinions, estimates, and projections constitute our judgement and are subject to change without notice. This publication is provided to you for information purposes only and is not intended as an offer or solicitation for the sale of any financial instrument. Oak Associates, ltd. may hold a position in the financial instruments of any issuer discussed herein or act as advisor or lender to such issuer. Transaction should be executed through a Deutsche Bank entity in the client s home jurisdiction unless otherwise permitted by law. Oak Associates, ltd. Copyright 211 Oak Associates, ltd.