The Black Owl Report : An Executive Intelligence Brief

Briefing: Tuesday 14, January 2020

Lead: Gut Check time The Toughest “Call” for an Executive to Make

We get exposed to a tremendous amount of research as we gather Additional Items we are watching. information to turn into intelligence. One of the big trends we are watching for our clients is in the area of customer experience. • Wuhan SARS Outbreak? The World Health Organization is monitoring an outbreak of I am preparing for a presentation that links 1) macroeconomics to 2) a virus that is behaving much like SARS. industry-specific observations then to 3) company-specific research for a The virus starts with a fever and then client. develops into a respiratory illness or pneumonia. In short, we are trying to paint a picture to help them understand:

The World Health Organization has been 1. Will the economy provide them with a tide that “lifts all ships”? given a genetic sequence to use in trying 2. Will their industry experience something unique that makes it float higher than the tide or below the surface? to develop just a test for the strain. At this 3. Is their unique boat taking on water or starting to plane so that it stage, we don’t know exactly how many can rise above the tide and “make way”? cases there are, how fast it’s spreading, what the mortality rate is, etc. In the process of assembling reams of data and information, we came across an interesting piece sent to me by a friend that discusses customer Approximately 41 people have been experience during a downturn. diagnosed with the virus, one has died, seven were discharged and six remain in The graphic below from Forbes and Watermark Consulting shows the critical condition. results of a study that looked at the Great Recession and the S&P 500 and the correlation between growth by companies that had outstanding Details are a little sketchy, but it is customer experiences and those that were offering sub-par experiences. believed that perhaps as many as 7 new The results are astounding. cases have already popped up in Hong Kong.

SARs had a significant impact on the global economy back at a time when the world was not as interconnected as it is today. To the degree that it would have a big impact on global trade, it’s important to continue to monitor.

• Blackstone Shifting to Green? It was a small story of sorts, but Blackstone will take steps to increase its percentage of holdings in many funds to companies with sustainable footprints. We wrote a bit article about the impact of a “zero- emissions” future on businesses. This is another example of how that is playing out in real terms in financial markets. Your efforts toward sustainability may not save The most difficult decision for an executive to make as the rumors of the planet, but it could boost shareholder recession and an economic slowdown are on the horizon is the one to wealth. continue to invest in customer experience endeavors. According to the data by Watermark, it pays off.

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I’ll be honest, for an executive responsible for finances, it’s a gut-check moment - granted, your businesses may be different depending on competitive pressures and industry environments. You can’t invest in events and marketing if you are a technology company and your products are lagging the industry. Understanding both stated and derived importance (as we have written about in the past) is critical when looking at attributes of your business and what customers value. If you haven’t done a formal consumer value analysis in a while, you need to consider it.

The Business Roundtable recently made a statement that they would start to prioritize customer satisfaction and experience over shareholder wealth in the future. It was almost considered to be sacrilege in the sense that we learn in business school that increasing shareholder and stakeholder wealth is the number one most important factor in finance – right? Some statements of fiduciary duty are written as such!

I’m including this in the front of today’s brief because we believe that businesses may start to fight an internal and external fight over the next two years between investing in items that directly provide growth, and those activities that create a slower, more gradual ascension into a superior competitive position through increasing customer satisfaction and improving customer experience.

US Domestic Economic Items

Economic Microbriefs:

• 2020/2021 Years of the House. Working on some forecasting information for a few clients, I dove into the outlook for the economy and I see one consistent prediction across the board: housing will be booming. For 2019, residential construction expected to be up @1.1% Y/Y in 2019. Some solid forecasts I see for 2020 show growth of 8% with 2021 following up with a 7.3% growth rate. In any given year, housing can represent as much as 19% of total GDP if you include all-in direct and indirect benefits associated with the housing sector.

If you touch the housing sector, services, direct construction materials, fixtures, decorations, etc., your outlook should be optimistic at this time.

• Consumer Price Index up 2.3% in December . The CPI headlines are all over the place. The number we need to know is that core inflation was 2.2% in December, down just slightly from a 2.3% rate hit in October and November. The Fed’s target rate is about 2%, but they have constantly said that they want to see inflation at 2.5% or higher for a period of time before they start to get concerned.

We also know that we need to watch the Trimmed Mean PCE which is a better average of inflationary pressure. November was the last rate that we have on the TMPCE, and it was at the Fed’s target rate of 2%. In short, inflation is still tame.

