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ABRAHAM GULKOWITZ

abe@gulkowitz.com917-402-9039

2013 issue 1June 11 , 2013

Recovery, with a Tangle of Mixed SignalsLots of tantalizing tidbits in this issue. We have a new World Competitiveness Ranking to reporton. And a surprise in the U.S. jobs reports is always weleven though the path of job growth remains well under historical recovery patterns. With all the massive policy easing and robust corporate refinancinggrowth has been particularly meager. Moreover too much of the job growth is subpar. That is, lower-paid and temporaryworkaccounted for much of the remployment growth. And there is a risk that such part-time work could remain high as Obamacare requirements kick in. New job growth in leisurehospitality, retailingand temporarywork made upwell over50% ofMays increase and 40percent of the2.1 million jobs added to the economy since MayYet their overall share of the existing labor force is generally just 23 percent. Bottomline, with unprecedented government largesse in all major financial cearoundthe globe, the throughput to job growth has been abysmal. Also there havebeen consistentlypoor results in key emergingeconomies, as we highlthis issue of The PunchLine. Mixed signals fromAsia, in particular, havecaught world markets off guard. NewChinese trade, inflation and industrial proddatasets all undershot general expectations. Disappointing export and import figures were a particular concern. Another major concern is the likely timingradual change in the Feds easing posture. It is inevitable. What is worrisome is that there may have been a significant reliance a dependency - onmoney thathas builtup in worldfinancial markets. Any reversal in this historic experimentin government policyleads us into the unknown.

Stocks Had Advanced Despite Tepid Economic Data

Treasuries Likely to be Volatile on Stimulus Exit, BIS WarnsUS funds bruised by heavy May bond lossesSharp rise in global yields takes toll

World Competitiveness Scoreboard 2013 (page 3)

Timber!!!The price of framing lumber on

CME is barely over $300 per 1,000

board feet, down more than 20%

since the beginning of April. The

last time prices were this low was

October of last year.

Internet sales tax could kill small businesses

The downturn in the world's second largest economy, China, could be the mo

drawn-out since the 1997-1998 Asian Financial Crisis, with the risks heighten

following a slew of weaker-than-expected economic data for May released ov

the weekend. The risk for growth is now predominantly on the down side

The real estate sector - an important driver of fixed asset investment - showe

weakness in May, with growth of new home starts, property transactions and lan

purchases falling.

US data mining revelations complicate cyber policySenator Mark Udall of Colorado, a member of the Senate Intellige

Committee, yesterday called for reopening debate on the Patriot Act, wh

among other things, authorizes greatly expanded US electronic surveilla

and data mining efforts. Last week's disclosures of the scale and pervasiven

of these US intelligence community activities have caused a degree of politembarrassment for the White House, compromised Washington's position

cybersecurity during the June 7-8 US-China summit in California, and crea

acute commercial and reputational challenges for a range of US-based

companies. Most of this strategic and economic damage is likely to be b

and relatively insignificant -- but a few key elements could have a m

lasting effect.

An upward revision to Japanese

growth numbers: Q1 GDP rose by

an annualized 4.1%, up significantly

from the initial estimate of 3.5%.

Weakness of central instit utions has become more evident

Japan did not offer new measures to calm its

bond market, disappointing U.S. investors

who are also trying to gauge the future

direction of central bank policy at home.

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In This Issue

Headlines and data appearing in The Punch Line came from widely available publications including

national and international newspapers, trade journals, economic and industrial bulletins and news websites.

New Directions (

The New Geography of Business (

U.S. Breakout Potential ( The Return to Normal (p Credit Matters (p The Likelihood of Unlikely Events... (p

A Closer Look (p

Data Detective (pg

Pumping Iron (pg

Deal or No Deal in Europe (pg

The DNA of Business (p

Tech and the Business Cycle (p

Real Estate and Construct ion (p

More Construction Views (pg

Will L ife Ever be the Same? (pg

Recovery, with a Tangle of Mixed SignalsLots of tantalizing tidbits in this issue. We have a new World CompetitivenessRanking to reporton. And a surprise in the U.S. jobs reports is always welcome,even though the path of job growth remains well under historical recoverypatterns.With all the massivepolicyeasingandrobustcorporate refinancings, jobgrowth has been particularly meager. Moreover too much of the job growth issubpar. Thatis, lower-paid and temporaryworkaccounted for muchof the recentemployment growth. And there is a risk that such part-time work could remainhigh as Obamacare requirements kick in. New job growth in leisure andhospitality, retailing and temporary work made up well over 50% of Maysincrease and 40 percent of the 2.1 million jobs added to the economy since May2012. Yet their overall share of the existing labor force is generally just 23percent. Bottom line, with unprecedented government largesse in all majorfinancial centers around the globe, the throughput to job growth has beenabysmal. Also there have been consistently poor results in key emergingeconomies, as we highlight in this issue of The PunchLine. Mixed signals fromAsia, in particular, have caught world markets off guard. New Chinese trade,

inflation and industrial production datasets all undershot general expectations.Disappointing exportand import figures were a particular concern. Anothermajorconcern is the likely timing of a gradual change in the Feds easing posture. It isinevitable. What is worrisome is thatthere may have been a significant reliance a dependency - on easy money that has built up in world financial markets. Anyreversal in this historic experiment in government policy leads us into the

unknown. (pg 1)

