7/20/2018

1

Brown Sugar:Deriving Satisfaction through

Data Analysis

By: Anirban BasuSage Policy Group, Inc.

On Behalf of

Michigan Land Title AssociationSummer Convention

July 16th, 2018

Disclaimer: Any resemblance between the presentation’s title and the speaker is purely coincidental.

Get off of My Cloud

IPSOS Global Confidence Index, June 2018

Source: IPSOS

Based on data from Thomson Reuters/Ipsos Primary Consumer Sentiment Index (PCSI).

2

© 2018 Ipsos

US

Largest drops

Turkey

South Africa

Argentina

CONSUMER CONFIDENCE GLOBAL SNAPSHOT Ipsos Consumer Confidence Index

June 2018

Canada

Mexico

Argentina

55.3/ +0.6

61.9/ -0.9

42.5/ -3.3

47.0 /+1.3

Brazil

42.7/ -1.2

50.7/+0.2

Great Britain

France

43.3/-2.4

Spain

44.3/+1.4 Italy

40.9/+2.3

South Africa43.1/ -3.8

Germany

56.8/ +0.2

Poland

51.0/-0.7Sweden

61.0/ -2.9

Hungary

45.2/ +1.2

Israel

55.1/+1.5

Turkey

37.9/-4.2

Saudi Arabia

57.9/+5.3

Russia

42.2/+1.4

China

71.2/+0.9

India

64.1/ -0.9

South Korea

47.7/+2.0

Japan

45.2/+0.2

Australia

53.8/-0.4

48.8/-1.0

Belgium

High Low

CountryIndex/3-month change

Change ≥ +1.5

Change ≥ -1.5

Largest gains

Saudi Arabia

Italy

South Korea

Global Average: 50.4

(3-month change: -0.1)

Highest (over 60) in:

China, India, U.S.,

Sweden

Lowest (below 40) in:

Turkey

Down in 5 countries:

Turkey, South Africa,

Argentina, Sweden,

France

Up in 4 countries:

Saudi Arabia, Italy, South

Korea, Israel

Based on data from Thomson Reuters/Ipsos Primary Consumer Sentiment Index (PCSI).

2

© 2018 Ipsos

US

Largest drops

Turkey

South Africa

Argentina

CONSUMER CONFIDENCE GLOBAL SNAPSHOT Ipsos Consumer Confidence Index

June 2018

Canada

Mexico

Argentina

55.3/ +0.6

61.9/ -0.9

42.5/ -3.3

47.0 /+1.3

Brazil

42.7/ -1.2

50.7/+0.2

Great Britain

France

43.3/-2.4

Spain

44.3/+1.4 Italy

40.9/+2.3

South Africa43.1/ -3.8

Germany

56.8/ +0.2

Poland

51.0/-0.7Sweden

61.0/ -2.9

Hungary

45.2/ +1.2

Israel

55.1/+1.5

Turkey

37.9/-4.2

Saudi Arabia

57.9/+5.3

Russia

42.2/+1.4

China

71.2/+0.9

India

64.1/ -0.9

South Korea

47.7/+2.0

Japan

45.2/+0.2

Australia

53.8/-0.4

48.8/-1.0

Belgium

High Low

CountryIndex/3-month change

Change ≥ +1.5

Change ≥ -1.5

Largest gains

Saudi Arabia

Italy

South Korea

Global Average: 50.4

(3-month change: -0.1)

Highest (over 60) in:

China, India, U.S.,

Sweden

Lowest (below 40) in:

Turkey

Down in 5 countries:

Turkey, South Africa,

Argentina, Sweden,

France

Up in 4 countries:

Saudi Arabia, Italy, South

Korea, Israel

50.4

7/20/2018

2

The business confidence index (BCI) is based on enterprises’ assessment of production, orders and stocks, as well as its current position and expectations for the immediate future. Opinions compared to a “normal” state are collected and the difference between positive and negative answers provides a qualitative index on economic conditions.