• Goldman Jumps into the New Era of Banking . Goldman is renaming Clarity Money and relaunching it with new services and products as Marcus. This is the bank’s answer to a trend in banking that is happening fast: mobile banking. It’s not just a way of capturing market share, it’s critical for survival.

Recent studies are showing over and over again that Millennials are making banking decisions unlike any generation has before them. It’s based on the mobile banking offering and the access to money, artificial intelligence tools, visibility, ability to get assistance, etc. And, Millennials are wearing off on

Confidential – Armada Executive Intelligence Brief – Confidential - 2 - The Black Owl Report : An Executive Intelligence Brief their older-generation predecessors. Gen Xers and Baby Boomers are now starting to look for banking relationships that have more accessibility and ease of engagement.

BankRate has one of the most recent rankings of the Top 8 mobile banking apps (August 2019). Not in any particular order, here were the top 8 based on popularity of apps, etc.:

• Chase Bank • Bank of America • USAA • Alliant Credit Union • BB&T • Huntington Bank • Chime (Digital banking only)

Earlier in the year (April of 2019), MarketWatch issued the following list of it’s top 8 (just for comparison):

• Capital One • Chase Mobile • Wells Fargo • Bank of America • Discover • Ally • PNC • Simple

Large banks have carved out the mobile banking sector as their battleground, knowing that the winner could be the one that helps control Millennial money. The ability for these banks to spend and invest in tools that are unique and differentiating makes it tougher on smaller banks. Smaller banks can certainly compete, but they are being forced to get creative, pair resources together, and use more strategic partnerships to stay abreast of the big firms.

As mentioned, all of the banking sector knows this. Goldman Sachs has hired Michael Dell’s brother, Adam to lead their development of “Marcus” – to create a competitive mobile app to go up against those firms mentioned earlier.

However, the biggest competition for all could come from the digital-only sector. Several sources are saying to watch companies like Monzo, an online-only banking app that is taking the UK by storm. Monzo has recently partnered with a US bank to offer its services in the US – and social media and pop culture could lead to a landslide of new customers that flock to the brand.

Competition for banks is coming from a variety of directions. Confusion in the sector could be one of the biggest challenges – and biggest opportunities for competing.

When it comes to importance, most people would say that managing our money is probably second only to the health and welfare of our family. Some people want to still physically walk into a branch and have a relationship with a bank – even if they then use the mobile apps that bank has to offer afterwards. They like the physical security of knowing that they can walk over and touch their bank.

When the world of financial options gets confusing, people will revert back to going to a source they trust (or one that their parent’s trusted). That’s the opportunity for smaller, community banks over the next couple of years. They have the opportunity to offer certainty, customer service and

Confidential – Armada Executive Intelligence Brief – Confidential - 3 - The Black Owl Report : An Executive Intelligence Brief troubleshooting, and training to young banking customers and upsell/cross-sell longer term customers on new mobile banking options. That’s the opportunity.

The risk is coming through new, cool tech and very little switching costs for customers to bounce, test, and experiment with new technologies. It will be interesting to see how many different types of banks customers ultimately use in the coming years. I know my daughter has pushed me to experiment with Acorn, Digit, etc. A bunch of buddies of mine did an informal football pool – and you paid your $20 bucks by Venmo.

It’s not going to be a different world; it is a different world. – KP

• Conference Board Forecast for 2020 . The Conference Board has released its top line forecast for the biggest economic indicators for 2020, and they don’t look too bad. Thankfully, we have been steering you in the right direction in what to watch, the forecast also agrees that there is one part of the economy that is troublesome. There are also some nice surprises in the forecast.

The Conference Board has 2019 ending with Real GDP at about 2.3%; that’s down from 2.9% but slightly ahead of the Federal Reserve’s prediction for 2.1%.

For 2020, the CB sees 2.1% growth. It’s far from recessionary, but perhaps lacks a little bit of the sizzle that we all had hoped for a couple of years ago. This of course could change if the Administration does something to goose the economy prior to the election.

Secondly, look at consumer spending (which is 70% of the economy). It is expected to improve slightly in 2020 – mostly on the back of a strong employment environment and late upticks in real wages.

Residential investment is one of the brightest spots in the forecast. The CB has it growing at 4.6% next year after contracting slightly in 2018 and 2019. Everything that has to do with housing will see some nice demand in 2020. I’ve also seen several other forecasts that has this increase as high as 8% with that rate of growth continuing in 2021 at 7.8%. The notion here is that people may be taking an opportunity while rates are low to get into homes and Millennials have begun to show an interest in getting into their first homes. Since many waited so long to make this move (many living with their parents for a long time), many are taking leaps into homes that would normally be considered a second-tier or middle-income home (not starter homes). The only limiters on this is the speed with which construction firms can actually get the labor to build homes. There is compression on available sub-contractors, which will hold back potential growth rates some.

