Good afternoon and welcome. I'm Rebecca Marquez, Business Intelligence Coordinator with PMMI. Today we're going to hear from Chris Steele, Research and Consulting Economist with ITR Economics. Chris will be covering the findings of PMMI's second quarter 2018 Quarterly Economic Outlook Report. Chris is an economist at ITR Economics. He provides economic consulting services with a great deal of insight and action-oriented advice for small businesses, trade associations, and Fortune 500 companies. Chris has also brought in-depth insights of industry trends to the ITR Economics team with his willingness to go above and beyond in his daily research for our clients. Chris graduated from UMass Amherst with a BA in Economics and served six years in the National Guard. His attention to detail, ability to understand the client's specific needs, and organizational skills create an enjoyable partnership with each of his clients. Today, Chris will interpret the information included in the Quarterly Outlook and provide insight on how today's economy may be affecting your packaging and processing operations. If you have any questions that you would like to ask Chris, please type your question in the chat box that is located in the bottom right-hand corner of the screen. At the end of the presentation, which will last approximately 30 to 40 minutes, he will answer your questions. At this point, I would like to hand the webinar over to Chris with ITR Economics. Thank you, Rebecca, and thank you for everyone for coming here today to our Market Forecast webinar. For those of you that have been tuning in for the last few quarters, the structure of today's webinar isn't going to be too surprising for you. For those of you that are first-time listeners, a quick update on what we're looking at going over here today, first we're going to start off with a little bit about what's going on in the U.S. macroeconomy right now, kind of the state of the Union and how the economy stands. We're going to look at our economic outlook for the next two or three years and some of the evidence that supports that before diving into some of the trends specific to PMMI. After that, we're going to zoom out a little bit and look at some of the global economic trends that are going on and some of the international growth drivers and international growth hindrances that we can be expected to see over the next again two or three years. But before we get into that, if I can get this, there we go, before we get into that, I want to go a little bit over our terminology and methodology. ITR as a long-term business cycle consulting firm does look at the economy in a way that is sometimes heterodox or a little bit different than you might hear on the headline news organizations or from other consulting organizations. So I'm not going to drive this point home because I know a lot of you are familiar with our work here at ITR, but the two primary metrics that we look at in our research, either when describing corporate trends or macroeconomic trends, are going to be our data trends and our rates of change. Our data trends are our three-month moving total, our three MMT, or our 12-month moving total or 12 MMT. Those are our quarterly totals or our annual totals. And basically all those are doing is summing up your monthly data into quarterly and yearly totals to help smooth out some of that data. As a long-term business cycle consulting firm, we don't want to get lost in the weeds of month-to-month volatility and trying to interpret what amounts to essentially noise and random chance. Because of that, we like to look at those long-term moving totals to get a better understanding of where a company or where an industry or where the economy as a whole is going in general. So for those three-month moving totals and 12-month moving totals, we also have our rates of change analogs. These are our 312 and 1212, which is our quarter over year and our year over year rates of change. In general, we use the 1212 annual rate of change for benchmarking both corporate and economic activity. And as a rule of thumb, if I'm talking about any rates of change without specifying, I'm generally talking about this annual rate of change. And the reason I'm generally talking about this annual rate of change is because ITR defines the business cycle, again, both for corporate activity, industry, and macroeconomic activity, by your 1212 and by what the 1212 is doing. So you can see down here on the bottom of our screen, we have ITR's business cycle. And for those of you who took finance or business or economics in college or high school, this isn't anything high-brow or surprising for you. But you can see that we break the business cycle down into four main phases. In the bottom left-hand corner in blue, in the bottom left of the sine curve, you can see we have the first phase of the business cycle, phase A recovery. Phase A is defined as when your 1212 is below the zero line, so things are contracting on a year over year basis. Your sales or your industry is declining. However, that 1212 is moving upward toward the zero line. So the pace of decline is diminishing every month. This is kind of the light at the end of the tunnel phase of the business cycle because while things are tough, you can start to see the potential for rise on the horizon. As that 1212 breaks through that zero line, we transition up into green here into phase B accelerated growth. This is the best phase of the business cycle. Whatever metric we're looking at is rising on a year over year basis, and the pace of rise is accelerating on a month over month basis. So your growth rates are going from 3.8 to 4.5% every month. And things are very good. However, those paces of acceleration obviously can't last forever. And at some point that 1212 will reach a peak and begin to fall back down toward the zero line. This brings us over to this yellow portion, phase C slowing growth. I like to think of phase C as the cautionary