EGG & POULTRY INDUSTRY CONFERENCE NOVEMBER 2015 TWITTER - - PowerPoint PPT Presentation

NOVEMBER 2015 TWITTER @USTEWART WWW.7IM.CO.UK

EGG & POULTRY INDUSTRY CONFERENCE

2020 – A GLOBAL VIEW

A STORM WARNING?

THE NEWS FEARS

• China slowdown
• Emerging Market effects
• US Interest rates
• Eurozone
• Greece
• Immigration
• UK Deficit & Growth

A KEY MOMENT OF

ECONOMIC CHANGE

5

HOW BAD IS IT?

SOURCE BLOOMBERG.

UNPRECEDENTED STIMULI

• Low Rates
• Infrastructure Spending
• Quantitative Easing
• Commodity Price falls

AFTER THE STIMULANTS....

OLD NEWS………………..

• China Slowdown
• US growth still not at pre-recession trend
• Rate hikes will prompt slowdown?
• Eurozone future
• Greece
• Ukraine
• ISIS
• China Sea Sores

BIG IMBALANCES

• Government debt and deficits
• Consumer debt
• Trade balances
• Income distribution

AFTER THE “NOUGHTIES”-THE TINY TEENS

• Low Growth
• Low Inflation
• Low Interest Rates
• Low Returns

Now make some Money!

OIL PRICES

Oil price move is still happening! 59% fall 22% fall

COMMODITIES - ROLLING 5 YEARS

BALTIC DRY, COPPER, GOLD, BRENT CRUDE (WTI)

01/11 01/12 01/13 01/14 01/15 4,000 4,000 5,000 5,000 6,000 6,000 7,000 7,000 8,000 8,000 9,000 9,000 10,000 10,000 11,000 11,000

5281.00

Copper - Spot Price - LME (US$/MT)

High: 9986.00 Low: 5063.75 Last: 5281.00 RecessionPeriods- United States RecessionPeriods- United Kingdom

UNEMPLOYMENT IS FALLING

GREEN – EUROPEAN, RED - UNITED STATES, YELLOW - UNITED KINGDOM

CONSUMER CONFIDENCE & Savings

US, EUROZONE, UK AND JAPAN CONSUMER CONFIDENCE - 30 YEARS. GREY AREAS MARK RECESSIONS – EZ MEASUREMENT AGAINST GERMANY. GREEN – US AND UK HOUSEHOLD SAVINGS RATIO’S

RATES – LOWER FOR LONGER

LHS – BASE RATES RHS 10 YEAR TREASURY YIELDS, US (RED) JAPAN (GREEN), UK ORANGE, GERMANY (PINK) CANADA (BLUE) GLOBAL YIELDS GRADUALLY INCREASING.

UK & US INTEREST RATE EXPECTATIONS

US BASE RATES (GREEN) EXPECETED TO BE AT 2% IN SEPTEMBER 2018 SOURCE BLOOMBERG

UK BASE RATES (ORANGE) EXPECTED TO BE AT 2% IN SEPTEMBER 2019

FX – GBP V US$, EURO AND JPY – 12M

WITH OVERSEAS MARKETS FAVOURED CURRENCY MANAGEMENT KEY.

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 85 90 95 100 105 110 115 94.74 104.13 108.59

U.S. Dollar per British Pounds Daily

1.55 0.00 -0.12% VWAP: High: 100.19 Low: 89.67 Chg: -5.26% (INDEX) U.S. Dollarper British Pounds - Price (INDEX) Japanese Yen per BritishPounds - Price (INDEX) Euro per British Pounds - Price

WHICH COMPANIES ARE GROWING PROFITS?

GDP GROWTH STILL POSITIVE

AVERAGE GLOBAL GROWTH CLOSE TO STATIC BUT CHANGES IN REGIONAL GROWTH RATES NOTABLE.

USA

Rate Change? Corporate Earnings still rising! Iran/Cuba Geopolitics Housing improving, unemployment falling Economic growth uninspiring Fuel Costs

US DEFICIT REDUCTION

GASOLINE PRICE FALL

• Gas at the pumps

have fallen over 20% in the last 6 months

• The American motorist

is $800 a year better

• ff which is equivalent

to a 2% pay rise.

• However yet to see
• spending. Americans

are saving rather than consuming.

US Average Gasoline Price

2.25 2.50 2.75 3.00 3.25 3.50 3.75 4.00 4.25 O J A J O J A J O J A J O J A J O J A J 2010 2011 2012 2013 2014 2015

THE WORLD BENEFITS

Countries who export to the US Country % of exports to US China 16.7% Japan 17.8% South Korea 10.7% Germany 7.9% France 6.9% UK 10.5%

American Ejukashon?

26

EU LEVEL PLAYING FIELD.....

SOURCE: TWITTER - @MARK_WILLEM5

TRUSTED GERMAN ENGINEERING?

EUROZONE

The Future of the Euro “Grexit”? Widespread economic pickup Company earnings rising at double digit rates QE = Growth? Further financial integration Deflation?

THE SOUFFLE RISES – at last!

WEAK CURRENCY HELPS EXPORTS

Euro over 10% weaker than start of 2014!

WATCH IT SHORTY!

SOURCE: NEWEUROPE.EU/EPA

THE AGONY & THE ECSTASY

“GREAT ECONOMY

• PITY ABOUT THE

POLITICIANS”

36

UK

Jobs & growth vs Income Tax Fixing the banking system Tax reform? 2 Unions No Power or Transport strategy World’s 5th - 8th -10th ?

THE UKTI

INWARD INVESTMENT

REPORT 2014/15

38

UK – SHE’s GOT PULLING POWER!

