the 2010 2014 business cycle
TRANSCRIPT
Winter Outlook Trends 2010
Summary Points:•US DOLLAR INDEX LOWER IN 2010: $.67
Target.•CRB INDEX ASCENDS TO 300 LEVEL
RANGE•MATERIALS LEADS S&P 500 NEXT 5
YEARS•COPPER TO LEAD MATERIALS - $3.75
RANGE 2010•OIL MID TO HIGH ‘80’s….POST 90 2011
•
ASIAN DEMAND DRIVES COMMODITIES: DOLLAR IMPACT POSITIVE AS $US DOLLAR WEAKENS
ASIAN DEMAND
ASIAN DEMAND DRIVES COMMODITIES: DOLLAR IMPACT POSITIVE AS $US DOLLAR WEAKENS
ASIAN DEMAND
Commodities continued…..
• NEXT LOW MARCH TIMEFRAME – SHALLOW
• PRIMARY UPTREND IN PLACE• LIMITED PRESSURE ON $US STABLE
ABOVE $.765• CRB TRADING ON 10 WEEK CYCLES• ASSET CLASSES MOVING TOGETHER IN
OIL, COPPER AND $CDN.
LIGHT CRUDE OIL CONTRACT
CRUDE OIL…..
• TECHNICAL OUTLOOK: POSITIVE OIL, COPPER, $CDN.
• OIL TRADING ON 12 WEEK OUTLOOK
• MARCH LOW
• PRIMARY OIL TREND IS UP
• TARGET RANGE 85-90
CANADIAN DOLLAR
• GOOD PRICE SUPPORT $.70 to $.74• SAME PATH AS COPPER, OIL
GOLD BUGS INDEX….
• CONSOLIDATION TREND – 1200 OZ ?
NATURAL GAS….
2008 US ECONOMY – GAS INVENTORY HIGH• GAS PLUNGES TO 2002 LEVELS
• INVENTORY ABOVE 5 YEAR LEVELS
• SEASONAL MOVEMENT SEPT. TO DEC.
AGRICULTURE….• CAN LAG CRB INDEX BY ONE YEAR.
• GOLD IS FIRST UP AND GRAINS ARE LAST.
• GOLD IS LINKED TO THE US DOLLAR VS. AGRICULTURE MORE ECONOMY DRIVEN.
• GLOBAL ECONOMY NEEDS MORE LIFT BEFORE A. PRICES LIFT.
INVESTOR ACTIONS?
• STAY FOCUSED ON 24 MONTH VIEW• ASIAN DEMAND TO GROW WORLD
ECONOMY• $US WEAKNESS FUELS COMMODITIES• CYCLE MAY LAST SEVERAL YEARS• NATURAL RESOURCES OUTPERFORM
STOCK SINCE 2001• NEXT BUSINESS CYCLE 2010-2014
ETF’S FOR 2010-2014 BUSINESS CYCLE
• FXE – EURO TRUST AS $US WEAK
• XMA MATERIALS
• CMW CLAYMORE GLOBAL MINES
• XEG ENERGY
• XGD GOLD PRODUCERS
• JJC – IPATH COPPER
• XRB REAL RETURN BONDS
• XSB SHORT TERM BONDS
• SEA GLOBAL SHIPPING
• EWZ – BRAZIL
• CBQ – CLAYMORE BRAZIL, RUSSIA, INDIA , CHINA
• IYR – US REAL ESTATE
ETF CLAYMORE GLOBAL MINES
• Symbol (Click for Intraday Price)
• CMW
• Exchange
• TSX
• CUSIP 183839109
• Fund Inception Date 6/12/07
• Income Distribution Canadian & Foreign Dividend Income
• Distribution Frequency Quarterly
• RSP Eligible
• Yes
• Management Fees 0.55 %
• Fiscal Year-End12/31
• Investment Adviser Claymore Investments, Inc.
CLAYMORE HOLDINGS……
• BHP BILLITON LTD - ADR15.91 %
• RIO TINTO PLC -SPONSORED ADR12.00 %
• BHP BILLITON PLC-ADR (1ADR=2ORD)9.47 %
• CIA VALE DO RIO DOCE ADR(COMMON)6.40 %
• ANGLO AMERICAN PLC UNSPON ADR5.09 %
• FREEPORT-MCMORAN COPPER & GOLD4.98 %
• BARRICK GOLD CORP COM (I/L)3.94 %
• ALCOA INC3.71 %
• GOLDCORP INC3.20 %
• TECK COMINCO LTD CL B2.42 %
• NEWMONT MINING CORP.2.33 %
• PEABODY ENERGY CORPORATION 2.25 %
• CONSOL ENERGY INC
• 2.00 %CAMECO CORP (I/L)1.58 %
• KINROSS GOLD CORP1.38 %
• YAMANA GOLD INC COM1.17 %
• AGNICO-EAGLE MINES LTD1.14 %
• FORDING CANADIAN COAL TRUST1.06 %
• ARCH COAL INC1.05 %
• GOLD FIELDS LIMITED SPONS ADR0.95 %
• ANGLOGOLD ASHANTI LTD ADR0.90 %
• ALUMINUM CORP OF CHINA - ADR0.78 %
• •
SILVER….UNDERVALUED…..
