EGG & POULTRY INDUSTRY CONFERENCE NOVEMBER 2015 TWITTER @USTEWART WWW.7IM.CO.UK
2020 – A GLOBAL VIEW
A STORM WARNING?
THE NEWS FEARS • China slowdown • Emerging Market effects • US Interest rates • Eurozone • Greece • Immigration • UK Deficit & Growth
A KEY MOMENT OF ECONOMIC CHANGE 5
HOW BAD IS IT? SOURCE BLOOMBERG.
UNPRECEDENTED STIMULI • Low Rates • Infrastructure Spending • Quantitative Easing • Commodity Price falls
AFTER THE STIMULANTS....
OLD NEWS……………….. • China Slowdown • US growth still not at pre-recession trend • Rate hikes will prompt slowdown? • Eurozone future • Greece • Ukraine • ISIS • China Sea Sores
BIG IMBALANCES • Government debt and deficits • Consumer debt • Trade balances • Income distribution
AFTER THE “NOUGHTIES”-THE TINY TEENS • Low Growth • Low Inflation • Low Interest Rates • Low Returns Now make some Money!
OIL PRICES Oil price move is still happening! 59% fall 22% fall
COMMODITIES - ROLLING 5 YEARS Copper - Spot Price - LME (US$/MT) High: 9986.00 Low: 5063.75 Last: 5281.00 11,000 11,000 RecessionPeriods- United States RecessionPeriods- United Kingdom 10,000 10,000 9,000 9,000 8,000 8,000 7,000 7,000 6,000 6,000 5281.00 5,000 5,000 4,000 4,000 01/11 01/12 01/13 01/14 01/15 BALTIC DRY, COPPER, GOLD, BRENT CRUDE (WTI)
UNEMPLOYMENT IS FALLING GREEN – EUROPEAN, RED - UNITED STATES, YELLOW - UNITED KINGDOM
CONSUMER CONFIDENCE & Savings US, EUROZONE, UK AND JAPAN CONSUMER CONFIDENCE - 30 YEARS. GREY AREAS MARK RECESSIONS – EZ MEASUREMENT AGAINST GERMANY. GREEN – US AND UK HOUSEHOLD SAVINGS RATIO’S
RATES – LOWER FOR LONGER LHS – BASE RATES RHS 10 YEAR TREASURY YIELDS, US (RED) JAPAN (GREEN), UK ORANGE, GERMANY (PINK) CANADA (BLUE) GLOBAL YIELDS GRADUALLY INCREASING.
UK & US INTEREST RATE EXPECTATIONS US BASE RATES (GREEN) UK BASE RATES (ORANGE) EXPECETED TO BE AT 2% IN EXPECTED TO BE AT 2% IN SEPTEMBER 2019 SEPTEMBER 2018 SOURCE BLOOMBERG
FX – GBP V US$, EURO AND JPY – 12M U.S. Dollar per British Pounds Daily 1.55 0.00 -0.12% VWAP: High: 100.19 Low: 89.67 Chg: -5.26% 115 (INDEX) U.S. Dollarper British Pounds - Price (INDEX) Japanese Yen per BritishPounds - Price (INDEX) Euro per British Pounds - Price 110 108.59 105 104.13 100 95 94.74 90 85 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep WITH OVERSEAS MARKETS FAVOURED CURRENCY MANAGEMENT KEY.
WHICH COMPANIES ARE GROWING PROFITS?
GDP GROWTH STILL POSITIVE AVERAGE GLOBAL GROWTH CLOSE TO STATIC BUT CHANGES IN REGIONAL GROWTH RATES NOTABLE.
USA Housing improving, Economic growth Rate Change? unemployment uninspiring falling Corporate Earnings Iran/Cuba Fuel Costs still rising! Geopolitics
US DEFICIT REDUCTION
GASOLINE PRICE FALL • Gas at the pumps US Average Gasoline Price have fallen over 20% 4.25 in the last 6 months 4.00 3.75 • The American motorist 3.50 is $800 a year better 3.25 off which is equivalent 3.00 to a 2% pay rise. 2.75 2.50 • However yet to see 2.25 spending. Americans O J A J O J A J O J A J O J A J O J A J are saving rather than 2010 2011 2012 2013 2014 2015 consuming.
THE WORLD BENEFITS Countries who export to the US Country % of exports to US China 16.7% Japan 17.8% South Korea 10.7% Germany 7.9% France 6.9% UK 10.5%
American Ejukashon? 26
EU LEVEL PLAYING FIELD.....
SOURCE: TWITTER - @MARK_WILLEM5
TRUSTED GERMAN ENGINEERING?
EUROZONE The Future of the Further financial QE = Euro integration Growth? “Grexit”? Widespread Company earnings economic rising at double Deflation? pickup digit rates
THE SOUFFLE RISES – at last!
WEAK CURRENCY HELPS EXPORTS Euro over 10% weaker than start of 2014!
WATCH IT SHORTY! SOURCE: NEWEUROPE.EU/EPA
THE AGONY & THE ECSTASY
“GREAT ECONOMY -PITY ABOUT THE POLITICIANS” 36
UK Jobs & growth vs No Power or 2 Unions Income Tax Transport strategy World’s Fixing the banking Tax reform? 5 th - 8 th -10 th system ?
