Baird Family Wealth Group · Baird Family Wealth Group . Presents: Brian Beaulieu . September 7,...

Baird Family Wealth Group

Presents:

Brian Beaulieu

September 7, 2016

Dallas 5950 Berkshire Lane Dallas, TX 75225 214-373-2974

Milwaukee 777 East Wisconsin Avenue Milwaukee, WI 53202 414-765-7092

Robert W. Baird & Co.

www.BairdFamilyWealthGroup.com

First in Forecasts Since 1948

ITR Economics provides the best economic intelligence to reduce risk and drive practical and profitable business decisions.

Duration 2015 Forecast Result Accuracy

US GDP 18 $16.632 Trillion $16.442 Trillion 98.9%

US Ind. Prod. 17 108.3 (12MMA) 107.1 98.9%

Eur Ind. Prod. 15 100.4 (12MMA) 103.3 97.1%

Canada Ind Prod 17 361.2 (12MMA) C$351.2 97.2%

China Ind Prod 22 607.0 (12MMA) 598.3 98.6%

US Housing 17 1.090 Mils. Units 1.111 Mils. Units 98.1%

US Retail Sales 13 $2.248 Trils deflated $2.244 Trils deflated 99.8%

US Employment 21 147.7 Million 148.8 Million 99.3%

2015 Forecast Results

2

2

First in Forecasts Since 1948

Flubbers

3

CPI forecast 3Q16 3MMA 1.0% v. forecast 2.4% Short-term interest rates forecast 2Q16 .219% v. actual .555% 10-Yr Bond Yields forecast 3Q16 2.78% v. actual 1.55% (est.) Oil prices forecast 3Q16 $60.3 v. actual ~ $45 (est.) USIP forecasted R-o-C stays >zero; actually = Ph D

First in Forecasts Since 1948

Real Gross Domestic Product

Source: BEA 3MMA

10

12

14

16

18

20

10

12

14

16

18

20

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Sep-15GDPCON 3MMA

4

First in Forecasts Since 1948

US Industrial Production to Gross Domestic Product

Sources: FRB, BEA Year-over-Year, Quarter-to-Quarter (3/12)

-6.8%

-2.9% -5.3%

-15.5%

-0.7%

-16

-12

-8

-4

0

4

8

12

-16

-12

-8

-4

0

4

8

12

'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

GDP US IP

GDPUS IP

5

First in Forecasts Since 1948

2016 Global Manufacturing Competitiveness Index

Source: Deloitte Index Score: 100 = High, 10 = Low

6

Rank Country Index Score 1 China 100.0 2 United States 99.5 3 Germany 93.9 4 Japan 80.4 5 South Korea 76.7 6 United Kingdom 75.8 7 Taiwan 72.9 8 Mexico 69.5 9 Canada 68.7 10 Singapore 68.4

2016 (Current) Rank Country Index Score 1 United States 100.0 2 China 93.5 3 Germany 90.8 4 Japan 78.0 5 India 77.5 6 South Korea 77.0 7 Mexico 75.9 8 United Kingdom 73.8 9 Taiwan 72.1 10 Canada 68.1

2020 (Projected)

• Talent is the most important driver of a country’s ability to compete on the global stage

• Cost competitiveness is the second most influential driver

First in Forecasts Since 1948

Real Gross Domestic Product

Source: BEA 3/12 Rate-of-Change

-8

-4

0

4

8

12

16

1950 1960 1970 1980 1990 2000 2010 2020Republican Democrat GDP 3/12

7

First in Forecasts Since 1948

US, Wisconsin and the Midwest Annual GSP Growth Rate

Source: BEA 12/12 Rates-of-Change

-4

-2

0

2

4

6

'00 '02 '04 '06 '08 '10 '12 '14 '16U.S. Wisconsin Midwest

8

First in Forecasts Since 1948

US to Wisconsin Unemployment Rates

Source: BLS

2

3

4

5

6

7

8

9

10

11

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15U.S. Wisconsin

9

July 2016

US 4.9%

WI 4.2%

First in Forecasts Since 1948

Milwaukee County to WI to USA Population Trends

Overall Population Growth (2010-15)

