Presentation Transcript
March 2006: March 2006 “Projecting When Business Cycles Will Change”
Presented By:
The Institute for Trend Research
Brian Beaulieu
brian@ecotrends.org
www.ecotrends.org
US Industrial Production Index Forecast Through December 2008 Annual Average Index: US Industrial Production Index Forecast Through December 2008 Annual Average Index Source: ITR’s EcoTrendsTM Here today Tipping Points- Hard Landing – 2009-2010 Debt
Interest Rates
Demographics
Inflation
Inventories
China – WTO
Elections
Oil
Home Prices
US Industrial Production to Textiles Production Annual Average Indices: US Industrial Production to Textiles Production Annual Average Indices
US Industrial Production to Oil & Gas Extraction Production Annual Data Trends: US Industrial Production to Oil & Gas Extraction Production Annual Data Trends
Exports by Nation Percentage of Total World Exports of Goods and Services: Exports by Nation Percentage of Total World Exports of Goods and Services Source: IMF 10.1 5.9 4.8 4.7 3.8 3.4 9.4 5.7 0 2 4 6 8 10 12 US Germany China Japan France UK Italy Canada 0 2 4 6 8 10 12
Slide8: China Today and Tomorrow
(Aka The Dirty Dozen)
Social Costs vs. Infrastructure
Skilled Labor
Raw Materials
$5 fresh capital to $1 incremental output
Relational Government
FDI – SARS – No Guarantees
Banking System
Negative Demographics
Floating the Yuan
Global Competitiveness
WTO EU denied China Market Status
Pollution 7 of the 10 most polluted cities
Employment – Civilian Labor Force Annual Data Trend: Employment – Civilian Labor Force Annual Data Trend
GOODS & SERVICES AS A PERCENT OF GDP (real) w/o structures: GOODS & SERVICES AS A PERCENT OF GDP (real) w/o structures
Example: Revenue 12MMT: Example: Revenue 12MMT Mar
Apr
May
June
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar 05
05
05
05
05
05
05
05
05
05
06
06
06 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 12MMT:
3MMT = 4.63
3MMT = 5.14
3MMT = 4.98
3MMT = 4.22
3MMT = 3.95
3MMT = 4.24 12MMT = 17.54
12MMT = 18.54
12MMT = 18.70
12MMT = 18.97 8.2%
RATE-OF-CHANGE : ANNUAL MOVING TOTAL (12MMT) AS OF 2/06
ANNUAL MOVING TOTAL (12MMT) AS OF 2/05 = 1/12 3-MOS MOVING TOTAL (3MMT) AS OF 2/06
3-MOS MOVING TOTAL (3MMT) AS OF 2/05 = 3/12 = 12/12 ACTUAL MONTHLY DATA AS OF 2/06
ACTUAL MONTHLY DATA AS OF 2/05 RATE-OF-CHANGE
US Total Industrial Production 12/12 Rate-of-Change: US Total Industrial Production 12/12 Rate-of-Change Source: ITR’s EcoTrendsTM
Company L to US Industrial Production 12/12 Rates-of-Change: Company L to US Industrial Production 12/12 Rates-of-Change
US Industrial Production to Canadian Industrial Production 12/12 Rates-of-Change: US Industrial Production to Canadian Industrial Production 12/12 Rates-of-Change
US Industrial Production to Japan Industrial Production 12/12 Rates-of-Change: US Industrial Production to Japan Industrial Production 12/12 Rates-of-Change Source: ITR’s EcoTrendsTM
US Industrial Production to China Industrial Production 12/12 Rates-of-Change: US Industrial Production to China Industrial Production 12/12 Rates-of-Change
China Cutting Machine Tools to China Industrial Production Index 12/12 Rates-of-Change: China Cutting Machine Tools to China Industrial Production Index 12/12 Rates-of-Change
US Industrial Production to Asia Industrial Production 12/12 Rates-of-Change: US Industrial Production to Asia Industrial Production 12/12 Rates-of-Change
India Industrial Production Index to India Machinery & Equipment excluding Transport Production Index Rates-of-Change: India Industrial Production Index to India Machinery & Equipment excluding Transport Production Index Rates-of-Change
US to Europe Industrial Production Annual Average Data Trends: US to Europe Industrial Production Annual Average Data Trends Source: ITR’s EcoTrendsTM
Indicator Sequence: Indicator Sequence
Four Phases: Four Phases
Slide24: Phase Management ObjectivesTM :
1. Start to phase out marginal opportunities
2. Build inventories in the system
3. Continue placing capital equipment orders
4. Hire "top" people
5. Implement training programs
6. Add sales staff
7. Introduce new product lines
8. Begin advertising and sales promotions
9. Implement plans for facilities' expansion
10. Update standard costs
Phase Late A - Recovery:
Slide25: Phase Management ObjectivesTM :