Historic ratio of 10:1 silver to gold• Silver will return 6.5x MORE Potential Than Gold Current ratio is 65:1
MARKET DIRECTIONS…..
• MARKETS FALL IN SUCCESSION HISTORICALLY
• FINANCIALS DECLINE FIRST
• STOCK MARKETS THEN WEAKEN
• COMMODITIES FALL LAST AND HARDEST
GLOBAL MARKETS…KEY POINTS
• WORLD ECONOMY BOTTOMS LATE 2009
• 2010 GRADUAL ECONOMIC EXPANSION
• EMERGING NATIONS – EXPAND
• BRIC NATIONS OUTPERFORM
• GLOBAL MARKETS MORE TRANSPARENT
DOW JONES WORLD STOCK INDEX
• STIFF RESISTANCE AT 240-280• TRADING ON A 16 WEEK CYCLE
GDP VS. CPI
• MARCH IS 1ST ANNIVERSARY OF BULL MARKET PER TECHNICALS
• TIME IS 2-3 YEARS
• ASIA, RUSSIA, MEXICO, SOUTH AMERICA, AFRICA = DEVELOPING COUNTRIES AT 6.6% PER IMF STATS
• ADVANCE ECONOMIES US, CANADA, JAPAN, EU AVERAGE 2.4% GROWTH
• WORLD AVERAGE IS 4.5% 2010
• CPI DEVELOPING COUNTRIES AVERAGE 5% VS. 1% ADVANCED ECONOMIES
BRIC NATIONS SET PACE…..
• BRAZIL, RUSSIA, INDIA,CHINA
BRIC NATIONS OUTPERFORMING EU 350 INDEX & S&P500
Chinese GDP 10.7%India GDP 8.4%Brazil GDP 6.6%
S&P 500
• BOTTOM FORMING AT 980 LEVEL• MONEY IS EASIER TO LEND…..TIME
DATA SHOWS WORLD ECONOMY BOTTOMING
• 1980’s TOP COUNTRIES NOT TO DOMINATE IN 2010-2014 BUSINESS CYCLE
• TOP 7 PERFORMING INDICES & REGIONS• LATIN AMERICA• INDIA• PACIFIC – EX. JAPAN• SHANGHAI• BRAZIL• MALAYSIA• HONG KONG
TSX KEY POINTS…
• TWO YEAR RALLY – COMMODITIES & OIL• STABLE BANKS• CANADA OUTPERFORMS GLOBALLY• TARGET RANGE 12,000 – 12,500 2010
WHERE IS INVESTOR VALUE….
• REITS OFFER VALUE• UTILITIES AND PIPELINES INFRASTRUCTURE• PRIVATE EQUITY EYES INCOME TRUSTS• MATERIALS• INFLATION EXPOSURE• REAL RETURN BONDS• CORPORATE AND HIGHER YIELDING BONDS• GLOBAL BONDS
OPERATING CASH FLOW
• LEADING INDICATOR OF VALUE• PREVENTS PORTFOLIO SPECULATION
• CASH FLOW FROM OPERATIONS• CASH FLOW FROM FINANCING• CASH FLOW FROM INVESTMENTS• CASH FLOW OR EBITDA = SAME
LANGUAGE OF BAY AND WALL STREET• OCF IS NOT EBITDA
OPERATING CASH FLOW VALUE……
QUARTER OCF EPS
Q1(3/31/01) -$.62 +$.54
Q2(6/30/01) -$1.16 +$.51
ENRON’S OCF VS. EPS 2001
ENRON SHOWS POSITIVE EARNINGS BUT IS LOSING CASH………..
EBITDA…..WHAT IS THIS?
• EARNINGS BEFORE INTEREST TAXES DEPRECIATION ALLOWANCE
• ENABLES FINANCIAL STATEMENT MANIPULATION
• EARNINGS PER SHARE…..IS NOT CASH FLOW
• ITEMS SOLD BUT CASH NOT NECESSARILY COLLECTED
• WRITEOFFS MAY OCCUR AT ANY TIME
• EBITDA IS NOT OPERATING CASH FLOW !
ENRONS RESTATED CASH…..
QUARTER OCF EPS
Q1(3/31/01) -$.53 +0.46
Q2(6/30/01) -$.98 +$0.43
Q3(9/30/01) +$.77 -$.87
EXAMPLE OF OPERATING CASH…
CASH FLOW FROM OPERATIONS
NET EARNINGS 2,000,000
ADDITIONS TO CASH
DEPRECIATION 10,000
DECREASE IN ACCOUNTS RECEIVABLE 15,000
INCREASE IN ACCOUNTS PAYABLE 15,000
INCREASE IN TAXES PAYABLE 2000
SUBTRACTIONS FROM CASH
INCREASE IN INVENTORY (30,000)
NET CASH FROM OPERATIONS 2,012,000
CASH FLOW FROM INVESTING
EQUIPMENT (500,000)
CASH FLOW FROM FINANCING
NOTES PAYABLE 10,000
CASH FLOW YEAR END DEC 31/2003 1,522,000
THANK YOU FOR COMING !
ALL WELCOME!
MICHAEL KORMAN. B. COMM, FMA, FCSI416-493-8786WWW.MICHAELKORMAN.COM