In This Issue (pg 2)

New World Ranking Data (pg 3)

You Cant Handle the Truth (pg 4)

Engines of GrowthThere will be far-reaching repercussions from this ongoing subpar growth

trajectory, and one should worry about the likely contours of the recovery path as

massive easing is tempered. And lets not forget that its clearly an international

affair, rife with politics and therefore difficult to resolve (pg 5)

Households?Lots of recovery signals but far off the normal recovery path. Numerous

questions remain for a once free-spending sector whose housing and mortgage

finance machinery have not just collapsed but are severely damagedThe

previous boom cannot and should not be recreated But the world aches for a

vibrant U.S. consumer with healthy job growth (pg 6)

Contact information:

Abraham Gulkowitz

phone: 917-402-9039 email: abe@gulkowitz.com

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New World Competitiveness Rankings

The World Competitiveness Scoreboard presents the 2013 overall rankingsfor the 60 economies covered. The economies are ranked from the most to theleast competitive

The competitiveness ranking is an annual survey compiled by the IMD

institute's World Competitiveness Center. For its 2013 ranking, it looked into

the economies of the world's 60 most industrialized countries. IMD has based

its ranking on 333 criteria, of which about two-thirds are statistics and the

remaining third gathered from opinion polls.

http://www.imd.org/news/World-Competitiveness-2013.cfm

New World Competitiveness Rankings Select Country Recordsource: Institute of Management Development, Switzerland; Competitiveness of 59 economies, based on over 330 criteriaountry 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1990 1980

-----------------------------------------------------------------------------------------------------------------------------------

USA 1 2 1 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 2

WITZERLAND 2 3 5 4 4 4 6 8 8 14 9

weden 4 5 4 6 6 9 9 14 14 11 12 12 11 14 14 16 19 14 12 9 -- --

anada 7 6 7 7 8 8 10 7 5 3 6 7 9 8 10 8 6 12 13 20 -- --

Australia 16 15 9 5 7 7 12 6 9 4 7 10 12 11 11 12 15 21 16 16 -- --

Germany 9 9 10 16 13 16 16 26 23 21 20 17 13 13 12 15 16 10 6 6 4 4

aiwan 11 7 6 8 23 13 18 18 11 12 17 20 16 17 15 14 18 18 14 22 -- --

U.K. 18 18 20 22 21 21 20 21 22 22 19 16 17 15 19 13 9 19 15 14 -- --

rance 28 29 29 24 28 25 28 35 30 30 23 25 25 22 23 22 22 20 19 13 -- --

Japan 24 27 26 27 17 22 24 17 21 23 25 27 23 21 26 20 17 4 4 3 1 1

Korea 22 22 22 23 27 31 29 38 29 35 37 29 29 29 41 36 30 27 26 -- -- --

hina 21 23 19 18 20 17 15 19 31 24 29 28 26 24 29 21 27 26 31 34 -- --

- - - - - - - - - - - - - - - -- - - - - - - - - - - - - -- - - - - - - - - - - - - -- - - - - - - - - - - - - -- - - - - - - - - - - - - -- - - - - - - - - - - - - -- - - - - - - - - - - - - -- - - - - - - - - - - - - -- - - - - - - - - - - - - -- -

IMD ANALYSIS:The United States was back as the world's most competitive country, ahead of

Switzerland which had moved up one place and Hong Kong, the frontrunner in2012, the Swiss Institute for Management Development (IMD) announced .The world's biggest economy regained the top sport due to the recovery in itsfinancial sector, more technological innovations and and a wide range ofsuccessful companies.Germany was ranked in ninth place, alongside Switzerland and Sweden one ofjust three European countries which made it into the top 10.

Winners since 1997 (+ 5 or more ranks):China, Germany, Israel, Korea, Mexico, Poland, Sweden, Switzerland, Taiwan

Loserssince 1997 ( 5 or more ranks):Argentina, Brazil, Chile, Finland, France, Greece, Hungary, Iceland, Ireland,Italy, Japan, Luxembourg, Netherlands, New Zealand, Philippines, Portugal,South Africa, Spain, United Kingdom and Venezuela.US competitiveness and performance remains a key to global recovery Noother nation can exercise such a strong pull effect on the world.

