itr brian beaulieu november 2011 - sf partnership, llp1965 1970 1975 1980 1985 1990 1995 2000 2005...

[email protected] www.itreconomics.com

Presented by

ITR®

Brian Beaulieu

November 2011

www.itreconomics.com

2

The U.S. economy remains almost comatose. The current slump already ranks as the longest period of sustained weakness since the Great Depression. Once-in-a-lifetime dislocations will take years to work out.

Among them: the job drought, the debt hangover, the defense-industry contraction, the banking collapse, the real estate depression, the health-care cost explosion and the runaway federal deficit.


3

8

9

10

11

12

13

14

0.8

0.9

1.0

1.1

1.2

1.3

1.4

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14

USCanada

CanadaUS

US GDP to Canada GDP3MMA Trillions of Constant $


4

23.3

9.3

8.75.3

4.1

3.6

3.3

3.3

2.52.4

2.32.2 2.0 1.7 1.6

United States

China

Japan

Source: IMF

World GDP, Bils of US $, Current Prices Percent of World GDP


• Leading indicators pointing up• Liquidity is not an issue• Exports are up• Stimulative monetary policy• Employment rising (companies right-sized)• Banks are lending • Normal seasonal rise in Retail Sales • Deficit spending continues

US/Canada Recovery5


• Europe’s financial troubles might…• China’s housing/inflation bubble could…• Oil prices could break through $120 …• USD could lose all credibility causing…• Unemployment remains high…• Construction activity problematic…

Recession in 20126


7Example: Revenue 12MMTMonthly

SeptOctNovDec

10101010

3MMT = 4.63

JanFebMar

111111

3MMT = 5.14

AprMayJune

111111

3MMT = 4.98

JulyAugSept

111111

3MMT = 4.223MMT = 3.953MMT = 4.24

12MMT = 18.7012MMT = 18.97

12MMT = 17.54

8.2%


8

RATE-OF-CHANGE

ACTUAL MONTHLY DATA AS OF 10/11ACTUAL MONTHLY DATA AS OF 10/10

3-MOS MOVING TOTAL (3MMT) AS OF 10/113-MOS MOVING TOTAL (3MMT) AS OF 10/10

ANNUAL MOVING TOTAL (12MMT) AS OF 10/11ANNUAL MOVING TOTAL (12MMT) AS OF 10/10

= 1/12

= 3/12

= 12/12


9Global Industrial Production Indices12/12 Rates-of-Change

ITR Trends Report

2.3 Brazil

-0.2 Japan

4.4 Mexico4.7 US

7.6 SE Asia5.6 Europe

-30

-20

-10

0

10

20

-30

-20

-10

0

10

20

'00 '02 '04 '06 '08 '10 '12 '14


10China Industrial Production Index

SA, 2000 = 100

14.213.9

414.1

70

140

210

280

350

420

490

560

630

-28

-21

-14

-7

0

7

14

21

28

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14

MMAR-O-C


11

-30

-20

-10

0

10

20

30

-30

-20

-10

0

10

20

30

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

US IP

Japan IP

US Industrial Production to Japan Industrial Production12/12 Rates-of-Change

ITR Trends Report


12US Industrial Production to India Industrial Production12/12 Rates-of-Change

-15

-10

-5

0

5

10

15

20

-15

-10

-5

0

5

10

15

20

'98 '00 '02 '04 '06 '08 '10 '12 '14

IndiaUS IP

US IPIndia IP


132010 Exports from Canada to the WorldBillions of Dollars

9%

22%

5%

24%

19%

14%

4%

1% 1% Agricultural and fishing products

Energy products

Forestry products

Industrial goods and materials

Machinery and equipment

Automotive products

Other consumer goods

Special transactions trade

Unallocated adjustments


14Canada Industrial Production Index toCanada Professional, Scientific and Technical Services

12/12 Rate-of-Change

-12

-9

-6

-3

0

3

6

9

12

-12

-9

-6

-3

0

3

6

9

12

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

ServicesIndex

IndexServices


15Canada Industrial Production Index toCanada Health Care & Social Assistance

12/12 Rates-of-Change

-4

-2

0

2

4

6

-12

-6

0

6

12

18

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

Health CareIndex

IndexHealth Care


16US GDP to Canada GDP


-6

-4

-2

0

2

4

6

8

-6

-4

-2

0

2

4

6

8

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14

USCanada

CanadaUS


17

US


18US Employment – Private SectorAnnual Data Trend

85

90

95

100

105

110

115

120

85

90

95

100

105

110

115

120

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

Employment Mils of Jobs

ITR Trends Report


19Total U.S. Public Debt(% of GDP)