Confidential – Armada Executive Intelligence Brief – Confidential - 4 - The Black Owl Report : An Executive Intelligence Brief Real Capital Spending is where we see trouble. Corporate investment in capex spending was deteriorating in the latter part of 2019. Fear during the Presidential election this year could also continue to make executives conservative in their approaches to spending. Real Capital Investment is expected to finish 2019 with a mild increase of 2.3%, down from 6.4% in 2018. For 2020, the CB is estimating growth of just 1%.

Lastly, exports are not expected to pick up dramatically – they will remain somewhat subdued into 2020 with growth of just .1% (essentially flat). They are expected to show contraction of .1% for 2019. - KP

Global Economic Items

• Port Authorities Say Brexit Isn’t Even in Consideration. Brexit will happen by January 31 st , officially. The UK will no longer be a part of the EU by February 1 st , but that doesn’t change trade in the early days. Continuation of current customs, excise and value added tax rules and regulations will happen until December 31 st of this year. If deals aren’t hammered out by then, well, we have problems.

According to port authorities around the UK, the problem is that there hasn’t been any discussion thus far about the details of what it means to create agreements “where none existed before”. It’s starting from a blank piece of paper. With a myriad of details to work out, many authorities in the UK say that 11 months isn’t enough time – there’s no way they will be ready by this time next year.

A report from Lloyd’s List quoted Tim Morris, Chief Executive of the UK Major Ports Group in which he was quoted as saying:

“We’re all going to need to work very hard and at pace — government, industry, agencies, intermediaries — to put in place a whole new framework in only 11 months. Some of this, such as moving freight to and from Great Britain and Northern Ireland, is wholly new, and has not even been contemplated in necessary detail yet .”

Issue #1 is that we are going to walk back up to a precipice in Q4 of 2020 – and could see some significant early inventory building activity if companies feel like they need to be getting ahead of any differences in trade before the January 1 st deadline. So, throughout 2020, we’ll be reporting on deals that seemingly are getting done, or the lack of progress being made on trade agreements and details of trade and regulation.

Issue #2: I know you get tired of us harping on the role of inventory management in the current US economy but the same dynamics are playing out in the UK, and port operators have confirmed it.

Port operators say that companies started inbounding freight in Q4 of 2018 to get ahead of tariff risk (remember that in early 2019 we had several Brexit deadlines come and go and the risk of a no-deal Brexit had a lot of companies trying to get out and in front of trade risk). That behavior continued through early 2019 before those order volumes and inventory building activity just stopped. Port operators reported that freight throughput was down 7% in 2019. Some of that was the global pull on port volumes as the world saw a general slowdown in economic activity. Much of it was companies getting out over their skis with regard to Brexit.

Britain saw inventories surge and spike prior to last March, and once prior to October of this year.

Confidential – Armada Executive Intelligence Brief – Confidential - 5 - The Black Owl Report : An Executive Intelligence Brief Unfortunately for you and I both, it’s going to be at least one more year of watching the headlines in the UK to see what the latest Brexit news is, and trying to make heads and tails out of how that translates into business activity on the streets. - KP

Supply Chain Items

Supply Chain Microbriefs:

• PIL The Face of Difficult Market Conditions. According to Lloyd’s List, Pacific International Lines has been rumored to be late on several “bunker fuel payments” and suppliers of that fuel could “arrest” cargo ships (although no threats have been made thus far according to PIL). That would mean that a ship could be detained at port until payment to those suppliers are made. Shippers could become concerned that cargo could get delayed or embargoed until a credit/collection situation is rectified. The CEO of PIL Mr. Teo Siong Seng wrote an editorial piece to Lloyd’s List yesterday refuting many of the details in the story. However, he acknowledged that this was a difficult environment for the maritime sector and that “suppliers were working with them”.

The global slowdown in manufacturing and rising costs of everything from insurance to meeting IMO 2020 requirements has started to lead to financial strains on some maritime carriers. It’s a sector to watch, especially if you rely on foreign goods.

• Key: Inventory Investment in 2020 . One of the key factors that moves the transportation and freight sector is the change in business inventories . We know that tariff risk and a favorable dollar helped push inventories much higher in 2018 and early 2019. Important for all companies is what happens in 2020 and 2021? According to forecasts, we see inventory building activity was about $76 billion in 2019, that forecast is expected to drop to $61 billion in 2020 and $68 billion in 2021.