THE UKTI INWARD INVESTMENT REPORT 2014/15 38
UK – SHE’s GOT PULLING POWER! 85,000 new jobs 50% Increase UK UK No1 in Europe INWARD £1trillion (2014) UK 3 rd Globally INVESTMENT 1,988 Projects UK top for HQs UK Client ECONOMY
KRANKIES – THE LOVECHILD? SOURCE: NEWEUROPE.EU/EPA
KEYS TO ECONOMIC CONFIDENCE INEXPERIENCED POLITICIANS INEXPERIENCED CIVIL SERVICE CYNICAL MEDIA HOBBLED BANKING
HOW HAS THE UK FARED? UK trade balance The UK exports services such as: •Finance 5 •Accounting •Legal 3 •Tourism •University education 1 -1 -3 -5 -7 1998 2000 2002 2004 2006 2008 2010 2012 2014 Trade Balance Trade in Services as % of GDP Trade in Goods as % of GDP SOURCE: GOOGLE IMAGES
Real wages ticking up RHS - GREEN – WAGE INFLATION V RED UK CONSUMER PRICE INFLATION LIVING STANDARDS STARTING TO PICK UP AT LAST?
GOVERNMENT DEFICIT UK Govt’ forecast to borrow £70bn in 2015/2016 SOURCE: ONS
THE LONG AND WINDING ROAD INFLATION LIKELY TO STAY LOW IN THE MID-TERM SOURCE: BANK OF ENGLAND
UK PMIs 65.0 62.5 60.0 57.5 55.0 52.5 50.0 47.5 45.0 S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A 2012 2013 2014 2015 Markit/CIPS UK Services PMI Business Activity SA Construction Markit/CIPS UK Manufacturing PMI SA SOURCE:
PRICE SENSITIVITY - BONDS 1% fall in yields : 100.0% 30yr = +20% 10yr = +9% 80.0% 3 Yr = +3% 1% rise in yields : 30yr = -13% 60.0% 10yr = -8% Change in Price 3 Yr = -3% 40.0% 20.0% 0.0% -20.0% -40.0% Change in Yield 30Yr 10Yr 3Yr
UK POSITIVE ISSUES • “Re-shoring” – Noodles & Antler • Record Car production • Steel – 40 year peak • Non EU exports now higher than EU • Rice Cookers to Asia! • Financial/Professional trade exports £55bn • Over half million business start ups 550,000 • New Financing structures • Record Employment
NOW - SOME RADICAL COMMON SENSE • Tax Reform • NI & SME • Stamp Duty – transactions & property • Sugar & Fat Tax • Pension Reform • Auto E • Education • Investment Reform • New Funding schemes • Housing Free & Leasehold • Infrastructure
JAPAN Debt 220%+ of Islands Dispute Trade Turnaround GDP Abe - nomics Yen Weakness Nappy Sales
THE CHINA SEA -SORES
FEEL THE LOVE…….
BROKEN BRICS? China India Russia Change of Life Post election Rule of law? Brazil South Africa Turkey Weaker Exports Political issues On the Cusp
...FAVOUR Commodity IMPORTERS MSCI Emerging Markets MSCI Asia Ex Japan China China South Korea South Korea Taiwan Taiwan Brazil Brazil South Africa South Africa India India Mexico Mexico Russia Russia Malaysia Malaysia Indonesia Indonesia Thailand Thailand Turkey Turkey Poland Poland Chile Chile Philippines Philippines Hong Kong Singapore SOURCE: ISHARES/7IM 55
HOW BAD IS THE CHINA SLOWDOWN? Solid growth in crude petroleum import volumes Retail sales growth running >10% Slowdown in industrial production rate of growth Wage growth running around 10% p.a.
THE NEW LEADERSHIP
THE NEW LEADERSHIP
RIDING THE ROLLERCOASTER Shanghai Index (white) vs MSCI World (yellow) YTD
KEY RISKS to the VIEW EUROZONE GREEN/K SHOOTS CHINA CHANGE of LIFE UK SULLEN GROWTH & NERVES US DEBT, DEFICIT & DEMAND
REBUILDING INVESTMENT CONFIDENCE
KEY WORD FOR ECONOMY - CONFIDENCE
FTSE 100
FTSE 100 TOTAL RETURN
POWER OF COMPOUNDING Today’s value of £100 invested at the end of 69 years 1 – without reinvesting income Nominal Equities £9,148 2 – gross income reinvested Nominal Equities £179,265 SOURCE: BARCLAYS CAPITAL
CHOOSING NEXT YEAR’S TOP Asset Class COULD YOU? SOURCE: BLOOMBERG, THOMSON REUTERS AS AT 1 JANUARY 2015
IT WORKS! SOURCE: BLOOMBERG, THOMSON REUTERS AS AT 1 JANUARY 2015
YOUR OWN PLANNING Investment Mortgage Providers Accountants Your Banks Lawyers Planning Trustees Insurance Client Your Clients
FORWARD FINANCIAL HEADLIGHTS Cash flow – income and expenditure ▪ Now ▪ Long term future
SO WHAT DO YOU DO? Think broader family assets and liabilities • Managing family assets Improve Investment Discipline • Reducing Costs • Better than average Returns • Reducing Risks • Lower Volatility • Regular financial planning
FAMILY BALANCE SHEET ASSETS LIABILITIES House Mortgage Car Credit Cards Pension Loans Life assurance ISAs Shares & National Savings Cash NET BALANCE £
REWARDING YOUR HARD WORK
THE ALTERNATIVE?
EGG & POULTRY INDUSTRY CONFERENCE NOVEMBER 2015 TWITTER @USTEWART WWW.7IM.CO.UK
THANK YOU TWITTER @USTEWART WWW.7IM.CO.UK
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