UK No1 in Europe UK 3rd Globally

UK top for HQs 50% Increase UK £1trillion (2014)

1,988 Projects

85,000 new jobs

Client

UK ECONOMY

INWARD INVESTMENT

KRANKIES – THE LOVECHILD?

SOURCE: NEWEUROPE.EU/EPA

KEYS TO ECONOMIC CONFIDENCE INEXPERIENCED POLITICIANS INEXPERIENCED CIVIL SERVICE CYNICAL MEDIA HOBBLED BANKING

HOW HAS THE UK FARED?

SOURCE: GOOGLE IMAGES

The UK exports services such as:

• Finance
• Accounting
• Legal
• Tourism
• University education
• 7
• 5
• 3
• 1

1 3 5 1998 2000 2002 2004 2006 2008 2010 2012 2014

Trade in Goods as % of GDP Trade in Services as % of GDP Trade Balance

UK trade balance

Real wages ticking up

RHS - GREEN – WAGE INFLATION V RED UK CONSUMER PRICE INFLATION LIVING STANDARDS STARTING TO PICK UP AT LAST?

GOVERNMENT DEFICIT

SOURCE: ONS

UK Govt’ forecast to borrow £70bn in 2015/2016

SOURCE: BANK OF ENGLAND

THE LONG AND WINDING ROAD

INFLATION LIKELY TO STAY LOW IN THE MID-TERM

UK PMIs

SOURCE: 45.0 47.5 50.0 52.5 55.0 57.5 60.0 62.5 65.0 S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A 2012 2013 2014 2015

Construction Markit/CIPS UK Manufacturing PMI SA Markit/CIPS UK Services PMI Business Activity SA

• 40.0%
• 20.0%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0% Change in Price Change in Yield

30Yr 10Yr 3Yr

PRICE SENSITIVITY - BONDS

1% fall in yields: 30yr = +20% 10yr = +9% 3 Yr = +3% 1% rise in yields: 30yr = -13% 10yr = -8% 3 Yr = -3%

UK POSITIVE ISSUES

• “Re-shoring” – Noodles & Antler
• Record Car production
• Steel – 40 year peak
• Non EU exports now higher than EU
• Rice Cookers to Asia!
• Financial/Professional trade exports £55bn
• Over half million business start ups 550,000
• New Financing structures
• Record Employment

NOW - SOME RADICAL COMMON SENSE

• Tax Reform
• NI & SME
• Stamp Duty – transactions & property
• Sugar & Fat Tax
• Pension Reform
• Auto E
• Education
• Investment Reform
• New Funding schemes
• Housing Free & Leasehold
• Infrastructure

JAPAN

Islands Dispute Abe - nomics Yen Weakness Debt 220%+ of GDP Trade Turnaround Nappy Sales

THE CHINA SEA -SORES

FEEL THE LOVE…….

BROKEN BRICS?

China Change of Life Brazil Weaker Exports South Africa Political issues Russia Rule of law? India Post election Turkey On the Cusp

MSCI Asia Ex Japan China South Korea Taiwan Brazil South Africa India Mexico Russia Malaysia Indonesia Thailand Turkey Poland Chile Philippines Hong Kong Singapore

...FAVOUR Commodity IMPORTERS

SOURCE: ISHARES/7IM 55

MSCI Emerging Markets China South Korea Taiwan Brazil South Africa India Mexico Russia Malaysia Indonesia Thailand Turkey Poland Chile Philippines

HOW BAD IS THE CHINA SLOWDOWN?

Solid growth in crude petroleum import volumes Retail sales growth running >10% Slowdown in industrial production rate of growth Wage growth running around 10% p.a.

THE NEW LEADERSHIP

THE NEW LEADERSHIP

RIDING THE ROLLERCOASTER

Shanghai Index (white) vs MSCI World (yellow) YTD

KEY RISKS to the VIEW EUROZONE GREEN/K SHOOTS CHINA CHANGE of LIFE UK SULLEN GROWTH & NERVES US DEBT, DEFICIT & DEMAND

REBUILDING INVESTMENT CONFIDENCE

KEY WORD FOR ECONOMY - CONFIDENCE

FTSE 100

FTSE 100 TOTAL RETURN

POWER OF COMPOUNDING

Today’s value of £100 invested at the end of 69 years

SOURCE: BARCLAYS CAPITAL

1 – without reinvesting income

Nominal Equities £9,148

2 – gross income reinvested

Nominal Equities £179,265

CHOOSING NEXT YEAR’S TOP Asset Class 
 COULD YOU?


SOURCE: BLOOMBERG, THOMSON REUTERS AS AT 1 JANUARY 2015

IT WORKS!

SOURCE: BLOOMBERG, THOMSON REUTERS AS AT 1 JANUARY 2015

YOUR OWN PLANNING

Accountants Lawyers Insurance Mortgage Providers Banks Trustees Investment

Client

Your Clients Your Planning

FORWARD FINANCIAL HEADLIGHTS

Cash flow – income and expenditure

▪ Now ▪ Long term future

SO WHAT DO YOU DO?

Think broader family assets and liabilities

• Managing family assets


Improve Investment Discipline

• Reducing Costs
• Better than average Returns
• Reducing Risks
• Lower Volatility
• Regular financial planning

FAMILY BALANCE SHEET

House Car Pension Life assurance ISAs Shares & National Savings Cash Mortgage Credit Cards Loans

ASSETS LIABILITIES

NET BALANCE £

REWARDING YOUR HARD WORK

THE ALTERNATIVE?

NOVEMBER 2015 TWITTER @USTEWART WWW.7IM.CO.UK

EGG & POULTRY INDUSTRY CONFERENCE

TWITTER @USTEWART WWW.7IM.CO.UK

THANK YOU