Transcript 2014 Forecast Dinner: Rich Yamarone Presentation

Economic Indicators to Watch
The Disturbing Economic Tea Leaves
Nashville, TN
Thursday, January 30, 2014
Richard Yamarone
Bloomberg Economics, Bloomberg Economic BRIEF
Author of “The Trader’s Guide to Key Economic Indicators”
Richard Yamarone, [email protected], TEL: 212-617-8737
Twitter: @Yamarone
Jobs, Jobs, Jobs…It’s All About Jobs
Richard Yamarone, [email protected], TEL: 212-617-8737
The Type of Jobs Matter
Richard Yamarone, [email protected], TEL: 212-617-8737
The Top Concern for Businesses
Richard Yamarone, [email protected], TEL: 212-617-8737
Economy Isn’t Advancing Fast Enough to Engender Job Creation
Nonfarm Payrolls vs. Real GDP
Payrolls ('000)
GDP YOY%
1200
6
5
800
4
400
3
2
0
1
-400
0
-800
-1
-2
-1200
-3
-1600
Payrolls (lhs)
-2000
Real GDP (rhs)
-4
-5
-6
-2400
-7
'85
Source: BEA, BLS
'87
'89
'91
'93
'95
'97
'99
NFP T <Index>, GDP CYOY <Index>
Richard Yamarone, [email protected], TEL: 212-617-8737
'01
'03
'05
'07
'09
'11
'13
Economy Operating Well Below its Potential
Real GDP (Blns) vs. Real Potential GDP (Blns)
$14,500
$13,500
$12,500
$11,500
Potential GDP
$10,500
Real GDP
$9,500
$8,500
$7,500
$6,500
CBOPGDPR <Index>, GDP CHWG <Index>
$5,500
1980
1985
1990
1995
Source: BEA, CBO, Bloomberg
Richard Yamarone, [email protected], TEL: 212-617-8737
2000
2005
2010
2015
Hiring not Exactly Brisk
Jobs Created Since Depression Trough*, in thousands
Government
-613
Others Services
184
Leisure/Hospitality
1,348
Healthcare
1,146
Education
286
Temporary
802
Professional
2,211
Financial
181
Information
-50
Utilities
3
Transportation
392
Retail Trade
924
Wholesale Trade
344
Manufacturing
554
Mining & Logging
209
Construction
329
-800
Source: BLS
-500
-200
100
400
*February 2010
Richard Yamarone, [email protected], TEL: 212-617-8737
700
1,000
1,300
1,600
1,900
2,200
2,500
If GDP Dips to 2.0% -- It’s Recession Time
Real GDP (Y/Y %)
14
12
10
8
6
4
2
0
-2
-4
-6
1948
1953
1958
Source: NBER, BEA, Bloomberg
1963
1968
1973
1978
1983
1988
GDP CYOY <Index>
Richard Yamarone, [email protected], TEL: 212-617-8737
1993
1998
2003
2008
2013
Manufacturing Gains Still Not Generating Jobs
Industrial Production MFG vs. Manufacturing Jobs ('000)
19,000
105
18,000
100
17,000
95
16,000
90
15,000
85
14,000
80
13,000
75
12,000
70
11,000
MFG Payrolls (lhs)
65
MFG IP (rhs)
10,000
60
1995
Source: Federal Reserve, BLS
2000
2005
USMMMANU <Index>, IP <Index>
Richard Yamarone, [email protected], TEL: 212-617-8737
2010
Won’t Get Any Jobs from Housing
Residential Construction Spending ($ mls)
Residential Construction Employment (thousands)
700,000
1,200
Spending (lhs)
1,100
600,000
Res Construction Employment (rhs)
1,000
500,000
900
400,000
800
300,000
700
600
200,000
500
100,000
400
Source: U.S. Department of Commerce, Bureau of Labor Statistics, Bloomberg
0
300
1993
1997
2001
USECBURB <Index>, CNSTRESI <Index>
Richard Yamarone, [email protected], TEL: 212-617-8737
2005
2009
2013
Sideways Movements in Housing
Mortgage Bankers Association's
Purchase Applications Index
550
500
450
400
350
300
250
200
150
100
2005
2006
2007
Source: Mortgage Bankers Association
2008
2009
2010
MBAVPRCH <Index>
Richard Yamarone, [email protected], TEL: 212-617-8737
2011
2012
2013
Retailers Headed Out of the Malls
Regional & Strip Mall Vacancies
12.0%
11.0%
10.0%
Strip Mall
Regional & Superregional Malls
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
2000
2003
2006
Source: Reis Inc.
Richard Yamarone, [email protected], TEL: 212-617-8737
2009
2012
Earnings/Analyst Conference Calls
Bloomberg Orange Book
Summary of Commentary on ____________________
Current
Economic
Conditions
By Corporation
ORANGE <GO>
from earning statements commencing July 1, 2010
Richard Yamarone, [email protected], TEL: 212-617-8737
What is Being Said…
“And so we're still seeing that midnight shopping in our stores when that EBT card, it's like a
debit card, when it is ready and it is funded, there are people who are in the store at
midnight because they know it turns on. And they have shopped from like 10:45 to midnight
and they're waiting for that card and then our lines open up. And we've had some of our
busiest ours at midnight.”
