2009-04 Global Monitor Final

April 2009 BCM Global Monitor Summary: • Economy has peaked in terms of spending, production & employment • Global economy in Stage 5 – Early Downturn Stocks: May have further downside risk (perhaps 20%) Commodities: Likely to have formed a bottom Government Bonds: Likely to have formed a top Firm Strategy: Budget offerings, look for long-term supplier contracts Personal Strategy: Protect job, expand skills, reduce spending, rent

Global Economic Summary, Asset, Personal & Business Strategy Global Economy

Personal Strategy

1. 2.

1.

3. 4. 5. 6. 7. 8. 9.

Consumer sentiment remains at historical lows Consumer wealth is falling with stocks down and property falling Consumer spending (demand) growth continues to contract Business production/service activity continues to contract The global manufacturing/services PMI appears to have bottomed Global unemployment continues to rise Leading indicators in several economies have, or are close to bottoming The OECD World CLI may bottom as early as June The global economy is early in Stage 5 – Early Downturn

2. 3. 4. 5. 6.

1. 2. 3. 4.

Equities: Possible short-term bottom in place, further risk to downside Property: Further falls ahead in November 2010 Bonds: A likely top has been achieved Commodities: At or near bottom

April 2009 BCM Global Monitor

Conservative Investor: Cash is king, wait for transition to equities Aggressive Investor: Long-term government bonds Property: Rent over buy if possible Employment: Protect job, expand skills Finances: Reduce debt and spending Debt: Look to refinance at lower interest rates

Business Strategy 1. 2. 3. 4.

Asset Classes

2

5.

Competitive Strategy: Continue budget offerings Operational Strategy: Continue cost reductions, reduce inventory Human Resources: Review remuneration conditions Supplier Strategy: Anticipate upcoming purchase of capital equipment Acquisitions/Divestments: Anticipate possible acquisitions

Global Economy: What stage are we in? Actual Economy

Expansion 1. Early

2. Late

Slowdown 3. Early

Downturn

4. Late

5. Early

6. Late

3 Recovery 7. Early

8. Late

OECD Leading Indicator (100)

The business cycle is currently in Stage 5 – Early Downturn. Over the next few months we expect to see further declines in economic indicators until consumer sentiment and spending recovery.

OECD Reference Series (100) Consumer Sentiment Consumer Spending Grth Industrial Production PMI

Rising Stagnating Above 50 Above 50

Falling to 50

Falling Thru 50

Stagnates Below 50

Rising Below 50

Rising To 50

Stagnating At 50

PSI

Rising Stagnating Above 50 Above 50

Falling to 50

Falling Thru 50

Stagnates Below 50

Rising Below 50

Rising To 50

Stagnating At 50

Unemployment Rate Business Investment Reserve Bank Funds Rate

April 2009 BCM Global Monitor

8 Stage Business Cycle

The trigger for the transition to Stage 6 is increasing consumer sentiment and spending, leading to a reversal in production related series. For now the momentum appears to be to the downside.

8 Stage Asset Class Cycle: Where to invest? Asset Classes

Expansion

Slowdown

Downturn

4 Recovery

1. Early 2. Late 3. Early 4. Late 5. Early 6. Late 7. Early 8. Late

Stock Market Commodity Sectors Government Bonds

Stock Market • • •

The stock market is predicting a smooth recovery based on early positive economic results (e.g. US PMI) Stocks may have further downside (~30%) once the March 6 rally concludes The current rally does not appear supported by economic fundamentals

Commodity Sector • • •

Commodities, particularly copper and oil, are rising strongly The Baltic Dry Index has been falling in contraction to commodity strength Sound long-term commodity fundamentals have commodities ahead of our 8-stage economic model

Bond Sector • •

Extreme central bank interest rate interventions have bonds ahead of our 8-stage model predictions The top in bonds appears to have been achieved in Dec 2009

April 2009 BCM Global Monitor

8 Stage Business Cycle

8 Stage Firm Business Cycle: Business Strategy Ideas? Business Strategy

Expansion 1. Early

Competitive Strategy Sales Strategy Operations Strategy Human Resources Acquisitions/ Divestments Supplier Contracts Debt (Loan) Management

