Michael Drury - Monterrey 2016

McVEAN Trading & Investments, LLC

GLOBAL ECONOMIC OUTLOOK February 1, 2016

Global Interdependence Center Monterrey, Mexico Michael Drury Chief Economist McVean Trading and Investments, LLC

Past Performance Is Not Necessarily Indicative Of Future Results.

0

2015 GLOBAL GDP $73.6 TRILLION (-3.6% Y/Y)

NAFTA $20T +2.4%

-9.7%

Japan+South Korea+Taiwan $6.2T -5.9%

China $11.5T +8.0%

-4.1%

EUROPE $17.5T -10.9%

Other $10.5T +0.8%

Australia+Brazil+ Argentina+Russia+ OPEC $7.9T -17.7% Past Performance Is Not Necessarily Indicative Of Future Results.

1

U.S. MAP

SUNBELT

Past Performance Is Not Necessarily Indicative Of Future Results.

2

U.S.; EUROPE; CHINA

SUBURBS

RUST BELT

Past Performance Is Not Necessarily Indicative Of Future Results.

SUNBELT

3

REAL GDP CURRENT QTR % CHANGE FROM YEAR AGO 14%

12%

10%

8%

6%

4%

2%

0%

NASDAQ BUBBLE

RTC CRISIS

-2%

-4%

LEHMAN -6% Jan-49

Jan-55

Jan-61

Jan-67

Jan-73

Jan-79

Jan-85

Jan-91

Jan-97

Jan-03

Jan-09

Jan-15

Q3 2015 Past Performance Is Not Necessarily Indicative Of Future Results.

4

REAL GDP CURRENT QTR % CHANGE FROM YEAR AGO 16%

14%

12%

10%

8%

6%

4%

2%

0%

ASIAN CRISIS

NIKKEI BUBBLE

-2%

-4%

-6% Jan-49

LEHMAN Jan-55

Jan-61

Jan-67

Jan-73

Jan-79

Jan-85

Jan-91

Past Performance Is Not Necessarily Indicative Of Future Results.

Jan-97

Jan-03

Jan-09

Jan-15

5

US TRADE BALANCE AS A % OF GDP 2%

1%

0%

-1%

-2%

-3%

-4%

-5%

-6% Jan-60

Jan-64

Jan-68

Jan-72

Jan-76

Jan-80

Jan-84

Jan-88

Jan-92

Jan-96

Jan-00

Jan-04

Jan-08

Jan-12 Q3 2015

Past Performance Is Not Necessarily Indicative Of Future Results.

6

US Household Wealth 2200

280

2000

260

1800 240

1600 220 1400

200 1200

180

1000

800 1/1/2000

160

1/1/2002

1/1/2004

1/1/2006

1/1/2008 S&P

1/1/2010

HOME PRICE

Past Performance Is Not Necessarily Indicative Of Future Results.

1/1/2012

1/1/2014

Dec-15 7

DOMESTIC CORPORATE PROFITS VS CAPITAL INVESTMENT AS A % OF GDP

12%

16.0%

15.0% 10% 14.0%

8%

13.0%

12.0% 6% 11.0%

4% Mar-75

10.0% Mar-79

Mar-83

Mar-87

Mar-91

Mar-95

DOMESTIC CORPORATE PROFITS

Mar-99

Mar-03

Mar-07

CAPITAL INVESTMENT

Past Performance Is Not Necessarily Indicative Of Future Results.

Mar-11

Mar-15

Q3 15 8

POLICY LEVERS

• 1) Monetary Policy • 2) Fiscal Policy • 3) Regulation • 4) Exchange Rates Past Performance Is Not Necessarily Indicative Of Future Results.

9

MONETARY POLICY US OVERNIGHT RATE VS 10YR YIELD

20

18

16

14

12

10

8

6

4

2

0 1/1/1980

1/1/1984

1/1/1988

1/1/1992

1/1/1996 Overnight Rate

1/1/2000

1/1/2004

US 10YR Yield

Past Performance Is Not Necessarily Indicative Of Future Results.

1/1/2008

1/1/2012

Dec 15 10

5 YR TREASURY YIELD CHANGE FROM 5 YEARS AGO 2

1

0

-1

-2

-3

-4

-5

-6 Jan-89

Jan-91

Jan-93

Jan-95

Jan-97

Jan-99

ACTUAL

Jan-01

Jan-03

Jan-05

Jan-07

Jan-09

Jan-11

Jan-13

Jan-15

Jan-17

Jan-19

PROJECTION AT CURRENT RATE

Past Performance Is Not Necessarily Indicative Of Future Results.

11

FISCAL POLICY FEDERAL GOVERNMENT DEFICIT AS A % OF GDP 10%

8%

6%

4%

2%

0%

-2%

-4% Jan-78

Jan-82

Jan-86

Jan-90

Jan-94

Jan-98

Jan-02

Jan-06

Jan-10

Jan-14 Q3 2015

Past Performance Is Not Necessarily Indicative Of Future Results.