Source: Census Bureau 10

Milwaukee County 1.1% WI 1.5% USA 4.1%

First in Forecasts Since 1948

Millennials as a Percentage of Total Population in Urban Areas

Based on Census Bureau 2014 projection 11

Rank City % 15 Virginia Beach, VA 24.66% 16 San Diego, CA 24.47% 17 Salt Lake City, UT 23.96% 18 Atlanta, GA 23.94% 19 Indianapolis, IN 23.86% 20 Milwaukee, WI 23.73% 21 Minneapolis, MN 23.64% 22 Houston, TX 23.49% 23 Seattle, WA 23.46% 24 Charlotte, NC 23.44% 25 San Antonio, TX 23.38% 26 Dallas, TX 23.31% 27 Chicago, IL 23.26%

First in Forecasts Since 1948

Milwaukee Construction Industry Employment

Seasonally Adjusted, Thousands of Workers

4.8% 3.7%

29.4

20

27

34

41

48

55

62

69

-30

-24

-18

-12

-6

0

6

12

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMA R-O-C

3/12 12/12

3MMA 12MMA

12 Data Source: BLS

Milwaukee-Waukesha-West Allis MSA

First in Forecasts Since 1948

24.5%

15.0%

5.6% 4.6% 3.9% 3.3%

2.9% 2.5%

2.4% 2.1%

1.9% 1.8%

1.7% 1.6% 1.6% 1.2% 1.0% 1.0%

0.9% 0.9%

19.6%

United States

China

Rest of World

Japan

Australia

Percent of 2015 World GDP by Country

Source: IMF, *67% are IMF Estimated Figures 13

*Total 2015 World GDP: $73.171 Trillion, US$

First in Forecasts Since 1948

US States Renamed for Countries with Similar GDPs, 2016

Sources: BEA; IMF 14

Global Leading Indicators

Source: Markit Economics 1/12 Rates-of-Change

15

0.0% -0.8% -1.3%

-60

-40

-20

0

20

40

60

80

-60

-40

-20

0

20

40

60

80

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

EZ Comp PMIEU Manufacturing PMIJP Morgan Global MFG PMI

First in Forecasts Since 1948

US Industrial Production to ITR Leading Indicator™

Sources: FRB, ITR Economics USIP – 12/12 Indicator - Monthly

-15

-10

-5

0

5

10

15

-15

-10

-5

0

5

10

15

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Indicator US IP

Indicator - MonthlyUS IP - 12/12

16

Reported in ITR Trends Report – ITR Advisor

First in Forecasts Since 1948

US Purchasing Managers Index

Source: Institute for Supply Management 1/12 Rate-of-Change

-3.1

-50

-25

0

25

50

75

-50

-25

0

25

50

75

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

1/12

17

As seen in

First in Forecasts Since 1948

Nondefense Capital Goods New Orders w/o Aircraft

Source: Census Bureau Billions of Dollars

-4.8% -4.1%

$765.8

500

750

1000

1250

1500

-60

-40

-20

0

20

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMT R-O-C

3/12 12/12

3MMT 12MMT

18

First in Forecasts Since 1948

Non-Manufacturing Purchasing Managers Index

Source: Institute for Supply Management Above 50 Indicates expansion

55.1

45

50

55

60

65

45

50

55

60

65

'10 '11 '12 '13 '14 '15 '16 '17

MMA R-O-C

Raw Data 12MMA

19

First in Forecasts Since 1948

Nondefense Capital Goods New Orders (excl. Aircraft) to Manufacturing Capacity Utilization

Sources: Census Bureau, FRB Rates-of-Change

-30

-20

-10

0

10

20

30

-30

-20

-10

0

10

20

30

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

New OrdersNew Orders ForecastUtilization Rate

Utilization Rate

New Orders

1/12 12/12

20

US Industrial Production Index to US Owner Occupied Housing Inventory

-6

-4

-2

0

2

4

-15

-10

-5

0

5

10

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18

US IPUS IP ForecastInventory

Inventory

US IP

Sources: FRB, Census Bureau 12/12 Rates-of-Change

21

US Industrial Production Index to Wilshire Total Market Cap

Sources: FRB, Yahoo Finance Rates-of-Change

22

-60

-40

-20

0

20

40

60

-15

-10

-5

0

5

10

15

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18

US IPUS IP ForecastWilshire

Wilshire US IP

3/12

12/12

First in Forecasts Since 1948

S&P500 Stock Prices Index

Source: Wall Street Journal Data Trends

0

400

800

1200

1600

2000

2400

0

400

800

1200

1600

2000

2400

1980 1985 1990 1995 2000 2005 2010 2015 2020

Raw

12MMA

23

First in Forecasts Since 1948

Stock Prices Index

Source: WSJ Raw Data

10

2000

1950 1960 1970 1980 1990 2000 2010 2020Republican Democrat Stock Prices Index - Raw

