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War Room 15 Dec 2011 US Decouples from the World

War Room 15 Dec 2011 US Decouples from the World. War Room. Monthly macro discussion Using tools in context Feature for subscribers only Feedback - what should it to be?. US Decoupling. US Economic Picture Improving Continued government support Scenarios that can kill the dream.

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War Room 15 Dec 2011 US Decouples from the World

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  1. War Room 15 Dec 2011 US Decouples from the World

  2. War Room • Monthly macro discussion • Using tools in context • Feature for subscribers only • Feedback - what should it to be?

  3. US Decoupling • US Economic Picture Improving • Continued government support • Scenarios that can kill the dream

  4. Improving Picture - Labor • - 1.65 million more people working in Nov 2011 than Nov 2010 • US still down 6.2 million from peak employment (July 2007) • Source: Bureau of Labor Statistics • Jobless claims • - Most recent = 366k • - lowest since May 2008 • - was low 300s in mid 2007 • Non-Farm Payrolls • - Most recent = +120k • Up 14 consecutive months • leading indicator for S&P Levers tell the truth

  5. Improving Picture – Retail + Auto • Retail Sales • consumer confidence turning up • Strong holiday sales so far • CPI low = not just inflated retail #s • Macy’s earnings foreshadowed • Car Sales • Rising 5 consecutive months • Pent up demand • Median car age – 8 years in 2008 • 11 years today • - Ford reinstating dividend

  6. Improving Picture - Housing • Housing starts picking up • Commercial Foreclosure rates dropping fast • Toll Brothers just beat estimates • Change in sentiment toward home builders by rating agencies • Home Prices close to bottoming?

  7. US Government Support • Congress: • Payroll tax cut likely to be extended • Unemployment benefits likely to be extended • Deficit spending of 10% of GDP = programs continue to get funding • Fed • O% interest rates through 2013 • Ready to pursue further easing in Euro contagion • USD Swap arrangements with other central banks • (foreign currency liquidity swap lines) • Executive • No major drag on above initiatives • Contrasts between US + Europe • Austerity (Europe) vs No Austerity (USA) • Consumption not crippled • Programs and basics paid for • Sentiment – Not adding insult to injury • ECB vs Fed • ECB not aggressive in cutting rates • ECB refusing to do QE • Minimal sovereign debt purchases • Obama vs EU leadership • Merkel opposing aggressive intervention • UK effectively leaving European Union • 17 fighting leaders vs 1 guy doing nothing Spanish firefighters protesting spending cuts in public services (14/Dec AP)

  8. US Decoupling – Dream Killers • Europe – counterparty risk • Deflation – USD too strong for growth • China hard landing – 50% of world econ growth • Iran + Oil – oil shocks lead to recession

  9. HiddenLevers Product Update + Roadmap

  10. Some Features Added During 2011 • April: Support Model Portfolios & Custom Branding • May: Create Custom Scenarios + Portfolio Comparison • July: Max Drawdown, Volatility, 2yr regressions added • Aug: Historical Scenarios and 28 new indices added • Sep: New reports, Macro Themes + Macro Snapshot • Oct: Options/short support, portfolio sharing • Nov/Dec: Portfolio Charting, report excel output

  11. 2012 Roadmap • Scenario Hedging Wizard and Report • Client-facing iPad app • Fixed Income Support • Inter-asset correlations • Much more including your suggestions

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