OECD Business Confidence Index –Select Regions/CountriesMay 2000 - May 2018

Source: OECD

94.0

95.0

96.0

97.0

98.0

99.0

100.0

101.0

102.0

103.0

104.0

May

-00

No

v-0

0

May

-01

No

v-0

1

May

-02

No

v-0

2

May

-03

No

v-0

3

May

-04

No

v-0

4

May

-05

No

v-0

5

May

-06

No

v-0

6

May

-07

No

v-0

7

May

-08

No

v-0

8

May

-09

No

v-0

9

May

-10

No

v-10

May

-11

No

v-11

May

-12

No

v-12

May

-13

No

v-13

May

-14

No

v-14

May

-15

No

v-15

May

-16

No

v-16

May

-17

No

v-17

May

-18

OECD - Total Euro area (19 countries) United States China

Global Monetary Policy Tightening/EasingAs of June 2018

The CFR Global Monetary Policy Tracker covers fifty-four large countries—mainly those that target inflation in some manner. Tightening policy is indicated in red, loosening in blue. The more a country has raised (lowered) rates, in percentage points, from the most recent trough (peak) in its policy rate, the darker the shade of red (blue). Generally, the policy rate target is the overnight interbank rate, with exceptions indicated.

Source: Council on Foreign Relations (CFR), Global Monetary Policy Tracker

Estimated Growth in Output by Select Global Areas2018 Projected

Source: International Monetary Fund: World Economic Outlook Database, April 2018

2.3%2.3%

2.0%3.4%

7.4%6.6%6.5%

1.7%4.3%

3.4%4.9%

2.9%3.0%

2.1%1.6%

1.2%2.8%

1.5%2.5%

2.1%2.4%2.5%

-6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

BrazilMexico

Latin America & the CaribbeanMiddle East, North Africa, Afghanistan, & Pakistan

IndiaChina

Emerging & Developing AsiaRussia

Emerging & Developing EuropeSub-Saharan Africa

Emerging Market & Developing EconomiesUnited States

CanadaAustralia

JapanItaly

United KingdomFrance

GermanySpain

Euro AreaAdvanced Economies

Annual % Change

2018 Proj. Global Output Growth: +3.9%

2017 Growth (Estimate)

World: 3.8% Euro Area: 2.3%

United States: 2.3% Japan: 1.7%

7/20/2018

3

Start Me Up

0

20

40

60

80

100

120

140

200

5

Feb

-08

Jun

-08

Oct

-08

Feb

-09

Jun

-09

Oct

-09

Feb

-10

Jun

-10

Oct

-10

Feb

-11

Jun

-11

Oct

-11

Feb

-12

Jun

-12

Oct

-12

Feb

-13

Jun

-13

Oct

-13

Feb

-14

Jun

-14

Oct

-14

Feb

-15

Jun

-15

Oct

-15

Feb

-16

Jun

-16

Oct

-16

Feb

-17

Jun

-17

Oct

-17

Feb

-18

Jun

-18

June 2018 = 126.4 where 1985 = 100

Conference Board Consumer Confidence Index2005 – June 2018

Source: Conference Board

NFIB Index of Small Business Optimism: Good Time to Expand1986-2018

Source: National Federation of Independent Business (NFIB)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Jun

-86

Jun

-87

Jun

-88

Jun

-89

Jun

-90

Jun

-91

Jun

-92

Jun

-93

Jun

-94

Jun

-95

Jun

-96

Jun

-97

Jun

-98

Jun

-99

Jun

-00

Jun

-01

Jun

-02

Jun

-03

Jun

-04

Jun

-05

Jun

-06

Jun

-07

Jun

-08

Jun

-09

Jun

-10

Jun

-11

Jun

-12

Jun

-13

Jun

-14

Jun

-15

Jun

-16

Jun

-17

Jun

-18

June 2018:29%

% of respondents who think the next 3 months will be a good time to for small business to expand

7/20/2018

4

Paint It Black – Corporate ProfitsU.S. Corporate Profits After Tax*

Source: U.S. Bureau of Economic Analysis *With Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj); Seasonally Adjusted Annual Rate

