The Bullish Outlook Continues

Dr. Mark G. DotzourChief Economist

Real Estate Center at Texas A&M University

Household Debt Service Payments as a Percent of Disposable Personal Income

Household Debt Service Payments as a Percent of Disposable Personal Income

(Per

cent

)

Source: Board of Governors of the Federal Reserve System

Household Net Worth RecoveringAfter Stock Market Rally

Households and Nonprofit Organizations; Net Worth, Level

(Bill

ions

of D

olla

rs)

Source: Board of Governors of the Federal Reserve System

The Oil Market:“Let’s Play Hardball”

Money Supply and Velocity:Actual Money Supply Growing Modestly

Source: Federal Reserve Bank of St. LouisSource: Federal Reserve Bank of St. Louis

(Per

cent

Cha

nge

from

Yea

r Ago

)

MZM Money Stock

Too Much Money Chasing Deals

Too Much Money Chasing Deals

S&P 500 companies have parked $1.9 trillion of profits they have made outside the U.S.

• There is a total of $2.6 trillion in US money market funds.

• A recent report from Bain said PE firms have more than $1 trillion in unused cash at he end of 2013.

• Goldman Sachs has raised $2.4 billion for its second real estate debt fund. With leverage, it will be able to buy $4.2 billion in commercial real estate loans that mature in coming months.

• Carlyle Group raised $5.5 billion in new equity capital in 1Q2014, pushing total assets under management to $198 billion.

Margin DebtDebit Balances at Broker/Dealers

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

100000150000200000250000300000350000400000450000500000

Mill

ions

Source: Standard and Poor’s

Mar 2000 Dow 11,234Mar 2001 Dow 9,106Mar 2002 Dow 7,415

Jul 2007 Dow 14,021Jul 2008 Dow 10,827Jul 2009 Dow 8,087