global markets - amazon s3...global markets: crumbling with the empire, or your opportunity to...

GLOBAL MARKETS:

CRUMBLING WITH THE EMPIRE, OR

YOUR OPPORTUNITY TO THRIVE

FRANK TROTTER

PRESIDENT, EVERBANK DIRECT(A DIVISION OF EVERBANK)

© EverBank 2013, all rights reserved

All commentary, comments, and opinions are solely those of the speaker and are not in any way comments oropinions of EverBank or any affiliates. Additional information is available upon request.

Information in this presentation has been obtained from sources believed to be reliable, but the accuracy,completeness and interpretation are not guaranteed and have not been independently verified. Opinions expressedare subject to change without notice and, due to the rapidly changing nature of currency markets, may quicklybecome outdated.

The opinions and information presented do not constitute a solicitation for the purchase or sale of any securities oroptions on securities or for any services of EverBank. The speaker or EverBank may hold positions from time to timein assets discussed during this presentation.

Past performance can not guarantee future results. Charts in this presentation are provided for illustration purposesonly. The indices may not reflect any management fees, transaction costs, or expenses. The benchmark indices areunmanaged and may not be available for direct investment. Prices of equity securities change in response to manyfactors including the historical and prospective earnings of the issuer, the value of its assets in general, economicconditions, interest rates and market liquidity. Fixed income investments have interest rate risk, which refers to therisk that bond prices generally fall as interest rates rise and rise when interest rates fall. Foreign securities haveadditional risk, including exchange rate changes, political, economic and social factors, all of which may be magnifiedin emerging markets. Investments in narrow sectors such as real estate or commodities may be subject to morevolatility than more diversified investments. Asset allocation/diversification does not guarantee a profit or eliminatethe risks of loss.

The spoken word is a critical part of this presentation. Any distribution of this presentation is incomplete without theassociated verbal commentary provided. Do not rely exclusively on the elements included here in your analysis.

Past performance is not representative of future performance.

LEGAL NOTICES

2©2013 EVERBANK, ALL RIGHTS RESERVED

From time to time, EverBank may make forward-looking statements that reflect itsviews with respect to, among other things, future events and financial performance.Words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,”“could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,”“anticipates” or the negative version of those words or other comparable words areintended to identify forward-looking statements but are not the exclusive means ofidentifying such statements.

These forward-looking statements are not historical facts, and are based on currentexpectations, estimates and projections about the EverBank’s industry, its beliefs andcertain assumptions made by EverBank, many of which, by their nature, are inherentlyuncertain and beyond EverBank’s control. Accordingly, you are cautioned that any suchforward-looking statements are not guarantees of future performance and are subject tocertain risks, uncertainties and assumptions that are difficult to predict.

Although EverBank believes that the expectations reflected in such forward-lookingstatements are reasonable as of the date made, expectations may prove to have beenmaterially different from the results expressed or implied by such forward-lookingstatements. Unless otherwise required by law, EverBank also disclaims any obligationto update its view of any such risks or uncertainties or to announce publicly the result ofany revisions to the forward-looking statements made in this presentation.

3

DISCLOSURES CONCERNING FORWARD LOOKING STATEMENTS

©2013 EVERBANK, ALL RIGHTS RESERVED

EverBank Breakouts

•Thursday Marquis 6-8 4:10pm Toolkit

•Friday Grand Ballroom C-E 4:30pm Wealth

EverBank Hospitality Center

EverBank clients only

Key provided for entry

Identify yourself if you don’t have a key (or open online)

DON’T WORRY,BE HAPPY

Stocks are up 5 years in a row

Dsource:: Tiburon Strategic Associates CEO Summit October 9, 2013: 10/2/13 Morningstar Web Site; 10/2/13 CNN Money Web Site; 9/18/13 Linked In Web Site; 9/13/13 YahooFinance Web Site; 4/3/13 AdvisorOne; 4/2/13 Alston & Bird Email (Moore); 4/2/13 TD Ameritrade Email (Schweiss); 3/31/13 Investment News; 3/30/13 Yahoo Finance Web Site;1/24/13 Yahoo Finance Web Site; 9/5/12 Reuters; 9/5/12 Google Finance; 8/28/12 CNN Money Web Site; 6/29/12 CNN Money Web Site; Tiburon Research & Analysis