$0

$400

$800

$1,200

$1,600

$2,000

1950

Q1

1952

Q1

1954

Q1

1956

Q1

1958

Q1

196

0Q

1

196

2Q1

196

4Q

1

196

6Q

1

196

8Q

1

1970

Q1

1972

Q1

1974

Q1

1976

Q1

1978

Q1

198

0Q

1

198

2Q1

198

4Q

1

198

6Q

1

198

8Q

1

199

0Q

1

199

2Q1

199

4Q

1

199

6Q

1

199

8Q

1

200

0Q

1

200

2Q1

200

4Q

1

200

6Q

1

200

8Q

1

2010

Q1

2012

Q1

2014

Q1

2016

Q1

2018

Q1

$ Billions

2018Q1: $1.92 Trillion

U.S. Job OpeningsMay 2001 through May 2018

Source: U.S. Bureau of Labor Statistics

2.0

3.0

4.0

5.0

6.0

7.0

May

-01

No

v-0

1

May

-02

No

v-0

2

May

-03

No

v-0

3

May

-04

No

v-0

4

May

-05

No

v-0

5

May

-06

No

v-0

6

May

-07

No

v-0

7

May

-08

No

v-0

8

May

-09

No

v-0

9

May

-10

No

v-10

May

-11

No

v-11

May

-12

No

v-12

May

-13

No

v-13

May

-14

No

v-14

May

-15

No

v-15

May

-16

No

v-16

May

-17

No

v-17

May

-18

Job

Op

en

ing

s (M

illi

on

s)