In Europe, the most competitive nations include Switzerland (2), Sweden (4)and Germany (9), whose success relies upon exportoriented manufacturing,diversified economies, strong small and medium enterprises (SMEs) andfiscal discipline. Like last year, the rest of Europe is heavily constrained byausterity programs that are delaying recovery and calling into question thetimeliness of the measures proposed.The BRICS economies have enjoyed mixed fortunes. China (21) and Russia(42) rose in the rankings, while India (40), Brazil (51) and South Africa (53)all fell. Emerging economies in general remain highly dependent on theglobal economic recovery, which seems to be delayed.In Latin America, Mexico (32) has seen a small revival in its competitivenessthat now needs to be confirmed over time and by the continuousimplementation of structural reforms.

BOTTOM 2040 India

41 Latvia

42 Russia

43 Peru

44 Italy

45 Spain

46 Portugal

47 Slovak Rep48 Colombia

49 Ukraine

50 Hungary

51 Brazil

52 Slovenia

53 S Africa

54 Greece

55 Romania

56 Jordan

57 Bulgaria

58 Croatia

59 Argentina

60 Venezuela

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You Cant Handle the TruthLet'sTaketheConoutofEconomics

China Failure to Accelerate With $1 Trillion in Debt is Stark WarningChinas economy is proving less responsive to credit, escalatingpressure on Premier Li Keqiang to strengthen the role of privateenterprise. The governments broadest measure of credit rose 58

percent to a record 6.16 trillion yuan ($1 trillion) in Januaryto

March,

when gross domestic product gained 7.7 percent, compared with 8.1percent a year earlier. Each $1 in credit firepower added theequivalent of 17 cents in GDP, down from 29 cents last year and 83cents in 2007, when global money markets began to freeze

Emerging Stock Markets had Rough MonthEmerging-market stocks fell, dragging the benchmark index towa

biggest monthly loss in a year. Philippine equities tumbled the most

months and South Africas rand traded weaker than 10 per dollar f

first time since March 2009. San Miguel Corp. (SMC), the Philip

largest food and drinks company, slid 5.2 percent and Ayala Land Inccountrys biggest developer, retreated 6.3 percent. New World Reso

Plc dropped to a record low in Prague, declining for a second day

Moodys Investors Service lowered its credit rating. Harmony

Mining Co. (HAR), Africas third-largest producer of the metal, g

the most in more than four years in Johannesburg as gold advanced

MSCI Emerging Markets Index has lost 2.3 percent this past month

concern the Federal Reserve will scale back stimulus as the rec

strengthens.

BIS warns of dangers of cheap money

driving up stock pricesMarkets are under the spell of the worlds central

bankers, with cheap money driving stock prices to record

highs despite a lack of good economic news, the Bank for

International Settlements has said. The BIS, the so-

called central bankers bank, on Sunday became the latest

high-profile financial institution to warn that low ratesand a plentiful supply of cash from quantitative easing

had prompted investors to drive asset prices to record

highs in spite of signs that a meaningful recovery

continues to elude the global economy. The strong

performance of European bourses, which held up despite

negative economic news and officials dithering over the

banking crisis in Cyprus, highlighted the degree to which

the worlds monetary authorities were driving investor

behaviour. Several senior central bankers have voiced

misgivings about the optimism seen in financial markets

since the turn of the year.

Prospects for TurkeyPrime Minister Recep Tayyip Erdogan, leader of the conservative Justice and

Development Party (AKP), will face the greatest test of his political career as

nationwide protests against his rule continue. The economic recovery, which has

not been as strong as expected, must now cope with the recent weakness of the

lira as well as the political unrest.

South East AsiaDeclining export competitiveness undercut growth in the moreindustrialised economies during the first quarter. Growth averaged about5.0% between January and March, down from 5.5% in the fourth quarter,an extraordinary 7.8% growth in the Philippines preventing a deepertrough. However, regional performance was skewed by a high base effectfrom end-2012 and the Chinese New Year in February. Preliminary data for

April showed some signs of an exports recovery, but advance orders werestill dropping and inventories were again climbing. More ominously, thereare signs that domestic demand, which has replaced external revenues asthe backbone of most economies, may be starting to weaken.

Ship finance is so scarce that the glut of vessel capacity that'sdepressing freight rates in the major east-west trades this year could

vanish by 2016 unless shipowners and shipping lines find new ways to

finance orders for the fuel-efficient ships they'll need if they hope to

lower their costs.