Energy independence is around the corner

Source: Popular Mechanics onlineh]p://www.popularmechanics.com/science/energy/coal-‐oil-‐gas/top-‐10-‐myths-‐about-‐natural-‐gas-‐drilling-‐6386593#slide-‐1

7.0%

6.0% 6.0% 6.0%

5.0% 5.0%

3.9%

5.7%6.0%

5.7% 5.4%4.9%

4.4%5.0%

7.3%

9.9%9.4%

8.5%

7.8%7.3%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201 1 2012 Aug-13

Unemployment Rate

THE UNEMPLOYMENT RATE OFF ITS 9.9% PEAK IN 2009

Source: TIBURON CEO Summit October 8th, 2013: 9/28/13 The Economist; 9/27/13 San Francisco Chronicle (United States LaborDepartment); 9/20/13 San Francisco Chronicle; 9/19/13 Wall Street Journal; 9/16/13 Financial Times; 1/13/13 Wall StreetJournal; 9/4/12 DomesPc Human Needs.Org Web Site; 9/4/12 Bureau of Labor StaPsPcs Web Site; 4/17/12 Fidelity InvestmentsPresentaPon (Young); 4/7/12 Wall Street Journal; 3/25/12 Bureau of Labor StaPsPcs Web Site; Tiburon Research & Analysis

GDP is growing

Consumer HouseholdMedian Income

CONSUMER HOUSEHOLD MEDIAN INCOME IS $52,000, UP 15% SINCE 1970 BUT DOWNSINCE 2007

Source: Tiburon CEO Summit October 8th, 2013: 9/21/13 The Economist; 9/18/13 New York Times; 9/17/13 Wall Street Journal; 9/13 BusinessWeek; Tiburon Research & Analysis

$46,089 $46,995

$50,994

$55,987 $56,000 $55,627$53,644 $53,285

$51,892 $51,100 $51,017$52,000

1970 1980 1990 2000 2006 2007 2008 2009 2010 2011 2012 2013

$39.2

$46.0

$52.0

$61.2$65.6 $66.1

$53.6 $55.7$59.7 $60.6

$66.1

2002 2003 2004 2005 2006 2007 2008 2009 2010 201 1 2012

(Source: Tiburon Strategic Advisors -‐ $ Trillions)

Source: 12/31/12 Federal Reserve Flow of Funds Report; 6/30/12 Federal Reserve Flow of Funds Report; 3/31/12 Federal Reserve Flow of Funds Report;12/31/11 Federal Reserve Flow of Funds Report; 4/8/11 Fidelity Investments Email (Graham); 4/7/11 TD Ameritrade Email (Schweiss); 12/31/10Federal Reserve Flow of Funds Report; 6/30/10 Federal Reserve Flow of Funds Report; 3/15/10 Barron’s (Federal Reserve); Tiburon Research & Analysis

Household Net Worth is Back!

Housing prices are strong

Energy prices remains . . .

Source: hYp://www.indexmundi.com/commodi_es/?commodity=crude-‐oil-‐west-‐texas-‐intermediate&months=120

Rates are at 50+ year low

Rates are low

Refinancing is . . .