0

20

40

60

80

100

120

140

0

20

40

60

80

100

120

140

1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

120.0%


20

236128

-158

-378-413

-318-248-161

-455

-1552-1449

-1173-939 -938-955-925-988-1013-1031

-1145

-2000

-1500

-1000

-500

0

500

-2000

-1500

-1000

-500

0

500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

OMB’s 10-Year Deficit Projections(Baseline of Current Policy)

Billions of Dollars


21Consumer Loan Delinquency Rates3MMA and 12MMA

3.6%3.2%

-2

0

2

4

6

-2

0

2

4

6

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

3MMA12MMA


22Delinquency Rates for C&I Loans3/12 & 12/12 Rates-of-Change

-41.0%-32.8%

-80

-40

0

40

80

120

160

-80

-40

0

40

80

120

160

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

3/1212/12


23Commercial & Industrial Loans at Commercial BanksRates-of-Change

-20

-15

-10

-5

0

5

10

15

20

25

-20

-15

-10

-5

0

5

10

15

20

25

'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

3/1212/12


24Corporate Profits – 2nd QuarterBillions of $

Source: BEA

$23.5

$22.2

$83.3

$81.2

$106.0

$125.2

$401.8

$34.4

$25.0

$85.8

$87.7

$122.6

$217.1

$494.7

$26.8

$15.2

$90.8

$103.6

$112.7

$249.9

$438.9

$0 $100 $200 $300 $400 $500 $600

Transportationand warehousing

Utilities

Wholesale trade

Information

Retail trade

Manufacturing

Financial

2011 (2Q SAAR)

2010

2009


25US Consumer Price Index to Canada Price Index


-3

0

3

6

9

12

15

-3

0

3

6

9

12

15

'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

USCanada

CanadaUS


26US 3-Month Money Market Rate to Canada 3-Month Money Market Rate

Raw Data

-2

0

2

4

6

8

-2

0

2

4

6

8

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

US

USCanada

Canada


27US 10-Year Government Bond Yields to Canada 10-Year Government Bond Yields

Raw Data

0

2

4

6

8

0

2

4

6

8

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14

US

USCanada

Canada


28US Mortgage Rates to Federal FundsRaw Data

-2

2

6

10

14

18

22

-2

2

6

10

14

18

22

1975 1980 1985 1990 1995 2000 2005 2010 2015

Mortgage RatesFederal Funds


29

0

4

8

12

16

20

0

4

8

12

16

20

'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

Short-Term Interest RatesLong-Term Bonds

US Short-Term Interest Rates to US Gov’t Long-Term Bond YieldsRaw Data Trends


30

6.2

2.6

4.0

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

-25

-20

-15

-10

-5

0

5

10

15

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

MMAR-O-C

Dec '09

Oct '09

Jul '95

Nov '10

US M2 Money SupplyTrillions of 82$

12/12

Actual12MMA

1/12

ITR Trends Report


31US Industrial Production to Corporate Bond Prices12/12 Rates-of-Change

ITR Trends Report

-30

-20

-10

0

10

20

30

-15

-10

-5

0

5

10

15

1975 1980 1985 1990 1995 2000 2005 2010 2015

BondsUS IP

US IPCorporate Bonds


32Canada Exchange RateC$ per US Dollar

0.9

1.2

1.5

1.8

2.1

2.4

2.7

3.0

3.3

3.6

-40

-32

-24

-16

-8

0

8

16

24

32

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

MMAR-O-C

0.986

-4.5-6.2

12/12

12MMA

3/12

3MMA


33Nondefense Capital Goods New Orders w/o AircraftBillions of $

9.613.9

$777.1

400

600

800

1000

1200

1400

1600

-80

-60

-40

-20

0

20

40

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

MMTR-O-C

Oct '09

Nov '09

Jul '08

Feb '113/12 12/12

3MMT

12MMT

ITR Trends Report


34US Leading Indicator1996 = 100

6.25.2

113.3

65

80

95

110

125

140

155

-24

-18

-12

-6

0

6

12

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

MMAR-O-C

Jun '09

Apr '09

Aug '07

Oct '101/12

12/12

Actual12MMA

ITR Trends Report


35Canada Industrial Production Index toCanada Purchasing Managers Index

Rates-of-Change

-60

-40

-20

0

20

40

-12

-8

-4

0

4

8

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14

IndexProduction

Production - 12/12

Index - 3/12


36S&P 500 to S&P Toronto Stock Exchange (TSX)