phase of the business cycle. Things are still good. You're still expanding on a year over year basis. You likely are building a strong backlog of orders. Your profitability figures are looking very good. You might have more work than you know what to do with. However, if you're not paying attention to where you are in this business cycle, if you're not looking toward your rates of change, you risk focusing on all of that positivity and not realizing that your 1212 is falling down toward the zero line. And once it crosses below that zero line, we're in phase D recession. I don't think I need to explain what phase D is for any of you. So when I reference the four phases of the business cycle, phases A, B, C, and D throughout this report, always feel free to reference back to the slide because this describes in a little bit more detail what I'm talking about. So now where is the U.S. economy right now? Well, one of our primary benchmarks for U.S. economic growth, as it relates to you and the members of PMMI, we have U.S. industrial production. U.S. industrial production comprises three main segments of the economy, mining, manufacturing, and utilities production. Right now we are feeling very good when phase B accelerating growth up not quite 2.5% year over year. We expect to see some acceleration into the third quarter of 2018, where we'll rise to about 2.9% by the end of the year before falling into a mild industrial recession in 2019. While negativity will characterize 2019 as a whole, by the time we get into early 2020, we will be in a phase A to phase B trend, and 2020 is looking to be a fairly strong growth year. Now, kind of characterizing the economy in that way of thinking, of that phase B to phase C transition later on in 2018, before a slowing growth trend gives way to a mild recession in 2019, is really kind of the mindset I want you in throughout this report. Overall, 2018 is shaping up to be a very good year, but you do have to remember that crest, that tipping point, that inflection point is on the horizon, and we'll look at a little bit of the data that supports that before we move forward. Now, if you've been a long-time listener at ITR, and if you tuned in for our market forecast update last quarter, you'll know that we were talking about a mid-2018 peak for industrial production. So what's changed? Why has our outlook been extended? Well, first off, in February we had, or excuse me, in March, our annual Federal Reserve Bureau historical data revision. This is where they take a look at the assumptions they've made about the U.S. economy and some of the measuring metrics that they've implemented over the past two or three years, and they revised them and they tweaked them. Normally there's not a huge change to the data when this happens. This year it wasn't extreme. We did see some of those data trends tweaked up and tweaked down, and ultimately we're going to eke out a little bit more positivity for 2018 as compared to what we were looking at last year, or even last quarter. So our phase B expectations for industrial production has been extended to 3Q18. That's good news for everyone in this room. 2018 is generally shaping up to just be overall a little bit stronger than before this data revision. However, it is important that while being more aggressive this year, while positioning yourself to take hold of some of that growth and really translate that economic growth into sales growth or revenue growth, continue to plan for a 2019 recession. While we have upgraded our outlook for 2018, our outlook for 2019 and beyond is largely unchanged. In addition to some of the positivity that came out of that Federal Reserve data revision, there were also a few key leading indicators that were signaling that it might get a little more rise and a little more run out of the industrial sector than we had previously expected. Here you can see the U.S. total industry capacity utilization rate 112, which is essentially a metric that just tries to determine how hot the U.S. economy is running, how much of our capital equipment is being implemented and is being used at any given time. You can see it's currently in a very robust phase B trend, it's in that accelerating growth trend, and with the six to nine months lead time, it's signaling rise in the U.S. economy through at least the third quarter of 2018. That was one of the major metrics that suggested that that second quarter inflection point in U.S. industrial production wasn't going to take hold. Similar, another major leading indicator for the U.S. economy we have is U.S. corporate profits, and you can see that dissimilar to that phase B trend, U.S. corporate profits have turned over into that slow in growth, that phase C trend, and they're also signaling a third quarter of 2018 peak, as well as cyclical decline, that phase C weakening trend in the Wilshire total market cap, which is a measure of stock market activity, is also suggesting a third quarter peak in the industrial production 1212. So when we make revisions to our outlook, or when we're discussing our outlook in general, it's important that you don't have to take our word for it. Instead, we back up our outlook, we back up our view of the trajectory of the economy with these leading indicators, and it's important to remember that these leading indicators aren't constructed via forecast methods or statistical forecasting, anything like that. These are actual real-world, real-time economic data points talking about what is happening in the U.S. economy right now. So we can say with a strong degree of confidence that despite the positivity we're seeing right now in the U.S. economy, by late 2018, by that third quarter, we will reach a tipping point and the business environment is going to become progressively less and less favorable. Another major benchmark for the U.S. economy we have is U.S. non-defense capital goods, new orders without aircraft. All this kind of slurry of words is signifying