May 2018:6.64M Openings

Net Change in U.S. JobsJune 2002 through June 2018

Source: U.S. Bureau of Labor Statistics

-1000

-800

-600

-400

-200

0

200

400

600

Jun

-02

Oct

-02

Feb

-03

Jun

-03

Oct

-03

Feb

-04

Jun

-04

Oct

-04

Feb

-05

Jun

-05

Oct

-05

Feb

-06

Jun

-06

Oct

-06

Feb

-07

Jun

-07

Oct

-07

Feb

-08

Jun

-08

Oct

-08

Feb

-09

Jun

-09

Oct

-09

Feb

-10

Jun

-10

Oct

-10

Feb

-11

Jun

-11

Oct

-11

Feb

-12

Jun

-12

Oct

-12

Feb

-13

Jun

-13

Oct

-13

Feb

-14

Jun

-14

Oct

-14

Feb

-15

Jun

-15

Oct

-15

Feb

-16

Jun

-16

Oct

-16

Feb

-17

Jun

-17

Oct

-17

Feb

-18

Jun

-18

Th

ou

san

ds

June 2018:+213K

7/20/2018

5

National Nonfarm Employmentby Industry Sector, June 2017 v. June 2018

Source: U.S. Bureau of Labor Statistics

-28

17

57

99

127

261

282

285

308

445

521

-100 0 100 200 300 400 500

Information

Government

Mining and Logging

Other Services

Financial Activities

Leisure and Hospitality

Construction

Manufacturing

Trade, Transportation, and Utilities

Education and Health Services

Professional and Business Services

Thousands, SA

All told 2,374K jobs gained

U.S. Labor Force Participation: Men Ages 25-342000 – 2018

Source: U.S. Bureau of Labor Statistics, Current Population Survey

88%

89%

90%

91%

92%

93%

94%

200

0Q

2

200

0Q

4

200

1Q2

200

1Q4

200

2Q2

200

2Q4

200

3Q2

200

3Q4

200

4Q

2

200

4Q

4

200

5Q2

200

5Q4

200

6Q

2

200

6Q

4

200

7Q2

200

7Q4

200

8Q

2

200

8Q

4

200

9Q

2

200

9Q

4

2010

Q2

2010

Q4

2011

Q2

2011

Q4

2012

Q2

2012

Q4

2013

Q2

2013

Q4

2014

Q2

2014

Q4

2015

Q2

2015

Q4

2016

Q2

2016

Q4

2017

Q2

2017

Q4

2018

Q2

89.2%

-2,000

0

2,600

3,600

3,700

5,900

6,700

7,800

8,200

8,800

12,500

-5,000 -3,000 -1,000 1,000 3,000 5,000 7,000 9,000 11,000 13,000 15,000

Information

Mining and Logging

Financial Activities

Other Services

Manufacturing

Government

Education & Health Services

Trade, Transportation, & Utilities

Professional & Business Services

Leisure & Hospitality

Construction

Michigan Nonfarm Employmentby Industry Sector Groups (SA)May 2017 v. May 2018 Absolute Change

Source: U.S. Bureau of Labor Statistics

MI Total: +57.8K; +1.3%

US Total (SA): +2,400K; +1.6%

*According to the Local Area Unemployment Statistics (LAUS) seriesMI added 28,117 jobs between May 2017 and May 2018.

7/20/2018

6

-3,300

-800

-400

-200

200

1,400

2,100

4,600

5,900

7,700

-5,000 -2,000 1,000 4,000 7,000 10,000

Professional & Business Services

Information

Government

Other Services

Manufacturing

Education & Health Services

Financial Activities

Mining, Logging, & Construction

Trade, Transportation, & Utilities

Leisure & Hospitality

Detroit-Warren-Dearborn MSA Nonfarm Employmentby Industry Sector Groups (NSA)May 2017 v. May 2018 Absolute Change

Source: U.S. Bureau of Labor Statistics

Detroit Total: +17.2K; +0.9%

MI Total (SA): +57.8K; +1.3%

US Total (SA): +2,400K; +1.6%

-400

-300

200

600

700

700

1,900

2,000

2,400

3,900

-1,000 0 1,000 2,000 3,000 4,000

Financial Activities

Information

Other Services

Government

Trade, Transportation, & Utilities

Leisure & Hospitality

Mining, Logging, & Construction

Manufacturing

Professional & Business Services

Education & Health Services

Grand Rapids-Wyoming MSA Nonfarm Employmentby Industry Sector Groups (NSA)May 2017 v. May 2018 Absolute Change

