Back to the Future: What Now Marty McFly? Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. This review has been prepared by Westfield Group for informational purposes only. Any statistics mentioned have been obtained from sources we believed to be reliable, but the accuracy and completeness of the information cannot be guaranteed. Opinions expressed herein reflect the author’s judgment and are subject to change based on economic, market and other conditions. It should not be assumed that this is a forecast of future events or that any security transactions, holdings, or sector discussed were or will be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal any investment performance discussed herein. Ohio Chapter Fall Conference Columbus Ohio November 2015
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Back to the Future:What Now Marty McFly?
Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known andunknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. This review has been prepared by Westfield Group forinformational purposes only. Any statistics mentioned have been obtained from sources we believed to be reliable, but the accuracy and completeness of the information cannot be guaranteed. Opinions expressedherein reflect the author’s judgment and are subject to change based on economic, market and other conditions. It should not be assumed that this is a forecast of future events or that any security transactions,holdings, or sector discussed were or will be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal any investment performance discussed herein.
Ohio Chapter Fall ConferenceColumbus OhioNovember 2015
Scott G Richter CFA, CMT, CHPPortfolio Manger, Westfield Group• 14 Years Functional/Operating Experience• 18 Years Investment Management Business
• Senior Portfolio Manager – Westfield Group• $4B+ AUM/Investment Strategy Team
• Mutual Fund Manager – Fifth Third Asset Management• Large Cap Value
• University of Rochester BSME• Harvard Masters in Business Admin
• Chartered Financial Analyst - CFAI• Chartered Market Technician – MTA• Chartered Hedge Fund Professional – CHP
• [email protected]; (330) 887-8795
Your Host
2
Here We Are – Back to the Future
3
Source: Google Images
Where are we going Doc?
• Highlight Major Themesin the Economy
• Review Some Dynamicsin the Capital Markets
• Open Discussion – Q & A
4
Source Google Images; Copyright Universal Studios
What Did We Learn from Last Year?
5
• Good Content• Entertaining• Too Many Slides• Too Long• More Q&A.
We’ll hit the high points, do it quicker, and getinto more dialogue together…
Source Google Images; Copyright Universal Studios
How’s the US Economy Doc?
6
• GDP is slow and bumpy.• Employment is Strong• Company Earnings Face
Headwinds from EM’sand US Dollar.
• Recession Looks 3-5Years Out, Maybe…
• US Fed Might RaiseRates in December,Maybe…
Meh
Source Google Images; Copyright Universal Studios
US GDP – Growth Since 2008-9
7
Source: Factset, WFG
US GDP – Average Growth of About 2.25%
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Source: Factset, WFG
9
US GDP – Bumpy Growth
Source: Factset, WFG
US Employment – Getting Warmer!
10
Source Google Images; Copyright Universal Studios
Payrolls Growing Nicely – Higher than 2007-8
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Source: Evercore ISI
UE Claims at a Record Low…
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Source: Evercore ISI
Earnings Creeping Up…
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Source: Evercore ISI
Wages and New Worth at New Highs…
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Source: Evercore ISI
Company Earning --Facing Headwinds…
15
Source: Earnings Scout
Company Revenues --Facing Headwinds Too…
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Source: Earnings Scout
Company Earnings –But Energy is the Drag…
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Source: Factset
But Why Doc?
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• Slowing Global Growth• Slowing Commodity
Complex• Strong US Dollar• Geopolitics??
Source Google Images; Copyright Universal Studios
Slowing Global Growth – China
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Source: Google Images
20
Slowing Global Growth - China
Source: Evercore ISI
Slowing Commodity Complex – Globally…
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Source: Stockcharts, WFG
Slowing Commodity Complex – True Collapse
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Source: Stockcharts, WFG
Dollar Impacts – Earnings and Commodities
23
Source: Stockcharts, WFG
Dollar Impacts – Earnings and Commodities
24
Source: Stockcharts, WFG
Dollar Impacts – Correlations: Rocket Science - NO
25
Source: Stockcharts, WFG
Dollar Impacts – How Long?
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Source: Stockcharts, WFG
Geopolitical Hot Spots
27
Source: Deutsche Bank
Recession Time Frames
• Yield Curve Inversion– Usually 36 months after FED rate hikes begin
• Average Hourly Earnings Move Up– Usually move up from 2% to 4% in ~ 3 Years– FED typically hikes rates– Once AHE’s accelerate, recession ~ 5 Years
• Run Away Inflation??– Not in Cards Yet…Stay Tuned
• Geopolitical Impacts??
28
FED – Masters of the Universe – When to Raise? Lower?
Masters of the Universe Graphic
BenHaruhiko Mario
Janet
29
Source SciFiNews.com
Central Banks – Printing Money…
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Source: Yardeni.com
Even Steeper!
Major Central Banks – 2015 and Beyond…The TENSION!
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Major Central Banks – FED Hike – December Odds?
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Source: CME Group
Interest Rates…FED Blinked in September…Jawboning Now…
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Source: Stockcharts, WFG
Central Banks – Marginal Returns? Are We Past the Hump?
Lengthen Time Prevent Pain
What if theyfail?
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Source: Google Images
Central Banks – What If They Fail? What About Long Term?
Lengthen Time Prevent Pain
35
Source Wikipedia
The Race to ZeroDick Hokensen
Evercore ISI
Marty – Who Needs Stink’in Oil – We Got Nuclear Fusion…
Lengthen Time Prevent Pain
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Source Google Images; Copyright Universal Studios
Last Year’s Oil…
Lengthen Time Prevent Pain
37
Source Stockcharts; WFG
This Years Oil…Even Worse…w/ Record Consumption…
Lengthen Time Prevent Pain
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Source Stockcharts; WFG
You were herelast year! Ouch!
Crude Oil Demand – EM’s Continue to Guzzle…
Lengthen Time Prevent Pain
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Source Yardeni.com
Rigs Down – Production Down Eventually…
Lengthen Time Prevent Pain
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Source Yardeni.com
Fossil Fuels Still in Our Future…Sorry Greenies
Lengthen Time Prevent Pain
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Global Markets…Uninspiring…Uncertainty Dominates
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Source IBD; WFG
11/14/15
S&P 500 Winners/Losers YTD
Lengthen Time Prevent Pain
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Source Stockcharts; WFG
Doc…Looks Like It’s Time to Go…
Summary• US Stable, Steady; Slow• Employment Solid/Confidence• Earnings Tepid
• $$ and Slowdown• Energy Drags
• Global Economy Struggles• China Slowing• Europe Stabilizing• EM’s Gasping for Air
• Dollar Power Hurts Translationsand Commodities
44
Source Google Images; Copyright Universal Studios
Doc…Looks Like It’s Time to Go…
Summary• Geopolitics Ramping/Messy• No US Recession in Sight• Central Banks Are Easy
• FED Tensions? Rate Hike?• Inflation? None Found!
• Wages Creeping Up• Commodities Under Pressure
– $$ & Slowdown• Oil Struggles, But Self
Correcting. Consumer Bump.• Markets – Uncertain. Lumpy.
45
Source Google Images; Copyright Universal Studios
Lengthen Time Prevent Pain
46
Source lightroomkillertips.com
Prevent Pain
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Thank You for Your Attention.Good Luck Seeing Your Bright Future!
Source Google Images; Copyright Universal Studios; Amazon.com
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