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Households Brave New World

U.S. Household Wealth Still StrugglingIncreasing housing prices and the stock market's posting all-time highs haven'thelped the plight most Americans. The average U.S. household has recovered

only 45 percent of the wealth they lost during the recession, according to a

report released yesterday from the Federal Reserve Bank of St. Louis. This

finding is a very different picture than one painted in a report earlier this year

by the Fed that calculated Americans as a whole had regained 91 percent of

their losses. The writers of the report released yesterday point out that the

earlier number is based on aggregate household-net-worth data. However, this

isn't adjusted for inflation, population growth or the nature of the wealth.Further, they say much of recovery in net worth is because of the stock

market, which means most of the improvement has been a boon only to

wealthy families.

Unemployment rates fall in 92 percent of US

cities in April, latest sign of widespread gains

New-vehicle sales in the U.S. rose last month on demand for pickups

and SUVs, but the industry's rebound is showing signs of leveling off.

Rising stock markets and a housing recovery have combined to bringUS household net worth to a new record high in Q1 2013

Why home prices are rising . Two trends

are apparent. One is that banks are delaying

foreclosures, or not foreclosing at all despite

long-term delinquencies. The other is that

private equity firms flush with cash thanks

to easy mony have been bidding up and

holding foreclosed houses off the market.

These two factors have artificially limited

supply and, combined with cheap mortgages

rates, driven up prices.

Poor Job Growth and Demoralizatio

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New Directions

US shale gas challenge paves way for lower crude pricesThe US shale gas revolution virtually guarantees the end of oilsmonopoly as a transport fuel paving the way for lower crude prices.While coal, natural gas and renewable fuels regularly substitute foreach other in power generation, oil has traditionally been immunefrom price competition because of the lack of widely adoptedalternatives to kerosene, diesel and petrol in plane, train and carengines. But many argue that the lower gas prices and plentifulsupplies unleashed by the US shale revolution to lead to the adoptionof compressed natural gas and liquefied natural gas vehicles.

U.S. Driving Declines Could Negatively Affect Toll RoadsThe revenue of some toll roads may come under pressure if the driving decline trend

continues for the long run, according to Fitch Ratings. Americans have driven less each

year since 2004 and those ages 16 to 34 have reduced their driving more than any other

age group. Toll roads with meaningful un-tolled competition, especially those designed

to relieve congestion, could be vulnerable because their value would diminish with

slower traffic growth. Expressway system expansions and standalone projects built to

meet new growth needs in particular have a greater dependence on the nature of future

infrastructure funding development. We would expect the important corridors for

interstate commerce to see small effects. We also expect bridge systems that are

essential to cities like San Francisco and New York City to be only marginally affected,

given the existing capacity constraints and transportation options.

Persistently low yields have led corporate cash

managers and corporate treasury consultants to

think more creatively about how to achieve

higher returns without taking excessive riskand maintaining appropriate liquidity,

according to Fitch Ratings. Cash managers

seek safety of principal and liquidity while

optimizing yield to the extent possible.

Increasingly, this involves dividing a

corporation's liquidity needs into several

'buckets' based on when the cash is needed and

the accuracy of their cash forecasting process.

This more focused analysis of liquidity needs

has led some cash managers to invest a portion

of their companies' cash for longer time

horizons in order to maximize yield.

Toyota Helped by Yen SlideDetroit Claims it as a $5,700-Per-Car Bonus

Toyota Motor Corp. (7203), which last year overtook GeneralMotors Co. (GM) to become the worlds largest automaker even as

its profit margins lagged behind the industry, is riding a weakening

yen that has Detroit executives concerned. The yen has fallen 17

percent against the dollar since Oct. 31 as Shinzo Abe, who became

Japans prime minister in December, advocated for the decline to

improve his countrys economy. The currencys slide gives Toyota

and other Japanese automakers a financial gain on every car, which

they can use to cut prices, boost ads and improve products. Morgan

Stanley estimates the currency boost at $1,500 per car, while the

Detroit automakers contend the figure is $5,700 per vehicle.

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The New Geography of Business

China Reaping Biggest Benefits of Iraq Oil BoomSince the toppling of Saddam Hussein, Chinese state-owned companies

have poured workers and billions of dollars into Iraq to secure a steady

supply of energy for China.

Export growth fastest for three years in Japan,

contrasting with falling exports in China

TURKEYStrife on the streets puts economic rise in peril

Biggest fall in stock market for a decade

Central Europe suffers severe flooding

South Korean stocks suffer as weak yen hits profits

Birth rate fall and prospect of longerlife cloud Mexicos future

Moodys Casts Doubt Over Nordic Havens Amid Housing RisksScandinavias mortgage model is adding risk to the regions economies as too fewhomeowners pay down their debt, Moodys Investors Service said. While interest-

only mortgages in Sweden and Denmark helped households keep up payments

during the crisis, consumers now rely too much on the loans, according to Oscar

Heemskerk, vice president and senior credit officer at Moodys.

