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Its pretty worrisome if the FED removes itself out of the equation. Several factors in the economy still show a worrying trend. 1) Take a look at the flow of money (in the last 3 years) into Fixed income vehicles (billions of $'s). 2) Employment data is still not strong as companies went through major cost cutting, laid off a large number of employees to reduce their fixed costs. 3) Investment in equipment, infrastructure and other items is doing ok but its not enough. 4) Residential mortgages and most homes are still under water. 5) Large companies have plenty of cash and see no need to borrow money. 6) Small business can not borrow money since banks are not lending. 7) Europe looks terrible. We need job creation as a priority.
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What’s next for the economy?
Ignore the DOW hitting
all time highs
Click icon to add picture
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Source: JPMorgan Asset Management
S&P 500 Total Leverage
This is not a goodtrend
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Source: JPMorgan Asset Management
Corporate Financing Gap
1) Companies don’t have to borrow2) Banks don’t
want to lend either
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Source: JPMorgan Asset Management
House Inventories
Home inventoriesstill heading in
the wrongdirection
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Source: JPMorgan Asset Management
After Tax Corporate Profits
• Corporate profitsstill at all time highs
and growing• Close to 2008
Levels
• Aggressive costcutting
• Massive layoffs
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Source: JPMorgan Asset Management
S&P Earnings Per Share
Historicallycompanies EPS
has driven S&P and the
markets
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Source: JPMorgan Asset Management
Residential Mortgage Delinquency Rates
While commercialand consumer
loans have somewhatstabilized, residentialmortgages still look
a total mess
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Source: JPMorgan Asset Management
Light Vehicle Sales
Back to average
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Source: JPMorgan Asset Management
Housing Starts
Still below average
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Source: JPMorgan Asset Management
Private Inventories
Needs improvement
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Source: JPMorgan Asset Management
Capital Goods Orders
Needs improvement
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Source: JPMorgan Asset Management
Deploying Corporate Cash
Too much corporatecash sitting around
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Source: JPMorgan Asset Management
Corporate Growth
Good capitalexpendituresactivity butneed more
investment in infrastructure, and hiring more
employees
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Source: JPMorgan Asset Management
Employment
Not enough job growth
1) Many part timejobs
2) Lower level salaries
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Source: JPMorgan Asset Management
European Unemployment
Not a good longterm picture
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Source: JPMorgan Asset Management
US GDP and Economic Growth
Consumptioncan’t keep driving US
GDPChina example:
investmentand consumption%’s are opposite
of US
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Source: JPMorgan Asset Management
Mutual Fund Flows
• Too much moneyhas flowed into
fixed income
• Seems like biginstitutions are the
only players inequity markets
and not the average
American
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Source: JPMorgan Asset Management
Growing your business in an average economy
Having the right business intelligence Finding the right market niches and segments
Identifying and securing strategic partnerships (x3-5 revenue growth)
Getting more out of existing clients (loyalty marketing)
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Source: JPMorgan Asset Management