2. Late

Consider longterm contracts

Slowdown 3. Early

4. Late

Key Customers

Budget Offerings

Move to longterm contracts

Key Customers Budget Offers

Consider shortterm contracts

More cost cutting

Plan Expansion

Cost cutting

Limit Hires

5. Early

6. Late

Review conditions

Enter wage negotiation

Plan for acquisitions

Make acquisitions

Avoid wage negotiation

Avoid acq., Sell assets

Sell assets, reduce debt

Downturn

5 Recovery 7. Early

8. Late

New Customers

Quality Offerings

Move to shortterm contracts

New Cust. Quality Offers Expand Operations

Hire Staff

Move to shortterm

Press for discounts

Move to longterm

Press quality

Seek short-term funds

Ensure credit availability

Procure capital equip

Seek long-term funds

Firm Business Cycle Strategy Ideas • • • • • •

Continue to focus on budget offerings, consumers/customers/clients are under financial pressure Target sales activity towards key customers with budget offerings (recognise their financial pressure) Look to use the crisis to implement cost cutting, institute more efficient work practices/processes Look to review wage remuneration rates to lock in lower unit labour costs If cashed up, start planning for acquisitions that will expand market share or product offering Continue to press for discounts from your major suppliers

April 2009 BCM Global Monitor

8 Stage Business Cycle

8 Stage Personal Business Cycle: Personal Strategy Ideas? Personal Strategy

Expansion

Slowdown

Downturn

6 Recovery

1. Early

2. Late

3. Early

4. Late

5. Early

6. Late

7. Early

8. Late

Conservative Investing Strat.

Stock Market

Stock Market

Transition to cash

Term Deposit

Term Deposit

Transition to stock market

Stock Market

Stock Market

Aggressive Investing Strat.

Stocks & Commodities

Stocks & Commodities

Commodities

High Quality Long Bonds

High Quality Long Bonds

Corporate Bonds

Transition to Stocks

Stock Market

Pursue promotion

Seek wage rise

Seek secure employment

Become indispensible

Expand skills

Plan next career move

Assume responsibility

Pursue promotion

Cut back, retire debt

Focus on retiring debt

Essential only

Buy major items

Take long-term debt

Employment Strategy Spending & Debt Strategy Housing Considerations

Avoid buying here, prices and sentiment buoyant

Avoid buying here, lower as lower prices are ahead

Try to buy here, prices and sentiment subdued

Personal Business Cycle Strategy Ideas • • • • •

Conservative investors remain in cash. Begin planning your stock investments as we approach Stage 6 Aggressive Investor may look to transition towards corporate bonds or look for a stock market bottom This is a time to expand career skills through skills training or difficult assignments Focus on essential purchases only at this stage, look to retire debt Avoid buying property here if possible, lower prices are ahead

April 2009 BCM Global Monitor

8 Stage Business Cycle

Global OECD Composite Leading Indicators

7

Most nations CLI remain in downturn (below 100 and decelerating). The rate of deceleration for Russia, Brazil and China in particular suggest further declines ahead. Korea and Italy have accelerating CLI suggesting a near term recovery for these nations. April 2009 BCM Global Monitor

Global Economic Maps

Global OECD Standardised Unemployment Rate

8

All nations shown now have rising unemployment over a 3month period. Whilst Spain remains in unemployment purgatory, we see the US and Canada leading OECD nations into recession induced high unemployment with high and increasing unemployment rates. April 2009 BCM Global Monitor

Global Economic Maps

Global OECD Standardised Consumer Confidence

Consumer confidence appears closer to a bottom than business confidence with the rate of decline beginning to slow. The UK, Australia, Korea, Brazil and Spain have stable consumer confidence (i.e. not falling, near Y-axis). China has low and declining consumer confidence. April 2009 BCM Global Monitor

Global Economic Maps

9

Global OECD Standardised Business Confidence

10

Business confidence remains subdued everywhere except Korea. US business confidence looks to be improving, Australia’s has stabilised, and confidence in most other OECD nations continues to decline. April 2009 BCM Global Monitor

Global Economic Maps

OECD Standardised Consumer Confidence History OECD World Consumer Confidence

Historical lows reflect severity of the 2008 Financial Crisis. The good news is that sentiment may have bottomed for the cycle.

April 2009 BCM Global Monitor

Global Economy

11

JP Morgan Global All-Industry PMI Feb

Mar

12 Summary

Output

37.4 40.1

Contracting at slower rate

New Orders

36.7 37.7

Contracting at slower rate

Employment

39.1 37.5

Declining at record rate

Input Prices

45.1 41.3

Falling at faster rate

Note index is a diffusion index, >50 indicates improvement over previous month, <50 a decrease, =50 indicates no change.

