1. War Room 29 August 2012 Jobs + Inequality

2. War Room Monthly macro discussion Using tools in context Update on HiddenLevers Features Your feedback welcome

3. Jobs + Inequality I.Jobs Picture: Current Snapshot II.Comparative: Post-Recession Job Recoveries III.Market Inequality IV.Scenarios

4. HiddenLevers JOBS PICTURE: CURRENT SNAPSHOT

5. Current Snapshot: Long Way To Go Still 5 million jobs from peak

6. Unemployment claims: decreased significantly since 2009 peak Currently not decreasing Currently equal to peak of 2001 recession Current Snapshot: Jobless Claims Now at 2001 Highs 450k

7. Current Snapshot: Muddling Through upticking unemployment this summer unemployment down confidence up

8. approaching 2008 lows Current Snapshot: Recovery + Demographics Singles 5 million jobs lost – 90% recovered Married 6 million jobs lost – 22% recovered

9. COMPARATIVE: POST-RECESSION JOB RECOVERIES HiddenLevers

10. Comparative: Post-Recession Job Recoveries source: Bureau of Labor Statistics Qualitative: Character of recovery similar to 1990 + 2001 Quantitative: % job loss dramatically more

11. Comparative: 2000s = Jobless Recovery Losers -Manufacturing -Automotive Winners -Professional services -Healthcare

12. MARKET INEQUALITY HiddenLevers (Rich Kids of Instagram)

13. Inequality – Top 1% versus The Rest Takeaways - excluding top 1%, income inequality has not risen over past 20 years - system that works well for richest, doesn’t for the rest - Income share for top 1% is at Great Depression era highs

14. Source: Economic Policy Institute Fortune 500 CEOs CEO/worker pay ratio has risen exponentially – 20x in 1965 to 200x today CEO pay has accelerated even faster than top 1% income Shareholders could affect things – vote down CEO packages Winner-take-all Ratio of CEO to Worker Compensation: 1965-present Inequality – Part of General Trend?

15. Baseball Salaries Average MLB salary up 100x since 1970 Median wage across all pro-athletes = 40k (minor leagues) Winner-take-all

16. Startup Billionaires Startups not creating jobs, creating wealth for few Automation = key to many startups success, but eliminates jobs Winner-take-all 12 employees 1b usd acquisition 67 employees 1.65b usd acquisition Inequality – Part of General Trend?

17. Inequality – Russell 2k vs Mega Caps Top 8 Firms outperformed over last 20 years Mega Caps outperformed small caps (and S+P) over last 20 years. All but Apple were huge companies 20 years ago – no cherry picking here Apple demonstrates inequality markets iPhone is king of smartphone market iPad has even greater share of tablet space Winner-take-all Apple - Outlier or new Paradigm?

18. Future: Automation + Change in Workforce Examples: Tesla - new factory uses robots + few humans FoxConn - automating iPhone factories in China, use 90% less workers Amazon – automating logistics, new warehouses devoid of humans Philips – robots replacing workers to make consumer electronics devices Examples: Tesla - new factory uses robots + few humans FoxConn - automating iPhone factories in China, use 90% less workers Amazon – automating logistics, new warehouses devoid of humans Philips – robots replacing workers to make consumer electronics devices Technology + Automation = Spoils to go to a few, companies and individuals Ford Factory 1925 - humans Tesla Factory 2012 - robots they don’t need me anymore

19. What are the effects of continued automation on the workforce? Pessimists: Once a robot can do everything an unskilled laborer can do, and better, what happens to mass unemployed? If a robot can serve you fries, what's the purpose of a minimum wage worker? Optimists: We've been through this transition before: 19 th century Industrial Revolution, 20 th century rise of services and information economy – this is just creative destruction at its best. These trends are far reaching – too early to model scenarios here. Future: Optimistic and Pessimistic Scenarios

20. HiddenLevers – Product Update Macro Profile for a Portfolio (print to PDF) War Room – now on iPad Coming soon: iPad App (beta) Big Screen Presentation (beta)