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Presentation
By
- A. Gary Shilling, Ph.D.
To
Texas Municipal Retirement System May 19, 2017
- A. Gary Shilling & Co., Inc.
Presentation By A. Gary Shilling, Ph.D. To Texas Municipal - - PowerPoint PPT Presentation
Presentation By A. Gary Shilling, Ph.D. To Texas Municipal - - PowerPoint PPT Presentation
Presentation By A. Gary Shilling, Ph.D. To Texas Municipal Retirement System May 19, 2017 A. Gary Shilling & Co., Inc. 500 Morris Avenue Springfield, NJ 07081 (973) 467-0070 / Fax (973) 467-1943 Email: gary@agaryshilling.com /
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Nov-16 Dec-16 Jan-17 Jan-17 Feb-17 Mar-17 Apr-17 $2.2 $2.3 $2.4 $2.5 $2.6 $2.7 $2.8 $2.2 $2.3 $2.4 $2.5 $2.6 $2.7 $2.8
Copper Price
USD/pound; nearest futures contract
Source: Bloomberg Last Point 05/08/17: $2.49
Chart 2
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Nov-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 18.0 18.5 19.0 19.5 20.0 20.5 21.0 21.5 22.0 97 98 99 100 101 102 103 104 Pesos/USD - left axis U.S. Dollar Index - right axis
Mexican Pesos Per U.S. Dollar and U.S. Dollar Index
Source: Thomson Reuters Last Points 05/08/17: Pesos/USD, 19.21; USD Index, 99.06
Stronger U.S. Dollar Stronger U.S. Dollar
Chart 3
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Nov-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 820 840 860 880 900 920 940 960 980 1000 151 152 153 154 155 156 157 158 159 160 161 162 MSCI Emerging Market Stocks Index - left axis Bloomberg Emerging Market Bond Index - right axis
Emerging Markets Stocks and Bond Indices
Source: Bloomberg, MSCI Last Point: 05/08/17: Stocks: 978.27; Bonds: 160.72
Chart 4
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Nov-16 Nov-16 Dec-16 Jan-17 Jan-17 Feb-17 Mar-17 Mar-17 Apr-17 1.6% 1.8% 2.0% 2.2% 2.4% 2.6% 2.8% 3.0% 3.2% 1.6% 1.8% 2.0% 2.2% 2.4% 2.6% 2.8% 3.0% 3.2% 10 Year Treasury Yield 30 Year Treasury Yield
10 and 30 Year Treasury Yields
Source: Federal Reserve Last Points 05/08/17: 10-Yr: 2.39%; 30-Yr: 3.02%
Chart 5
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1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1
Cumulative Number of Federal Restrictions
in millions
Source: The Wall Street Journal; Mercatus Center
Chart 6
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1991 1995 1999 2003 2007 2011 2015
- 3%
- 2%
- 1%
0% 1% 2% 3% 4% 5% 6% 7%
- 3%
- 2%
- 1%
0% 1% 2% 3% 4% 5% 6% 7% Germany Japan United Kingdom United States
Real Annual Wages
year/year percent change
Source: Bloomberg; OECD Last Points 2016: Ger., 2.9%; Jap., 1.4%; U.K., 1.6%; U.S., 1.0%
Chart 7
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1991 1995 1999 2003 2007 2011 2015
- 4%
- 3%
- 2%
- 1%
0% 1% 2% 3% 4% 5%
- 4%
- 3%
- 2%
- 1%
0% 1% 2% 3% 4% 5% Canada France Italy
Real Annual Wages
year/year percent change
Source: Bloomberg; OECD Last Points 2016: Can., 1.4%; Fra., 0.9%; Ita., 0.6%
Chart 8
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1980 1990 2000 2010 2016
- 1600
- 1400
- 1200
- 1000
- 800
- 600
- 400
- 200
200 400
- 1600
- 1400
- 1200
- 1000
- 800
- 600
- 400
- 200
200 400
Federal Budget Balance
billion USD
Source: Congressional Budget Office Last Point 2016: -$587
Chart 9
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Real GDP Growth During Expansions
annualized rates of expansion from NBER trough-to-peak
*Through 1Q 2017 Source: BEA; NBER
7.6% 4.0% 5.6% 4.9% 5.1% 4.3% 4.4% 4.3% 3.6% 2.8% 2.1%* 1950 1954 1958 1961 1971 1975 1980 1983 1991 2002 2009 0% 1% 2% 3% 4% 5% 6% 7% 8% 0% 1% 2% 3% 4% 5% 6% 7% 8%