Slight improvement for the month, however the PMI and sub-component remain in contraction. Employment weakened noticeably to a record rate of contraction.

April 2009 BCM Global Monitor

Global Economy

JP Morgan Global Manufacturing PMI Feb

Mar

13

Summary

Global PMI

35.8 37.2

Contracting at slower rate

Output

33.4 35.2

Contracting at slower rate

New Orders

31.4 35.8

Contracting at slower rate

Employment

35.0 35.8

Falling at slower rate

Input Prices

35.1 34.2

Falling at faster rate

Note index is a diffusion index, >50 indicates improvement over previous month, <50 a decrease, =50 indicates no change.

Slight improvement for the month, however the PMI and sub-component remain in strong contraction. Employment strenthened marginally for the month.

April 2009 BCM Global Monitor

Global Economy

JP Morgan Global Services PMI Feb

14 Mar

Summary

Output/activity

38.6 41.5

Contracting at slower rate

New Business

38.1 38.3

Contracting at slower rate

Backlogs of work

37.9 40.6

Contracting at slower rate

Employment

40.3 37.9

Contracting at faster rate

Input Prices

47.9 43.3

Costs falling at faster rate

Note index is a diffusion index, >50 indicates improvement over previous month, <50 a decrease, =50 indicates no change.

Improved for March noticeably to 41.5. Whilst all elements remain in contraction, backlog improved, new business was steady, and employment and input prices fell.

April 2009 BCM Global Monitor

Global Economy

OECD World/NAFTA CLI & Industrial Production

15

The World* CLI declined 0.82 to 91.41 in February (previous month decline 1.05). If the trend of a slowing rate of decline continues the CLI should bottom in 4 months (June 2009).

The NAFTA CLI declined 1.00 to 90.52 in February (previous month decline 1.22). If the trend of a slowing rate of decline continues the CLI should bottom in 5 months (July 2009).

Industrial production continues to collapse. A 6-9 month delay on the CLI suggests an economic recovery in 1st quarter 2010.

Industrial production continues to collapse. A 6-9 month delay on the CLI suggests and economic recovery in 1st quarter 2010.

April 2009 BCM Global Monitor

Global Leading Indicators

OECD Major 4 Europe/Major 5 Asia CLI & Industrial Production

The Major 4 Europe CLI declined 0.06 to 94.42 in February (previous month decline 0.39). The Major 4 Europe CLI will likely bottom in March Industrial production continues to collapse. A 6-9 month delay on CLI bottoming suggests an economic recovery in 4th quarter 2009.

April 2009 BCM Global Monitor

16

The Major 5 Asia CLI declined 0.92 to 90.47 in February (previous month decline 1.12). If the trend of a slowing rate of decline continues the CLI should bottom in 5 months (July 2009). Industrial production continues to collapse. A 6-9 month delay on the CLI suggests and economic recovery in 1st quarter 2010.

Global Leading Indicators

OECD CLI Analysis: US, China, Australia, & World

17

The peak rate of decline of the US (consumer), China (manufacturer) and World CLI was in November 2008. Australia (commodities) decline rate peaked in January 2009. We anticipate global CLI bottoming around Qtr 4 2009, with an economic recovery in 1H 2010. April 2009 BCM Global Monitor

Leading Indicator Analysis

US, UK & Australian House Price Index

Global house prices continue to decline. US, UK and Australian prices are down 30%, 19% and 4% respectively. The US market peaked in June 2006, the UK in October 2007 (US +16 months), and Australian in March 2008 (US + 21 months). S&P Case-Shiller Futures data suggests US house prices will bottom in November 2010 with a peaktrough decline of 35.9% (115.2 on the index). April 2009 BCM Global Monitor

Global Property

18

US, UK & Australian House Price Annualised Rate of Change

Global house prices continue to decline with the US, UK and Australian prices falling at 19.4%, 15.7% and 3.0% per annum respectively. The gain from June 1994 to the peak was 194%, 261%, and 204% respectively (Perth, Australia 351%). Only UK house prices are showing a slowing in the rate of house price declines. April 2009 BCM Global Monitor

Global Property

19

OECD United States CLI & Industrial Production

20

The US CLI declined 1.12 to 89.87 in February (previous month decline 1.36). If the trend of a slowing rate of decline continues the CLI should bottom in 5 months (July 2009). Industrial production continues to collapse. A 6-9 month delay on the CLI suggests an economic recovery in 1st quarter 2010.

