Transcript PowerPoint Presentation - Greater Phoenix Chamber of Commerce

Bank of Arizona
Economic Outlook 2017
Greater Phoenix Chamber of Commerce
Tuesday, October 11, 2016
Jim Huntzinger, Chief Investment Officer | BOK Financial Corporation
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
Labor Market Vastly
Improved
Civilian Unemployment Rate: 16 yr. +
SA, %
 Unemployment down to 4.9%,
butjob growth is clearly
slowing.
4.9%
Source: Bureau of Labor Statistics/Haver Analytics
 Employment okay, but moving
sideways.
Change in Total Nonfarm Employment
SA,Thous.
Source: Bureau of Labor Statistics/Haver Analytics
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Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
Gross Domestic Product
Positive…but
Real2s/5s
Gross
Domestic
Product
U.S.
Treasury
Yield
Spread
% Change – Annual Rate
SAAR, Bil. Chn. 2009$
 U.S. gross domestic product
positive but with little
momentum.
Source: Bureau of Labor Statistics/Haver Analytics
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Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
Consumer Confidence
of Michigan:
U.S.University
2s/5s Treasury
Yield Spread
Consumer Sentiment
NSA, Q1-66=100
 Consumer confidence overall
solid.
Source: University of Michigan/Haver Analytics
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
U.S. Manufacturing
ISM Manufacturing:
PMI Composite
Index
U.S. 2s/5s
Treasury Yield
Spread
SA, 50+=Increasing
 U.S. manufacturing stuck in
neutral.
Source: Institute for Supply Management/Haver Analytics
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
Existing Home Sales
NAR Total Existing
Home Sales, United States
SAAR, Thous.
 Existing home sales
somewhat restrained by tight
inventories, and affordability.
However home sales are on
track to finish their strongest
year since the financial
crisis.
Source: National Association of Realtors/Haver Analytics
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
Wage Pressure Modestly
Moves Up
Employment Cost Index:
Civilian Workers
% Change – Year to Year SA, Dec-05=100
 Economy at full employment.
Wage pressure developing and
could help the case for
inflation.
Source: Bureau of Labor Statistics/Haver Analytics
 ECI measures wage inflation
and employer paid benefits.
Avg. Hourly Earnings: Prod &
Nonsupervisory: Total Private Industries
% Change – Year to Year SA, $/Hour
 Average hourly earnings finally
moving up.
Source: Bureau of Labor Statistics/Haver Analytics
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
Bull Markets
S&P 500 Historical Bull Markets
1928 to Present
 Second longest lasting bull
market.
 Fourth best performing bull
market.
3/9/09 to Current
90 Mos., 222%
Average 59
Mos., 169%
Bull Market Duration (Months)
Source: Strategies Research Partners, LLC
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
Investment Flows Since
End Of Recession
Net Flows into Mutual Funds + ETFs ($BN)
 Few signs of speculative
excess in domestic equities.
Source: Strategies Research Partners, LLC
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
Disruptors Become The
Disrupted

Amazon vs. Wal-Mart
(Price Per Share Since 2006)
One of the great challenges for the
U.S. in the 21st century will be the
ability to balance the country’s
technological prowess with the
need to “create job.”
Market Cap
# of Employees

A country reliant upon services
(about 85% of the economy) and
consumption (about 70%) presents
a challenge for workers without
high value-added skills to prosper
and thrive.

This tension could indeed be the
question of our times.
AMZN
WMT
$342 BN $222 BN
230,800 1,500,000
Source: Strategies Research Partners, LLC
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
Predicting Election Results
 The equity market has done a
great job of forecasting
presidential election results.
Source: Strategies Research Partners, LLC
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
Central Bank Centric
 Over last eight years, central
banks have taken center stage,
replacing the private economy.
“If you put the federal
government in charge of
the Sahara desert, in five
years, there’d be a
shortage of sand.”
- Milton Friedman
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
U.S. PMI Slowing
U.S. Composite PMI
(ISM) 20% Mfg. + 80%
Non-Mfg. 3 Mo. Avg.
Aug: 53.9%
 Slowing PMI’s are a concern
for 2017.
 They lead leading indicators.
 If trend continues… will
pressure weakest links, Japan
– China – Europe.
Foreign Composite PMI
(CSM) GDP Wts. 3 Mo.
Avg. Aug: 51.4%
Source: Cornerstone Marco l Economic Research
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
Economic & Market Outlook
2015-2016 Themes
The Good



Recession unlikely, consumer and government spending strong.
Equity valuation, high side of normal but, not in red-zone.
Few signs of speculative excessive public stock.
The Bad



Inefficient policy mix.
Negative interest rates.
Little earnings momentum

A VERY COMPLICATED PICTURE.
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
Stereotyping In Europe
Who Is Trustworthy, Arrogant, and Compassionate
European Union nation most likely to be named…
Most
Trustworthy
Least
Trustworthy
Most
Arrogant
Least
Arrogant
Most
Compassionate
Least
Compassionate
Britain
Germany
France
France
Britain
Britain
Germany
France
Germany
Greece
France
France
France
Britain
Germany
Germany
Greece/Italy
France
Germany
Germany
Britain
Italy
Germany
Italy
Germany
Spain
Italy
Germany
Spain
Germany
Italy
Germany
Spain
Spain
Germany
Greece
Greece
Germany
Germany
Greece
Greece
Germany
Poland
Germany
Germany
Germany
Poland
Poland
Germany
Czech Rep.
Germany
Greece
Germany
Slovakia
Czech Rep.
Germany
Views in:
Source: Pew Research Center Q44a-Q46b
© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.
16
Legal Information
Disclaimers
The information provided in this was prepared by Jim Huntzinger, Chief Investment Officer of BOK Financial
Corporation. The information provided herein is intended to be informative and not intended to be advice relative to any
investment or portfolio offered through BOK Financial Corporation (NASDAQ:BOKF). The views expressed in this
commentary reflect the opinion of the author based on data available as of the date this report was written and is subject
to change without notice. This commentary is not a complete analysis of any sector, industry or security. Individual
investors should consult with their financial advisor before implementing changes in their portfolio based on opinions
expressed. The information provided in this commentary is not a solicitation for the investment management services of
any BOKF subsidiary.
BOK Financial Corporation (BOKF) offers wealth management and trust services through various affiliate companies and
non-bank subsidiaries including advisory services offered by BOKF, NA (and its banking divisions Bank of Oklahoma,
Bank of Texas, Bank of Albuquerque, Bank of Arkansas, Bank of Arizona, Colorado State Bank and Trust, and Bank of
Kansas City) and its subsidiaries BOK Financial Asset Management, Inc., and Cavanal Hill Investment Management,
Inc. each an SEC registered investment adviser. BOKF offers additional investment services and products through its
subsidiary BOK Financial Securities, Inc., a broker/dealer, member FINRA/SIPC, an SEC registered investment adviser
and The Milestone Group, also an SEC registered investment adviser.
Investments are not insured by the FDIC and are not guaranteed by BOKF, NA or any of its affiliates.
Investments are subject to risks, including the possible loss of the principal amount invested.
This report may not be reproduced, redistributed, retransmitted or disclosed, or referred to in any publication, in whole or
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prohibited. Receipt and review of this research report constitutes your agreement not to redistribute, retransmit, or
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© 2016 BOK Financial Corporation. Member FDIC. Equal Housing Lender.
Services provided by BOKF, NA doing business as Bank of Albuquerque, Bank of Arizona, Bank of Arkansas, Bank of Kansas City, Bank of Oklahoma, Bank of Texas, Colorado State Bank and Trust.