the structure and nature of the new economy

The Structure and Nature

of the New Economy

Prepared and Presented by:

Richard Hastings Macro Strategist

Global Hunter Securities, LLC 949.335.0686 – [email protected]

Presented to the New York Media Credit Group Hosted by ABC-Amega, Inc. - New York – November 6, 2012

2

Disclaimers

This is not a solicitation or an offer to sell securities. This report should not be used as a

complete analysis of the company, industry or security discussed in the report. Additional

information is available upon request. Any price, opinions and other information in this

report is subject to change without notice. This material has been prepared by Global

Hunter Securities, LLC ("Global Hunter") a registered broker-dealer, employing

appropriate expertise, and in the belief that it is fair and not misleading. Information,

opinions or recommendations contained in the reports and updates are submitted solely

for advisory and information purposes. The information upon which this material is based

was obtained from sources believed to be reliable, but has not been independently

verified. Therefore except for any obligations under law, we do not guarantee its

accuracy. Additional and supporting information is available upon request. This is not an

offer or solicitation of an offer to buy or sell any security or investment. Any opinion or

estimates constitute our best judgment as of this date, and is subject to change without

notice. Not all products and services are available outside of the US or in all US states.

Copyright 2012 Global Hunter Securities, LLC.

3 3

The Employment Situation:

The North American Energy Colossus

The Part-Time Colossus

4 4

The Expanding Part-Time Universe (data is not seasonally adjusted)

Employed, 000's Oct-12 Oct-11 YoY % ▼ Oct-07 5-yr. % 5yr CAGR

Part-time for

noneconomic reasons 19,058 18,543 2.78% 19,956 -4.5% -0.9%

Employed part-time 27,993 27,530 1.68% 24,736 13.2% 2.5%

Data source: BLS.gov. Interpretation, Global Hunter Securities

5

77%

The September Part-Time Job Effect: September over August Actual Change in Part-Time Workers, in thousands (unadjusted)

Year Part Time,

Noneconomic reasons

Part time,

Economic reasons Economic as

% of Noneconomic

2000 2,696 (150) –

2001 2,565 177 6.90%

2002 2,559 (96) –

2003 2,110 190 9.00%

2004 2,173 (119) –

2005 2,341 27 1.15%

2006 2,288 (137) –

2007 2,374 26 1.10%

2008 1,884 26 1.38%

2009 1,977 168 8.50%

2010 1,691 129 7.63%

2011 2,112 380 17.99%

2012 1,753 408 23.27%


6

77%

1,500

1,700

1,900

2,100

2,300

2,500

2,700

2,900

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Data source: BLS.gov. Interpretation: Global Hunter Securities

The September Part-Time Counting Effect: Unadjusted, 2000 - 2012, in thousands, Sept. over August each year

"Number at work usually part time for noneconomic reasons"

7 7 Table continued on next slide

Oct. 2012 Highlights for Employment Trends in Media and Publishing (not seasonally adjusted)


Publishing industries, excl. Internet 740.3 749.4 -1.21% 899.1 -17.7% -3.8%

Newspaper, books and directories1 454.5 475.2 -4.36% 636.7 -28.6% -6.5%

Newspaper publishers1 223.9 238.1 -5.96% 341.2 -34.4% -8.1%

Periodical publishers1 109.9 112.5 -2.31% 142.3 -22.8% -5.0%

Book publishers1 71.5 73.1 -2.19% 80.3 -11.0% -2.3%

Directory and mailing lists1 32.9 32.8 0.30% 46.5 -29.2% -6.7%

Software publishers1 285.1 271.6 4.97% 259.2 10.0% 1.9%

Broadcasting, excl. Internet 279.4 281.9 -0.89% 323.0 -13.5% -2.9%

Total nonfarm 134,792.0 132,870.0 1.45% 138,786.0 -2.9% -0.6%

Total private sector 112,399.0 110,479.0 1.74% 116,129.0 -3.2% -0.7%

Cable and other subscriptions1 74.1 72.8 1.79% 88.0 -15.8% -3.4%

Telecommunications 828.5 852.4 -2.80% 1,026.7 -19.3% -4.2%

Other information services 170.6 164.7 3.58% 130.6 30.6% 5.5%

1 Unadjusted data lags by one month and is rendered for the prior month's comparisons.


8 8

Oct. 2012 Highlights for Employment Trends in Mining, Oil and Gas (not seasonally adjusted)