Recession Start Date
Chart 10
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1990 1995 2000 2005 2010 2015 10% 15% 20% 25% 30% 35% 40% 10% 15% 20% 25% 30% 35% 40%
China Exports of Goods and Services
as % share of GDP
Source: The World Bank Last Point 2015: 22.1%
Chart 11
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1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 4% 6% 8% 10% 12% 14% 16% 4% 6% 8% 10% 12% 14% 16%
Chinese Real Gross Domestic Product
year/year percent change
Last Point 1Q 2017: 6.9% Source: Bloomberg; Chinese National Bureau of Statistics
Chart 12
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1947 1955 1963 1972 1980 1988 1997 2005 2013 11 12 13 14 15 16 17 18 19 20 5% 10% 15% 20% 25% 30% 35% Level (millions of employees) - left axis Share of Total Nonfarm Payrolls - right axis
Manufacturing Payroll Employment
level and share of total
Source: Bureau of Labor Statistics Last Points April 2017 - Level: 12.40, Share: 8.49%
Chart 13
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Fertility and Life Expectancy Rates
Fertility Rates Life Expectancy Rates 2014 estimate Total Pop. Women Men Japan
1.4 84.46 87.99 81.13
Australia
1.77 80.17 83.24 77.25
Italy
1.42 82.03 84.82 79.4
Canada
1.59 81.67 84.42 79.07
France
2.08 81.66 84.91 78.55
Spain
1.48 81.47 84.67 78.47
Netherlands
1.78 81.12 83.34 79.02
Germany
1.43 80.44 82.86 78.15
U.K.
1.9 80.42 82.69 78.26
Eurozone
1.55 81.5 84.1 78.7
South Korea
1.25 79.8 83.13 76.67
U.S.
2.01 79.56 81.94 77.11
China
1.55 75.15 77.43 73.09
Brazil
1.79 73.28 77 69.73
Russia
1.61 70.16 76.3 64.37
India
2.51 67.8 69.06 66.68
Source: CIA and eurostat
Chart 14
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Working Age Population
15-64 year olds as a share of the total population
Canada France Germany Italy Japan UK USA China 1960 59.0% 62.0% 67.2% 65.5% 64.1% 64.9% 60.0% 56.4% 1990 68.0% 65.9% 69.1% 68.6% 69.7% 65.3% 65.8% 66.0% 2010 69.5% 64.8% 66.1% 65.6% 64.0% 66.0% 66.9% 72.4% 2030 60.7% 59.4% 58.2% 60.3% 57.3% 61.3% 61.0% 68.9% 2040 59.7% 57.7% 55.2% 55.0% 53.4% 59.7% 60.3% 63.1%
Source: United Nations
Chart 15
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G-7 and BRIC Population and Projections; Millions
2017 2025 2050
Japan
126.0 122.8 107.4
United Kingdom
65.5 68.5 75.4
France
64.9 66.9 71.1
Germany
80.6 80.0 74.5
Italy
59.8 59.5 56.5
Canada
36.6 39.1 44.1
United States
326.5 345.1 388.9
China
1,388.2 1,414.9 1,348.1
India
1,342.5 1,461.6 1,705.3
Russian Federation
143.4 141.2 128.6
Brazil
211.2 223.0 238.3
Source: United Nations
Chart 16
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1955 1963 1971 1979 1987 1995 2003 2011 2019
- 1.0%
- 0.5%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5%
- 1.0%
- 0.5%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5%
Japanese Population
year/year percent change
Source: Japanese Statistics Bureau Projected
Chart 17
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G7 Labor Force Participation Rates
Female Male Total Canada 61% 71% 66% U.S. 56% 69% 62% U.K. 56% 69% 62% Germany 54% 66% 60% France 51% 61% 56% Japan 49% 70% 59% Italy 40% 60% 49%
Source: The World Bank
Chart 18
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1980 1990 2000 2010 2020 2050 120 140 160 180 200 220 240 260 120 140 160 180 200 220 240 260
Chinese Population Aged 15-24
millions
*Projections start after 2015 Source: United Nations
Projected
Chart 19
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Productivity in the U.S. Nonfarm Business Sector