Brazilian Dollar Bond Slump Deepens as S&P Lowers Rating Outlook

Brazils benchmark dollar bonds fell after Standard & Poors cut thegovernments credit rating outlook to negative amid an economic slump thats

threatening to drive up debt levels.

Latin America Elections in the latter part of 2013 willdominate political calculations in most of the major economies,

sometimes to the detriment of economic policy-making.

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U.S. Breakout Potential

U.S. Oil Boom Scrambles Economicand Political Calculus

According to a report from SEMI (the global industry

association serving the nano- and microelectronics

manufacturing supply chains) the U.S. Semiconductor

Market is Poised for Long-Term Growth, heres an

excerpt:

Six years ago, the outlook for U.S. semiconductor

manufacturing was dim and dimmer. Today, the outlookfor U.S. semiconductor manufacturing couldnt be more

promising. The United States has rebounded to

become once again one of the largest and fastest growing

regions of the world for semiconductor manufacturing.

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The Return to Normal ?

Modest Negative Rating Drift Persists

for Global Corporates in 2013The rating drift remained net negative for

global corporate issuers in the first-quarter of

2013. Downgrades topped upgrades by a

margin of 1.3 to 1 even with 2012 fourth

quarter results. However, rating activity was

overall more subdued at the beginning of the

year.

The loan markets technical fever

finally broke in May, thanks largely

to the sell-off in the high-yield market

and an increase in new-money loan

activity.

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Credit Matters-Know Risk

BIS records startling collapse

of eurozone interbank loansCross-border lending is falling drastically across th

western world as banks slash exposure to Europe an

bend to tougher capital rules, according to data from

the Bank for International Settlements. Foreign ban

loans fell by $472bn (311bn) in rich countries in th

fourth quarter of last year, contracting at an 8p

annual rate. The retrenchment was led by a collaps

of interbank loans in the eurozone, where lenders i

the creditor states continue to pull back from

periphery countries. Volumes fell by $284bn acros

the eurozone, a 20pc rate of contraction. Bel

tightening by banks is a key reason why the regio

remains stuck in recession for the seventh quarter i

a row.

Junk bond issuance is at record highs this year-and thu

the greatest danger should yields start rising. Compan

around the world have issued $254 billion in high-yi

debt this year, a number that includes $130.6 billion fr

the U.S., according to the latest numbers from Dealo

Global issuance is up a stunning 53 percent from the sa

period in 2012 and has accounted for 9 percent of the t

deals in the debt capital markets space-also a record

fully one-third higher than last year's pace.

SHADOW BANKING

Big finance companies to be regulated like banksAIG, GE Capital, Prudential Financial and other major nonbankfinancial companies face tougher federal oversight under a longawaited plan from financial regulators. The Treasury DepartmentledFinancial Stability Oversight Council has designated such big "shadow"banks "systemically important financial institutions," which meansthey couldbe required toset asidea minimumamountof capital

Surprise changes in European bankingregulat ion are set to deal a blow to the

nascent market in structured loanvehicles, making it harder to raise fundsthat lend to sub-investment-gradecompanies. Collateralised loan obligations in which corporate loans are bought and

bundled into investable packages were

once the main source of funding in the

European leveraged loan market for

corporate buyouts. Before the crisis, this was

a 220bn market. Under existingregulation, managers of new CLOs are

required to keep some skin in the game by

holding a slice of equity in their device.

Managers have been able to get around this

requirement by offloading that slice of

equity to a larger third party. But the

European Banking Authority is proposing

that offloading will not be allowed from

next year. As a result, the cost of holding theextra capital will make it difficult for

smaller managers to raise CLOs.SOVEREIGN RISK The IMF appears to be tes

the waters for a potentially radical shake-up in

sovereign debt restructuring process. If

bondholders should beware. The papers m

conclusions are that the IMFs rescue money someti

simply bails out private creditors; that

sustainability assessments have often proved

optimistic; and that restructurings are often done

late in the process. The findings indicate that the IM

likely to be more aggressive in the future, seek

earlier and deeper haircuts of government creditor

Easing US C&I Loan Terms Point to Weaker Asset QualityFitch Ratings- Competitive pricing and easier terms offered by U.S.

banks on commercial and industrial (C&I) loans likely signal weakening

asset quality for many commercial lenders, according to Fitch. Weexpect some deterioration in C&I credit quality, particularly in a rising

rate scenario, with smaller banks potentially facing greater risks as a

result of their more recent entry into this loan space. Tighter spreads

across all asset categories have contributed to more competitive loan

pricing by C&I lenders. Underwriting terms have also been loosened.