Oil and gas pipeline construction1 133.8 121.0 10.58% 108.3 23.5% 4.3%

Support activities oil/gas operations1 270.8 249.1 8.71% 198.2 36.6% 6.4%

Metal ore mining1 47.0 43.5 8.05% 37.6 25.0% 4.6%

Oil and gas extraction 194.6 182.2 6.81% 148.5 31.0% 5.6%

Part-time for noneconomic reasons 19,058.0 18,543.0 2.78% 19,956.0 -4.5% -0.9%

Natural gas distribution1 113.0 110.3 2.45% 107.5 5.1% 1.0%

Employed part-time 27,993.0 27,530.0 1.68% 24,736.0 13.2% 2.5%

Mining 784.0 773.2 1.40% 677.4 15.7% 3.0%

Support activites for mining 370.0 365.6 1.20% 299.9 23.4% 4.3%

Sand, gravel, clay & refractory mining1 39.1 38.9 0.51% 47.6 -17.9% -3.9%

Construction (all forms) 5,770.0 5,753.0 0.30% 7,796.0 -26.0% -5.8%

Fossil fuel electric power generation1 99.1 100.1 -1.00% 135.3 -26.8% -6.0%

Mining, except oil and gas 219.4 225.4 -2.66% 229.0 -4.2% -0.9%

Coal mining 80.0 87.1 -8.15% 77.2 3.6% 0.7%

1 Unadjusted data lags by one month and is rendered for the prior month's comparisons.


9 9

Holiday Retail Sales: What about Sandy?

10

77%

U.S. Retail Sales – Holiday Forecast – Nov.-Dec.-Jan. Not seasonally adjusted, in millions $

All Retail YoY% Ex-autos YoY%

2007 $1,104,866 3.42% $794,539 3.49%

2008 $1,148,173 3.92% $836,296 5.26%

2009 $1,033,463 -9.99% $772,711 -7.60%

2010 $1,058,126 2.39% $793,781 2.73%

2011 $1,136,025 7.36% $839,019 5.70%

2012 Est. $1,192,826 5.00% $872,580 4.00%

Data source: Census Bureau. Interpretation, Global Hunter Securities

11

77%

U.S. Retail Sales – Holiday Forecast – Nov.-Dec.-Jan.

***Estimating Impacts from Hurricane Sandy*** Not seasonally adjusted, in millions $

All Retail YoY% Ex-autos YoY%

2012 Est. $1,192,826 5.00% $872,580 4.00%

Worst Case $1,164,425 2.50% $853,702 1.75%

Best Case $1,181,466 4.00% $864,190 3.00%

Data sources: Census Bureau; Global Hunter Securities

12 12

Consumer Attitudes: Strength in the U.S.

Weakness Abroad

Weakness in California

13

77%

BIGinsight™ Surveys, October 2012 CA, 848* NY, 625*

Which one of the following best describes your feelings about chances

for a strong economy during the next 6 months?

Very confident 9.2% 12.0%

Confident 31.4% 27.9%

No confidence 18.5% 14.7%

Average Income $58,999 $61,157

How have fluctuating gas prices impacted your spending?

Delayed major purchase such as car, TV, furniture 19.4% 23.3%

Reduced dining out 33.3% 26.9%

Decreased vacation/travel 32.1% 26.8%

I will be driving less 42.4% 36.9%

Spending less on groceries 18.8% 13.0%

Spending less on clothing 28.4% 19.4%

No major impact 27.1% 35.9%

Deferring auto maintenance/tires 10.0% 6.1%

Decrease overall spending 32.7% 29.3%

Over the last 30 days, have you put off or

deferred purchases in any of the following areas?

Apparel 31.5% 28.2%

Vacation Travel 34.0% 26.9%

Auto Purchases 19.1% 14.0%

Data source: BIGinsight™. * is number of respondents by state.

