Transcript Document 1 - Hallandale Beach

City of Hallandale Beach
3rd Quarter 2012 DB Plan
Update
November 19, 2012
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Economy and Market Review
Recap 3rd Quarter 2012
•
In a reversal of the general risk aversion in the second quarter of 2012, equity
markets enjoyed solid gains during the third quarter
•
In the U.S., the S&P 500 Index gained 6.4% in the third quarter, and is up 16.4%
year-to-date
•
International markets (as measured by the MSCI All Country World (ex-U.S.) Index)
gained 7.4% for the third quarter, and are up 10.4% for the year
•
–
International developed markets (as measured by the MSCI EAFE Index) gained 6.9% for the
quarter and are up 10.1% for the year
–
International emerging markets (as measured by the MSCI Emerging Markets Index) gained
7.7% for the quarter and are up 12.0% for the year
With so much slack in the U.S. economy, the EU in recession, and slow growth in
China and other emerging markets, we believe potential inflation is well into the future
and are keeping yields ultra-low
–
The 10-year Treasury yield finished at 1.63%, down 1 basis point for the quarter
–
The 2-year Treasury yield finished at 0.23%, down
2 8 basis points for the quarter
Indexes are not available for direct investment.
Economy and Market Review
Recap 3rd Quarter 2012
•
Renewed central bank easing actions dominated the headlines
•
While the U.S. economy may only be the best house in a bad neighborhood, it
appears to be gradually healing
•
Our view is employers have cut their payrolls to the bone and will be forced to hire
more to increase profitability
•
Housing data continues to improve
•
ECB action may stabilize the EU economy next year, but for now, the mild recession
continues and potentially years of de-leveraging and restructuring lie ahead
•
Economic growth in China has slowed
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Economy and Market Review
Outlook for the Future
•
We expect U.S. growth to be a bit better in the second half than the revised 1.3%
number of the second quarter
•
State and local government tax revenue was up in the second quarter so the drag
from public sector layoffs and spending cuts could be waning
•
U.S. household spending is poised to benefit from lower mortgage rates
•
We believe inflation, while a risk of Fed policy, is not an immediate worry
•
The outcome of the election and resolution of the fiscal cliff will at least provide some
certainty about future tax and regulatory policy. Whatever the outcome…we believe
business will adjust and growth will likely accelerate in the second half.
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Economy and Market Review
Outlook for the Future
•
Businesses and investors seem to be waiting for clarity over tax and spending
negotiations before committing resources, and this delay could reinforce slow job
growth and weak consumer spending – potentially nullifying the Fed’s efforts to
stimulate the economy. In this environment, our forecast for year-end interest rates
is:
– A Federal Funds Rate target of 0% to 0.25%
– A 10-year Treasury Rate of 2.00%
– A 2-year Treasury Rate of 0.30%
•
We expect economic growth to come in around 2.2% for 2012
•
Our projection for inflation for year-end 2012 is around 2.2%
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Economy and Market Review
Important Information
©2012 Principal Financial Services, Inc.
No part of this presentation may be reproduced or used in any form or by any means, electronic or mechanical, including photocopying or
recording, or by any information storage and retrieval system, without prior written permission from the Principal Financial Group®.
Information provided by Principal Global Investors, a member of the Principal Financial Group.
The information in this document has been derived from sources believed to be accurate as of September 30, 2012. Information derived from
sources other than Principal Global Investors or its affiliates is believed to be reliable; however, we do not independently verify or guarantee its
accuracy or validity.
The information in this document contains general information only on investment matters and should not be considered as a comprehensive
statement on any matter and should not be relied upon as such. The general information it contains does not take account of any investor's
investment objectives, particular needs or financial situation, nor should it be relied upon in any way as forecast or guarantee of future events
regarding a particular investment or the markets in general. All expressions of opinion and predictions in this document are subject to change
without notice.
Subject to any contrary provisions of applicable law, no company in the Principal Financial Group nor any of their employees or directors gives
any warranty of reliability or accuracy nor accepts any responsibility arising in any other way (including by reason of negligence) for errors or
omissions in this document.
All figures shown in this document are in U.S. dollars unless otherwise noted.
Past performance is not a reliable indicator of future performance and should not be relied upon as a significant basis for an investment
decision. You should consider whether an investment fits your investment objectives, particular needs and financial situation before making any
investment decision.
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Economy and Market Review
Important Information
Standard & Poor's 500 Index is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock
market.
The MSCI ACWI (All Country World (ex.U.S.) Index) Index is a free float-adjusted market capitalization weighted index that is designed
to measure the equity market performance of developed and emerging markets.
MSCI - EAFE Index NDTR D is listed for foreign stock funds (EAFE refers to Europe, Australia, and Far East). Widely accepted as a
benchmark for International stock performance, the EAFE Index is an aggregate of 21 individual country indexes.
MSCI - Emerging Markets NDTR D Index measures equity market performance in the global emerging markets. It consists of 26
emerging market countries in Europe, Latin America and the Pacific Basin.
Indices are unmanaged and do not take into account fees, expenses and transaction costs. Indices are not available for direct
investment.
Insurance products and plan administrative services are provided by Principal Life Insurance Company. Principal Life and Principal
Global Investors are members of the Principal Financial Group, Des Moines, IA 50392.
t12101502b5 – 10/2012
PQ 4927
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General Employee Plan –
Target Allocation By Asset Class
General Employee Plan –
Target Allocation By Investment Option
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General Employee Plan –
Target Allocation By Investment Option
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General Employee Plan –
Asset Allocation By Asset Class
General Employee Plan –
Asset Allocation By Investment Option
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General Employee Plan –
Asset Allocation By Investment Option
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General Employee Plan
International Exposure
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Investment Option by Style Box
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Investment Option by Style Box
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General Employee Plan
Performance – 9/30/2012
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Professional/Management Plan –
Target Allocation By Asset Class
Professional/Management Plan –
Target Allocation By Investment Option
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Professional/Management Plan –
Target Allocation By Investment Option
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Professional/Management Plan –
Asset Allocation By Asset Class
Professional/Management Plan –
Asset Allocation By Investment Option
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Professional/Management Plan –
Asset Allocation By Investment Option
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Professional/Management Plan
International Exposure
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Investment Option by Style Box
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Investment Option by Style Box
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Professional/Management Plan
Performance – 9/30/2012
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