12

REGULATION • • • • • • • •

• • •

• • • • • • • •

Exclusion of Utility Operations-Related Swaps with Utility Special Entities from De Minimis Threshold for Swaps with Special Entities Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships with, Hedge Funds and Private Equity Funds Derivatives Clearing Organizations and International Standards Protection of Collateral of Counterparties to Uncleared Swaps; Treatment of Securities in a Portfolio Margining Account in a Commodity Broker Bankruptcy Swap Dealers and Major Swap Participants; Clerical or Ministerial Employees Clearing Exemption for Certain Swaps Entered Into by Cooperatives Harmonization of Compliance Obligations for Registered Investment Companies Required To Register as Commodity Pool Operators Enhanced Risk Management Standards for Systemically Important Derivatives Clearing Organizations Interpretive Guidance and Policy Statement Regarding Compliance With Certain Swap Regulations Exemptive Order Regarding Compliance With Certain Swap Regulations Process for a Designated Contract Market or Swap Execution Facility To Make a Swap Available to Trade, Swap Transaction Compliance and Implementation Schedule, and Trade Execution Requirement Under the Commodity Exchange Act Core Principles and Other Requirements for Swap Execution Facilities Core Principles and Other Requirements for Swap Execution Facilities; Correction Procedures To Establish Appropriate Minimum Block Sizes for Large Notional OffFacility Swaps and Block Trades Procedures To Establish Appropriate Minimum Block Sizes for Large Notional OffFacility Swaps and Block Trades Procedures To Establish Appropriate Minimum Block Sizes for Large Notional OffFacility Swaps and Block Trades; Correction Reassignment of Commission Staff Responsibilities and Delegations of Authority Delegation of Authority To Disclose Confidential Information to a Contract Market, Registered Futures Association or Self-Regulatory Organization Clearing Exemption for Swaps Between Certain Affiliated Entities

• DODD FRANK

Past Performance Is Not Necessarily Indicative Of Future Results.

13

EXCHANGE RATE Dollar / Euro Cross vs Dollar / Yen 1.6

280

1.5

258

1.4

236

1.3

214

1.2

192

1.1

170

1

148

0.9

126

0.8

104

0.7

82

0.6 1/1/1980

60 1/1/1984

1/1/1988

1/1/1992

1/1/1996 Dollar_Euro

1/1/2000

1/1/2004

Dollar_Yen

Past Performance Is Not Necessarily Indicative Of Future Results.

1/1/2008

1/1/2012

Dec 15 14

AGGREGATE HOURS WORKED VS AVERAGE HOURLY EARNINGS THREE MO AVG % CHANGE FROM 3 MO AVG YEAR AGO

6.0%

4.5%

4.0%

4.0%

2.0%

3.5%

0.0%

3.0%

-2.0%

2.5%

-4.0%

2.0%

-6.0%

1.5%

-8.0% Jan-85

1.0% Jan-89

Jan-93

Jan-97

AGGREGATE HOURS WORKED

Jan-01

Jan-05

Jan-09

AVERAGE HOURLY EARNINGS (right)

Past Performance Is Not Necessarily Indicative Of Future Results.

Jan-13

Dec-15 15

RETAIL SALES EX GASOLINE VS DISPOSABLE INCOME 3 MONTH AVERAGE % CHANGE FROM 3 MONTH AVERAGE YEAR AGO

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

-2.0%

-4.0%

-6.0%

-8.0%

-10.0% Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

RETAIL SALES EX GAS

Jan-08

Jan-09

Jan-10

Jan-11

DISPOSABLE INCOME

Past Performance Is Not Necessarily Indicative Of Future Results.

Jan-12

Jan-13

Jan-14

Jan-15

Nov-15 16

TOTAL RETAIL SALES VS RETAIL SALES EX GASOLINE 3 MONTH AVERAGE % CHANGE FROM 3 MONTH AVERAGE YEAR AGO

9.0%

6.0%

3.0%

0.0%

-3.0%

-6.0%

-9.0%

-12.0% Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

RETAIL SALES

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

EX GAS STATION SALES

Past Performance Is Not Necessarily Indicative Of Future Results.

Jan-12

Jan-13

Jan-14

Jan-15

Nov-15 17

US, EUROPE, JAPAN, CHINA PMI 65

80

60

65

55

50

50

35

45

20

40

5

35

-10

30 1/1/2006

-25 1/1/2007

1/1/2008

1/1/2009

1/1/2010

CHINA

1/1/2011

Eurozone

1/1/2012 US

1/1/2013

JAPAN (RS)

Past Performance Is Not Necessarily Indicative Of Future Results.