24

Eisenhower 3.1%

Kennedy 4.6%

Johnson 5.2%

Nixon 2.8%

Carter 3.4%

Reagan/Bush 3.5% 2.3%

Clinton 3.9%

Bush 2.2%

Obama 1.4%

First in Forecasts Since 1948

US Retail Sales Excluding Gas Stations (deflated)

Source: Census Bureau Trillions of Dollars

2.1% 3.3%

2.101

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMT R-O-C 3/12

12/12

3MMT 12MMT

25

First in Forecasts Since 1948

Retail Sales

Source: Census Bureau 12/12 Rates-of-Change

12.8 5.9 5.9

5.4 4.9

3.4 0.5 0.4

-1.2

-2 0 2 4 6 8 10 12 14

Online Retailers

Bldg Materials, Garden, Supplies

Health and Personal Care Stores

Furniture Stores

Light Vehicle Sales

Beer, Wine & Alcoholic Beverage

Clothing Stores

General Merchandise Stores

Jewelry Stores

26

First in Forecasts Since 1948

Housing Starts

Source: Census Bureau Millions of Units

3.3% 8.5%

1.155

0.2

1.0

1.9

2.7

3.5

4.4

5.2

-80

-60

-40

-20

0

20

40

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMT R-O-C

3/12

12/12

3MMT 12MMT

27

Mar ‘13

May ‘11

Dec ‘09 As seen in

First in Forecasts Since 1948

US New Homes Sold

Source: Census Bureau Thousands

21.6% 10.6%

541.0

200

500

800

1100

1400

1700

2000

2300

-75

-60

-45

-30

-15

0

15

30

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMT R-O-C

3/12 12/12

3MMT 12MMT

28

Existing Home Sales

Millions of Units 29

4.2% 4.9%

5.4

4

5

7

8

10

11

13

-48

-36

-24

-12

0

12

24

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMA R-O-C 3/12

12/12

3MMA 12MMA

Source: National Association of Realtors

First in Forecasts Since 1948

Milwaukee Housing Unit Building Permits

Thousands of Units

139.8%

36.7%

3.1 0

3

6

9

12

15

18

21

-200

-150

-100

-50

0

50

100

150

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMT R-O-C

12MMT

3MMT

3/12 12/12

30

Milwaukee-Waukesha-West Allis MSA

Source: US Census Bureau

First in Forecasts Since 1948

Wisconsin Housing Price Index

Year over Year % Change

100

150

200

250

100

150

200

250

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18

Raw

31 Source: Federal Housing Finance Agency

First in Forecasts Since 1948

US to Milwaukee Median Home Sale Prices

Source: National Association of Realtors: Zillow.com Annual Data Trends

$228.3 $227.3

150

165

180

195

210

225

240

150

165

180

195

210

225

240

'02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Milwaukee US

US

Milwaukee

32

Milwaukee-Waukesha-West Allis, MSA

First in Forecasts Since 1948

US Consumer Price Index to US Producer Price Index

Source: BLS 1/12 Rate-of-Change

0.8%

-2.2%

-10

-5

0

5

10

-10

-5

0

5

10

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Consumer PriceProducer Price

33

First in Forecasts Since 1948

Commodity Prices

Sources: WSJ, London Metal Exchange, Metalprices.com, Steel Market Update 3/12 Rates-of-Change

