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“The Future is Your Decision”

“The Future is Your Decision”

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“The Future is Your Decision”

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  1. “The Future is Your Decision” PTRA May 2009 Presented By: Institute for Trend Research Alan Beaulieu alan@ecotrends.orgwww.ecotrends.org

  2. US Industrial Production to Gross Domestic Product3/12 Rates-of-Change

  3. 3 Example: Revenue 12MMT 12MMT: Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 12MMT = 18.70 12MMT = 18.97 12MMT = 17.54 3MMT = 4.63 3MMT = 5.14 3MMT = 4.98 1.47 1.51 1.65 1.75 1.76 1.64 1.71 1.74 1.54 1.44 1.24 1.26 1.74 3MMT = 4.22 3MMT = 3.95 3MMT = 4.24 8.2%

  4. RATE-OF-CHANGE ACTUAL MONTHLY DATA AS OF 4/09 ACTUAL MONTHLY DATA AS OF 4/08 = 1/12 3-MOS MOVING TOTAL (3MMT) AS OF 4/09 3-MOS MOVING TOTAL (3MMT) AS OF 4/08 = 3/12 ANNUAL MOVING TOTAL (12MMT) AS OF 4/09 ANNUAL MOVING TOTAL (12MMT) AS OF 4/08 = 12/12

  5. US Total Industrial Production Index2002 = 100, S.A. 1/12 12/12 Actual 12MMA Source: ITR’s EcoTrends® Monthly Economic Report

  6. US Industrial Production IndexForecast Through December 2011Annual Average Index Debt Interest Rates Unemployment Inflation Credit Crunch International scope Elections Oil Home Prices Source: ITR’s EcoTrends® Monthly Economic Report

  7. “I sincerely believe ... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.” Thomas Jefferson – 1816

  8. M2 Money SupplyTrillions of 82$ 12/12 1/12 Actual 12MMA Source: ITR’s EcoTrends® Monthly Economic Report

  9. Crude Oil Futures PricesLight & Sweet $ per Barrel 1/12 12/12 Actual 12MMA

  10. Global Industrial Production Indices12/12 Rates-of-Change

  11. Demographics Winning Demographics USA ~ 300 Million grows to 400 – 500 Million India Indonesia Australia Negative Demographics China Europe Japan Russia Source: United Nations

  12. Exports by NationPercentage of Total World Exports of Goods and Services Source: IMF 12 12 9.8 10 10 8.9 8 8 7.2 6 6 5.0 4.6 4.3 4 4 3.5 3.1 2 2 0 0 US Germany China Japan UK France Italy Canada

  13. GOODS & SERVICES AS A PERCENT OF GDP (real) w/o structures

  14. Major Issues Stalking China’s Future“A Tiger on Steroids” • Banking System* (Relational & ‘Not for Profit’) • Legal System* (Court of no appeals) • Government Interference/Control* • Environmental (Water, Air, Land Pollution) • Health Issues • Negative Demographics • Competition for Resources and ‘Cheap’ Labor – (Philippines, India, Vietnam, Thailand, E. Europe…) • Civil Unrest (Pollution, wages, abuse, health care, education…) • Increasing US protectionism sentiment (currency)

  15. US Industrial Production Index to Foods Production12/12 Rates-of-Change -3.0% 2.9%

  16. US Industrial Production to Beverage Production12/12 Rates-of-Change -3.9%

  17. US Industrial Production to Semiconductor Shipments New Orders12/12 Rates-of-Change -5.5% Struggle toward 0% in 2010

  18. US Industrial Production to Semiconductors & Related Equipment Production12/12 Rates-of-Change • 2.9% • 23.9%

  19. US Industrial Production to US Raw Steel Production 12/12 Rates-of-Change -6.8%

  20. US Industrial Production to General Purpose Machinery Production12/12 Rates-of-Change -7.8% -1.4% 8.2%

  21. Nondefense Capital Goods New Orders w/o AircraftBillions of $ 3/12 12/12 3MMT 12MMT Source: ITR’s EcoTrends® Monthly Economic Report

  22. Durable Goods New Orders to Durable Goods InventoriesRates-of-Change Change you can believe in #1

  23. US Industrial Production to Corporate Bond Prices12/12 Rates-of-Change #2 Source: ITR’s EcoTrends® Monthly Economic Report