1/1/2014

1/1/2015

Dec-15 18

BALANCE SHEETS MONTHLY

5000

4500

4000

Billions of US$

3500

3000

2500

2000

1500

1000

500

US

Europe

Japan

Past Performance Is Not Necessarily Indicative Of Future Results.

Dec-15 19

EXCHANGE RATE Yen / Euro Cross 0.011

0.01

0.009

0.008

0.007

0.006

0.005 1/1/1986

1/1/1990

1/1/1994

1/1/1998

1/1/2002

1/1/2006

1/1/2010

1/1/2014

Dec 15 Past Performance Is Not Necessarily Indicative Of Future Results.

20

U.S., EUROPE AND JAPAN GDP 10%

8%

6%

4%

2%

0%

-2%

-4%

-6%

-8%

-10% Jan-95

Jan-97

Jan-99

Jan-01

Jan-03 US

Jan-05 Europe

Jan-07

Jan-09

Japan

Past Performance Is Not Necessarily Indicative Of Future Results.

Jan-11

Jan-13

Jan-15

Q1 2015 21

SHANGHAI COMPOSITE STOCK MARKET 6000

5500

5000

4500

4000

3500

3000

2500

2000

1500

1000

Jan-16 Past Performance Is Not Necessarily Indicative Of Future Results.

22

CHINESE YUAN IN US$

0.17

0.165

0.16

0.155

0.15

0.145

0.14

0.135

0.13

0.125

0.12 Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-15 23 Past Performance Is Not Necessarily Indicative Of Future Results.

CHINA NOMINAL GDP GROWTH IN US$ CURRENT QUARTER % CHANGE FROM YEAR AGO

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0% Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Q3 15 Past Performance Is Not Necessarily Indicative Of Future Results.

24

CORN VS COPPER 850

500

450

750 400 650 350

550

300

250

450

200 350 150 250 100

150 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Corn

Copper

Past Performance Is Not Necessarily Indicative Of Future Results.

50

Dec-15 25

WTI CRUDE OIL 160

140

120

100

80

60

40

20 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Dec-15 Past Performance Is Not Necessarily Indicative Of Future Results.

26

CHINA GDP GROWTH

CURRENT QUARTER %CH FROM YEAR AGO 15.0

15.0

12.5

10.0

10.0

5.0

7.5

0.0

5.0 Mar-02

-5.0 Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

REAL GDP (LHS)

Mar-09

Mar-10

Mar-11

Mar-12

GDP DEFLATOR (RHS)

Past Performance Is Not Necessarily Indicative Of Future Results.

Mar-13

Mar-14

Mar-15 Q3 15

27

CHINESE NOMINAL GDP BY SECTOR

3 MONTH AVERAGE % CHANGE FROM YEAR AGO

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0% Jan-99

Jan-01

Jan-03

Jan-05

Jan-07

PRIMARY & SECONDARY

Jan-09 TERTIARY

Past Performance Is Not Necessarily Indicative Of Future Results.

Jan-11

Jan-13

Jan-15

Q3 2015 28

CHINA TOTAL AMOUNT OF SOCIAL FINANCING 12 MONTH AVERAGE

1600

1400

1200

1000

800

600

400

200

0

Nov 15 Past Performance Is Not Necessarily Indicative Of Future Results.

29

REAL ESTATE IN CHINA Sales of Commercial Buildings in Eastern, Central and Western Regions for January-November Floor Space of Commercial Buildings Sold Regions

National Total Eastern Central Western

Share of Production 100.0% 46.6% 26.9% 26.3%

Growth Rate Y/Y (%) 7.4 9.6 7.3 3.8

Sales of Commercial Buildings Share of Value Sold 100.0% 60.2% 20.1% 19.8%

Growth Rate Y/Y (%) 15.6 21.1 10.9 5.5

Real Estate Investment in Eastern, Central and Western Regions for January- August

Regions

National Total Eastern Central Western

Investment Share

100.0% 55.6% 21.6% 22.7%

% of Investment in Residential Buildings

Growth Rate Y/Y (%)

67.3% 67.0% 70.0% 65.4%

Past Performance Is Not Necessarily Indicative Of Future Results.

1.3 1.1 1.8 1.1

Residential Buildings 0.7 1.2 1.3 -1.2

30

CHINESE EXPORT VS IMPORTS 3 MO AVG %CH FROM 3 MO AVG YEAR AGO

66.0%

49.5%

33.0%

16.5%

0.0%

-16.5%

-33.0% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 EXPORTS

IMPORTS

Past Performance Is Not Necessarily Indicative Of Future Results.

Nov 15 31

CHINESE GLOBAL TRADE SURPLUS BILLIONS OF US$ - 3 MONTH AVERAGE

900.0

800.0

700.0

600.0

500.0

400.0

300.0

200.0

100.0

0.0

-100.0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Nov-15 Past Performance Is Not Necessarily Indicative Of Future Results.

32