- avg. annual growth rate by decade
NBER BLS
1901-1910
2.34% na
1911-1920
2.64% na
1921-1930
2.07% na
1931-1940
2.39% na
1941-1950
2.46% na
1951-1960
2.28% 2.14%
1961-1970
2.49% 2.71%
1971-1980
na 1.45%
1981-1990
na 1.61%
1991-2000
na 2.18%
2001-2010
na 2.36%
2011-2016
na 0.53%
Chart 20
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1948 1956 1964 1973 1981 1989 1998 2006 2014 55% 60% 65% 70% 75% 80% 85% 90% 30% 35% 40% 45% 50% 55% 60% 65% Male - left axis Total - left axis Female - right axis
Labor Force Participation Rate
seasonally-adjusted
Source: Bureau of Labor Statistics Last Points April 2017 - Male, 69.2%; Total, 62.9%; Female, 57.0%
Chart 21
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1948 1955 1963 1970 1978 1985 1993 2000 2008 2015 50% 55% 60% 65% 70% 75% 80% 85% 90% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 16 - 24 - left axis 25 - 54 - left axis 55 - 64 - left axis 65+ - right axis
Labor Force Participation Rate
by age group; seasonally-adjusted
Source: Bureau of Labor Statistics Last Points April 2017: 16-24, 55.9%; 25-54, 81.7%; 55-64, 64.5%; 65+, 19.7%
Chart 22
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1997 1999 2002 2004 2007 2009 2012 2014 11% 12% 13% 14% 15% 16% 17% 11% 12% 13% 14% 15% 16% 17%
United States Manufacturing Value Added
as % share of GDP
Source: Bureau of Economic Analysis; The World Bank Last Point 4Q 2016: 11.6%
Chart 23
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Jan-07 Sep-08 May-10 Jan-12 Sep-13 May-15 Jan-17
- 30%
- 20%
- 10%
0% 10% 20% 30% 40% 50% 60%
- 30%
- 20%
- 10%
0% 10% 20% 30% 40% 50% 60%
Chinese Exports
year/year percent change
Source: China General Administration of Customs Last Point April 2017: 8.0%
Chart 24
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2004 2006 2008 2010 2012 2014 2016 150% 160% 170% 180% 190% 200% 210% 220% 230% 240% 250% 260% 150% 160% 170% 180% 190% 200% 210% 220% 230% 240% 250% 260%
Chinese Total Debt as a Share of GDP
includes corporate, household, government and bank debt
Source: Bloomberg Last Point 2016: 257.6%
Chart 25
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G7 and BRIC Gross Domestic Product Per Capita: 2015
thousand USD
Source: The World Bank
56.12 43.88 43.25 41.31 36.21 32.48 29.96 9.09 8.54 8.03 1.60 U.S. U.K. Canada Germany France Japan Italy Russia Brazil China India 10 20 30 40 50 60 10 20 30 40 50 60
Chart 26
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G7 and BRIC Personal Consumption to GDP Ratio: 2015
68.1% 65.1% 63.4% 61.0% 59.6% 58.6% 57.5% 55.1% 53.9% 51.9% 37.0% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% U.S. U.K. Brazil Italy India Japan Canada France Germany Russia China
Source: The World Bank
Chart 27
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PCE Deflator
seasonally-adjusted
Source: Bureau of Economic Analysis Last Points March 2017 - M/M: -0.2%; Yr/Yr: 1.8%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
- 1.5%
- 1.0%
- 0.5%
0.0% 0.5% 1.0%
- 9.0%
- 6.0%
- 3.0%
0.0% 3.0% 6.0% Month/Month % Change - left axis Year/Year % Change - right axis Fed Target: 2.0%
Chart 28
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Historic Inflation and Deflation
Period Military Engagement
- No. of Years
Annualized Wholesale Price Change 1749-1755 Peacetime 6
- 0.50%
1756-1763 French-Indian War 8 2.27% 1764-1774 Peacetime 11
- 0.35%
1775-1783 American Revolution 9 12.31% 1784-1811 Peacetime 28
- 1.91%
1812-1815 War of 1812 4 7.78% 1816-1845 Peacetime 30
- 2.36%
1846-1848 Mexican-American War 3
- 0.40%