Data Trends

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

0

200

400

600

800

1000

1200

1400

1600

1800

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14

S&P 500

S&P TSX

S&P TSXS&P 500


37Retail Sales Excluding AutomobilesTrillions of 82-84$

1.52.8

$2.095

1.00

1.75

2.50

3.25

4.00

4.75

-21

-14

-7

0

7

14

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

MMTR-O-C

Feb '11

Jul '09

Jan '10

Nov '07

3/1212/12

3MMT 12MMT

ITR Trends Report


38Canada Retail Trade GDPBillions of C$

200

300

400

500

600

700

800

-20

-15

-10

-5

0

5

10

'98 '00 '02 '04 '06 '08 '10 '12 '14

MMAR-O-C

3.63.8

444.171


39Canada to Ontario Retail Sales12/12 Rates-of-Change

-6

-3

0

3

6

9

12

-6

-3

0

3

6

9

12

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

CanadaOntario


40US Light Vehicle Retail Sales to Canada Light Vehicle Retail Sales


-30

-20

-10

0

10

20

-30

-20

-10

0

10

20

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

US SalesCanada

Canada SalesUS Sales


41Canada Housing StartsThousands of Units, SAAR

-9.0

2.4

183.3

100

140

180

220

260

300

340

380

420

460

-120

-100

-80

-60

-40

-20

0

20

40

60

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

MMAR-O-C


42Canada to Ontario Housing Starts Growth12/12 Rates-of-Change

-45

-30

-15

0

15

30

45

-45

-30

-15

0

15

30

45

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

CanadaOntario


43Housing StartsMillions of Units

5.0-3.2

0.5710.2

0.7

1.2

1.7

2.2

2.7

3.2

3.7

4.2

-90

-75

-60

-45

-30

-15

0

15

30

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

MMTR-O-C

Mar '06

Nov '10

Sep '09

Dec '09

3/1212/12

3MMT 12MMT

ITR Trends Report


44

50

150

250

350

450

35

65

95

125

155

1975 1980 1985 1990 1995 2000 2005 2010 2015

ConstructionIndex

IndexConstruction

US Industrial Production to Non-Residential ConstructionData Trends


45

Phase Late A – Recovery

1. Positive leadership modeling (culture turns to behavior)

2. Establish goals: tactical goals which lead to strategic achievement

3. Develop a system for measurement and accountability re:#2

4. Align compensation plans with #2 and #3

5. Be keenly aware of the BE (Break Even) point and check it regularly

6. Judiciously expand credit

7. Check distributions systems for readiness to accommodate

increased activity

8. Review and uncover competitive advantages

9. Invest in customer market research (know what they value)

10. Improve efficiencies with investment in technology and software

Phase Management ObjectivesTM:

ITR Trends Report


46

Phase Late A – Recovery

Part 211. Start to phase out marginal opportunities

12. Add sales staff

13. Build inventories (consider lead time and turn rate)

14. Introduce new product lines

15. Determine capital equipment needs and place orders

16. Begin advertising and sales promotions

17. Hire "top" people

18. Implement plans for facilities expansion

19. Implement training programs


ITR Trends Report


47

Phase Early B – Growth1. Accelerate training

2. Check the process flow for possible future bottlenecks

3. Continue to build inventory

4. Increase prices

5. Consider outside manufacturing sources if internal

pressures becoming tight

6. Find the answer to “What next?”

7. Open distribution centers

8. Use improved cash flow to improve corporate governance

9. Use cash to create new competitive advantages

10. Watch your debt‐to‐equity ratio and ROI

11. Maintain/pursue quality: don’t let complacency set in


ITR Trends Report


48

EnergyGreenWaterExportsHigher EducationHealth Care

Practices

FoodPetsFuneral ServicesAlcoholSecurityLegal Services

(Diversified)