14

77%

95

100

105

110

115

120

50

60

70

80

90

100

110O

ct-

02

Jan

-03

Ap

r-0

3

Ju

l-0

3

Oc

t-0

3

Jan

-04

Ap

r-0

4

Ju

l-0

4

Oc

t-0

4

Jan

-05

Ap

r-0

5

Ju

l-0

5

Oc

t-0

5

Jan

-06

Ap

r-0

6

Ju

l-0

6

Oc

t-0

6

Jan

-07

Ap

r-0

7

Ju

l-0

7

Oc

t-0

7

Jan

-08

Ap

r-0

8

Ju

l-0

8

Oc

t-0

8

Jan

-09

Ap

r-0

9

Ju

l-0

9

Oc

t-0

9

Jan

-10

Ap

r-1

0

Ju

l-1

0

Oc

t-1

0

Jan

-11

Ap

r-1

1

Ju

l-1

1

Oc

t-1

1

Jan

-12

Ap

r-1

2

Ju

l-1

2

Oc

t-1

2

USA China

Data source: ThomsonReuters. Interpretation: Global Hunter Securities

Consumer Confidence/Sentiment in U.S. and China

15

77%

0%

2%

4%

6%

8%

10%

12%

35%

40%

45%

50%

55%

60%

Ju

n-0

3

Oc

t-03

Fe

b-0

4

Ju

n-0

4

Oc

t-04

Fe

b-0

5

Ju

n-0

5

Oc

t-05

Fe

b-0

6

Ju

n-0

6

Oc

t-06

Fe

b-0

7

Ju

n-0

7

Oc

t-07

Fe

b-0

8

Ju

n-0

8

Oc

t-08

Fe

b-0

9

Ju

n-0

9

Oc

t-09

Fe

b-1

0

Ju

n-1

0

Oc

t-10

Fe

b-1

1

Ju

n-1

1

Oc

t-11

Fe

b-1

2

Ju

n-1

2

Oc

t-12

Little Confidence Very Confident (right axis)

Data courtesy BIGinsight™

Prospects for Strong Economy: Watching the Margins

Source: : BIGinsight™ Monthly Consumer Survey, Sept. 2012. © 2012, Prosper®. Interpretation: Global Hunter Securities.

Responses, Oct. 2012 = 8,899

16

77%

57.2%

51.7% 50.9%

30%

35%

40%

45%

50%

55%

60%

Oc

t-05

De

c-0

5

Fe

b-0

6

Ap

r-06

Ju

n-0

6

Au

g-0

6

Oc

t-06

De

c-0

6

Fe

b-0

7

Ap

r-07

Ju

n-0

7

Au

g-0

7

Oct-0

7

De

c-0

7

Fe

b-0

8

Ap

r-08

Ju

n-0

8

Au

g-0

8

Oc

t-08

De

c-0

8

Fe

b-0

9

Ap

r-09

Ju

n-0

9

Au

g-0

9

Oc

t-09

De

c-0

9

Fe

b-1

0

Ap

r-10

Ju

n-1

0

Au

g-1

0

Oc

t-10

De

c-1

0

Fe

b-1

1

Ap

r-11

Ju

n-1

1

Au

g-1

1

Oc

t-11

De

c-1

1

Fe

b-1

2

Ap

r-12

Ju

n-1

2

Au

g-1

2

Oc

t-12

"I will be driving less"

Source: : BIGinsight™ Monthly Consumer Survey, Sept. 2012. © 2012, Prosper®. Interpretation: Global Hunter Securities.

Question first submitted after Hurricane Katrina

9-month average respondents approx. 8,876

Data through Sept. 2012

Question: "How have fluctuating gas prices impacted your spending?"

Data courtesy BIGinsight™

17

77%

BIGinsight™ Surveys of >9,000 Consumers – Sept. 2012 Source: BIGinsight™. Responses from shoppers at each retailer/brand indicated.

Answers are % of respondents yes/no. *WMT = Walmart, excl. SAM’s Clubs. # of responses varies by retailer.

The Walmart Effect: Where do you shop most often for children’s toys?

WMT* SAM's Sears AMZN RSH HGG BBY TGT COST

44.0% 41.0% 40.5% 40.3% 40.2% 39.7% 37.7% 37.6% 34.2%

The Walmart Effect: Where do you shop most often for consumer electronics?

