clover asset management strategy 2011
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8/7/2019 Clover Asset Management Strategy 2011
http://slidepdf.com/reader/full/clover-asset-management-strategy-2011 1/17
Forward Thinking...
Strategy2011
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
http://slidepdf.com/reader/full/clover-asset-management-strategy-2011 2/17
Strategy2011OutlookUSEconomy
Index of Leading Economic Indicators
Index120
110
90
100
80
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Recession Leading Index (Dec 17 release, Nov = 112.4)
Source: The Conference Board http://www.dallasfed.org
-USMacroIndicatorslookingbe=ersincefall2010,
theriskofadoublediprapidlydisappearing
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
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U.S. Imports and Exports
Billions of Dollars
240
180
200
120
140
160
60
80
100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Recession Exports (Jan 13 release, Nov = 159.6) Imports (Jan 13 release, Nov = 198)
Source: Bureau of the Census http://www.dallasfed.org
-ImportandExportaregrowing
Strategy2011OutlookUSEconomy
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
http://slidepdf.com/reader/full/clover-asset-management-strategy-2011 4/17
-Non-Manufacturinggrowingrapidly
ISM Non-Manufacturing Activity Index
IndexJan 05 release, Dec = 63.5
50
40
30
Source : Institute for Supply Management ™ http://www.dallasfed.org
2007 2008 2009 2010
Strategy2011OutlookUSEconomy
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
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-asaredurablegoods
New Orders for Durable Goods
Billions of Dollars
235
250
190
205
220
130
145
160
70
85
100
115
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Durable Goods (Jan 04 release, Nov = 195.7) Excl. Transportation (Jan 04 release, Nov = 149.7)
Source: Bureau of the Census http://www.dallasfed.org
Recession
Strategy2011OutlookUSEconomy
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
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-RiskofdeflaGonmelGngaway
Producer Price Index
1-month % change Jan 13 release, Dec = 1.1
2
2.5
3
.3-year average
0.5
1
1.5
-1.5
-1
-0.5
-3
-2.5
-2
2007 2008 2009 2010
Source: Bureau of Labor Statistics http://www.dallasfed.org
Strategy2011OutlookUSEconomy
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
http://slidepdf.com/reader/full/clover-asset-management-strategy-2011 7/17
Consumer Price Index
1-month % change Jan 14 release, Dec = 0.5
1
. -
0
.
-1
- .
-2
- .
2007 2008 2009 2010
Source: Bureau of Labor Statistics http://www.dallasfed.org
-RiskofdeflaGonmelGngaway
Strategy2011OutlookUSEconomy
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
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Commodity Prices
1967=100, EOP1,100
700
800
900
,
400
500
600
100
200
300
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
KR-CRB Spot Commodity Price Index: Metals (Jan 02 release, Dec=1006.2)
KR-CRB Spot Commodity Price Index: Raw Industrials (Jan 02 release, Dec=583.8)
Source: Commodity Research Bureau http://www.dallasfed.org
Recession
-andCommodiGeshavebeenabigdriver
Strategy2011OutlookUSEconomy
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
http://slidepdf.com/reader/full/clover-asset-management-strategy-2011 9/17
-Jobsarecoming
Strategy2011OutlookUSEconomy
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
http://slidepdf.com/reader/full/clover-asset-management-strategy-2011 10/17
-Jobsarecoming...
butitwilltakeGmetonormalize
Strategy2011OutlookUSEconomy
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
http://slidepdf.com/reader/full/clover-asset-management-strategy-2011 11/17
-theUSDisweakbutshouldstrengthen
astheEconomygetsbe=er
Real Value of the Dollar
120
March 1973 = 100
100
110
90
70
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Exchange Value of the US$ (Jan 10 release, Dec=84.4)
US$ vs Major Currencies* (Jan 10 release, Dec=82)
Source: Federal Reserve Board http://www.dallasfed.org
* Euro Area, Canada, Japan, UK, Switzerland, Australia, and Sweden
Strategy2011OutlookUSEconomy
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
http://slidepdf.com/reader/full/clover-asset-management-strategy-2011 12/17
-RealEstatemarketshowssignof
“bo=oming”
Strategy2011OutlookUSEconomy
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
http://slidepdf.com/reader/full/clover-asset-management-strategy-2011 13/17
-RealEstatemarketshowssignof
“bo=oming”
Strategy2011OutlookUSEconomy
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
http://slidepdf.com/reader/full/clover-asset-management-strategy-2011 14/17
-WeforecastaRealDProwth
between3.5to4%”
Strategy2011OutlookUSEconomy
Real GDP
1-quarter % change,
annualized6
Dec 22 release, Q3 = 2.6
3-year average
2
4
-2
0
-6
-4
-8
2007 2008 2009 2010
Source: Bureau of Economic Analysis http://www.dallasfed.org
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
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Strategy2011EquiGestoOutperformBonds
RaGonal
-P/EMulGplesarerelaGvelylow,belowthehistoricalaverageand
reallylowwhencomparedtobondyields
-JobcreaGonandconsumerconfidenceshouldpickupinthecoming
monthsandcreateaposiGvemomentum(watchthe400kWeeklyClaimsmark)
-RetailInvestorsaregraduallyreturningtoequityandincreased
volumeshouldtranslateinhigherpriceandP/EmulGpleexpansion.
-EveryoneiswaiGngonthesidelineforthecorrecGon,before
jumpingin,thiswillbesupporGveofthemarketfortheyear
-StrengtheningoftheeconomywillbringanexpectaGonofgradual
normalizaGonfromtheFedandsend10YrTreasuriesover4%by
yearend.LongBondholderswillgethurt.
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
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Risk-ChineseGghteningbringsahardlandinginAsiaand
contaminatesothermarkets
-FearsofdefaultfromSpain
-InflaGonand/orOilpricegetsoutofcontrol
-RapidriseintheUSD
-MarketrealizaGonthatthefiscalsituaGoninJapaniscatastrophic
(moreindebtthananyEuropeanorCaribbeancountry!)
-ConGnueddeterioraGonoftheRealEstateandJobmarket.
-LowVIXillustratescomplacencyinthemarket
Note:IfanyshockisexperiencedweexpecttheFed
tomovetowardQ3,thiswouldbeposiGveforbonds
andEquiGes.
Strategy2011EquiGestoOutperformBonds
Friday, January 21, 2011
8/7/2019 Clover Asset Management Strategy 2011
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Strategy2011AfewPicksfor2011
1)PowerShares DB Agriculture Fund (DBA): The rise in oil pricewill continue to send the price of food commodities much higher and demand from China and India will fuel the rally.
2)ProShares UltraShort 20+ Year Treasury ETF (TBT): Thissecurity will blossom as long term yield goes up
3)WisdomTree Japan Total Dividend Fund (DXJ): As the Yenweakens, exporters will do well in the country of the rising sun. It isone of the only equity indexes that has not really participated in therally so far. This ETF hedges against the depreciation of the Yen.
4)SPDR S&P MidCap 400 ETF and Lazard Ltd (MDY & Laz): 2011will be the year of Merger and Acquisition, the action will take placein the mid-cap sector (which is also more resilient to a stronger $)and Lazard Inc. gets 45% of its revenue from M&A 5) and of course our favorite long term plays: AAPL, XLK, BUD etc.
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