Source: U.S. Bureau of Labor Statistics

Grand Rapids Total: +11.7K; +2.1%

MI Total (SA): +57.8K; +1.3%

US Total (SA): +2,400K; +1.6%

RANK STATE % RANK STATE % RANK STATE %

1 UTAH 3.4 18 KANSAS 1.6 35 ALABAMA 1.1

2 IDAHO 3.1 18 MASSACHUSETTS 1.6 35 DISTRICT OF COLUMBIA 1.1

3 TEXAS 2.9 18 NEW MEXICO 1.6 35 INDIANA 1.1

3 WASHINGTON 2.9 21 OKLAHOMA 1.5 35 IOWA 1.1

5 NEVADA 2.8 21 RHODE ISLAND 1.5 35 NEW YORK 1.1

6 COLORADO 2.7 23 MAINE 1.4 40 ILLINOIS 1.0

7 ARIZONA 2.5 23 MISSISSIPPI 1.4 40 LOUISIANA 1.0

8 NORTH CAROLINA 2.3 23 NEW JERSEY 1.4 40 MINNESOTA 1.0

8 OREGON 2.3 23 OHIO 1.4 43 KENTUCKY 0.8

8 WEST VIRGINIA 2.3 23 SOUTH DAKOTA 1.4 44 CONNECTICUT 0.7

11 FLORIDA 2.1 28 MICHIGAN 1.3 44 WISCONSIN 0.7

12 NEW HAMPSHIRE 1.9 28 DELAWARE 1.3 46 MONTANA 0.6

13 CALIFORNIA 1.8 28 NEBRASKA 1.3 47 MARYLAND 0.5

13 SOUTH CAROLINA 1.8 28 PENNSYLVANIA 1.3 47 ARKANSAS 0.5

13 TENNESSEE 1.8 28 VIRGINIA 1.3 49 VERMONT 0.4

16 GEORGIA 1.7 28 WYOMING 1.3 50 ALASKA -0.2

16 HAWAII 1.7 34 MISSOURI 1.2 51 NORTH DAKOTA -0.5

Employment Growth, U.S. States (SA) May 2017 v. May 2018 Percent Change

Source: U.S. Bureau of Labor Statistics

U.S. Year-over-year Percent Change: +1.6%

7/20/2018

7

Rank MSA % Rank MSA %

1 Orlando-Kissimmee-Sanford, FL 3.5 14 Atlanta-Sandy Springs-Roswell, GA 1.7

2 Dallas-Fort Worth-Arlington, TX 3.4 15 Boston-Cambridge-Nashua, MA-NH 1.6

3 Seattle-Tacoma-Bellevue, WA 3.3 16 Baltimore-Columbia-Towson, MD 1.5

4 Phoenix-Mesa-Scottsdale, AZ 3.1 16 Minneapolis-St. Paul-Bloomington, MN-WI 1.5

4 Riverside-San Bernardino-Ontario, CA 3.1 18 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 1.4

6 Denver-Aurora-Lakewood, CO 2.819

Washington-Arlington-Alexandria, DC-VA-MD-WV

1.37 Charlotte-Concord-Gastonia, NC-SC 2.7

8 Houston-The Woodlands-Sugar Land, TX 2.6 19 Los Angeles-Long Beach-Anaheim, CA 1.3

9 Portland-Vancouver-Hillsboro, OR-WA 2.3 21 New York-Newark-Jersey City, NY-NJ-PA 1.2

9 Tampa-St. Petersburg-Clearwater, FL 2.3 22 Detroit-Warren-Dearborn, MI 0.9

11 San Antonio-New Braunfels, TX 2.2 22 Miami-Fort Lauderdale-West Palm Beach, FL 0.9

11 San Diego-Carlsbad, CA 2.2 22 St. Louis, MO-IL 0.9

13 San Francisco-Oakland-Hayward, CA 1.8 25 Chicago-Naperville-Elgin, IL-IN-WI 0.8

Employment Growth, 25 Largest Metros (NSA)May 2017 v. May 2018 Percent Change

Source: U.S. Bureau of Labor Statistics, Current Employment Statistics (CES) Survey

Unemployment Rates, 25 Largest Metros (NSA)May 2018

Source: U.S. Bureau of Labor Statistics, Current Employment Statistics (CES) Survey. Note: 1. Area boundaries do not reflect official OMB definitions.