is U.S. capital investment, B2B activity within the U.S. Again, in a very robust, sustained Phase B accelerating growth trend, capital investment is up about 6.5% year over year after a relatively significant slide in most of 2014, 2015, and 2016. Now, new orders are a dollar-denominated series and a lot of the rise that we saw in 2017 and that we see right now in 2018 coming out of the B2B sector is largely due to an appreciating commodity price environment. Inflation has been kick-started and if we look back to about 2015, 2016, that dip in a wide variety of industrial commodity prices that we have, zinc, copper, aluminum, steel, kind of some of the benchmark names. You can see that coincided with the oil and gas crash and overall just a very large pullback in capital investment. The pricing point in the U.S. economy was low enough that returns on investment were being threatened on large pieces of capital equipment and purchasing managers basically stopped buying new pieces of equipment. They stopped upgrading those factories and we got into a fairly steep, prolonged lull. However, you can see now zinc up 23%, copper, 15%, aluminum, 12.7% steel, 3.3%. Whenever you see those double-digit, low single-digit growth rates on industrial commodity prices, you know that we have transitioned to an inflationary environment and that higher pricing point is stimulating a lot of growth within the U.S. economy. But now we can't talk commodity prices without talking a little bit about the recent news coming out of the White House and coming out of the Chinese administration with tariffs, trade and protectionism. Obviously, we levied a 25% tariff on imported Chinese raw steel as well as a 15% tariff on aluminum and that's going to help kickstart that steel prices 312 that we were looking at. You can see scrap prices down here kind of lagging behind the other industrial commodity prices at 3.3% compared to the same quarter in 2017. However, since the start of the year, so since January 1, 2018, steel scrap prices are already up almost 20% compared to the start of the year and with these new tariffs in place coupled with the strong economic rise that we're seeing, we expect to eke out a few more percentage points of rise in that steel Jan 1 to current pricing environment. So look for steel to rise about 25% higher, maybe 27% higher than where it was at the start of the year and generally appreciate throughout the year. But you can see this relatively well-defined phase C trend in the commodity pricing environment most other industrial metals as well as oil and natural gas, our major energy commodities are in that phase C trend and we're going to see some mild appreciation through the second quarter of 2018 before mostly just flatlining or declining very slightly through the end of the year. This is largely in line with our structural expectations of cyclical decline for the overall US economy by year end. When we talk about commodity price decline by year end, it's important you don't think back to 2014 and 2015 with the oil and gas crash. This is more just a cyclical transition that is naturally tied to lower consumer and industrial demand as opposed to any structural imbalances within our country or within the global economy abroad. Moving back to tariffs, the US White House recently announced tariffs totaling $100 billion worth of goods coming in from China. China recently hit back with $50 billion worth of goods moving into China and it looks like we may be getting ourselves into a little bit of a trade war here. That's concerning in the long run but it's important to note that total US exports into the Chinese economy only total about $115, $120 billion of goods or so. So with the US upping the ante to about $100 billion worth of tariffs on incoming goods, the Chinese government really doesn't have any more leeway to increase the amount of goods they're placing tariffs upon simply because of the trade imbalance between China and the US. The US is a much larger consumer of Chinese goods than China is a consumer of US goods. The US products being hit most severely by these tariffs going into China are going to be aircraft, steel, soy, a few other agricultural products like sorghum but largely while the tariffs are relatively broad across the board these three components are going to be the ones that are going to be hit the hardest and we'll see likely the biggest economic shock domestically. Outside of those industries the near term risks of this burgeoning trade war for the economy abroad are largely going to be higher inflation. We expect to see a generally higher pricing point for consumer goods and industrial goods and as that inflation metric kick starts rising interest rates. We're already in a rising interest rate environment. In any deepening of this trade war any deepening of these tariffs between the US and China will only exacerbate the pace at which the Fed likely raises interest rates. Long term risks talking more the two, three, four year outlook. If things continue to get bad, if the administrations continue to double down on their protectionist agenda versus each other, well like I said the US can continue to place tariffs upon the upwards of $500 billion of goods that come in from China but China largely has their hands tied with the relatively small portion of goods flowing out there. If this trade war deepened then hopefully it doesn't because I challenge any of you to find a situation in history when there was an overall winner in a trade war. We haven't been able to find one. I can't think of any off the top of my head for sure. Longer term risks really the only power China has at striking back at us punitively is either by stop buying or beginning to sell US debt. That could really cripple the US dollar in the long run, really exacerbate the demand for US money. And our international financing situation would be very tough if China even really just pulled back in the pace at which they buy US