ITR Alan Beaulieu. October 2011

Transcription

1 Presented by ITR Alan Beaulieu October 211

2 15 US Industrial Production to Gross Domestic Product Year-over-year Quarter to Quarter (3/12) % % GDP US IP -3.1% -5.3% -14.6% '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '

3 Recovery Leading indicators pointing up Liquidity is not an issue Exports are up Simulative monetary policy Employment rising (companies right-sized) Banks are lending Normal seasonal rise in Retail Sales $447 bils stimulus program

4 Recession in 212 Europe s financial troubles might China s housing/inflation bubble could International banking crisis becomes Oil prices could break through $12 USD could lose all credibility causing

5 2 Global Industrial Production Indices 12/12 Rates-of-Change SE Asia 5.9 Europe 4.9 US 4.8 Mexico 2.9 Brazil -.2 Japan ' '2 '4 '6 '8 '1 '12 '14-3 ITR Trends Report

6 Example: Revenue 12MMT 6 Monthly Sept Oct Nov Dec MMT = MMT = Jan Feb Mar MMT = 5.14 Apr May June MMT = 4.98 July Aug Sept MMT = MMT = MMT = MMT = MMT = %

7 RATE-OF-CHANGE 7 ACTUAL MONTHLY DATA AS OF 9/11 ACTUAL MONTHLY DATA AS OF 9/1 = 1/12 3-MOS MOVING TOTAL (3MMT) AS OF 9/11 3-MOS MOVING TOTAL (3MMT) AS OF 9/1 = 3/12 ANNUAL MOVING TOTAL (12MMT) AS OF 9/11 ANNUAL MOVING TOTAL (12MMT) AS OF 9/1 = 12/12

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9 12 Employment Private Sector Annual Data Trend Employment Mils of Jobs '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 ' ITR Trends Report

10 Commercial & Industrial Loans at Commercial Banks Rates-of-Change Don t forget private equity and alternate sources Two to three year period of adjustment /12 12/ '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14-2

11 R-O-C 15 M2 Money Supply Trillions of 82$ 11 MMA /12 Oct ' /12 Nov ' Dec ' MMA Actual Jul '95 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 2. ITR Trends Report

12 R-O-C 2 Crude Oil Futures Prices Light & Sweet $ per Barrel 12 MMA /12 12/12 Sep ' Sep '9-1 Sep ' MMA 3MMA Sep '9 4-3 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14-4 ITR Trends Report

13 CPI 5 Consumer Price Index to Crude Oil Futures Prices 12/12 Rates-of-Change 13 OIL '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 CPI OIL -5 ITR Trends Report

14 22 Mortgage Rates to Federal Funds Raw Data Mortgage Rates Federal Funds

15 Managing Inflationary Pressures 15 Phase B raise prices (as justified) Consider real cost of living vs. nominal CPI Highlight quality, content, service ~ competitive advantage Borrow now fixed as long as possible o Inflation favors debtors o Purchase land/property leasing rises with inflation o Build in efficiencies for long-term cost savings Lower fixed costs ~ increase variable costs for increased flexibility Re-assess domestic sources (inflation will be imported) Rigorous cost controls hire the best accountant/cfo R & D ~ substitute products and materials Move liquid assets off shore Hire now and/or lock in labor rates Select price indices that magnify inflation negotiating with customers Select price indices that minimize inflation negotiating with vendors o Get Vendors to agree to longer-term price commitments Sell overseas

16 25 General Government Gross Debt as a % of GDP (Selected Countries) Source: IMF

17 Total U.S. Public Debt (% of GDP) %

18 Trends 1 18 Medical Wholesale Trade Retail Production New Orders Prices Foreign Financial Soft Landing Nonresidential Construction Housing Hard Landing ITR Trends Report

19 US Industrial Production to Chemicals & Products Production 12/12 Rates-of-Change 19 US IP 8 Chemicals US IP Chemicals '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '

20 US Industrial Production to Iron & Steel Products Production 12/12 Rates-of-Change 2 US IP 12 Production US IP Steel Production -12 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14-6

21 US Industrial Production to Paper & Products Production 12/12 Rates-of-Change 21 US IP 8 Production US IP Paper Production '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14-15

22 US IP 15 US Industrial Production to Foods Production 12/12 Rates-of-Change 22 Production US IP Food Production ITR Trends Report

23 US Industrial Production to Textile Mill Products Production 12/12 Rates-of-Change 23 Production 15 US IP Textile Production US IP '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '

24 Nondefense Capital Goods New Orders w/o Aircraft Billions of $ 24 R-O-C 4 MMT /12 12/12 Feb ' Oct '9 1 Jul '8-4 12MMT $ MMT Nov '9 6-8 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 4 ITR Trends Report

25 8 Purchasing Managers Index ISM Dec ' /12 12/12 Dec '8-4 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 ' ITR Trends Report