U.S. Unemployment RateMay: 3.8% June: 4.0%

Rank MSA UR Rank MSA UR

1 Denver-Aurora-Lakewood, CO 2.3 11 Dallas-Fort Worth-Arlington, TX 3.4

1 Minneapolis-St. Paul-Bloomington, MN-WI 2.3 11 Phoenix-Mesa-Scottsdale, AZ 3.4

3 San Francisco-Oakland-Hayward, CA 2.4 11 Portland-Vancouver-Hillsboro, OR-WA 3.4

4 San Diego-Carlsbad, CA 2.9 17 Miami-Fort Lauderdale-West Palm Beach, FL 3.5

5 Orlando-Kissimmee-Sanford, FL 3.0 17 New York-Newark-Jersey City, NY-NJ-PA 3.5

6 Boston-Cambridge-Nashua, MA-NH 3.1 19 Detroit-Warren-Dearborn, MI 3.7

7Washington-Arlington-Alexandria, DC-VA-MD-WV

3.2 19 Los Angeles-Long Beach-Anaheim, CA 3.7

7 San Antonio-New Braunfels, TX 3.219

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

3.79 St. Louis, MO-IL (1) 3.3

9 Tampa-St. Petersburg-Clearwater, FL 3.3 19 Riverside-San Bernardino-Ontario, CA 3.7

11 Atlanta-Sandy Springs-Roswell, GA 3.4 23 Seattle-Tacoma-Bellevue, WA 3.8

11 Charlotte-Concord-Gastonia, NC-SC 3.4 24 Baltimore-Columbia-Towson, MD 4.0

11 Chicago-Naperville-Elgin, IL-IN-WI 3.4 25 Houston-The Woodlands-Sugar Land, TX 4.2

Gimme Shelter

7/20/2018

8

15-Year & 30-Year Fixed Mortgage RatesJuly 1995 through July 2018*

Source: Freddie Mac

*Week ending 7/12/2018

4.02%

4.53%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Jul-

95

Jan

-96

Jul-

96

Jan

-97

Jul-

97

Jan

-98

Jul-

98

Jan

-99

Jul-

99

Jan

-00

Jul-

00

Jan

-01

Jul-

01

Jan

-02

Jul-

02

Jan

-03

Jul-

03

Jan

-04

Jul-

04

Jan

-05

Jul-

05

Jan

-06

Jul-

06

Jan

-07

Jul-

07

Jan

-08

Jul-

08

Jan

-09

Jul-

09

Jan

-10

Jul-

10Ja

n-1

1Ju

l-11

Jan

-12

Jul-

12Ja

n-1

3Ju

l-13

Jan

-14

Jul-

14Ja

n-1

5Ju

l-15

Jan

-16

Jul-

16Ja

n-1

7Ju

l-17

Jan

-18

Jul-

18

Rat

e

15-yr 30-yr

U.S. Households: Owner v. Renter Occupied, 1965-2017

Source: U.S. Census Bureau; Pew Research Center

36.2

75.4 76.2

21.3

34.2

43.1

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

196

5

196

7

196

919

71

1973

1975

1977

1979

198

1

198

319

85

198

7

198

919

91

199

319

95

199

719

99

200

1

200

320

05

200

7

200

9

2011

2013

2015

2017

# of Household Heads (Millions)

Homeowners

Renters

• From 2006-2017 the number of households headed by owners remained relatively flat.

• At the same time, the number of households renting their home increased significantly (+26%).

• The share of renter households also increased—from 31.2% of households in 2006 to 36.1% in 2017.

58%

60%

62%

64%

66%

68%

70%

198

0Q

119

81Q

119

82Q

119

83Q

119

84

Q1

198

5Q1

198

6Q

119

87Q

119

88

Q1

198

9Q

119

90

Q1

199

1Q1

199

2Q1

199

3Q1

199

4Q

119

95Q

119

96

Q1

199

7Q1

199

8Q

119

99

Q1

200

0Q

120

01Q

120

02Q

120

03Q

120

04

Q1

200

5Q1

200

6Q

120

07Q

120

08

Q1

200

9Q

120

10Q

120

11Q

120

12Q

120

13Q

120

14Q

120

15Q

120

16Q

120

17Q

120

18Q

1

2018Q1:64.2%

U.S. Homeownership (NSA)1980Q1-2018Q1

Source: U.S. Census Bureau *NSA: not seasonally adjusted

7/20/2018

9

$0

$10

$20

$30

$40

$50

$60

$70

May

-93

May

-94

May

-95

May

-96

May

-97

May

-98

May

-99

May

-00

May

-01

May

-02

May

-03

May

-04

May

-05

May

-06

May

-07

May

-08

May

-09

May

-10

May

-11

May

-12

May

-13

May

-14

May

-15

May

-16

May

-17

May

-18

$ B

illi

on

s (S

AA

R)

U.S. Private New Multifamily ConstructionMay 1993 through May 2018

Source: U.S. Census Bureau

S&P Case-Shiller Home Price Indices for Select MetrosApril 2018, 12-Month Percentage Change

