Capital Markets Outlook & Investment Strategy Update Stokes - - PowerPoint PPT Presentation

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Capital Markets Outlook & Investment Strategy Update Stokes - - PowerPoint PPT Presentation

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Capital Markets Outlook & Investment Strategy Update Stokes Capital Advisors, LLC is a Registered Investment Adviser. This brochure is solely for informational purposes. Advisory services are only offered to clients or prospective clients

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SLIDE 1

Capital Markets Outlook & Investment Strategy Update

Stokes Capital Advisors, LLC is a Registered Investment Adviser. This brochure is solely for informational purposes. Advisory services are only

  • ffered to clients or prospective clients where Stokes Capital Advisors, LLC and its representatives are properly licensed or exempt from
  • licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be

rendered by Stokes Capital Advisors, LLC unless a client service agreement is in place.

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SLIDE 2

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 80 100 120 140 160 180 200 220 240

$99

2008 Financial Crisis Wealth Destruction Weekly

2758.33 -9.45 -0.34% 1:29:41 PM VWAP: High: 217.63 Low: 98.56 Chg: -1.00% (INDEX) S&P 500 - Total Return Recession Periods - United States

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SLIDE 3

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 100 200 300 400 500 600

$510

Post 2008 Financial Crisis Wealth Creation Weekly

2758.33 -9.45 -0.34% 1:29:41 PM VWAP: High: 538.74 Low: 100.00 Chg: 410.00% (INDEX) S&P 500 - Total Return Recession Periods - United States

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SLIDE 4

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 100 200 300 400 500 600

$510

Post 2008 Financial Crisis Wealth Creation Weekly

2763.23 -4.55 -0.16% 3:38:40 PM VWAP: High: 538.74 Low: 100.00 Chg: 410.00% (INDEX) S&P 500 - Total Return Recession Periods - United States

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SLIDE 5

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 10 10 20 20 30 30 40 40 50 50 60 60 70 70 80 80 90 90

20

CBOE VIX Volatility Index

CBOE Market Volatility Index - Price - Close or Current Intraday Recession Periods - United States

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SLIDE 6

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 100 200 300 400 500 600 700 800

$384 $495 $501 $641

U.S. Markets Weekly

2758.52 -9.26 -0.33% 1:31:25 PM VWAP: High: 523.75 Low: 100.00 Chg: 395.00% (INDEX) S&P 500 - Total Return (INDEX) DJ 30 Industrials Average - Price (INDEX) NASDAQ Composite - Price (INDEX) Russell 2000 - Price

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SLIDE 7

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 100 200 300 400 500 600 700 800

$121 $200 $315 $315 $384 $495 $501 $641

Global Markets Weekly

2758.36 -9.42 -0.34% 1:33:40 PM VWAP: High: 523.75 Low: 100.00 Chg: 395.00% (INDEX) S&P 500 - Total Return (INDEX)Germany DAX - Price (INDEX)FTSE 100 - Price Index (INDEX)Japan Nikkei 225 - Price Index (INDEX)SSE Composite Index - Price Index (INDEX) DJ 30 Industrials Average - Price (INDEX) NASDAQ Composite - Price (INDEX) Russell 2000 - Price

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SLIDE 8

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 1 2 3 4 5 6 7

2.25

U.S. Fed Funds

US Federal Funds Target Rate - Yield Recession Periods - United States

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SLIDE 9

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

  • 1

1 2 3 4 5 6 7 8

  • 0.06

0.00 0.66 2.25

Global Central Bank Rates

Fed Fund Target Rate Interest Rate, Central Bank Policy - United Kingdom Interest Rate, Central Bank Policy - Japan Interest Rate, Central Bank Policy - Euro Zone Recession Periods - United States

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SLIDE 10

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 5,000,000

4,175,446

Federal Reserve Balance Sheet

H.4.1. Assets Of All Federal Reserve Banks, Assets, Excl. Eliminations From Consolidation, Mil USD - United States Recession Periods - United States

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SLIDE 11

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 1 2 3 4 5 6 7 8 9 10

3.19%

USA 10 Year Treasury Yield

Recession Periods - United States

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SLIDE 12

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

  • 2

2 4 6 8 10 12 14

0.15% 0.44% 0.81% 1.51% 3.19%

Global Bond Yields

US Benchmark Bond - 10 Year - Yield Germany Benchmark Bond - 10 Year - Yield Japan Benchmark Bond - 10 Year - Yield FR Govt Yield - 10 Yr United Kingdom Benchmark Bond - 10 Year - Yield Recession Periods - United States