With net interest margins compressed and yields on debt securities stillvery low, many banks have looked to C&I lending as a key growth

driver.

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The Likelihood of Unlikely Events

Report points to seeds of next global financial crisisTreasury Secretary Jack Lew testified to Congress last week onthe findings of the 2013 Annual Report of the FinancialStability Oversight Council (FSOC), which identified severalareas of continued systemic vulnerability. Despite the 2010comprehensive overhaul of financial regulation and continuedregulatory focus on implementing those reforms, a significantrisk remains of another iteration of the 2007-08 crisis.

Recent volatility in some of the worlds biggest bond

markets could upend the complicated mathematical

models that underpin large banks trading businesses, risk

managers have warned.

Chinese businesses have to slash prices to keep a

grip on their export markets. The weaker yen is

placing great pressure on China. And unit labour

costs are still rising at a 5 per cent rate, squeezing

profit margins, and are up 20 per cent relative to

the export competition since 2011.

Philippine stock volatility is surging at the fastest pace emerging markets as foreign investors sell the world

most expensive equities on speculation the U.S. w

reduce monetary stimulus. The Philippine Stock Exchan

Indexs 10-day historical volatility increased to

yesterday from 12 two weeks ago, the highest level sin

October 2011 and the biggest jump among 21 developin

nation gauges tracked by Bloomberg. Overseas mon

managers sold a net $78 million of the nations shar

yesterday. The PSE index fell 1.3 percent at the close

Manila, extending its drop from a May 15 record to 9

percent. A four-year rally has driven the PSE index

valuation to 19 times estimated profit, the highest lev

among gauges in 45 emerging and developed marke

While foreign inflows and record earnings help

Philippine shares produce the best risk-adjusted retur

among major markets since March 2009, Schroders Psays increased volatility will deter investors as the U.

Federal Reserve moves closer to scaling back its bon

buying program.

J APAN: The central banks aggressive money-printingpledge has yet to impress consumers. Though the BOJis pumping spending declined. Unless householdsopen their wallets, Prime Minister Abes anti-deflationdrive could hit a speed bump.

Great jobs still hard to find The U.S. recovery is leaning heavily o

McJobs. Lower-paid and temporary work accounted for most of May

175,000 employment increase and 850,000 of new jobs in the past yea

And part-time work remains high and may rise as Obamacare kicks in. Th

jump in jobs might look good, but for many its not a path to prosperity.

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A Closer Look

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Data Detective

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Pumping Iron - Old Economy

New Challenges

Joy Global Inc, the largest maker of

underground mining equipment, cut its

full-year profit and sales forecasts and saidit sees no immediate recovery in orders as

commodity producers reduce spending

amid surplus supply.

US manufacturing gauge sinks to June 2009 levelsA measure of U.S. manufacturing fell in May to its lowest levelsince June 2009 as slumping overseas economies and weakbusiness spending reduced new orders and production. TheInstitute for Supply Management said Monday that its index ofmanufacturing activity fell to 49 last month from 50.7 in April.That's the lowest level in nearly four years and the first time theindex has dipped below 50 since November. A reading under 50indicates contraction. The ISM index had sunk during therecession to a low of 33.1 in December 2008. Since the recessionended in June 2009, it peaked at 59.6 in February 2011.

SUVs drive 2013 pick up for US carmakersUS car buyers enthusiasm for pick-up

trucks and sport utility vehicles helped all threebig domestic carmakers report ongoing strongsales in May

Dubai and Abu Dhabi create $15bn aluminium championDubai and Abu Dhabi will merge their aluminium smelters after years

of negotiations to create a United Arab Emirates industrial champion

valued at $15bn including net debt. The government investment

arms of Dubai and Abu Dhabi will own a 50:50 equal stake in

Emirates Global Aluminium, which will become the worlds fifth-

largest producer with annual production of 2.4m tonnes a year when

the second phase of the Abu Dhabi smelter is completed in mid-

2014. The merger, expected to complete next year, marks the

end of five years of negotiations between Abu Dhabi, the UAEs oil-rich capital, and Dubai, the regions commercial and financial hub.

Relations between the two leading emirates in the seven-member

federation have historically been marked by both co-ordination and

competition. The creation of a Gulf entity to compete on a global

stage has been on the cards for years, with investment bankers trying

to structure a deal that would combine the financial power and

energy resources of Abu Dhabi with indebted Dubais greater

experience in aluminium.

