Presentation Transcript

1. This presentation has been provided to you for use in a private and confidential meeting to discuss potential or existing investment advisory relationship. This presentation is not an advertisement and is not intended for public use or distribution beyond our private meeting. Not Dead YetMichigan, The Economy and The MarketsMay 13, 2014 Presented By: John Cassady, CFA Senior Portfolio Manager For Institutional Investors Only
2. Detroit Demographics: Off a Cliff Detroit Demographics: Off a Cliff Source: US Census Bureau, Zillow, Bureau of Labor Statistics
3. Latest Unemployment Reports Source – Michigan Dept. of Labor (Note: Data are NOT seasonally adjusted)
4. Change in Mfg Employment
5. Michigan LEI Turning Up
6. Great Lake States LEI Focus – Near Best Michigan Reading in 25 years Source = FactSet
7. Michigan Median Income Growth – Beating the Rest of the Country Source: Bloomberg, L.P.
8. Global Manufacturing Focus – US Still Dominates Productivity
9. U.S. Manufacturing Renaissance Natural Gas Prices For Manufacturing $/MBTU Japan $16.6 Korea $17.0 Germany $8.2 USA $4.3 Source: Bloomberg Henry Hub Nat Gas Spot 01/01/07 – 03/31/14
10. U.S. Energy Renaissance Source = BEA
11. Global LEI’s Turning up - Mostly
12. US GDP growth expected to improve pace into 2015 25 year average Projections = Bloomberg; IMF; Federal Reserve * Source = Moody’s economy.com
13. Tapering is NOT Tightening Fed Targets for Tightening When will the Fed raise interest rates? 2015 at the earliest. Target Unemployment Rate of 6.5% Target Inflation Rate* of 2% * Core PCE Source: Bloomberg
14. Thank you, Mr. Sequester % of GDP Spending = 20.2% GDP Revenues = 16.8% GDP Deficit = (3.4)% of GDP Spending at Highest Level Since WWII Source: Strategas
15. Political Uncertainty – Holding Back Corporate Spending Balanced Budget Act Source: policyuncertainty.com
16. State of Housing Source: Bloomberg
17. Consumer Metrics Improving Source = FactSet
18. Consumer Borrowing Turning Up? Source = FactSet
19. Business Metrics Improving As Well Source = FactSet
20. US Business Focus – Profits outpacing Capex since 2009
21. Cap Ex Rebound Ahead?
22. 2013Asset Class Total Returns Source: : Bloomberg As of 12/31/13
23. Valuation, Not Level, Is What Matters P/E: 28.49 10yr Treasury: 5.725% EPS: $53.26 P/E: 17.34 10yr Treasury: 3.94% EPS: $89.37 P/E: 17.27 10yr Treasury: 2.65% EPS: $109.12 Source: Bloomberg
24. Valuations of Five Largest Stocks Then vs. Now 5 Largest S&P 500 Companies (March 2000) 5 Largest S&P 500 Companies (April 2014)
25. We’ve Lost $230 Billion since 12/31/13!!! …And we’ve made $23 Trillion since 12/31/08
26. Action→Reaction. Inflation - The Fed - The Market Market Correction Market Correction Inflation Shock Shock Shock Market Correction
27. The 10 year is Headed To?…+3.5% Inflation
28. Elevated but not Extreme 1.6% 1.9% 2.7% 17.3x Source: Strategas
29. General Disclosures ClearArc Capital, Inc., formerly known as Fifth Third Asset Management, Inc., is an investment adviser registered under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply any level of skill or training. The information presented in the material is general in nature and is not designed to address your investment objectives, financial situation or particular needs. Prior to making any investment decision, you should assess, or seek advice from a professional regarding whether any particular transaction is relevant or appropriate to your individual circumstances. Although taken from reliable sources, ClearArc Capital cannot guarantee the accuracy of the information received from third parties. The opinions expressed herein are those of ClearArc Capital and may not actually come to pass. This information is current as of the date of this presentation and is subject to change at any time, based on market and other conditions. Index performance used throughout this presentation is intended to illustrate historical market trends and performance. Indexes are unmanaged and do not incur investment management fees. An investor is unable to invest in an index. The performance shown may not reflect a ClearArc Capital portfolio. Past performance is no guarantee of future results. The mention of specific securities and sectors illustrates the application of our investment approach only and is not to be considered a recommendation by ClearArc Capital. The specific securities identified and described above do not represent all of the securities purchased and sold for the portfolio, and it should not be assumed that investment in these securities were or will be profitable. There is no assurance that the securities purchased remain in the portfolio or that securities sold have not been repurchased. Charts, diagrams and graphs, by themselves, cannot be used to make investment decisions.