This may seem counter-intuitive, but when the change in private inventories is going down year-over-year, transportation activity actually improves. The reason could be that companies are moving inventories faster, supply chain activity is quicker and inventory turns are higher. When we looked statistically at the strongest years in transportation, they occurred when the year-over-year change in private inventories went down.

The Congressional Budget Office has a more dramatic outlook for private inventories than anyone else. The CBO has private inventories growing by $74 billion in 2019, that’s up from $57 billion in 2018 and $26 billion in 2017. For 2020, the CBO has private inventory growth at $44 billion and $41 billion for 2021. The CBO has it “troughing” in 2022 at $39 billion.

If these relationships hold, 2020 should be a better year for transportation than 2019, and 2021 just slightly better than 2020. We’ll see. Remember, God invented economists to make meteorologists feel good about themselves . – KP

FTR Shipper Conditions Index . There’s a cool tool in the supply chain sector from FTR and Associates. It’s called the Shipper Conditions Index and it works pretty simply, when the index is above zero – conditions favor shippers. That means that capacity is sufficient, prices are swaying toward shippers, and they “hold the power” in the shipper/carrier relationship. When the pendulum is shifted the other direction and the index is negative, carriers “have the power”.

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The current shipper conditions index ( available here: FTR ) shows that the current freight sector (specifically trucking) favors shippers. They have more price control than in 2018. The blue lines indicate that the power pendulum was shifted toward carriers through August of 2018, and then inverted and favored shippers from then till October of 2019 (latest available).

Interestingly, note that the FTR index inverted just shortly after the first major headlines regarding US/China hit in 2018. Many indexes that we track hit their inversion point either in the summer of 2018 or at the end of Q4 in 2018 after a short period of pre- stocking inventory ahead of tariff risk. - KP

• Debate Rages on Open-Loop Scrubbers. IMO 2020 is a global enforcement act that requires large ships to either move to low-sulfur diesel or to install scrubbers on there exhaust systems to reduce CO2 emissions into the air. A debate has surfaced over the impact that certain types of scrubbers can have on the ocean. This could be disastrous for everyone depending on what the science finds out .

Ship Technology wrote a fantastic article about the two different types of scrubbers that are “allowed” under the IMO 2020 regulation (they are referred to as Exhaust Gas Cleaning Systems (EGCS)). There are open-loop and closed-loop systems that collect hazardous emissions from exhaust systems. The closed-loop system collects “wastewater” that houses the pollutants and it stores that water until it can be disposed of once the ship gets to port.

An open-loop system discharges the wastewater into the ocean as the ship is underway. Initial tests showed that the discharged water contained a PH of “no-less than 6.5” – which makes it compliant but scientists and environmentalists are outraged. New scientific challenges are Another group interviewed by Ship Technology has a mounting against open-loop different view. Here is a small excerpt from their article on Shiptechnology.com (unedited): EGCS’s. Could it force maritime companies to convert further?

“Despite being permitted by the IMO, environmental campaigners are far from convinced over the use of open-loop scrubbers.

For every tonne of fuel burned, ships using open-loop scrubbers emit approximately 45 tonnes of acidic, contaminated washwater containing carcinogens such as Polycyclic Aromatic Hydrocarbons (PAHs) and heavy metals which can affect ocean chemistry and marine life, according to the International Council on Clean Transportation (ICCT), a non- profit organisation that provides scientific analysis to environmental regulators.

Confidential – Armada Executive Intelligence Brief – Confidential - 7 - The Black Owl Report : An Executive Intelligence Brief The ICCT also estimated that cruise ships using heavy-sulphur fuel and open-loop scrubbers will discharge 180 million tonnes of contaminated scrubber washwater overboard in 2020.

As a result, some jurisdictions and ports are already restricting their use in their waters, necessitating either the use of closed-loop scrubbers or lower sulphur marine fuels.

China, for instance, has already banned the use of open-loop scrubbers within its emission control areas covering inland waters and most of its coastline. Other countries with bans or restrictions are the UAE, Malaysia, India, Belgium, Germany, Lithuania, Latvia, Ireland, Norway and parts of the US.

Singapore even went even further by classifying residues from scrubber operation as “toxic industrial waste (TIW)” under Singapore’s Environmental Public Health Regulations .” – Ship- technology.com; https://www.ship-technology.com/features/open-loop-scubbers/

There are very clear gaps here between those that view open-loop systems as being environmentally safe and those that are building scientific evidence to show that they might not be.