debt. Again in that situation which is basically a worst case situation we definitely see a weakening dollar ballooning interest rates in a just generally a less favorable business environment within the US especially when dealing with nations abroad. As far as that trade war goes well we'll have to wait and see. Again a lot of this is still in motion it's really breaking news and we'll have to see where both the Trump administration and the Chinese administration decide to draw the line as far as a trade war goes. Stepping back a little bit from the industrial sector and the industrial commodities that we're looking at we can take a look at US GDP gross domestic product to see how the most holistic capture of the US economy is doing and again very similarly excuse me to US industrial production GDP is growing at a 2.5% annualized rate rising to a record high about 17.5 trillion dollars. Again we're looking at that inflation rate sometime in the late second quarter early third quarter of 2018 before the US economy slows to that phase C trend overall but 2018 is still going to be positive. We're going to finish the year up about 1.6%. Before those growth rates tick down and kind of waffle around the zero line the majority of 2019. The major difference the major dichotomy or diverging trends within the US economy is going to be in 2019 as we saw the industrial sector is moving toward a mild economic recession while GDP as a whole is going to contract there's going to be some downward movement some sideways movement but we're likely not going to get the two consecutive quarters of decline in the GDP that is enough to warrant calling this a technical economic recession. So growth will largely halt in 2019 but 2019 by year end as a whole is going to be mildly positive up about a percent compared to 2018. Then once again in 2020 and beyond growth will be kickstarted and we're back to the front side of another positive macroeconomic business cycle. Now why that disparity between the industrial sector and overall GDP? Well it's important to look at what GDP is made up of. About 16% of the US economy is business investment. That's that non defense capital goods new orders kind of segment we were looking at. Government spending accounts for about another 17% and then 67% over two thirds of the US economy is US personal consumption. Personal consumption being the Snickers and Coca-Cola's and coffees and iPhones that you and I buy in our personal lives divorced from our corporate activity. So really as the consumer goes so goes the US economy as a whole and right now the consumer is doing pretty well. Here you can see we have a chart of US private sector employment. Employment is currently growing in a slowing growth trend but up about 1.8% year over year. However job openings are in a very robust phase B up over 5% year over year. So what's important to note here is that job openings are growing about two and a half times as fast as we can fill them and that to you should say a tightening labor market and that's why we're seeing these very low unemployment figures right now. This tight labor market has been very very good to the US consumer but there are some downsides to it as well. The rate is rising. People are confident in their ability to find a job and they are job hopping. But aside from that you know with those higher levels of employment the US consumer is largely doing what it does best and that's getting paid and instantly spending that money. Here you can see we have US retail sales excluding gas stations and that might seem a little strange. The reason we exclude gas stations from this figure is relatively low gas prices we're enjoying right now actually act as a negative indicator when you look at retail sales whereas in fact in reality we all know that low gas prices are good for the consumer. So we're just accounting for that little mismatch in what we're measuring. Once again retail sales up at record levels phase B accelerating growth trend up about 4% year over year. Very healthy and if you're tied to this consumer sector and sell more in the B to C markets than B to B markets you're likely going to link better to that GDP figure which is going to avoid a recession in 2019 than that industrial figure which is going to feel marginally more pain next year. You can see here a broad measure of retail sales segments are all experiencing growth from health and personal care stores at a relatively mild, relatively weak 1% up to jewelry at 6% building materials and gardening supplies 7.5%, 8% and online retailers blowing everyone out of the water at 11% year over year growth. Now and it's important when we look at those online retailers everyone knows about the Amazon effect, everyone knows about the emergence and the dominance of e-commerce and the consumers day to day life but it's important to note that and this is a lesser known figure that while e-commerce is dominating the retail sector business to business e-commerce actually accounts for about twice the activity of business to consumer activity. So the B to B e-commerce space is very robust, it's growing at a similar rate and what that should be saying to you is whether you play in the B to C space or the B to B space it's time for you to stop thinking of yourself as either a brick and mortar retailer or an e-commerce retailer and start realizing that as the years go on in the next 1, 5, 10 years the line between traditional brick and mortar and e-commerce is going to become more and more blurred as they largely converge. And if you don't already have an online presence or if you don't have a brick and mortar domestic presence it's time to start thinking about how you can have some low effort investments that bridge that gap between e-commerce and brick and mortar because that's one of the large scale trends that we're seeing in the B to B and the B to C space. However, despite the overwhelming positivity in these figures and that 4% headline growth