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SLIDE 13

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

  • 4
  • 2

2 4 6 8

  • 1.19%
  • 0.78%

0.73%

Global Bond Real Yields

10 Year, Government Benchmark Bond Yield, Real, Average, USD, Percent - United States 10 Year, Government Bond Yield, Real, Percent - Japan 10 Year, Government Bond Yield, Real Return, Percent - Europe Recession Periods - United States

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SLIDE 14

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

  • 10
  • 5

5 10 15 20

0.75% 1.90% 3.00% 6.50%

Global Real GDP Growth

USA Real GDP (%y/y) - Act/Est (Q) EUZ Real GDP (%y/y) - Act/Est (Q) CN Real GDP (%y/y) - Act/Est (Q) Japan Real GDP (%y/y) - Act/Est (Q) Recession Periods - United States

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SLIDE 15

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 500 1,000 1,500 2,000 2,500

2,007.5 2,242.3

USA Corporate Profits

USD Bil. USD Bil. Corporate Profits with IVA & CCAdj, Bil. $, SAAR Corporate Profits with IVA & CCAdj, Profits After Tax with IVA & CCAdj, Bil. $ Recession Periods - United States

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SLIDE 16

AVG: 15.72 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 5 5 10 10 15 15 20 20 25 25 30 30

15.9

S&P 500 Valuation - Price/Earnings 12/31/1999 to 10/22/2018 (Daily)

Average: 15.7 High: 26.0 Low: 8.7 Last: 15.9 S&P 500 - PE - NTM Recession Periods - United States

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SLIDE 17

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 40 50 60 70 80 90 100 110

  • 20%
  • 15%
  • 10%
  • 5%

0% 5% 10% 15% 20%

106.93 8.20

USA Household Net Worth

USD Tril. YoY% Balance sheet of households & nonprofit organizations - Net worth (% 1YR) Balance sheet of households & nonprofit organizations - Net worth Recession Periods - United States

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SLIDE 18

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18

  • 10%
  • 10%
  • 8%
  • 8%
  • 6%
  • 6%
  • 4%
  • 4%
  • 2%
  • 2%

0% 0% 2% 2% 4% 4% 6% 6%

YoY: 2.9% QoQ: 4.2%

USA Real GDP Growth

Gross Domestic Product, Real %Chg P/P - United States Real GDP, %Chg From Q1 Year Ago - United States Recession Periods - United States

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SLIDE 19

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18

  • 1.5%
  • 1.5%
  • 1.0%
  • 1.0%
  • 0.5%
  • 0.5%

0.0% 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% 1.5% 2.0% 2.0% 2.5% 2.5% 3.0% 3.0% 3.5% 3.5%

1.96% 2.22%

USA PCE Inflation

(% 1YR) Chain-Type Price Index for PCE, Personal Consumption Expenditures, Price Index, 2000=100, SA - United States (% 1YR) Chain-Type Price Index for PCE, Personal Consumption Expenditures less Food & Energy, Price Index, 2000=100, SA - United States Recession Periods - United States

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SLIDE 20

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18

  • 1,000
  • 800
  • 600
  • 400
  • 200

200 400 600 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0%

134 3.7%

USA Change in NonFarm Employment & Unemployment Rate

DIFF 1M) All Employees, Total Nonfarm Payroll, Thousands of Persons, SA - United States Unemployment Rate - Percent, SA - United States Recession Periods - United States

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SLIDE 21

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 100 200 300 400 500 600 700

210

U.S Initial Jobless Claims

USA - Weekly Job Claims (000's) Recession Periods - United States

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SLIDE 22

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18

  • 3%
  • 3%
  • 2%
  • 2%
  • 1%
  • 1%

0% 0% 1% 1% 2% 2% 3% 3% 4% 4% 5% 5% 6% 6%

0.47% 2.75%

USA Growth in Avg Hourly Earnings (YoY%) - Real vs. Nominal

(% 1YR) Average Hourly Earnings Of Production Workers Total Private SA (% 1YR) Average Hourly Earnings Of Production Workers Total Private SA - Inflation Adjusted Recession Periods - United States

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SLIDE 23

Summa mmary

  • Expansion Continues But Global Business Cycle Less Synchronized
  • Late-Cycle Pressures Rising, Risk of Recession Remains Low
  • Central Banks Normalize Monetary Policy (Headwind)
  • Solid Economic Growth and Corporate Earnings (Tailwind)
  • U.S./China Trade Tensions & Geopolitical Risks Rising
  • Possible Central Bank Policy Error