17

67%67%

68%68% 68%

69%69%

69%68% 68%

67%67%

67%

66%65%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

US Home Ownership Rate

US HOME OWNERSHIP HAS BEEN DECLINING SINCE 2005

Source: 9/24/13 Financial Times; Tiburon Research & Analysis

United States Labor ForceParticipation Rate

THE US LABOR FORCE PARTICIPATION IS 63.2%, DOWN FROM 66.2% IN 2004

Source: TIBURON CEO Summit October 8th, 2013: 10/4/13 Wall Street Journal; 10/4/13 Business Week; 9/28/13 The Economist;9/20/13 San Francisco Chronicle; 9/19/13 Wall Street Journal; Tiburon Research & Analysis

66.2%66.0% 66.0% 66.0% 66.0%

65.0%

64.0% 64.0%63.6%

63.2%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

<$500,000Investable Assets

~ 113 millionhouseholds

Consumer Household Financial Assets

Source: 4/2/13 TD Ameritrade Email (Schweiss); 4/2/13 Envestnet Email (Asnes) (Cerulli Associates); Tiburon Research & Analysis

$500,000-$5 MillionInvestable Assets

~ 8.7 millionhouseholds

>$5 MillionInvestable Assets

Source: Tiburon Strategic Advisors

$32.2 trillion total

$8.7 trillion total

$7.25 million avg.

$16.1 trillion total

$1.85 million avg.

$7.4 trillion total

$65 thousand avg.

The world is a peaceful place

Source: BBC Online: hYp://www.bbc.co.uk/news/world-‐middle-‐east-‐23323874

POLITICAL POLARIZATION

1

0.5

0

-‐0.5

-‐1

1 0.5 -‐1-‐0.50 1 0.5 -‐1-‐0.50

1

0.5

0

-‐0.5

-‐1

© BCA Research 2013

DEMOCRATS

REPUBLICANS

109TH CONGRESS(2005-‐2007)

93rd CONGRESS(1973-‐1975)

LIBERAL CONSERVATIVE LIBERAL CONSERVATIVE

Source: Presentacon by Bob Doll at Tiburon CEO Summit April 2013 – balance of a]ribucon from Bob DollSource: Pool, Rosenthal, ET AL. (2011). Used with permission.Data used for polarizacon analysis uses nominate (nominal three-‐step escmacon), a mulcdimensional scaling method developed to analyze preference and choice. The two dimensions used in this methodaccount for the great bulk of all roll call vocng in the U.S. congress over its history. The primary dimenison (x-‐axis) is the liberal-‐conservacve spectrum on the basic role of the government in the economy. Thesecond depends on the era, picking up regional differences on a number of social issues such as the civil rights movement. The data illustrates that the second dimenison has declined in importance, with socialissues now largely considered within the liberal-‐conservacve spectrum of the primary dimension. The primary dimension now accounts for approximately 93% of all roll call vocng choices and the two parces arehighly polarized on this spectrum.

DEMOCRATS

REPUBLICANS

THEORY #1

“If we could manage 4 or 5 percentinflation over that stretch, so that prices were 25percent higher

…the real value of mortgage debt would besubstantially lower than it looks on currentprospect

…and the economy would therefore besubstantially farther along the road to sustainedrecovery.”

Krugman, End This Depression Now!Quoted in New York Times Review of Books

Image: http://en.wikipedia.org/wiki/File:Paul_Krugman-press_conference_Dec_07th,_2008-8.jpg

A MORE FORMAL STATEMENT

Purpose and impact of QE

Lower real interest ratesRaise inflation expectationsDepreciate the US dollarBoost asset (stock) prices

Various St. Louis Federal Reserve speeches. Including:http://research.stlouisfed.org/econ/bullard/pdf/Bowling_Green_Feb_24_2011_Final.pdf

WHAT DOES THEORY #1 HAVE CORRECT?

GDP = C + I + G + NE

Reducing government spending will reduceGDP in the short run

Stopping QE will allow rates to rise

Lower interest rates encourage borrowing

Inflation can allow one to pay debt back easierin the future with money that is worth less

THEORY #2

Continuing fiscal deficits are unsustainable – atsome point a government will default or receivea price shock

An overly expansive monetary policy will resultin hyper-inflation or create a currency war

The US and European economies are levitatedby government participation and interferenceand can not stand on their own

Rent seeking zombies dominate the non-consumer economy

WHAT DOES THEORY #2 HAVE CORRECT?