1. Accelerate training
2. Continue to build inventory
3. Increase prices
4. Find the answers to “what next”
5. Consider outside manufacturing sources if internal resources becoming tight
6. Check the process flow for possible future bottlenecks
7. Open distribution centers
8. Use improved cash flow for corporate governance.
Phase Early B - Growth:
Slide26: Phase Management ObjectivesTM :
1. Stay in stock
2. Penetrate new OEM accounts
3. Develop plan for lower activity in traditional, mature markets
4. Begin missionary efforts into new markets
5. Consider taking on subcontract work if the backside of the cycle looks recessionary
6. Freeze all expansion plans in current core business units
7. Spin off undesirable operations
8. Stay realistic – beware linear budgets
9. Consider selling the business in a climate of maximum “goodwill” Phase Late B Early C - Prosperity:
Slide27: Phase Management ObjectivesTM :
1. Begin work force reductions
2. Reduce advertising
3. Cut training
4. Weed out inferior products
5. Reduce inventories
6. Avoid long-term purchase commitments – late in the price cycle
7. Set budget reduction goals by dept.
8. Encourage distributors to decrease inventory
9. Concentrate on cash and the balance sheet
10. De-Emphasize commodity products/services in anticipation of
diminishing margins
Phase Late C - Warning:
US Industrial Production to General Purpose Machinery Production 12/12 Rates-of-Change: US Industrial Production to General Purpose Machinery Production 12/12 Rates-of-Change
US Industrial Production to General Purpose Machinery Production Annual Data Trends: US Industrial Production to General Purpose Machinery Production Annual Data Trends
US Industrial Production to Paper & Products Production 12/12 Rates-of-Change: US Industrial Production to Paper & Products Production 12/12 Rates-of-Change
General Purpose Machinery Production to Manufacturing Utilization excluding Hi-Tech Industries Annual Data Trends: General Purpose Machinery Production to Manufacturing Utilization excluding Hi-Tech Industries Annual Data Trends
US Industrial Production Index to Industrial Machinery Production 12/12 Rates-of-Change: US Industrial Production Index to Industrial Machinery Production 12/12 Rates-of-Change
US Industrial Production to Machinery New Orders 12/12 Rates-of-Change: US Industrial Production to Machinery New Orders 12/12 Rates-of-Change
US Industrial Production to Equipment & Software Investment 12/12 Rates-of-Change: US Industrial Production to Equipment & Software Investment 12/12 Rates-of-Change
Nondefense Capital Goods New Orders to Material Handling Equipment New Orders 12/12 Rates-of-Change: Nondefense Capital Goods New Orders to Material Handling Equipment New Orders 12/12 Rates-of-Change
Interest Rate Comparison: Interest Rate Comparison
Short-Term Interest Rates to US Gov’t Long-Term Bond Yields Annual Data Trends : Short-Term Interest Rates to US Gov’t Long-Term Bond Yields Annual Data Trends
Mortgage Rates to Federal Funds Raw Data: Mortgage Rates to Federal Funds Raw Data
US Industrial Production to Corporate Bond Prices 12/12 Rates-of-Change: US Industrial Production to Corporate Bond Prices 12/12 Rates-of-Change Source: ITR’s EcoTrendsTM
Corporate Bond Prices to General Purpose Machinery Production 12/12 Rates-of-Change: Corporate Bond Prices to General Purpose Machinery Production 12/12 Rates-of-Change
M2 Money Supply to Retail Sales 12MMT(A) Data Trend Comparison : M2 Money Supply to Retail Sales 12MMT(A) Data Trend Comparison
U.S. Composite Leading Indicator 1996 = 100: U.S. Composite Leading Indicator 1996 = 100 12MMA Actual 12/12 1/12 Source: ITR’s EcoTrendsTM
Purchasing Manager’s Index to General Purpose Machinery Production 12/12 Rates-of-Change: Purchasing Manager’s Index to General Purpose Machinery Production 12/12 Rates-of-Change
ITR Leading Indicator to General Purpose Machinery Production Raw Data to 12/12 Rate-of-Change: ITR Leading Indicator to General Purpose Machinery Production Raw Data to 12/12 Rate-of-Change
New Homes Sales Median Price to Stock Prices Index Data Trends: New Homes Sales Median Price to Stock Prices Index Data Trends
Retail Sales Excluding Automobiles Trillions of 82-84$: Retail Sales Excluding Automobiles Trillions of 82-84$ 12MMT 3MMT 3/12 12/12 Source: ITR’s EcoTrendsTM
Higher Education Expenditures to Retail Sales excluding Autos 12/12 Rates-of-Change: Higher Education Expenditures to Retail Sales excluding Autos 12/12 Rates-of-Change
Housing Starts to Inventory Ratio: Housing Starts to Inventory Ratio
Casino Gambling Expenditures to Housing Starts 12/12 Rates-of-Change: Casino Gambling Expenditures to Housing Starts 12/12 Rates-of-Change
US Industrial Production to Non-Residential Construction Data Trends: US Industrial Production to Non-Residential Construction Data Trends
Fed. Government Cash Account to US Industrial Production Index Data Trends: Fed. Government Cash Account to US Industrial Production Index Data Trends
Consumer Price Index to Crude Oil Futures Prices 12/12 Rates-of-Change: Consumer Price Index to Crude Oil Futures Prices 12/12 Rates-of-Change Source: ITR’s EcoTrendsTM
Nondefense Capital Goods New Orders excluding Aircraft to Steel Scrap Producer Price Index 12/12 Rates-of-Change: Nondefense Capital Goods New Orders excluding Aircraft to Steel Scrap Producer Price Index 12/12 Rates-of-Change
GDP , Bils of US $, Current Prices Percent of World GDP: GDP , Bils of US $, Current Prices Percent of World GDP