WMT* Sears AMZN SAM's TGT HGG COST RSH BBY

31.7% 21.2% 17.8% 17.3% 16.9% 14.8% 9.6% 7.2% 4.7%

18 18

$4 Gasoline Is not: Fuel Efficiency Reducing the Perceived and

Actual Cost of Gasoline

19

77%

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

Oc

t-07

Dec

-07

Fe

b-0

8

Ap

r-08

Ju

n-0

8

Au

g-0

8

Oc

t-08

Dec

-08

Fe

b-0

9

Ap

r-09

Ju

n-0

9

Au

g-0

9

Oct-0

9

Dec

-09

Fe

b-1

0

Ap

r-10

Ju

n-1

0

Au

g-1

0

Oct-1

0

Dec

-10

Fe

b-1

1

Ap

r-11

Ju

n-1

1

Au

g-1

1

Oc

t-11

Dec

-11

Fe

b-1

2

Ap

r-12

Ju

n-1

2

Au

g-1

2

MPG-adjusted prices Actual prices, regular conventional mogas

Data source: University of Michigan; EIA.gov. Interpretation: Global Hunter Securities

Actual Mogas Prices and MPG-Adjusted Prices

20

77%

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

Oc

t-07

De

c-0

7

Fe

b-0

8

Ap

r-08

Ju

n-0

8

Au

g-0

8

Oc

t-08

De

c-0

8

Fe

b-0

9

Ap

r-09

Ju

n-0

9

Au

g-0

9

Oc

t-09

De

c-0

9

Fe

b-1

0

Ap

r-10

Ju

n-1

0

Au

g-1

0

Oc

t-10

De

c-1

0

Fe

b-1

1

Ap

r-11

Ju

n-1

1

Au

g-1

1

Oc

t-11

De

c-1

1

Fe

b-1

2

Ap

r-12

Ju

n-1

2

Au

g-1

2

Data source: University of Michigan; EIA.gov. Interpretation: Global Hunter Securities

Spread of Actual Mogas Prices less MPG-Adjusted Price

Linear trend of the spread

21 21

Powering the

Construction Story: The North America Energy Colossus

22

77%

Commercial Construction – August YTD in Millions

Category Aug’12 YTD Aug’11 YTD YoY % Shares’12 Shares’11

Nonresidential, total $368,888 $340,582 8.31% 100.00% 100.00%

Power $59,391 $45,308 31.08% 16.10% 13.30%

Educational $57,773 $56,309 2.60% 15.66% 16.53%

Highway and Street $50,718 $48,515 4.54% 13.75% 14.24%

Manufacturing $31,348 $24,786 26.47% 8.50% 7.28%

Commercial $30,709 $28,284 8.57% 8.32% 8.30%

Healthcare $26,950 $26,068 3.38% 7.31% 7.65%

Office $23,594 $22,742 3.75% 6.40% 6.68%

Transportation $23,265 $22,725 2.38% 6.31% 6.67%

Sewage and Waste Disposal $14,498 $14,631 -0.91% 3.93% 4.30%

Communication $11,003 $11,284 -2.49% 2.98% 3.31%

Amusement and Recreation $10,357 $10,553 -1.86% 2.81% 3.10%

Water Supply $8,717 $9,271 -5.98% 2.36% 2.72%

Lodging $7,243 $5,769 25.55% 1.96% 1.69%

Public Safety $6,832 $6,598 3.55% 1.85% 1.94%

Conservation and Development $3,907 $4,935 -20.83% 1.06% 1.45%

Religious $2,584 $2,804 -7.85% 0.70% 0.82%

Data source: Census Bureau. Interpretation: Global Hunter Securities

23

77%

0%

5%

10%

15%

20%

25%

Jan

-02

Ma

y-0

2

Oc

t-02

Fe

b-0

3

Ju

l-03

No

v-0

3

Ma

r-04

Au

g-0

4

De

c-0

4

Ap

r-05

Se

p-0

5

Jan

-06

Ma

y-0

6

Oc

t-06

Fe

b-0

7

Ju

l-07

No

v-0

7

Ma

r-08

Au

g-0

8

De

c-0

8

Ap

r-09

Se

p-0

9

Jan

-10

Ju

n-1

0

Oc

t-10

Fe

b-1

1

Ju

l-11

No

v-1

1

Ma

r-12

Au

g-1

2

Data sources: Census Bureau. Interpretation: Global Hunter Securities

Power as a % of Nonresidential Construction

August 2012 data is preliminary and subject to revision.Data is not seasonally adjusted.