1849-1860 Peacetime 12 1.05% 1861-1865 Civil War 5 14.75% 1866-1916 Peacetime 51
- 0.74%
1917-1918 World War I 2 23.92% 1919-1940 Peacetime 22
- 2.31%
1941-1945 World War II 5 6.12% 1946-1992 Cold War 47 4.20% 1992-2000 Peacetime 8 1.43% 2001-2014 War on Terror 13 2.81% 2015 - Q4 2016 Peacetime 2 1.48%
- No. of Years
- Avg. Price Change
Wartime: 96 8.20% Peacetime: 170
- 0.47%
Total: 266 3.86%
Chart 29
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1994 1997 2000 2004 2007 2011 2014 100 150 200 250 300 350 400 450 500 100 150 200 250 300 350 400 450 500
Reuters/Jefferies CRB Index
Source:Thomson Reuters Last Point 05/08/17: 179.69
Chart 30
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1774 1814 1854 1894 1934 1974 2014 200 400 600 800 1000 1200 1400 200 400 600 800 1000 1200 1400
Real U.S. Commodity Prices
CRB Index Deflated by CPI
Source: Bianco Research, Bureau of Labor Statistics, Historical Statistics of the United States Last Point March 2017: 75.96
Chart 31
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2007 2008 2010 2012 2013 2015 2017
- 3%
- 2%
- 1%
0% 1% 2% 3% 4% 5% 6%
- 3%
- 2%
- 1%
0% 1% 2% 3% 4% 5% 6% Consumer Price Index Services Index Durable Goods Index
Consumer Price Indexes
year/year percent change
Source: Bureau of Labor Statistics Last Points March 2017: CPI 2.4%, Services 2.9%; Durable Goods -2.0%
Chart 32
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Dec-13 May-14 Oct-14 Mar-15 Jul-15 Dec-15 May-16 Sep-16 Feb-17 20 30 40 50 60 70 80 90 100 110 120 20 30 40 50 60 70 80 90 100 110 120 Brent Crude Oil WTI Crude Oil
Brent and WTI Crude Oil Prices
dollars per barrel; nearest futures contracts
Source: Thomson Reuters Last Points 05/08/17- Brent: $49.34; WTI: $46.29
Chart 33
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2000 2004 2008 2012 2016 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% Nonstore Retailers Department Stores
Department and Nonstore Retail Sales
as percent share of total retail sales
Source: U.S. Cenusus Bureau Last Points March 2017: Nonstore, 10.6%; Department Stores, 2.7%
Chart 34
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1999 2003 2007 2011 2015 2% 3% 4% 5% 6% 7% 8% 2% 3% 4% 5% 6% 7% 8%
CPI : Tuition, School Fees, Childcare
year/year percent change
Source: Bureau of Labor Statistics Last Point March 2017: 2.4%
Chart 35
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The Vanguard Group
assets under management; trillion USD
Source: AdvisoryHQ Last Point 2016: $3.6
1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Chart 36
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2007 2008 2010 2012 2013 2015 2017
- 4%
- 2%
0% 2% 4% 6% 8%
- 4%
- 2%
0% 2% 4% 6% 8% Home Away From Home
Source: Bureau of Labor Statistics Last Points March 2017: Home -0.86%; Away 2.12%
CPI: Food at Home and Food Away From Home
year/year percent change
Chart 37
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1948 1954 1960 1966 1972 1978 1984 1990 1996 2002 2008 2014 0% 2% 4% 6% 8% 10% 12% 14% 16%
- 4%
- 2%
0% 2% 4% 6% 8% 10% 12% 14% 16% 20 Year Treasury Yield - left axis Consumer Price Index (Yr/Yr % Change) - right axis
20-Year Treasury Yield and Consumer Price Index
Last Points March 2017: CPI, 2.4%; Yield, 2.62%
Source: Federal Reserve Board; Bureau of Labor Statistics
Chart 38
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2007 2008 2010 2012 2014 2016 0% 1% 2% 3% 4% 5% 6% 0% 1% 2% 3% 4% 5% 6%
FED Funds Target Rate
Source: The Federal Reserve Last Point 05/08/17: 0.87%
Chart 39
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