Iron ore prices will falldramatically during the secondhalf of this year due to sluggishsteel demand in China, the headof Anshan Iron and Steel, Chinasfourth-largest steelmaker byoutput, has predicted in a rareand candid assessment. Zhang

Xiaogang, Ansteel chairman,expected the average iron oreprice for this year to be aroundthe current level of $110 to $120 atonne, implying that prices wouldcontinue their downward slide.

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Deal or No Deal in Europe?

Eurozone jobless rate climbed to a new record

in April after six quarters of economiccontraction forced companies to scale back

investment and in turn employment

More cuts and high pr ivate debt threaten

Dutch growthWith the economy still contracting and the budget

deficit now expected to settle at 3.3%, the European

Commission this week granted the Netherlands an

additional year to bring its budget deficit within the

threshold of 3.0% of GDP required by the EU Stability

and Growth Pact. The government of Prime Minister

Mark Rutte is maintaining its focus on enhancing

consumer confidence through austerity measures aimed

at balancing the public budget. However, thepopulation's willingness and ability to spend is low,

owing to record-high unemployment, depressed

disposable income and sky-rocketing private debt.

Spains Crisis Blunted as Exports Struggle

to Transform Country Spanish exportsclimbed to a record 223 billion euros ($291 billion)last year as a drought in orders at home pushedcompanies to upgrade products and go abroad. It wasanother step away from a decade of growth fueled bymass construction and tourism. Spains budget deficit,at 10.6 percent of gross domestic product, is thewidest in the EU, more than three times the limit setfor all members. The country last year received 41billion euros in European aid to bail out banksburdened by bad loans linked to real estate.

Latvia Steps Towarda Tarnished Prize, the EuroEuropean leaders hoped the membersh

the tiny Baltic nation would show

endurance of the euro zone.

Slower Growth in RussiaRussia's service sector recorded a slower growtMay, data from a survey by Markit Economics

HSBC Bank showed. The seasonally adju

purchasing managers' index (PMI) for the service s

dropped to 51.4 in May from 53 in April. Read

above 50 indicate expansion in the sector, while t

below signal contraction. The sector has reco

growth for the thirty-third month in a row.

The Russian manufacturing sector expanded

weaker pace in May, marking the third succeslowdown in activity, data from a survey by M

Economics and HSBC bank showed The seaso

adjusted purchasing managers' index (PMI) for

manufacturing sector dropped to 50.4 in May from

in April. An index reading above 50 indi

expansion, while one below points to contraction.

Spanish Banks told to untangle

complex ownership websThis cozy, interconnected world is epitomizethe nexus of crossshareholdings between band many of Spains largest companies, larconstructed during thepast two decades.Out of the 35 companies in the Ibex stock in15 are connected to another member thousignificant shareholding. If Bankia, nationalized savings bank recently dropped fthe index, were included, that figure wouldto19.

Germany's central bank has cut its growth forecast for the

country, but says the outlook for the economy has "become

brighter". The Bundesbank expects the economy to grow by

0.3% this year, down from an earlier forecast of 0.4%. In2014, it expects 1.5% growth, down from a previous estimate

of 1.9%. The Bundesbank suggested that the worst could beover for the eurozone, saying that in the euro area "the

economy appears to be bottoming out".

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The DNA of BusinessWorkouts to Define Recovery

The national LoDI index experienced a slight decline

from 52 in the preceding month. The national index

has been in the 48-54 range over the past five years.

The index uses data primarily from the four

transportation modes (road, runway, rail and river) that

are important to the logistics and distribution economy

to calculate a number value between 1 and 100.

Enterprise technology heads for the cloudsProliferation of remote servers has created a disruptive

moment that opens the door to start-upsWhen it comes to the sky-high prices being paid for the hottest new

companies in business IT, there have been few starker examples thanNicira. A specialist in a field known as software-defined networking,

the Californian start-up was sold to the much larger VMware last year

for nearly $1.3bn. Yet at the time, two people familiar with its

finances now say, it had generated lifetime revenues of only about $5m.

Such deals represent something new in the staid world of so-called

enterprise technology: a hunger for growth at the expense of profits, and

a race for strategic advantage amid a change in the IT landscape.

Valeant Pharmaceuticals' intention to purchase eye care company Bausch & Lom

underscores the continuing trend of consolidation in the specialty pharmaceutical secto

The need to build scale in this area has propelled Valeant's acquisitive posture as t

company has spent over $9 billion in 12 acquisitions since 2010 (excluding the Bausc

purchase expected to be completed during the third quarter). Mergers have becomecommon strategy for specialty pharmaceutical manufacturers like Valeant. Increases

scale and scope are beneficial as these firms compete against highly capitalized compani

in a cost restrictive healthcare environment. In addition, enhanced product and resear

portfolios allow drug developers to maintain pricing and reimbursement flexibility wi

public and private drug purchasers.