24

77%

20%

30%

40%

50%

60%

70%

80%J

an

-02

Ap

r-0

2

Ju

l-0

2

Oc

t-0

2

Jan

-03

Ap

r-0

3

Ju

l-0

3

Oc

t-0

3

Jan

-04

Ap

r-0

4

Ju

l-0

4

Oc

t-0

4

Jan

-05

Ap

r-0

5

Ju

l-0

5

Oc

t-0

5

Jan

-06

Ap

r-0

6

Ju

l-0

6

Oc

t-0

6

Jan

-07

Ap

r-0

7

Ju

l-0

7

Oc

t-0

7

Jan

-08

Ap

r-0

8

Ju

l-0

8

Oc

t-0

8

Jan

-09

Ap

r-0

9

Ju

l-0

9

Oc

t-0

9

Jan

-10

Ap

r-1

0

Ju

l-1

0

Oc

t-1

0

Jan

-11

Ap

r-1

1

Ju

l-1

1

Oc

t-1

1

Jan

-12

Ap

r-1

2

Ju

l-1

2

Residential Nonresidential

Data sources: Census Bureau. Interpretation: Global Hunter Securities

Residential and Nonresidential Construction % of Total

August 2012 data is preliminary and subject to revision. Data is not seasonally adjusted.

25

77%

(10.0)%

(8.0)%

(6.0)%

(4.0)%

(2.0)%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

1,500

1,600

1,700

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

YoY % from moving average

US natgas withdrawals (left axis)

Data source EIA.gov. Interpretation: Global Hunter Securities

1981-2012: Long-term U.S. Monthly Natural Gas Withdrawals

Bcf per month

Calculations derived from 13 month simple moving average

26

77%

Sources of U.S. Electric Energy Production (in 000 Mwh, July 2012 sort)

Energy Source Jul-12 ▼ Jul-11 YoY%

All Energy Sources 416,152 419,480 -0.79%

Coal 161,023 176,709 -8.88%

Natural Gas 139,767 120,377 16.11%

Nuclear 69,129 72,345 -4.45%

Hydroelectric Conventional 27,082 31,570 -14.22%

Other Renewables 15,403 14,094 9.29%

Wind 8,652 7,382 17.20%

Wood and Wood-Derived Fuels 3,221 3,348 -3.79%

Other Biomass 1,622 1,767 -8.21%

Petroleum Liquids 1,502 1,699 -11.60%

Geothermal 1,435 1,372 4.59%

Other Energy Sources 1,044 1,024 1.95%

Other Gas 1,036 1,059 -2.17%

Petroleum Coke 752 1,312 -42.68%

Solar Thermal and Photovoltaic 474 226 109.73%

Data source: EIA.gov; Global Hunter Securities

27 27

Bankruptcy Filing

Data Trends

28

77%

Business Filings June 2012*

Total Chapter 7 Chapter 11 Chapter 12 Chapter 13

10,374 7,145 2,225 142 836

Business Filings June 2011

Total Chapter 7 Chapter 11 Chapter 12 Chapter 13

12,304 8,669 2,567 166 881

Year-over-Year Trends

-1,930 -1,524 -342 -24 -45

-15.7% -17.6% -13.3% -14.5% -5.1%

Data source: U.S. Courts.gov; Global Hunter Securities. *June = Q2 for the U.S. bankruptcy fiscal year.

29

77%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Total Business Bankruptcy Filings, Annual, 1994 - 2011

