Macroeconomic Outlook 10 th Annual Waterways Symposium October 1-3, 2013

2 Synchronous Global Growth: Lead by Emerged Economies and Especially the U.S. or a European Lead Collapse? a Chinese Hard Landing?

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4 Focus On The U.S. Economic Prospects Slow Growth With Headwinds 2014 “Organic Growth” Less Government Know the Rules / Not Like the Rules

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6 Business Investment Improving

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10 Organic Growth and Jobs: Housing’s Role

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12 Housing: Improvements

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17 We Keep Counting On The Consumer Saving Less Now! Why?

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22 Gas Prices: Help or Hindrance

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27 Is Natural Gas America’s “Ace In The Hole”?

28 Crude Oil and Natural Gas Price Relationships Recent Divergence Energy Implications Implications For Renewable Fuels

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30 1 barrel of Crude Oil contains 5.8 million btu. The current price (August 2013) of 1 barrel of Crude Oil is $ per barrel. Cost per million btu in the form of Crude Oil = $106.30/5.8 = $ Cost per million btu in the form of Natural Gas = $3.43.

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32 Liquidity Issues Are Banks in Good Shape? The Fed’s Policy Role? The New Fed Chair?

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35 Bernanke’s Watch: Don’t Blame It On The Fed! Central Bank Accommodations Driven By The Data

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37 Maturity Interest Rate 3M 2YR5YR10YR30YR Normal Curve Normal Yield Curve Maturity Interest Rate 3M2YR5YR10YR30YR Normal Curve Flattening Yield Curve Maturity Interest Rate 3M2YR5YR10YR30YR Normal Curve Inverted Yield Curve Yield Curve Background The longer you lend money, the more money you want back in return. Short Rates Gain On Long Rates Long rates are below short rates; not paying a risk premium for money lending. Flat Curve Inverted Curve

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41 Federal Deficit The Dollar and Trade

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45 The Macroeconomic Implications For Commodities As An Asset Class

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47 Summary and Questions