April 2009 BCM Global Monitor

US Economy

OECD US Standardised Consumer Confidence History OECD US Consumer Confidence

US consumer confidence forming a bottom.

April 2009 BCM Global Monitor

US Economy

21

US Consumer Sentiment and Personal Consumption

22

US Consumer Confidence (via Uni Michigan survey) Real personal consumption spending contracted at a slower rate (~-1.2%) compared to the previous declined to near record lows. month. We need to see a rise in spending as a precursor to Look for a rise above 65 towards 70+ as evidence a general recovery. of recovery. April 2009 BCM Global Monitor

US Economy

US Industrial Production & Unemployment Rate

Industrial production continues to collapse, down 12% year-on-year. Lower production means less need for workers…

23

Unemployment is sky-rocketing, above 8% and rising rapidly. Falling employment will lead to lower spending and further US house price declines.

April 2009 BCM Global Monitor

US Economy

US GDP and Private Employment

US GDP continues to decline, currently -0.8% yoy. The rate of decline in production and employment suggest further declines ahead.

April 2009 BCM Global Monitor

24

Private employment growth, our bellwether indicator, continues contract (-4.2%). USPRIV is indicating Stage 5 – Early Downturn for the US economy.

US Economy

ISM PMI/NMF: Historical of New Orders and Production/Activity

25

Production and services activity improved for the month, continuing to suggest peak contraction has past. Most noteworthy is the continued rise in manufacturing new orders, although new services business contracted further. April 2009 BCM Global Monitor

US Economy

OECD Euro Area CLI & Industrial Production

26

The Euro Area CLI declined 0.19 to 93.82 in February (previous month decline 0.51). It is likely that the Euro Area CLI will bottom in March. Industrial production continues to collapse. A 6-9 month delay on the CLI suggests an economic recovery in 4th quarter 2009.

April 2009 BCM Global Monitor

Euro Economy

OECD Euro Area Harmonised Unemployment Rate

Continues to rise, up 0.3% to 8.5% in February. Further rises ahead…

April 2009 BCM Global Monitor

Euro Economy

27

EC Euro Economic Sentiment, Business Climate & Production

Economic sentiment for March is showing signs of recovery in the EU and EA led by the services and construction sector. Business climate remains in a steadfast downtrend. April 2009 BCM Global Monitor

Euro Economy

28

OECD Japan CLI & Industrial Production

The Japan CLI declined 1.48 to 89.74 in February (previous month decline 1.55). The decline rate of the CLI is stable making predictions of a CLI bottom difficult. The plunge in Japanese industrial production defies description. Medium term this will have major impacts on the Japanese economy.

April 2009 BCM Global Monitor

Japan Economy

29

Japan Unemployment Rate

30

Rose 0.3% to 4.4% in February continuing the business cycle uptrend. Further rises likely ahead…

April 2009 BCM Global Monitor

Japan Economy

OECD Japan Standardised Consumer Confidence History OECD Japan Consumer Confidence

New record low and still declining without a bottom in sight.

April 2009 BCM Global Monitor

Japan Economy

31

OECD China CLI & Industrial Production

32

The Euro Area CLI declined 0.74 to 90.08 in February (previous month decline 1.10). If the slowing rate of CLI decline continues, the China CLI may bottom in 2 months (May 2009). Industrial production continues to collapse. A 6-9 month delay on the CLI suggests an economic recovery in 1st quarter 2010.

April 2009 BCM Global Monitor

China Economy

CLSA China Manufacturing PMI

33

Continued contraction in Chinese manufacturing is indicated by a PMI of 44.8 in March, down slightly from 45.1 in February. Notable was the decline in new business orders which is ominous for future Chinese output.

April 2009 BCM Global Monitor

China Economy

OECD German CLI & Industrial Production

34

The German CLI declined 0.31 to 90.32 in February (previous month decline 1.08). It is likely that the German CLI will bottom in March. Industrial production continues to collapse. A 6-9 month delay on the CLI suggests an economic recovery in 4th quarter 2009.

April 2009 BCM Global Monitor

German Economy

German Harmonised Unemployment Rate

35

German unemployment rises continues to rise, up to 7.4% in February from 7.3% in January. Germany was perhaps the last OECD nation to experience a rise in unemployment.