Data source: American Bankruptcy Institute

2012 GHS estimate

30

77%

Business / Nonbusiness Bankruptcy Filings Trends

Year Total Filings Business Filings Nonbusiness Filings Business/

Nonbusiness Ratio

1997 1,404,145 54,027 1,350,118 2.5%

1998 1,442,549 44,367 1,398,182 3.2%

1999 1,319,465 37,884 1,281,581 3.4%

2000 1,253,444 35,472 1,217,972 3.4%

2001 1,492,129 40,099 1,452,030 3.6%

2002 1,577,651 38,540 1,539,111 4.0%

2003 1,660,245 35,037 1,625,208 4.6%

2004 1,597,462 34,317 1,563,145 4.6%

2005 2,078,415 39,401 2,039,214 5.2%

2006 617,660 19,695 597,965 3.0%

2007 850,912 28,322 822,590 2.9%

2008 1,117,771 43,546 1,074,225 2.5%

2009 1,473,675 60,837 1,412,838 2.3%

2010 1,593,081 56,282 1,536,799 2.7%

2011 1,410,653 47,806 1,362,847 3.4%

Data source: www.Bankruptcydata.com

31 31

Key Credit Quality

Indicators

32

77%

$600,000

$650,000

$700,000

$750,000

$800,000

$850,000

$900,000

$950,000

$1,000,000

$1,050,000

Fe

b-0

0

Au

g-0

0

Fe

b-0

1

Au

g-0

1

Fe

b-0

2

Au

g-0

2

Fe

b-0

3

Au

g-0

3

Fe

b-0

4

Au

g-0

4

Fe

b-0

5

Au

g-0

5

Fe

b-0

6

Au

g-0

6

Fe

b-0

7

Au

g-0

7

Fe

b-0

8

Au

g-0

8

Fe

b-0

9

Au

g-0

9

Fe

b-1

0

Au

g-1

0

Fe

b-1

1

Au

g-1

1

Fe

b-1

2

Au

g-1

2

Data source: Federal Reserve. Interpretation, Global Hunter Securities

Revolving Consumer Credit Outstanding, Monthly, Not Seasonally Adjusted

In millions USD

33

77%

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Ju

l-04

De

c-0

4

Ma

y-0

5

Oc

t-05

Ma

r-06

Au

g-0

6

Jan

-07

Ju

n-0

7

No

v-0

7

Ap

r-08

Se

p-0

8

Fe

b-0

9

Ju

l-09

De

c-0

9

Ma

y-1

0

Oc

t-10

Ma

r-11

Au

g-1

1

Jan

-12

Ju

n-1

2

First Mortgage Index

Second Mortgage Index

Data source: S&P/Experian

S&P/Experian Credit Delinquency Indices: 2004 - 2012

34

77%

0%

1%

2%

3%

4%

5%

6%

Au

g-0

7

Oc

t-07

De

c-0

7

Fe

b-0

8

Ap

r-08

Ju

n-0

8

Au

g-0

8

Oc

t-08

De

c-0

8

Fe

b-0

9

Ap

r-09

Ju

n-0

9

Au

g-0

9

Oc

t-09

De

c-0

9

Fe

b-1

0

Ap

r-10

Ju

n-1

0

Au

g-1

0

Oc

t-10

De

c-1

0

Fe

b-1

1

Ap

r-11

Ju

n-1

1

Au

g-1

1

Oc

t-11

De

c-1

1

Fe

b-1

2

Ap

r-12

Ju

n-1

2

Au

g-1

2

1st 2nd

Data source: S&P Dow Jones Indices;

S&P/Experian First and Second Mortgage Default Indices

35 35

Loan Performance

36

77%

0%

2%

4%

6%

8%

10%

12%

14%

Q2

19

91

Q4

19

92

Q2

19

94

Q4

19

95

Q2

19

97

Q4 1

998

Q2

20

00

Q4

20

01

Q2

20

03

Q4

20

04

Q2

20

06

Q4

20

07

Q2

20

09

Q4

20

10

Q2

20

12

Delinquency Rate Charge-off Rate

Quarterly loan performance data, not seasonally adjusted. Through Q2 2012.

Source: Federal Reserve. Interpretation: Global Hunter Securities

Commercial Real Estate Loan Trends: Charge-offs and Delinquencies

37

77%

($10,000)

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

Q2 1

991

Q2 1

992

Q2 1

993

Q2 1

994

Q2 1

995

Q2 1

996

Q2 1

997

Q2 1

998

Q2 1

999

Q2 2

000

Q2 2

001

Q2 2

002

Q2 2

003

Q2 2

004

Q2 2

005

Q2 2

006

Q2 2

007

Q2 2

008

Q2 2

009

Q2 2

010

Q2 2

011

Q2 2

012

Consumer Loan Delinquencies 4-year $ change

Data source: Federal Reserve. Interpretation, Global Hunter Securities

Quarterly, not seasonally adjusted, through Q2 2012, in millions USD

38 38

S&P/Experian Consumer Credit Default Indices, National Indices

Index July 2012

Index Level

June 2012

Index Level

July 2011

Index Level

July 2009

Index Level

Composite 1.51% 1.52% 2.06% 5.24%

First

Mortgage 1.41% 1.41% 1.93% 5.32%

Second

Mortgage 0.75% 0.73% 1.25% 3.94%

Bank Card 3.83% 3.97% 5.64% 8.18%

Auto

Loans 1.01% 1.04% 1.27% 2.46%

Source: S&P/Experian Consumer Credit Default Indices. Data through May 2012.