The industry will be forced to spend about $60 billion worldwide to become IMO 2020 compliant. Forecasts More disruption in the maritime had originally forecasted that converting to low-sulfur sector could come if authorities diesel would double diesel prices in 2020. With a larger portion of the world’s commercial fleet deciding force conversion to closed-loop to use scrubbers (which gives the ship an estimated EGCS’s. 30% fuel cost savings advantage over converting to low-sulfur fuels), the science behind the type of scrubber in-use could be a game-changer for some.

We aren’t sure what it would cost if global port authorities started to ban open-looped system in mass like Singapore and China are considering. Those that have already invested in the open-looped system could be in for a rough ride if they are then forced to convert to the closed-loop system.

Some maritime companies were smart and converted over to hybrid-EGCS’s. It allows them to switch back and forth between open and closed loop depending on where they are in transit and what governing bodies have set for meeting regulatory compliance.

The bottom line is that costs in the maritime sector are going to go up . And if we don’t see a resumption in global trade to get volumes higher in the short term, more shipping firms are going to be in financial dire straits . Adding scrubbers reduces vessel capacity by 2% and most ships that are 20 years old or older will likely have to get retired. It reduces operating profits for those firms.

The Baltic Dry Index is one of the oldest economic indexes in the world. It measures the cost of moving key bulk commodities in the world’s busiest trade lanes. When it’s higher, demand for vessel capacity is increasing because demand for input items into the manufacturing supply chain, food, and other bulk commodities are in demand.

Confidential – Armada Executive Intelligence Brief – Confidential - 8 - The Black Owl Report : An Executive Intelligence Brief The chart at right from Bloomberg shows a recent plummeting of the BDI after it had surged late in 2019. This is a very negative sign, and perhaps an indication that the slight global improvement that we saw in December’s global services PMI’s was not enough to boost demand. It certainly isn’t showing up in the BDI, which can lead manufacturing by 5-6 weeks.

There is much to watch on the maritime front. A confluence of factors is bearing down on the sector and could put supply chain continuity at risk . If you operate a supply chain, it’s a good idea to watch maritime partners closely to ensure that you don’t have cargo at risk. - KP

Environmental Events and Items

Environmental Microbriefs:

• Drought in Panama Canal Slowing Transits. The middle locks on the Panama Canal use water from a freshwater lake to lift and lower boats in the canal. Because of a drought that has limited water use in the mid-locks, the number of transits through the canal are being temporarily slowed down.

• Likewise, Venice Canals Go Dry . Ironically, we saw just two months ago that Venice was going through some of the worst flooding in more than 50 years. On the heels of that, today the canal system is drying up and famous gondolas are being stranded. Authorities are quick to point out that low tide situations in the canal system are not that infrequent, it was the flooding prior to it that has made it global news.

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Business Cycle Indicators We Are Watching An Early Warning System for Cycle Changes

We use the following indicators as early warning devices; when they move, it typically signals a change in the current business cycle. We will continue to update these on a weekly basis as new data is available and specific, deeper-dive commentary on these factors will be included in the written portion of the briefing as changes occur.

Transient Business Cycle Measures M/M % Y/Y % 20-Year 20-Year Forecast (Importance Subject to Change) ID Code Period Reading Change Change High Low Momentum