Trade ins

Sales of older iPhones, iPads banned as

agency says Apple infringed Samsung patent

New Business networking serviceCapital IQ co-founder Neal Goldman has launched

Relationship Science, or RelSci, a networking service aimed at

connecting businesspeople through everything from charitable

donations to job histories. It already has 2 million names and 1

million organizations in its database, and nearly 1,000

subscribers at $3,000 each

Google reportedly acquiring Waze app for $1.3 billion

News ends months of rumors on deals with Apple,

Facebook, or Google

Exide Technologies f iles for Chapte

11 protection in Wilmingt on

Milton, Ga.-based battery maker ETechnologies filed for Chapter 11 protectio

Wilmington, Del., early this week, as expec

blaming the rising price of lead and the los

one its main customers, Wal-Mart, am

other things. The California DepartmenToxic Substances Control issued an Apri

order suspending Exides operations

Vernon, a secondary lead-recycling faci

alleging the facilitys underground storm-w

system was not in compliance with s

requirements.

Dish proposes $25.5 billion merger with Sprint

Dish Network chairman Charlie Ergen offered an ambitious vision

Monday for a $25.5 billion merger with Sprint, outlining plans for a

single company that provides broadband, video and voice services

for the home and wireless devices.

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Tech and the Business Cycle

Disruptive technologies: Advances that will transform life, business, and the global economy

The relentless parade of new technologies is unfolding on many fronts. Almost every advance is billed as a breakthrough, and the list ofnext big things grows ever longer. Not every emerging technology will alter the business or social landscapebut some truly do have

the potential to disrupt the status quo, alter the way people live and work, and rearrange value pools. It is therefore critical that business

and policy leaders understand which technologies will matter to them and prepare accordingly.

More than one-third of Americans adults hav

tablets: Tablet adoption is on the rise nearl

doubling in the past year alone. The device

are now in the hands of just over one in thre

Americans, according to a study from the Pew

Internet and American Life Project.

Who needs money when you can have iMoneAppl e has appl i ed f or a patent on a combvi rt ual curr ency and di gi t al wal l et technot hat woul d al l ow you t o st ore money i n t he cl make payment s wi t h your i Phone, and j ust maycommuni cate wi t h poi nt - of - sal e t ermi nal s vi a Not t o ment i on maki ng money by vi ewi ng ads.The patent appl i cat i on, publ i shed by t he Pat ent and Trademark Organi zati on, detai l s i P hone us er s c oul d wal k i nt o a s t o r e, pay goods wi t h t hei r phone, and wal k out wi t h tmer c handi s e. Al l of t h i s i s pos s i bl e t o day ,cour se, but Appl e s pat ent appl i cati on ment i onal t hough does not r equi r e NFC, somethi ng Appl e has l ong resi sted addi ng t o t he i Phone. f aci l i t at es di gi t al wal l et s and cas hpurchasi ng by wi rel essl y t r ansmi t t i ng pay

cr edent i al s and pri ci ng i nf or mati on.

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Real Estate and Construction Outlook

Apartment Reit occupancy has hovered

around the 95 per cent mark since mid-2010, which has helped drive rental rate

growth of about 5 per cent since 2011.

World Chasing U.S. Real Estate With 25% Deal Jump

Singaporeans, South Koreans, Israelis and Norwegians areaccelerating purchases of U.S. real estate as a growing economy

and rebounding prices lure yield-hungry buyers from overseas.

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More Construction Views

MostActiveU.S.CommercialMarketsMarket Vol.(bil) Cap rate1 NYCMetro $52.3 5.67%

2 LAMetro $28.6 6.22%

3 SFMetro $21.6 5.82%

4 DCMetro $20.8 6.23%5 Chicago $12.0 6.94%

6 Dallas $10.1 6.85%

7 Houston $10.1 7.36%

8 Seattle $9.9 5.76%

9 Boston $8.7 6.35%

10Atlanta $8.1 7.01%

Basedonlivedata;dealsvaluedat$10mil.or

greaterreportedincontractorclosedinpast12

months

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Will Life Ever Be the Same?

This publication is provided to you for information purposes and is not intended as an offer or solicitation for the purchase or sale of any financialinstrument. The information contained herein has been obtained from sources believed to be reliable but is not necessarily complete and itsaccuracy cannot by guaranteed. The views reflected herein are subject to change without notice. No one connected to this publication accepts anyliability whatsoever for any direct or consequential loss arising from any use of this publication or its contents. This publication may not bereproduced, distributed to any person for any purpose without express permission from TPL Advisory, LLC. Please cite source when quoting. Allrights are reserved.