39 39

A Housing Recovery

40

77%

120

122

124

126

128

130

132

134

136

138

140

22%

23%

23%

24%

24%

25%

25%

26%

26%

Se

p-0

9

De

c-0

9

Ma

r-10

Ju

n-1

0

Se

p-1

0

De

c-1

0

Ma

r-11

Ju

n-1

1

Se

p-1

1

De

c-1

1

Ma

r-12

Ju

n-1

2

Sources: S&P/Case Shiller Home Price Indices; CoreLogic, Inc. Interpretation: Global Hunter Securities

Negative Equity and Home Price Trends: Quarterly from Q3 2009 to Q2 2012

Negative equity %, left side Home Price Indices, right side

41

77%

CoreLogic® House Price Index (HPI), Aug. 2012 – Major CSBAs

Image source: CoreLogic® www.corelogic.com

42

77%

0

10

20

30

40

50

60

70

80

90

100

De

c-0

4

Fe

b-0

5

Ap

r-05

Ju

n-0

5

Au

g-0

5

Oc

t-05

De

c-0

5

Fe

b-0

6

Ap

r-06

Ju

n-0

6

Au

g-0

6

Oc

t-06

De

c-0

6

Fe

b-0

7

Ap

r-07

Ju

n-0

7

Au

g-0

7

Oc

t-07

De

c-0

7

Fe

b-0

8

Ap

r-08

Ju

n-0

8

Au

g-0

8

Oc

t-08

De

c-0

8

Fe

b-0

9

Ap

r-09

Ju

n-0

9

Au

g-0

9

Oc

t-09

De

c-0

9

Fe

b-1

0

Ap

r-10

Ju

n-1

0

Au

g-1

0

Oc

t-10

De

c-1

0

Fe

b-1

1

Ap

r-11

Ju

n-1

1

Au

g-1

1

Oc

t-11

De

c-1

1

Fe

b-1

2

Ap

r-12

Ju

n-1

2

Au

g-1

2

Oc

t-12

Northeast Midwest South West

Source: National Association of Home Builders. Interpretation: Global Hunter Securities

NAHB Home Builder Sentiment Index (HMI) - Regions, Monthly

43 43

Unemployment – Selected Metro Areas (not seasonally adjusted)

Area Aug-12 Aug-11 Aug-07 5-yrs multiple

Atlanta (city) 11.5% 12.7% 5.8% 2.0x

Atlanta (CSA) 8.9% 9.9% 4.6% 1.9x

Chicago (city) 10.3% 10.6% 5.4% 1.9x

Chicago (CSA) 8.8% 10.4% 5.0% 1.8x

Dallas (city) 7.5% 8.7% 4.7% 1.6x

Dallas (CSA) 6.9% 8.1% 4.3% 1.6x

Denver (CSA) 7.6% 8.1% 3.8% 2.0x

Los Angeles (city) 12.3% 14.2% 5.9% 2.1x

Los Angeles (CSA) 10.7% 12.3% 5.3% 2.0x

Minn/St Paul (CSA) 5.7% 6.5% 4.3% 1.3x

Phoenix (city) 7.7% 9.2% 3.6% 2.1x

Phoenix (MSA) 7.4% 8.8% 3.1% 2.4x

San Francisco (CSA) 8.4% 9.8% 4.7% 1.8x

Seattle (city) 7.0% 7.3% 3.3% 2.1x

Seattle (CSA) 8.1% 8.5% 3.8% 2.1x

Data source: Census.gov; Interpretation, Global Hunter Securities. CSA = combined statistical area.

44 44

55%

57%

59%

61%

63%

65%

67%

69%

Q1

19

65

Q1

19

66

Q1

19

67

Q1

19

68

Q1

19

69

Q1

19

70

Q1

19

71

Q1

19

72

Q1

19

73

Q1

19

74

Q1

19

75

Q1

19

76

Q1

19

77

Q1

19

78

Q1

19

79

Q1

19

80

Q1

19

81

Q1

19

82

Q1

19

83

Q1

19

84

Q1

19

85

Q1

19

86

Q1

19

87

Q1

19

88

Q1

19

89

Q1

19

90

Q1 1

991

Q1

19

92

Q1

19

93

Q1 1

994

Q1

19

95

Q1

19

96

Q1 1

997

Q1

19

98

Q1

19

99

Q1

20

00

Q1

20

01

Q1

20

02

Q1

20

03

Q1

20

04

Q1

20

05

Q1

20

06

Q1

20

07

Q1

20

08

Q1

20

09

Q1

20

10

Q1

20

11

Q1

20

12

Customary Ownership Rate Alternative Ownership Rate (from total inventory)