April 2009 BCM Global Monitor

German Economy

OECD German Standardised Consumer Confidence OECD German Consumer Confidence

Consumer sentiment plunging, no bottom in sight.

April 2009 BCM Global Monitor

German Economy

36

OECD United Kingdom CLI & Industrial Production

37

The UK CLI declined 0.24 to 95.74 in February (previous month decline 0.28). It is likely that the UK CLI will bottom in the April-May 2009 timeframe. Industrial production continues to collapse. A 6-9 month delay on the CLI suggests an economic recovery in 4th quarter 2009.

April 2009 BCM Global Monitor

United Kingdom Economy

United Kingdom Harmonised Unemployment Rate

38

UK unemployment continues to rise, up to 6.4% in December 2008 from cycle lows in December 2007.

April 2009 BCM Global Monitor

United Kingdom Economy

OECD UK Standardised Consumer Confidence History OECD UK Consumer Confidence

Consumer sentiment plunging, no bottom in sight.

April 2009 BCM Global Monitor

United Kingdom Economy

39

OECD France CLI & Industrial Production

40

The France CLI rose 0.09 to 96.41 in February (previous month decline 0.03) marking a bottom in this series. Industrial production continues to collapse. A 6-9 month delay on the CLI suggests an economic recovery in 4th quarter 2009.

April 2009 BCM Global Monitor

France Economy

France Harmonised Unemployment Rate

41

Unemployment rose 0.3% to 8.6% in February. Note the previous months rise was 0.2% indicating that unemployment is accelerating. Further rises expected.

April 2009 BCM Global Monitor

France Economy

OECD France Standardised Consumer Confidence History OECD France Consumer Confidence

Consumer sentiment plunging, no bottom in sight.

April 2009 BCM Global Monitor

France Economy

42

OECD Italian CLI & Industrial Production

The Italian CLI rose 0.35 to 96.70 in February (previous month rise 0.09). The Italian CLI bottomed in December 2008. Industrial production continues to collapse. A 6-9 month delay on the CLI suggests an economic recovery in 3rd quarter 2009.

April 2009 BCM Global Monitor

Italian Economy

43

Italian Harmonised Unemployment Rate

44

Unemployment held steady in December at 6.9%. However the trend is for continued increases from the May 2007 lows.

April 2009 BCM Global Monitor

Italian Economy

OECD Italy Standardised Consumer Confidence History OECD Italy Consumer Confidence

Consumer sentiment still falling, though not at extremely low levels.

April 2009 BCM Global Monitor

Italian Economy

45

OECD Canadian CLI & Industrial Production

46

The Canadian CLI declined 1.16 to 90.61 in February (previous month decline 1.29). If the slowing rate of CLI decline continues, the CLI may bottom in 9 months (November 2009). Industrial production continues to collapse. A 6-9 month delay on the CLI suggests an economic recovery in 2nd quarter 2010.

April 2009 BCM Global Monitor

Canadian Economy

Canadian Unemployment Rate

Unemployment following the US and rising rapidly.

April 2009 BCM Global Monitor

Canadian Economy

47

OECD Canadian Standardised Consumer Confidence History OECD Canadian Consumer Confidence

Consumer sentiment plunging, no bottom in sight.

April 2009 BCM Global Monitor

Canadian Economy

48

OECD Australian CLI & Industrial Production

49

The Australian CLI declined 0.96 to 96.05 in February (previous month decline 0.79). If the slowing rate of CLI decline continues, the CLI may bottom in 7 months (September 2009). Industrial production continues to collapse. A 6-9 month delay on the CLI suggests an economic recovery in 2nd quarter 2010.

April 2009 BCM Global Monitor

Australian Economy

Australian Unemployment

50

The growth rate in full-time equivalent employment negative (contracting). Further falls in full-time employment is certain. April 2009 BCM Global Monitor

Unemployment has bottomed for the cycle and is now rising rapidly. Unemployment above 7-8% is expected.

Australian Economy

US Treasury Yields (Overnight, 1 Year, 10 year)

1yr US Treasury notes remain ~0.5% yield reflecting the safe haven status and the deteriorating economic conditions.

April 2009 BCM Global Monitor

51

10yr US Treasury bonds fell to a cycle low of 2.1% in December 2009 before rising to around 2.9% in April. Sustained rises above 3% may indicate economic recovery and/or inflation.