Advanced Retail Sales (less auto and gasoline) MARTSSM44W72USS Nov 377,616 0.0 3.3 377,827 247,822 Stable Real Gross Private Domestic Investment GPDIC1 Q3 3,416 -0.2 0.4 3,481 1,868 Decelerating GDP CapEx Business Spending NEWORDER Nov 69,395 0.1 0.5 69,904 47,043 Decelerating 2016 1.6% Total Business Inventory to Sales Ratio ISRATIO Oct 1.40 0.0 2.9 1.48 1.24 Elevated 2017 2.2% Retail Inventory to Sales Ratio RETAILIRSA Oct 1.45 0.0 0.0 1.62 1.34 Balanced 2018 2.9% Wholesale Trade Inventory to Sales Ratio WHLSLRIRSA Oct 1.37 0.7 5.4 1.41 1.12 Too High 2019 (Est) 2.3% Manufacturing Inventory to Sales Ratio MNFCTRIRSA Oct 1.40 0.0 4.5 1.46 1.14 Too High Housing 2020 (Est) 2.1% New Starts HOUST Nov 1,365 3.2 13.6 2,273 478 Moderate Single Family Home Starts HOUST1F Nov 938 2.4 16.7 1,823 353 Moderate Private Investment Multi-Family Home Starts HOUST5F Nov 404 2.3 4.4 487 53 Moderate 2016 -1.3% Existing Home Sales EXHOSLUSM495S Nov 5.350 -1.7 2.7 NA NA Good 2017 6.2% Monthly Supply of Homes MSACSR Nov 5.4 -1.8 -16.9 12.2 4.0 Low/Falling Permits PERMIT Nov 1,482 1.4 11.1 2,263 513 Good 2018 5.9% Auto Sales ALTSALES Nov 17.092 3.4 -1.7 20.607 9.023 Good 2019 (Est) 4.2% Trimmed Mean PCE (inflation measure) PCETRIM12M159SFRBDAL Nov 2.0 -2.0 -5.7 2.85 0.78 At Target 2020 (Est) 3.8% Gasoline Retail Price GASREGW Dec 2.57 1.5 13.5 4.11 1.61 Moderate Diesel Retail Price GASDESW Dec 3.07 0.9 0.7 4.76 2.02 Moderate Business Investment WTI Crude Oil DCOILWTICO Dec 61.72 1.1 38.8 145.31 27.54 Elevated Key: Black (Average), Red (declining/negative) , Green (growing/expanding) 2016 -4.5% 2017 6.7% Global PMI Monitor 2018 6.0% Latest Prior Latest Prior 2019 (Est) 4.5% Top US Trade with Month Month Month Month 2020 (Est) 4.2% Trading the US in Current Manuf. Manuf. M/M Current Services Services M/M Rank Partners 2017 Billions Month PMI PMI Change Month PMI PMI Change Retail Sales * Global PMI Dec 50.1 50.3 -0.2 Dec 52.1 51.6 0.5 2016 2.7% * Eurozone PMI Dec 46.3 46.9 -0.6 Dec 52.4 51.9 0.5 2017 4.2% 1 China$ 659.8 Dec 51.5 51.8 -0.3 Dec 52.6 53.2 -0.6 2018 4.7% 2 Canada$ 617.2 Dec 50.4 51.4 -1.0 2019 (Est) 4.0% 3 Mexico$ 611.5 Dec 47.1 48.0 -0.9 2020 (Est) 4.1% 4 Japan$ 217.6 Dec 48.8 48.9 -0.1 Dec 50.6 50.3 0.3 5 Germany$ 183.6 Dec 43.7 44.1 -0.4 Dec 52.0 51.7 0.3 New Housing Starts 6 South Korea$ 130.6 Dec 50.1 49.4 0.7 2016 1.2M 7 UK$ 127.0 Dec 47.5 48.9 -1.4 Dec 49.0 49.3 -0.3 2017 1.2M 8 France$ 88.8 Dec 50.4 51.7 -1.3 Dec 52.4 52.2 0.2 2018 1.3M 9 India$ 87.5 Dec 52.7 51.2 1.5 Dec 53.3 52.7 0.6 2019 (Est) 1.3M 10 Italy$ 77.9 Dec 46.2 47.6 -1.4 Dec 51.1 50.4 0.7 2020 (Est) 1.4 M 11 Taiwan$ 76.0 Dec 50.8 49.8 1.0 12 Brazil$ 70.7 Dec 50.2 52.9 -2.7 Dec 51.0 50.9 0.1 Auto Sales (Annual) 2016 18M 13 Netherlands$ 74.0 Dec 48.3 49.6 -1.3 2017 17.1M 14 Ireland$ 68.2 Dec 49.5 49.7 -0.2 Dec 55.9 53.7 2.2 2018 17.3M 15 Vietnam$ 58.2 Dec 50.8 51.0 -0.2 2019 (Est) 16.9M 16 Switzerland$ 63.4 Dec 50.2 48.8 1.4 Nov 51.7 54.8 -3.1 2020 (Est) 16.8 M ** Hong Kong$ 66.9 Dec 42.1 38.5 3.6

** Singapore$ 59.4 Dec 50.1 49.8 0.3

** Among top 5 trading partners with China Source: Markit

The Black Owl Report is an intelligence briefing for corporate executives written in the spirit of the President’s Daily Brief. It focuses on opportunities and risks bearing down on corporations spanning global economics, geopolitics, raw materials, supply chain, and environmental issues. Subscriptions are $7 a month. Please go to www.armada- intel.com to learn more about an individual subscription or to get a free trial.

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