Source: Standard & Poor’s

0%

2%

4%

6%

8%

10%

12%

3.0% 3.2%4.0%

5.0%5.5% 5.7%

6.6% 6.9%7.4%

8.3% 8.6%

10.9%

12.7%

12-M

on

th %

Ch

an

ge

U.S. Single-Family Housing StartsMay 1999 through May 2018

Source: U.S. Census Bureau

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

May

-99

No

v-9

9M

ay-0

0N

ov-

00

May

-01

No

v-0

1M

ay-0

2N

ov-

02

May

-03

No

v-0

3M

ay-0

4N

ov-

04

May

-05

No

v-0

5M

ay-0

6N

ov-

06

May

-07

No

v-0

7M

ay-0

8N

ov-

08

May

-09

No

v-0

9M

ay-1

0N

ov-

10M

ay-1

1N

ov-

11M

ay-1

2N

ov-

12M

ay-1

3N

ov-

13M

ay-1

4N

ov-

14M

ay-1

5N

ov-

15M

ay-1

6N

ov-

16M

ay-1

7N

ov-

17M

ay-1

8

Th

ou

san

ds,

SA

AR

May 2018: 936K

7/20/2018

10

National Nonresidential Construction Spending by Subsector May 2015 v. May 2018

Source: U.S. Census Bureau

-24.8%-17.6%

-10.8%-10.3%

1.2%4.4%5.0%5.7%

10.3%13.9%

16.8%22.7%

24.2%25.4%

37.7%45.4%

-35% -25% -15% -5% 5% 15% 25% 35% 45% 55%

ManufacturingReligious

PowerSewage and Waste Disposal

Conservation and DevelopmentHighway and Street

Water SupplyHealth CareEducational

TransportationPublic Safety

Amusement and RecreationCommunication

OfficeCommercial

Lodging

3-year % Change

Total Nonresidential Construction: +$47.8B; +6.8%

$0

$10

$20

$30

$40

$50

$60

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Bil

lio

ns

of

$US

Foreign investment increases 85.1% in 2015

Cross-border investment remained elevated in 2016:Although down relative to a record 2015, offshore investment levels still exceeded the pre-2015 high in 2007.

Commercial/Multifamily Offshore Investment Sales Volumes Reach New Heights in 2015/16

Source: Jones Lang LaSalle; Real Capital Analytics Note: Among transactions larger than $5.0 million

Foreign Investment in U.S. Commercial Real EstateTop Destination Markets, 2017

Source: Real Capital Analytics; Colliers International

$1.5

$1.7

$2.0

$2.4

$2.7

$3.2

$3.5

$4.5

$5.0

$9.0

$0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0

Seattle

Atlanta

Dallas

Chicago

Boston

Houston

Los Angeles

San Francisco

Washington, D.C.

New York City

2017 Deals ($Billions)

7/20/2018

11

19th

NervousBreakdown

Gross Domestic Product1990Q1 through 2018Q1*

Source: U.S. Bureau of Economic Analysis *3rd (Final) Estimate

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

199

0Q

1

199

1Q1

199

2Q1

199

3Q1

199

4Q

1

199

5Q1

199

6Q

1

199

7Q1

199

8Q

1

199

9Q

1

200

0Q

1

200

1Q1

200

2Q1

200

3Q1

200

4Q

1

200

5Q1

200

6Q

1

200

7Q1

200

8Q

1

200

9Q

1

2010

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

2016

Q1

2017

Q1

2018

Q1%

Ch

an

ge

fro

m P

rece

din

g P

eri

od

(S

AA

R) 2018Q1: +2.0%

Conference Board Leading Economic Indicators IndexAugust 2007 through May 2018

Source: Conference Board

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

Au

g-0

7N

ov-

07

Feb

-08

May

-08

Au

g-0

8N

ov-

08

Feb

-09

May

-09

Au

g-0

9N

ov-

09

Feb

-10

May

-10

Au

g-1

0N

ov-

10F

eb-1

1M

ay-1

1A

ug

-11

No

v-11

Feb

-12

May

-12

Au

g-1

2N

ov-

12F

eb-1

3M

ay-1

3A

ug

-13

No

v-13

Feb

-14

May

-14

Au

g-1

4N

ov-

14F

eb-1

5M

ay-1

5A

ug

-15

No

v-15

Feb

-16

May

-16

Au

g-1

6N

ov-

16F

eb-1

7M

ay-1

7A

ug

-17

No

v-17

Feb

-18

May

-18

On

e-m

on

th P

erc

en

t C

ha

ng

e

May 2018: 109.5 where 2016: 100

7/20/2018

12

U.S. Saving Rate, May 2005 – May 2018 (Savings as Percentage of Personal Disposable Income)