Find a way to do business in the “counter-cyclical” or largely unaffected areas:


49

Managing Inflationary Pressures• Phase B… raise prices (as justified) • Consider real cost of living vs. nominal CPI• Highlight quality, content, service ~ competitive advantage• Borrow now – fixed as long as possible

o Inflation favors debtorso Purchase land/property – leasing rises with inflationo Build in efficiencies for long-term cost savings

• Lower fixed costs ~ increase variable costs for increased flexibility• Re-assess domestic sources (inflation will be imported)• Rigorous cost controls – hire the best accountant/CFO• R & D ~ substitute products and materials• Move liquid assets off shore• Hire now and/or lock in labor rates• Select price indices that magnify inflation negotiating with customers• Select price indices that minimize inflation negotiating with vendors

o Get Vendors to agree to longer-term price commitments• Sell overseas


50

To learn how incorporating economic data into your planning process can

increase your profitability,please contact

[email protected]

Clients and Subscribers may call at any time to

ask questions.


51

Be sure to tune in to “Make Your Move” with Alan & Brian Beaulieu

Mondays at 4 PM Eastern Timeon the VoiceAmerica Business Channel

Listen live at www.voiceamerica.com

Institute for Trend Research

Brian Beaulieu

provides economic

forecasts with 90%

accuracy so companies

can improve their

performance and profits.

Rave Reviews

"Brian was spectacular, charismatic and

incredibly relevant."

C. Homann

Royal Bank of Canada

“Brian’s presentation was insightful, relevant

and very entertaining. The presentation in

Bend, Oregon was the best presentation on the

economy in this region for many years. I

found his message on investing in businesses

especially enlightening, as well as the optimal

timing of those investments in the business

cycle.”

Roger J. Lee, Director

Economic Development for

Central Oregon

“You WOWED our members at Nexstar’s

Super Meeting in Atlanta! Everyone enjoyed

your great sense of humor and how you were

able to connect specifically to them during

your presentation. You could have heard a pin

drop in the room while you were speaking as

everyone was captivated.”

Sandie Jacobson

Nexstar Network

“I can safely say that, in my 13 years of

putting together programs for the Marketing

Council and other AGMA meetings, you are

the most interesting, most informative, most

enlightening and most enthusiastic speaker we

have ever had!”

Kurt Medert, Vice President

American Gear Manufacturers

“…Brian was fabulous, not enough words in

the Thesaurus to express how good Mr.

Beaulieu really is in his presentation”

Glen R. Anderson

Executive Vice President

Pressure Sensitive Tape Council

A sample of what you will learn:

Short-term and long-term economic

forecasts (U.S. and /or abroad).

How our forecasts impact your company.

What ITR Management ObjectivesTM

apply at this time in the business cycle.

What about inflation?

What leading economic indicators should

we be watching for?

See the future first before your

competition does!

About Brian

Brian Beaulieu has been an economist with

ITR® since 1982, serving as a principal and

it’s CEO since 1987. At the Institute, his

focus is research into using business cycle

analysis and forecasts to increase business

profits.

He is co-author of “Make Your Move”, a

book on how to increase profits through

business cycle changes.

Mr. Beaulieu is Chief Economist for Vistage

International; a global organization comprised

of over 14,000 CEO’s and has an active

consulting practice. Beaulieu has been

providing workshops and economic analysis

seminars in 10 countries to literally thousands

of business owners and executives for the last

28 years. He is the winner of the 2008

Speaker Impact of the Year Award from

Vistage International.

Mr. Beaulieu’s views have appeared in/on: the

Wall Street Journal, New York Times,

Barron’s, USA Today, CNBC TV, FOX

Business TV, Knight Ridder News Services,

Reuters, CBS Radio, The Washington Times,

Forbes, Atlanta Journal Constitution, KERA

TV, Canadian TV, and numerous other outlets.

To book an engagement call:

166 King Street

Boscawen, New Hampshire 03303

603-796-2500 [email protected]

mailto:[email protected]

itr brian beaulieu november 2011 - sf partnership, llp1965 1970 1975 1980 1985 1990 1995 2000 2005...

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