Rosalind Brewer, EVP, Wal-Mart April 12, 2011
“I think the most telling indicator for us that economic weakness and employment is the key
issue driving soft volumes, is the fact that we continue to see, as – in contrast to the historical
norms, we continue to see volume pick up heavily at the beginning of each month, and then
steadily erode through the month, being particularly soft in the last week to 10 days of the
month. That just tells us that people are running out of money.”
Gregg Engles, CEO Dean Foods May 10, 2011
“Now clearly when it gets to the end of the month and they've run out of dollars and the
first of month gets there, you'll see some pick-up in sales. I would say it's not as dramatic as
it was two years ago due mostly to the fact that not 100% of those benefits are getting
loaded on to people's cards..”
J. Michael Schlotman, CFO, SVP Kroger May 17, 2011
Richard Yamarone, [email protected], TEL: 212-617-8737
What is Still Being Said…
“…know that 15% of the Americans are living on food stamps today. And we know that
most of them, even after two or three weeks, are short of money...”
Dick Boer, CEO Koninklijke Ahold Nv November 28, 2012
“…the value customers are still stretched. We still are getting a lot of food stamps, a
very high dollar amount and a very high percentage amount, and that is definitely
problematic.”
David Dillion, CEO Kroger October 16, 2012
“…Food stamp usage continues to grow…for a fragile consumer that's seeing volatility
in the economy, is worried about the state of their job or finding a job, maybe using
food stamps to feed their family and is trying to figure out how to put fuel in the car,
it's still a very challenging and uncertain environment.”
Brian Cornell, CEO, Pepsi Americas September 5, 2012
Richard Yamarone, [email protected], TEL: 212-617-8737
Bloomberg Orange Book Sentiment Index Below 50
Bloomberg Orange Book Sentiment Index
54
52
50
48
46
44
42
40
June 15, 2012
Source: Bloomberg
October 15, 2012
ORBOTOTL <Index>
Richard Yamarone, [email protected], TEL: 212-617-8737
February 15, 2013
June 15, 2013
Real Disposable Incomes Trending Lower
Real Disposable Personal Incomes (Y/Y%)
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
-1.00
-2.00
-3.00
-4.00
1990
Source: BEA, Bloomberg
1995
2000
PIDSDCWT <Index>
Richard Yamarone, [email protected], TEL: 212-617-8737
2005
2010
No Typo, Over 47 Million People at or Below Poverty!
Supplemental Nutrition Assistance Program
Number of Participants
50,000,000
45,000,000
40,000,000
35,000,000
30,000,000
25,000,000
2007
Source: U.S.D.A, Bloomberg
2008
2009
2010
FDSPNUM <Index>
Richard Yamarone, [email protected], TEL: 212-617-8737
2011
2012
2013
Poverty Growing Faster than Payrolls
Growth in Food Stamps vs. Nonfarm Payroll Jobs
135
130
125
120
Food Stamps
115
Employment
110
105
100
95
90
6/1/2009
6/1/2010
6/1/2011
Source: USDA, BLS
Richard Yamarone, [email protected], TEL: 212-617-8737
6/1/2012
6/1/2013
Peddle too Slow, and the Bike Tips Over
Real Consumption Expenditures (Y/Y%)
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
-4.0
2000
Source: BEA, Bloomberg
2002
2004
2006
PCE CONC <Index>
Richard Yamarone, [email protected], TEL: 212-617-8737
2008
2010
2012
There is No Holy Grail of Economic Indicators
Richard Yamarone, [email protected], TEL: 212-617-8737
‘Fab Five’ – Dining Out
Spending: Meals at Other Eating Places (Y/Y%)
8
6
4
2
0
-2
-4
-6
'00
Source: BEA, NBER
'03
'06
RPCEDPMB <Index> <GO>
Richard Yamarone, [email protected], TEL: 212-617-8737
'09
'12
‘Fab Five’ – Casino Gambling
Spending: Casino Gambling Y/Y%
24
20
16
12
8
4
0
-4
-8
-12
-16
'00
'03
Source: Bureau Economic Analysis, NBER
'06
RPCEDCAS <Index> <GO>
Richard Yamarone, [email protected], TEL: 212-617-8737
'09
'12
‘Fab Five” – Jewelry & Watches
Spending: Jewelry & Watches Y/Y%
16
12
8
4
0
-4
-8
-12
-16
-20
'00
'03
Source: Bureau Economic Analysis, NBER
'06
RPCEDJRY <Index> <GO>
Richard Yamarone, [email protected], TEL: 212-617-8737
'09
'12
‘Fab Five’ – Cosmetics & Perfumes
Spending: Cosmetics & Perfumes (Y/Y%)
12
9
6
3
0
-3
-6
-9
'00
'03
Source: Bureau Economic Analysis, NBER
'06
'09
RPCEDCOS <Index> <GO>
Richard Yamarone, [email protected], TEL: 212-617-8737
'12
Richard Yamarone, [email protected], TEL: 212-617-8737
‘Fab Five’ – Women’s Dresses
Spending: Women's & Girls' Clothing (Y/Y%)
12
10
8
6
4
2
0
-2
-4
-6
-8
-10
'00
'03
Source: Bureau Economic Analysis, NBER
'06
RPCEDWGC <Index> <GO>
Richard Yamarone, [email protected], TEL: 212-617-8737
'09
'12
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Richard Yamarone, [email protected], TEL: 212-617-8737