0.9% Zinc 17.8% Tin

1.8% Lead 1.3% Alum

35.6% Steel

-11.5% Copper

-100

-50

0

50

100

150

200

-100

-50

0

50

100

150

200

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

All Others ZincTinLeadAluminumSteelCopper

Copper & Steel

34

First in Forecasts Since 1948

US Consumption of Crude Oil & Petroleum Products to Real Gross Domestic Product

Sources: EIA, BEA Data Trends

6

10

14

18

0.4

0.5

0.6

0.7

1985 1990 1995 2000 2005 2010 2015 2020

GDP Trils C2009$

Oil Bils Barrels

Oil Consumption - Raw DataGDP - 3MMA

35

First in Forecasts Since 1948

United States Overview Weekly Oil Price & Rig Count

Sources: EIA, Baker Hughes Rigs: Weekly Count WTI: Average Weekly Price

$0

$20

$40

$60

$80

$100

$120

0

250

500

750

1,000

1,250

1,500

1,750

Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jan 2017

USD/bbl Rig Count

Oil Rigs

WTI Price - Shifted 13 Weeks

36

First in Forecasts Since 1948

US Crude Oil Production

Source: EIA Millions of Barrels per Day

8.7

3

4

5

6

7

8

9

10

11

3

4

5

6

7

8

9

10

11

37

First in Forecasts Since 1948

US Crude Oil Inventories Since January 2014

Source: EIA

200

300

400

500

Jan 2014 May 2014 Sep 2014 Jan 2015 May 2015 Sep 2015 Jan 2016 May 2016 Sep 2016

US Commercial Crude Oil Inventories

Million Barrels

38

First in Forecasts Since 1948

US Carbon Dioxide Emissions

Source: EIA.gov Million Metric Tons

5129.8

4700

4900

5100

5300

5500

5700

5900

6100

6300

4700

4900

5100

5300

5500

5700

5900

6100

6300

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Dec 2012: 5232.0 MMT

Feb 1995: 5219.7 MMT

39

First in Forecasts Since 1948

US Total Renewable Energy Consumption

Source: EIA Quadrillion Btu

9.9

3

4

5

6

7

8

9

10

3

4

5

6

7

8

9

10

40

First in Forecasts Since 1948

Employment – Private Sector

Source: BLS Annual Data Trend

41

85

95

105

115

125

85

95

105

115

125

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Employment Mils of Jobs

Private Sector Employment Growth Job Openings Involuntary Part Time Employment Quit Rate – Rising

10.7% C 2.1% C

-10.0% A

First in Forecasts Since 1948

Wisconsin to Milwaukee County Wage & Salary Jobs (number of jobs)

Annual data through 2014 12/12 Rates-of-Change

1.4% 0.7%

-6

-4

-2

0

2

4

6

-6

-4

-2

0

2

4

6

1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020

Wisconsin

WisconsinMilwaukee County

Milwaukee County

42

Employment of Age 25 & Over: High School Graduate Compared to College Degree & Above

51.8

33.6

25

35

45

55

25

35

45

55

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Degree and Above

High School Graduate

Source: BLS Annual Data Trends

43

Earnings and Unemployment Rates by Educational Attainment, 2015

First in Forecasts Since 1948

US Overall Wage Growth

Source: FRB Atlanta Percent

0

1

2

3

4

5

'06 '08 '10 '12 '14 '16 '18 '20

Raw Data

45

First in Forecasts Since 1948

Wisconsin to Milwaukee County Average Annual Wages

Data through Dec 2015 12/12 Rates-of-Change

3.7% 2.7%

-2

0

2

4

6

-2

0

2

4

6

'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

Wisconsin

WisconsinMilwaukee County

Milwaukee County

46

First in Forecasts Since 1948

Minimum Wage and Supply & Demand

by Dr. N. Gregory Mankiw

Source: Principles of Macroeconomics 47

First in Forecasts Since 1948

Mortgage Rates to Federal Funds

Sources: Federal Reserve Board, WSJ Raw Data

-2

2

6

10

14

18

22

-2

2

6

10

14

18

22

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Mortgage Rates

Federal Funds

48

First in Forecasts Since 1948

National Defense Expenditures to Defense Capital Goods New Orders

Source: Bureau of Economic Analysis, US Census Bureau 12/12 Rates-of-Change

-45

-30

-15

0

15

30

45

60

75

-12

-8

-4

0

4

8

12

16

20

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Orders Expenditures

ExpendituresOrders

Reagan Bush Clinton Bush Carter Obama

49

US Industrial Production Index to US Operations and Maintenance National Defense Budget

-30

-20

-10

0

10

20

30

-15

-10

-5

0

5

10

15

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US IPUS IP ForecastBudget

Budget

US IP

Sources: FRB, The White House 12/12 Rates-of-Change

50

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51

Robert W Baird

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