Global Economy (via US Economy)

Inflation v Deflation (via US 10 Year Treasury Yields)

52

Implied 10yr future inflation predictions have widened, though remain at very low levels (1.2%). Low inflation predictions reflect the dire economic predictions due to the current crisis (deflationary expectations), however these have widened recently. Note the November 2008 10yr inflation predictions were effectively 0% amidst the financial gloom.

April 2009 BCM Global Monitor

Global Economy (via US Economy)

US Consumer Debt Outstanding & Debt Servicing Payments

Consumer debt growth again hit a series low of 0.4%. The current crisis can be described as ‘peak credit’ as the fall in credit-fueled spending is one of the major causes of the economic contraction.

April 2009 BCM Global Monitor

53

Debt service payments are down slightly to a stillvery-high 14.0%. The high payments and inability to expand credit further are a major drain on the economy.

Global Economy (via US Economy)

US GDP, Consumer Debt & Personal Consumption

The fall in annualised GDPis easily seen in light of changes in annual consumer credit growth.

54

Much of the GDP growth since 1983 has been fueled by credit growth expansion (particularly since 2001).

Consumer spending growth is clearly driven by consumer credit (debt) growth. And this is plunging!!! April 2009 BCM Global Monitor

Global Economy (via US Economy)

US Personal Savings Rate

55

US consumers have reversed their spending patterns of the last decade, achieving a savings rate not seen since 1995. The need to save is driven by record high indebtedness and debt servicing payments. Whilst this chart is provided for the US, it is representative of the savings patterns of consumers in other OECD nations such as the UK and Australia. April 2009 BCM Global Monitor

Global Economy (via US Economy)

Oil Price Change (annualised) and Industrial Production

56

Industrial production continues to decline, not yet Oil price changes tell us much about the state of confirming a bottom in the oil series. the economy. This series may be predicting a rise in economic activity (as occurred at previous lows).

April 2009 BCM Global Monitor

Global Economy (via US Economy)

Commodities Basket

57

Falling commodities reflect weak demand in a weak economy. Commodities have recovered around 13% from their February 2009 lows suggesting that economic recovery may be imminent.

April 2009 BCM Global Monitor

Commodities

Oil Price and US Oil Stocks

58

The last 5 weeks have seen a powerful rise in oil from ~$35 to $55 (~48%). The rise above $50 is significant suggesting that December 2009 was the oil price low.

April 2009 BCM Global Monitor

The US (as indicator for the global economy) continues to accumulate oil inventories, albeit at a slightly reduced rate. This seems at odds with recent rises in the oil price.

Commodities

Dr Copper and the Baltic Dry Index

59

Rising copper is suggesting increasing economic activity and thus a possible imminent recovery.

The BDI has fallen since its early March high, seemingly in contradiction to the recent runup in commodities prices. As the BDI appears to lead commodities, changes in BDI/commodities over then next few months will be important.

Copper is a useful leading economic indicator as it is a key material in the manufacture of durable goods, particularly electrical and plumbing items.

The Baltic Dry Index is the daily shipping rate for bulk dry cargo ships carrying goods such as iron ore, coal and wheat. It is believed to provide a good leading indicator of economic activity.

April 2009 BCM Global Monitor

Commodities

Agriculture (Grains) & Livestock

Agricultural grains prices continue to strengthen off their December 2008 lows though are yet to break out of the 260-320 range.

April 2009 BCM Global Monitor

60

Livestock prices are trending higher from their March 2009 lows. Having exceeded 220, the trend appears higher suggesting a strengthening economy.

Commodities

Gold and the US Dollar

61

Gold has weakened in March having retested the $960/ounce level.

April 2009 BCM Global Monitor

The uptrend in the US dollar appears intact. The USD seems headed towards the 88-90 range which should place downward pressure on commodity prices.

Commodities

Stock Market: Developed Economies

Consistent with early signs of a recovering economy, developed stock markets have rallied from the March 6, 2009 lows. Most markets are approaching resistance formed by the January 2009 highs. The index covers the US (^GSPC), Japan (^N225), UK (^FTSE), Germany (^GDAXI), France (^FCHI), Australia (^AORD), Canada (^SPTSE), Spain (^SMSI), and Italy (^SPMIB).