GDP = C + I + G + NE

Multiple states today and through history cannot and could not sustain fiscal imprudence

Rent seeking drains productivity from economy

Early impact of stimulus reduction hint showsmarket’s understanding that economy can notstand

Low rates impact capital and investmentallocations

WHAT DON’T WE KNOW?

How much debt is sustainable

Will stimulation create (hyper) - inflation

Are there dire consequences of inflation as astrategy to promote growth and reduce debtburden

How will the USD fare in a world of competitivedevaluations

• USA government ~ 90%

– Interest rates remain low

– Foreigners still loan us money

HOW MUCH DEBT ISSUSTAINABLE?

• USA total ~ 300%

• Japan total > 500%

• Britain total ~ 500%

• Germany / Canada total ~ 300%


• German government ~ 79%

• Spanish government ~ 79%

• Cyprus government ~ 84%


Our view

MARKET WISDOM

LIQUIDITY ONLY MATTERS WHEN IT’S THE ONLY THING THAT MATTERS

FRANK’S COROLLARY

BORROWING IS CHEAP UNTIL IT ISN’T


Zone ~ GDP Rate

•USA ~$15 trillion 1.0% ~$150 billion

•Euro Zone ~$15 trillion 0.0% ~$ 00 billion

•China ~$10 trillion 5.0% ~$500 billion

FOR GLOBAL GROWTH:ONLY THREE THINGSMATTER

Financial Times, June 4, 2013 7:29 pm, Southeastern shik: The new leaders of global economic growthBy Chris Giles and Kate Allen,h]p://www.k.com/intl/cms/s/0/b0bd38b0-‐ccfc-‐11e2-‐9efe-‐00144feab7de.html#axzz2VM1JvIPw

GLOBAL GROWTH TRENDS

Presenta_on © EverBank 2013Presenta_on © EverBank 2013

Source: McKinsey Global Insctute37


CROSS BORDER FLOWS




Earnings are up

Source: Richard Bernstein Advisors LLC., Bloomberg, MSCI, Standard & Poor's, Russell, HFRI, BofA Merrill Lynch, Dalbar, FHFA ,FRB, FTSE.Total Returns in USD. Average Investor is represented by Dalbar's average asset allocacon investor return, which uclizes the net ofaggregate mutual fund sales, redempcons and exchanges each month as a measure of investor behavior. Tiburon CEO Conferencepresentacon April 2013.

43

HOW ARE WE FEELING HERE AT HOME?

US consumer risk

US financial status

CONSUMER HOUSEHOLDS HAVE $34.8 TRILLION INVESTABLE ASSETS, $53.5 TRILLIONFINANCIAL ASSETS, $88.4 TRILLION TOTAL ASSETS, AND $74.8 TRILLION OF NET WORTH…

Consumer HouseholdsNet Worth($ Trillions)

$88.4

$34.8

$74.8

$13.5

$18.7

$23.8$8.4

InvestableAssets

Re_rementPlan Assets

PersonalAssets

Small BusinessValua_ons

TotalHouseholdAssets

TotalHouseholdLiabili_es

TotalHouseholdNet Worth

Source: Tiburon CEO Summit October 8th, 2013: 10/8/13 Financial Engines PresentaPon (Maggoincalda); 9/27/13 Wall Street Journal;6/30/13 Federal Reserve Flow of Funds Report; 3/31/13 Federal Reserve Flow of Funds Report; 12/31/12 Federal Reserve Flow ofFunds Report; 9/30/12 Federal Reserve Flow of Funds Report; 6/30/12 Federal Reserve Flow of Funds Report; 3/31/12 FederalReserve Flow of Funds Report; Tiburon Research & Analysis

Consumer HouseholdsFinancial Assets

($ Trillions)