  24. Purchasing Managers IndexISM 41.6 #3 Source: ITR’s EcoTrends® Monthly Economic Report

  25. U.S. Composite Leading Indicator1996 = 100 1/12 12/12 Actual 12MMA #4 Source: ITR’s EcoTrends® Monthly Economic Report

  26. Stock Prices IndexS&P 500,1941 – 43 = 10 1/12 12/12 Actual #5 12MMA Source: ITR’s EcoTrends® Monthly Economic Report

  27. iShares S&P North Amer Tech-Software (IGV) to US Industrial Production12/12 Rates-of-Change

  28. iShares S&P North Amer Tech-Software (IGV) to Stock Prices12/12 Rates-of-Change

  29. PIMCO Total Return D (PTTDX)Rates-of-Change

  30. PIMCO Total Return D (PTTDX) to US Industrial ProductionRates-of-Change

  31. PIMCO Total Return D (PTTDX) to Stock PricesRates-of-Change

  32. Financial Select Sector SPDR (XLF) to Stock Prices Rates-of-Change

  33. Artio Global High Income A (BJBHX) to Stock PricesRates-of-Change

  34. Industrial Select Sector SPDR (XLI)Rates-of-Change

  35. Industrial Select Sector SPDR (XLI) to Stock PricesRates-of-Change

  36. Federal Express Stock Price Rates-of-Change

  37. FedEx Stock Prices to US Industrial Production12/12 Rates-of-Change

  38. Retail Sales Excluding AutomobilesTrillions of 82-84$ 3/12 12/12 3MMT 12MMT #6 Source: ITR’s EcoTrends® Monthly Economic Report

  39. Consumer Loan Delinquency Rate Source: ITR’s EcoTrends® Monthly Economic Report

  40. Consumer Expectations and Retail Sales

  41. Housing StartsMillions of Units 3/12 12/12 Don’t forget about long-term demographics 3MMT 12MMT Source: ITR’s EcoTrends® Monthly Economic Report

  42. US Industrial Production to Private Non-Residential Construction12/12 Rates-of-Change

  43. Find a way to do business in the “counter-cyclical” or largely unaffected areas: • Energy • Green • Water • Canada / Exports • Higher Education • Health Care Practices • Leisure • Pets • Funeral Services • Alcohol • Security • Legal Services (Diversified)

  44. Company WRates-of-Change

  45. Company W to US Industrial Production12/12 Rates-of-Change Source: ITR’s EcoTrends® Monthly Economic Report

  46. Four Phases Expansion Bankrupt

  47. Phase Management ObjectivesTM: Phase Late C - Warning: • 1. Begin work force reductions • 2. Set budget reduction goals by department • Avoid long-term purchase commitments late in the • price cycle • 4. Concentrate on cash and balance sheet • 5. Reduce advertising & inventories • De-emphasize commodity/services in anticipation of • diminishing margins • 7. Weed out inferior products (lose the losers) • 8. Encourage distributors to decrease inventory

  48. Phase Management ObjectivesTM: Phase Late C - Warning: 9. Identify and overcome any competitive disadvantages 10. Make sure you and the management team are not in denial 11. Cross train key people 12. Watch Accounts Receivable aging 13. Increase the requirements for justification of capital expenditures 14. Evaluate vendors for strength (don’t get caught honoring their warranties with no one to accept returned goods). 15. Manage the backlog through pricing and delivery, try to fill the funnel

  49. Phase Management ObjectivesTM: Phase Early D - Recession: • Continue force reduction • Reduce advertising – be very selective • 3. Continue to avoid long-term purchase commitments • 4. Review all lease agreements • 5. Increase the requirements for justification of capital equipment • 6. Eliminate all overtime • 7. Reduce overhead labor • 8. Combine departments with like capabilities and reduce management • 9. Select targets of opportunity where price will get the business • 10. Tighten credit policies – increase scrutiny • 11. Look for opportunistic purchases • 12. Grab market share as your competitor dies

  50. Phase Management ObjectivesTM: Phase Late D – Recession Early A - Early Recovery • Prepare training programs • 2. Negotiate union contracts if possible • 3. Develop advertising & marketing programs • 4. Enter or renegotiate long-term leases • 5. Look for additional vendors • 6. Capital expenditures & acquisitions considered in light of market-by-market potential • 7. Make acquisitions – use pessimism to your advantage • 8. People will be scared – lead with optimism and “can do” attitude