April 2015 LIIEA Conference May 21, 2015

p Where Are The World Economies? Although unemployment has improved across the globe since this time last year, there are troubling signs in other key metrics. Inflation is low globally (ex Brazil) and dangerously low in Europe. GDP is holding in there globally, but recent data in the US at least has not been as robust. This could have a potential impact on the fragile state of GDP elsewhere. 1 Key Economic Metrics Source: Bloomberg

p Where Are The World Economies? 2 Key Exchange Rates USD Per Euro USD Per GBP BRL Per USDJPY Per USDMXN Per USD Conclusions The USD has been firmer across the board since mid/late Although it has been slipping the last few months. This should be a slight stimulus to the rest of the world and a slight drain on the US. Source: Bloomberg

p Where Are The World Economies? 3 Important Changes From Last Year OilS&P 500US 10 Year Yield Oil’s tremendous drop over the past 9 months would normally been hailed in the US. However, the degree that to which the US recent recovery has been due the Shale Boom has tempered the euphoria. Despite on-going tension in the US, Saudi pumping has sent oil plummeting. The S&P 500, and stocks in general, have been virtually unstoppable. US long term rates, represented here by the US Government 10 year Bond Yield, have stayed lower, or gone lower, despite the halt of Federal Reserve Bond Purchases. Data Source: Bloomberg

p Where Are The World Economies? 4 Key Risk Factors US: Recent data has delayed market expectations of a rate hike this summer, now priced in for September. US: Focus will be on employment, GDP and inflation data for signs of Fed rate hike timing Europe: Greece. Europe: Focus will be on inflation data especially, as well as business confidence. Europe: Geopolitical pressures. (Ukraine) China: Slowing economic activity. China: Geopolitical issues. (South China Sea) China: Financial institution solvency. Japan: Geopolitical issues.(South China Sea) Japan: Trade Deficit. Brazil: Political Issues/Scandal Brazil: Also focus on inflation. Brazil: Increasing focus on preparation for the 2016 Olympics. Brazil: A tightening in the US will put pressure on rates to go higher in Brazil.

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