CONSUMER HOUSEHOLDS HAVE $53.5 TRILLION FINANCIAL ASSETS, UP OVER 35%SINCE 2008

Source: Tiburon CEO Summit October 8th, 2013: 9/27/13 Wall Street Journal; 6/30/13 Federal Reserve Flow of Funds Report; 3/31/13Federal Reserve Flow of Funds Report; 12/31/12 Federal Reserve Flow of Funds Report; 10/14/12 Joyce Financial ManagementEmail (Joyce); 6/30/12 Federal Reserve Flow of Funds Report; 12/31/11 Federal Reserve Flow of Funds Report; 12/31/09 FederalReserve Flow of Funds Report; 3/12/09 Federal Reserve Flow of Funds Data; Tiburon Research & Analysis

$39.0$43.0

$46.8 $47.5$51.1

$53.0 $53.5

2008 2009 2010 2011 2012 1Q/13 2Q/13

JOBS

Source: New York Timesh]p://www.nycmes.com/2012/08/19/business/new-‐wave-‐of-‐adept-‐robots-‐is-‐changing-‐global-‐industry.html

48©2013 EVERBANK

MONEY SUPPLY

"I personally don't think it's going to solve theproblem…“

"I don't think our tools are strong enough tooffset a major fiscal shock…“

Fed Chairman Ben Bernanke September 2012

NOMINAL PRICE LEVELS

Asset Jan-‐2000 March-‐2013 Change

DOW JONES(1) 11,497 14,090 1.2

M(2) (1) $ 4.6 T $ 10.4 T 2.3

REGULAR GAS(2) $ 1.29 $ 3.67 2.8

GDP(1) $ 9.6 T $ 15.9 T 1.6

FED TTL ASSETS(1) $ 0.6 T $ 3.1 T 5.2

10 YR T-NOTE(1) 6.59% 2.04% -4.55%

GOLD(1) $ 289 $1,576 5.4

AUSTRALIAN $(1) 0.6585 1.0203 1.5

YEN(1) 101.45 93.59 1.1

IMPACT OF POLICY

1) Bloomberg 2) Department of Energy

OUR VIEW OF THE US

Is game changing transition starting?

Uncertainty rules

Uneven housing recovery

Uneven employment prospects

More city / county / state bankruptcy

Possible social unrest

GDP growth entirely dependent on governmentaction / inaction

OUR VIEW OF THE US

Most likely - 60%

Annual GDP 1.0%

Ten Year Treasury near 3.00% at year end

Equities continue to drift upward

USD slow weakening if no shock

Gold range trading

OUR VIEW OF THE US

Possible sharp slowing - 30%

Annual GDP 0.0% for first half

Ten Year Treasury 3.50% at year end

Equities decline

USD falls 5-10%

Gold rises significantly

CURRENCY ASRELATIVE VALUE

Source: RideLust.com

CURRENCY AS RELATIVE VALUE

Source: Federal Reserve

2012 CURRENCIES TO WATCH

Returns for currency only. Since 2002 for period 1/1/2002 => 1/31/2013

2012 CURRENCIES TO WATCH

Country 2012 Since 2002

Norway +7.58% +64.23%

Canada +2.70% +59.68%

Australia +1.57% +104.53%

Singapore +6.16% +49.28%

China +1.13% +33.09%

Brazil -8.78% +16.02%

2013+ CURRENCIES TO WATCH

Country

Norway

Canada

Australia

Singapore

China

2013+ CURRENCIES TO WATCH

Returns for currency only. Since 2002 for period 1/1/2002 => 1/31/2013

For important disclosures see:h]ps://www.everbank.com/_campaigns/invescng/managed-‐currency

EverBank Wealth Management, Inc. is an investment adviser registered with the Securi_esand Exchange Commission. It is not a bank. EverBank Wealth Management, Inc.may recommend or make available products and services offered by its parent company,EverBank, a member of the FDIC, and EverBank's subsidiary, EverTrade Direct Brokerage, Inc.,a broker dealer registered with the Securi_es and Exchange Commission and a member of FINRA and SIPC.Investment services offered through EverBank Wealth Management, Inc.:Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value

global markets - amazon s3...global markets: crumbling with the empire, or your opportunity to...

Documents