26 US Leading Indicator 1996 = 1 26 R-O-C 12 MMA 155 1/12 Oct '1 6 12/ Aug '7 Apr ' Jun ' MMA Actual 8-24 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 65 ITR Trends Report

27 Velocity of Money Rates-of-Change Jul ' /12 Jun ' /12-2 '6 '8 '1 '12 '14-2

28 R-O-C 6 Stock Prices Index S&P 5, = 1 28 MMA 42 1/12 12/ MMA 3MMA '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 2 ITR Trends Report

29 R-O-C Retail Sales Excluding Automobiles Trillions of 82-84$ 29 MMT /12 3/12 Feb ' Jul '9-7 Nov '7 $ MMT 12MMT Jan ' '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 1. ITR Trends Report

30 Housing Starts Millions of Units 3 R-O-C MMT 3 3/12 12/ Nov ' May MMT 12MMT Mar ' Dec '9.571 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 ' ITR Trends Report

31 US Industrial Production to Private Non-Residential Construction 12/12 Rates of Change Construction 3 31 US IP Private Construction US IP '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 ' ITR Trends Report

32 National Defense Expenditures to Defense Capital Goods N.O. 12/12 Rates-of-Change 32 Expenditures 2 Orders Expenditures Orders Carter Reagan Bush Clinton Bush Obama

33 US IP 15 Company W to US Industrial Production 12/12 Rates-of-Change 33 Company W US IP Company '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '

34 Four Phases 34 Expansion B C B C A D A D Bankrupt ITR Trends Report

35 Phase Management Objectives TM : Phase Late A Recovery Positive leadership modeling (culture turns to behavior) 2. Establish goals: tactical goals which lead to strategic achievement 3. Develop a system for measurement and accountability re:#2 4. Align compensation plans with #2 and #3 5. Be keenly aware of the BE (Break Even) point and check it regularly 6. Judiciously expand credit 7. Check distributions systems for readiness to accommodate increased activity 8. Review and uncover competitive advantages 9. Invest in customer market research (know what they value) 1. Improve efficiencies with investment in technology and software ITR Trends Report

36 Phase Management Objectives TM : Phase Late A Recovery Part Start to phase out marginal opportunities 12. Add sales staff 13. Build inventories (consider lead time and turn rate) 14. Introduce new product lines 15. Determine capital equipment needs and place orders 16. Begin advertising and sales promotions 17. Hire "top" people 18. Implement plans for facilities expansion 19. Implement training programs ITR Trends Report

37 Phase Management Objectives TM : Phase Early B Growth Emphasis on Customer Service 2. Check the process flow for possible future bottlenecks 3. Continue to build inventory 4. Increase prices 5. Consider outside manufacturing sources if internal pressures becoming tight 6. Find the answer to What next? 7. Open distribution centers 8. Use improved cash flow to improve corporate governance 9. Use cash to create new competitive advantages 1. Watch your debt-to-equity ratio and ROI 11. Maintain/pursue quality: don t let complacency set in ITR Trends Report

38 Phase Management Objectives TM : Phase Late B Early C Prosperity Stay in stock on A items, be careful with C items 2. Consider selling the business in a climate of maximum goodwill 3. Penetrate new selected accounts 4. Develop plan for lower activity in traditional, mature markets 5. Freeze all expansion plans (unless related to what is next ) 6. Spin off undesirable operations 7. Consider taking on subcontract work if the backside of the cycle looks recessionary 8. Stay realistic beware of linear budgets 9. Begin missionary efforts into new markets 1. Communicate competitive advantages to maintain margins ITR Trends Report

39 Net Migration Top Thousands TX NC UT AL CA VA NV OR TN CO SC WA FL GA AZ 1-1 US Census Bureau, Annual Population Estimates, Net Migration 1 July 28-1 July 29

40 Net Migration Bottom 15 4 Thousands ID NJ MD RI AK VT ND NE WI MS NH HI -3-4 OH NY MI US Census Bureau, Annual Population Estimates, Net Migration 1 July 28-1 July 29

41 Find a way to business in the countercyclical or largely unaffected areas: 41 Energy Green Water Canada/Exports Higher Education Health Care Practices Food Pets Funeral Services Alcohol Security Legal Services (Diversified)

42 7 Must Watch Items 42 Money Supply Corporate Bonds Rate-of-Change US Leading Indicator Purchasing Managers Index Retail Sales Employment Nondefense Capital Goods New Orders Available from ITR via ITR Trends Report, the ITR Advisor, or on the web

43 The Road Ahead (actual results may vary stay tuned!) Slower rate of recovery 212 Ongoing recovery 213 Flattens out; recession begins 214 Recession 215 Growth 216 Growth 217 Growth

44 44 To learn how incorporating economic data into your planning process can increase your profitability, please contact Clients and Subscribers may call at any time to ask questions.

45 45 Be sure to tune in to Make Your Move with Alan & Brian Beaulieu Mondays at 4 PM Eastern Time on the VoiceAmerica Business Channel Listen live at