Quarterly data, Q1 1965 to Q2 2012

Data source: Census Bureau. Interpretation: Global Hunter Securities

45 45

Why 2% Is the Old 4%

46

77%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

19

47

19

49

19

52

19

54

19

57

19

59

19

62

19

64

19

67

19

69

19

72

19

74

19

77

19

79

19

82

19

84

19

87

19

89

19

92

19

94

19

97

19

99

20

02

20

04

20

07

20

09

20

12

Source: BEA.gov. Interpretation: Global Hunter Securities

PCE = personal consumption expenditures. Underlying data is seasonally adjusted at annual rates, quarterly.

Embargoes

Post-2003: U.S.

deficits and weak

USD

Household Gasoline and Energy Spend as % of Total PCE Quarterly, based on seasonally adjusted data at annual rate, to Q3 2012

47

77%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

19

47

19

49

19

51

19

53

19

55

19

57

19

59

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

Gasoline and energy spending as % of PCE: Goods


U.S. deficits

and weak USD

Embargoes

PCE = personal consumption expenditures. Underlying data is seasonally adjusted at annual rates, quarterly, through Q3 2012.

48

77%

0%

5%

10%

15%

20%

25%

30%1

94

7

19

48

19

49

19

50

19

52

19

53

19

54

19

55

19

57

19

58

19

59

19

60

19

62

19

63

19

64

19

65

19

67

19

68

19

69

19

70

19

72

19

73

19

74

19

75

19

77

19

78

19

79

19

80

19

82

19

83

19

84

19

85

19

87

19

88

19

89

19

90

19

92

19

93

19

94

19

95

19

97

19

98

19

99

20

00

20

02

20

03

20

04

20

05

20

07

20

08

20

09

20

10

20

12

Gasoline and Other Energy Goods as % of Gross Private Domestic Investment


Do higher energy costs worsen the typical volatility of fixed asset investments?

Rising household spending on energy (determined by higher prices in 2003-2012), relative to the decline of new construction investments, seems capable of constraining GDP growth, when viewed through the impact on Gross Private Domestic Investment (capital intensive, fixed assets). Data is quarterly, Q1 1947 to Q3 2012.

49

77%

0%

2%

4%

6%

8%

10%

12%

14%

$

$1

$2

$3

$4

$5

$6

$7

$8

19

47

19

49

19

52

19

54

19

57

19

59

19

62

19

64

19

67

19

69

19

72

19

74

19

77

19

79

19

82

19

84

19

87

19

89

19

92

19

94

19

97

19

99

20

02

20

04

20

07

20

09

20

12

Services spend, in trillions of USD (left side)

Energy spend as % of services spend

Source: BEA.govv. Interpretation: Global Hunter Securities

Overlay of Household Spending on Services, and Energy as % of ServicesQuarterly through Q3 2012

Either energy spend would need to continue to decline towards 2% to 4% of services spend, or the rate of growth in total spend on services would need to decline - and indeed in recent years this effect has started.

50

77%

91.63%

20%

30%

40%

50%

60%

70%

80%

90%

100%

196

0

196

2

196

4

196

7

196

9

197

1

197

3

197

6

197

8

198

0

1982

1985

198

7

198

9

199

1

199

4

199

6

199

8

200

0

200

3

200

5

200

7

200

9

201

2Household Spending on Healthcare as % of Spending on Housing1

Quarterly through Q3 2012

Source: BEA.govv. Interpretation: Global Hunter Securities

1 Housing includes other housing-specific fixed expenses including utilities.

Linear trendline

51 51 Image source: USPS.gov

Need a ride

to Fiscal

Cliff?

52 52

About Global Hunter Securities, LLC

Global Hunter Securities, LLC is an international

investment banking and institutional services firm.

Global Hunter Securities, LLC has offices in Calgary, Chicago,

Fort Worth, Houston, New Orleans, New York, Orange County,

CA and San Francisco.

Visit us at www.ghsecurities.com

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