Source: U.S. Bureau of Economic Analysis

0.0

2.0

4.0

6.0

8.0

10.0

12.0

May

-05

Sep

-05

Jan

-06

May

-06

Sep

-06

Jan

-07

May

-07

Sep

-07

Jan

-08

May

-08

Sep

-08

Jan

-09

May

-09

Sep

-09

Jan

-10

May

-10

Sep

-10

Jan

-11

May

-11

Sep

-11

Jan

-12

May

-12

Sep

-12

Jan

-13

May

-13

Sep

-13

Jan

-14

May

-14

Sep

-14

Jan

-15

May

-15

Sep

-15

Jan

-16

May

-16

Sep

-16

Jan

-17

May

-17

Sep

-17

Jan

-18

May

-18

Sa

vin

gs

Ra

te (

%)

May 2018:3.2%

Global Debt Reaches All Time Highs (IIF)

Sources: 1. Institute of International Finance (IFF), Global Debt Monitor. 2. Business Insider. 3. The Telegraph. 4. Reuters.

• According to the International Institute of Finance (IIF), global debt has reached an all-time high in 2016;

• At $247 trillion as of 2018Q1, global debt—including household, government, and corporate—now represents 318% of global GDP;

• Last year the IMF warned of risks to the global economy:

• “sheer size of debt could set the stage for an unprecedented private deleveraging process that could thwart the fragile economic recovery”

Shiller Price-Earnings Ratio, 1980-2018

Source: Robert J. Shiller Data used in his book, "Irrational Exuberance" Princeton University Press.

0

10

20

30

40

50

Jun

-80

Jun

-81

Jun

-82

Jun

-83

Jun

-84

Jun

-85

Jun

-86

Jun

-87

Jun

-88

Jun

-89

Jun

-90

Jun

-91

Jun

-92

Jun

-93

Jun

-94

Jun

-95

Jun

-96

Jun

-97

Jun

-98

Jun

-99

Jun

-00

Jun

-01

Jun

-02

Jun

-03

Jun

-04

Jun

-05

Jun

-06

Jun

-07

Jun

-08

Jun

-09

Jun

-10

Jun

-11

Jun

-12

Jun

-13

Jun

-14

Jun

-15

Jun

-16

Jun

-17

Jun

-18

June 2018:32.09

7/20/2018

13

Shattered! --- Bitcoin Price, 2014-2018

Source: CoinMarketCap.com

$0

$4,000

$8,000

$12,000

$16,000

$20,000

7/1/

14

9/1

/14

11/1

/14

1/1/

15

3/1/

15

5/1/

15

7/1/

15

9/1

/15

11/1

/15

1/1/

16

3/1/

16

5/1/

16

7/1/

16

9/1

/16

11/1

/16

1/1/

17

3/1/

17

5/1/

17

7/1/

17

9/1

/17

11/1

/17

1/1/

18

3/1/

18

5/1/

18

7/1/

18

7/8/2018:$6.8K

Time is on My Side, at least in the Near-Term

• U.S. setting up for best year since ’05. . .;

• Global economy better than it was -- still;

• Job opportunities are abundant;

• Corporate profitability elevated;

• Consumer and business confidence has been surging. . .;

• And now tax cuts, including major reductions in corporate taxes . . . What could go wrong?;

• A lot can go wrong – that’s always true – first there are the Black Swan threats:

• “I’m forever blowing bubbles, pretty bubbles in the air, they fly so high, nearly reach the sky, and like my dreams, they fade and die”;

• Where are all the pretty bubbles? Equity markets? U.S. bond market? Commercial real estate? Bitcoin?

• 2018 will be fine – better than fine –2019 might be, too, but beyond that, potential deleveraging cycle prompted by a repricing of assets – Bad!!!!

Thank YouPlease follow me on Twitter -- @sageanirban

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