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www.hifreqecon.com/WebinarJune2016

It Could Be Worse… And It Might Be, But Not YetBritain Ain’t No LehmansCarl Weinberg, Chief Economist

Brexit Vote’s U.S. Fallout: This Too Shall Pass?Jim O’Sullivan, Chief U.S. Economist

Carl B. Weinberg, Chief Economist


HFE Global Webinar — June 27, 2016

United States

China

India Japan

Germany

Russia Brazil

France United Kingdom

Indonesia

Italy

Mexico

Rest Of The World

United Kingdom: Share Of World GDP

Percent Share Of World GDP On PPP Valuation Basis, Source ICP/World Bank




United States

United Kingdom

Japan Singapore

Germany

France

Italy

Rest Of World

United Kingdom: Share Of World Finance Services Industry

HFE SWAG




1.22

1.24

1.26

1.28

1.30

1.32

1.34

Mar 25

Apr 01

Apr 08

Apr 15

Apr 22

Apr 29

May 06

May 13

May 20

May 27

Jun 03

Jun 10

Jun 17

Jun 24

Sterling In Euros, Daily Exchange Rate & Trends

Lines Show 89-, 29-, 9-Day Trends

102

103

104

105

106

107

108

109

Mar 25

Apr 01

Apr 08

Apr 15

Apr 22

Apr 29

May 06

May 13

May 20

May 27

Jun 03

Jun 10

Jun 17

Jun 24

United Kingdom: Daily Price Of 10-Year Gilt

Channels Show 89-, 29-, 9-Day Trends, Spliced To Match 2.0% Gilt Of September 2025

1.37

1.39

1.41

1.43

1.45

1.47

1.49

1.51

Mar 25

Apr 01

Apr 08

Apr 15

Apr 22

Apr 29

May 06

May 13

May 20

May 27

Jun 03

Jun 10

Jun 17

Jun 24

Sterling In U.S. Dollars, Daily Exchange Rate & Trends

Lines Show 89-, 29-, 9-Day Trends

101

102

103

104

105

106

Mar 25

Apr 01

Apr 08

Apr 15

Apr 22

Apr 29

May 06

May 13

May 20

May 27

Jun 03

Jun 10

Jun 17

Jun 24

Germany: Daily Price Of 10-Year Bund

Channels Show 89-, 29-, 9-Day Trends, Spliced To Match 0.5% Bund Of February 2026




-40

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0

01 Q1

01 Q4

02 Q3

03 Q2

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07 Q1

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08 Q3

09 Q2

10 Q1

10 Q4

11 Q3

12 Q2

13 Q1

13 Q4

14 Q3

15 Q2

16 Q1f

United Kingdom: Current Account Balance, £Billions

Quarterly Rate, Line Shows Four-Quarter Moving Average

-10

-5

0

5

10

15

May 06

Nov 06

May 07

Nov 07

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Nov 14

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Nov 15

May 16f

United Kingdom: Growth Of Broad Money And Credit

Bars Are M4, Red Line Is Business Lending, Percent Change Year Ago

-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4

59 63 67 71 75 79 83 87 91 95 99 03 07 11 15

Record!!

United Kingdom: Current Account As Share Of GDP

Quarterly Data 1959 Q1 To 2016 Q1f

750 1000 1250 1500 1750 2000 2250 2500 2750 3000

Mar 01

Mar 02

Mar 03

Mar 04

Mar 05

Mar 06

Mar 07

Mar 08

Mar 09

Mar 10

Mar 11

Mar 12

Mar 13

Mar 14

Mar 15

Mar 16

M4 Total

M4 Lending

United Kingdom: Broad Money Supply M4 And Lending

Billions Of Pounds Sterling




0

200

400

600

800

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1200

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1600

1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016

IMF Measure Of World Trade Value, Billions Of U.S. Dollars

Monthly Data Through February 2016

-25

-20

-15

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-5

0

5

10

15

-20 -15 -10 -5 0 5 10 15 20 25

Feb 02

Feb 03

Feb 04

Feb 05

Feb 06

Feb 07

Feb 08

Feb 09

Feb 10

Feb 11

Feb 12

Feb 13

Feb 14

Feb 15

Feb 16

IMF Measure Of World Trade Volume, Percent Change Year Ago

World Trade Volume In U.S. Dollars, (Right Axis), Black Line Is Three-Month Moving Average Green Line Shows HFE Index Of G-7 + China Industrial Output, (Left Axis)