April 2009 BCM Global Monitor

Stock Markets

62

Stock Market: Emerging Economies

63

Emerging markets (BRIC) recovered on March 9, 2009 along with developed markets. Emerging markets have exceeded their January 2009 highs indicating a new bullish trend may be inplace. The index covers Brazil (^BVSP), Russia (^RTS.RS) and India (^BSESN), China (^HSI). The US (^GSPC) is provided as a reference series to enable a comparison with developed markets above.

April 2009 BCM Global Monitor

Stock Markets

Bond Market: US 7-10 & 20+ Year Treasury Bonds

64

Bond prices (long and shorter duration) may have peaked for the cycle in December 2008. US Treasury purchases by the US Federal Reserve are likely to limit further price declines with prices stabilising at current levels. The index covers the iShares Lehman 7-10yr Treasury Bond Fund (IEF) and iShares Lehman 20+yr Treasury Bond Fund (TLT). The US (^GSPC) is provided as a reference series to enable a comparison with developed markets above.

April 2009 BCM Global Monitor

Bond Markets

OECD CLI & Industrial Production (Nations 1-4)

April 2009 BCM Global Monitor

Global Composite Leading Indicators

65

OECD CLI & Industrial Production (Nations 5-8)

April 2009 BCM Global Monitor

Global Composite Leading Indicators

66

OECD CLI & Industrial Production (Nations 9-12)

April 2009 BCM Global Monitor

Global Composite Leading Indicators

67

OECD CLI & Industrial Production (Nations 13-16)

April 2009 BCM Global Monitor

Global Composite Leading Indicators

68

OECD CLI & Industrial Production (Nations 17-20)

April 2009 BCM Global Monitor

Global Composite Leading Indicators

69

OECD CLI & Industrial Production (Nations 21-23, South Africa)

April 2009 BCM Global Monitor

Global Composite Leading Indicators

70

BCM Book of the Month: Meltdown… Meltdown: A Free Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse • •

•

•

•

Is Capitalism the Culprit? The media tells us that "deregulation" and "unfettered free markets" have wrecked our economy and will continue to make things worse without a heavy dose of federal regulation. But the real blame lies elsewhere. In Meltdown, bestselling author Thomas E. Woods Jr. unearths the real causes behind the collapse of housing values and the stock market-and it turns out the culprits reside more in Washington than on Wall Street. And the trillions of dollars in federal bailouts? Our politicians' ham-handed attempts to fix the problems they themselves created will only make things much worse. Available on the BCM Website: – – –

Podcasts Book Reviews Websites

April 2009 BCM Global Monitor

71

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Interested?? Don’t forget to subscribe to this publication and receive notification directly to your inbox. Alternatively, you can register for our BCM US Monitor ($0.99/month), or our BCM Australian Monitor ($1.49/month). These country specific publications provide far greater detail on their respective economies. Essential for the active monitor!! Understand, monitor and exploit the business cycle… April 2009 BCM Global Monitor

Disclaimer, Fair Use, Copyright

73

Disclaimer. Mark Walmsley B.Eng, MSc, MBA is the Business Cycle Monitor editor. The statements, opinions, buy or sell signals, and analysis presented in this document are provided as a general information and are for news commentary and educational services only. All opinions, estimates, buy or sell signals, and predictions expressed herein constitute the judgment of the author as of the date indicated and are subject to change without notice. The information contained in the newsletter is expressed in good faith, but its accuracy is not guaranteed. Nothing contained in this newsletter is intended to be, nor shall it be construed as, investment advice, nor is it to be relied upon in making any investment or other decision. Prior to making any investment decision, you are advised to consult your financial planner, broker or other appropriate tax or financial professional to determine the suitability of any investment. Neither Business Cycle Monitor nor Mark Walmsley shall be held responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided. Fair Use Policy. The BCM Global Monitor is sold to customers for personal use only. BCM considers it ‘fair use’ to forward one copy of the BCM Monthly to friends, family or associates for the purpose of introducing said individuals to BCM monthly publications. Such introductions lead to increased subscribership, greater research resources and a higher quality report. BCM does not consider it ‘fair use’ to repeatedly forward BCM products to individuals thus circumventing this policy. Copyright. Copyright 2009. All rights reserved. Business-Cycle Information. This summary should be read in conjunction with the business cycle articles and references provided at www.business-cycle-monitor.com. These provide additional information on how the business cycles functions. Description and References. Additional information on these indicators, global maps, the simplified economic model and the sources used in this publication can be found at the BCM website.

www.business-cycle-monitor.com April 2009 BCM Global Monitor