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0

1

2

3

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7

-30

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0

10

20

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50

69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

World Exports In U.S. Dollars, Percent Change Year Ago, Right Axis World GDP, Percent Change Year Ago, Left Axis

Yearly IMF Data Through 2014, HFE Forecast For 2015 Shown

IMF Measure Of World Trade Value Vs GDP Growth

0

2

4

6

8

10

12

14

16

77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15

Yearly GDP Growth 10-Year Average (Demonstrated Potential) GDP Growth

China: Yearly Economic Growth Rate, Percent


HFE Global Webinar — June 27, 2016 Jim O’Sullivan, Chief U.S. Economist

Daily Notes on the United States

256

328

400

472

544

616

688 -800

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0

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85 90 95 00 05 10 15

Payrolls, Ex-Temporary Census Hiring, ch, 3-Month Average, Thousands (Left) Jobless Claims, Monthly Average, Thousands Per Week (Inverted, Right)

Shaded Bars Denote Recession Periods

1. Sharp Slowing In Payrolls Is Not Being Corroborated In Claims




4.5

5.5

6.5

7.5

8.5

9.5

11 12 13 14 15 16 17 18

Actual Reported Rate Mid-Point Of Fed Projections, As Of Nov 2011 Mid-Point Of Fed Projections, As Of Jun 2013 Mid-Point Of Fed Projections, As Of Jun 2014 Mid-Point Of Fed Projections, As Of Jun 2015 Median Of Fed Projections, As Of Jun 2016

Unemployment Rate, %

Median Fed Estimate For Longer-Run Normal Unemployment Rate: 4.8%

2. Mission Accomplished? Unemployment Has Reached Fed’s Goal




-1

0

1

2

3

4

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6

07 08 09 10 11 12 13 14 15 16

ECI: Private Sector Wages Per Hour, %chya ECI: Private Sector Wages Per Hour, Ex Incentive-Paid Occupations, %chya Productivity Report: Compensation Per Hour, %chya Employment Report: Average Hourly Earnings, %chya Atlanta Fed Per-Hour Wage Tracker, %chya

Tax-Related Income Shifting Into 2012

3. NAIRU Framework Validation? Wage Gains Starting To Edge Up




0

1

2

3

4

05 06 07 08 09 10 11 12 13 14 15 16

Core CPI Core PCE Cleveland Fed Median CPI Atlanta Fed Sticky CPI Cleveland Fed Trimmed-Median CPI Dallas Fed Trimmed-Mean PCE

% Change In Price Index From 12 Months Earlier

Fed Goal For PCE Prices

Core PCE

4. Various Core Inflation Series Have Been Edging Up




100

107

114

121

128

14 15 16

Fed's Nominal Broad Trade-Weighted Dollar Index, Jan 1997 = 100

5. The Dollar: Up In Last Two Years, Down In Last Six Months




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2

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4

2011 2012 2013 2014 2015 2016

US 10-Year Treasury Yield, % (Left) S&P 500 Index (Right)

6. S&P 500 Remains Near Its High




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2

95 98 01 04 07 10 13 16

Bloomberg U.S. Financial Conditions Index*

*Based on 11 financial markets series, covering money markets, bond markets and equity markets; positive readings imply accomodative financial conditions.

Shaded Bars Denote Periods Of Recession

1998 European Sovereign Debt Fears

U.S. Debt-Limit Saga

7. No Sign Of Any Major Change In Financial Conditions




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115

150

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86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Michigan Sentiment Index (Left) Conference Board Confidence Index (Right)

1998 Market Turmoil

Shaded Bars Denote Recession Periods

Debt-Limit Scare

Govt Shutdown

8. Confidence Indexes Have Remained Fairly High

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