rate, there are some areas of weakness primarily light vehicle sales excluding trucks, trucks are doing pretty well in automotive parts stores. The automotive sector as a whole is one of the risk sectors that we're monitoring as we move into this 2019 recessionary period and largely US consumers are moving away from buying new cars at a fast pace and they're doing more with less. They're seeing them as pieces of equipment that perform a job as opposed to a luxury good that you want to buy for a status or a brand effect and because of that the auto industry is very oversupplied and very over leveraged right now. Up here in New Hampshire where we're based at ITR there's a jingle that's on the radio all the time for one of the largest regional car dealers and they're offering, I believe if you bring home $400 a week before taxes we'll give you up to $40,000 toward a new car loan with a zero down. Now, I'm not a car salesman, I'm not a lender, but that should be concerning when you're talking about $400 a week for a $40,000 car loan. That should start to harken back to the 2006-2007 bubble spending era and definitely if they don't start to police themselves could bode very poorly for the automotive sector moving into 2019. One of the drivers behind the very healthy retail spending we're seeing the U.S. economy right now is rising wages due to that tight labor market condition. Again, here you can see the growth rates on a monthly raw data basis. They're currently up about 2.9%, not quite at the 3% mark and overall if you want to deal with that rising quit rate you want to deal with people job hopping and you really want to max out your retention for 2018 and into 2019 as well. You should be planning for 3% wage inflation at least, more so for your key players who you'd have difficulty replacing. Now, while this is largely positive that 3% growth rate is outpacing inflation meaning real wages are rising there are some cracks beginning to show on the consumer sector of the U.S. economy. As you can see while again 2.9% wage inflation is fairly healthy it's down over 100 basis points from the beginning of 2017 when we saw about 4% wage growth. We're on the back side of that business cycle and as we see these labor conditions equilibrate people won't be enjoying the same pace of wage growth as they're seeing right now. And that's concerning because at the same time we're seeing U.S. personal savings absolutely plummet. This top line number you can see on the top of your screen that 15% quarterly growth rate and negative 26% annual growth rate is the rate of change of U.S. personal savings. So in the last year they've declined by over 25% which should be concerning in itself. But then if you look down bottom we have the total U.S. dollar value of personal savings currently at about 474 billion and you can see that is less than half of where we were just back to 2012 and we're approaching the pre-recession peak of about 400 billion. Very concerning, fewer personal savings again go to show that while the consumer is doing well in the moment and they are spending and they are buying and they are greasing the wheels of economic growth they are also leveraging themselves and making themselves more vulnerable to any potential downturn and any potential rise in that unemployment rate that we tend to see during recessionary periods. Compounding that fact we can see that delinquency rates in consumer loans are also rising. Similar to personal savings that peaked in 2012-2014 we saw a trough in delinquency rates a low in 2014 and they've been rising ever since. This is on personal consumer loans and also credit card delinquency. They're both up around 2.5% or so. Now a nascent burgeoning risk factor for the U.S. consumer but no reason to panic yet. You can see both consumer credit and credit card delinquency are both below their 10-year average. So again, there's still time to turn this around and with all of the economic growth that we're seeing in 2018 right now if that consumer does kind of pull back in their spending habits tighten up their purse strings a little bit and begin saving again we could likely mitigate some of the consumer weakness that we're seeing moving into 2019. Now regardless of the recessionary pressures in 2019 and how exposed the consumers are you can always count on beer, wine and liquor store sales to get you through a recession. Last time in over 25 years that we had even a mild recession in the liquor space was after the tech bubble crashed in 2001 and they weren't even drinking less alcohol they were just drinking cheaper alcohol. So if you're looking for a real recession-proof industry it's either beer, wine and liquor or maybe cat food. And again, as we mentioned before commodity prices are appreciating likely to do so through most of 2018 wages are rising, labor costs are rising and that's kick-starting inflation. Here in orange you can see we have the consumer price index and that's a measure of price rise as you and I feel it again for those Twinkies and those iPhones in our personal life but more importantly for you as business leaders we have in blue the US producer price index which measures inflation for producers of goods. The US producer price index PPI is currently outpacing the CPI 2.7% for producers about 2.2% for consumers look for that to rise into late 2018 before those pricing effects begin to diminish late this year into next year. So any pricing issues that you've been dealing with especially if steel or aluminum or imported Chinese goods are a major cost driver for you if you've been having profitability issues if you've been seeing your bottom line threatened by increasing costs you're going to have to find a way to continuously pass on those price increases to your consumers really through the majority of 2018. And as inflation is rising obviously the dual mandate of the Federal Reserve is to control inflation and interest rates and we have seen historically low interest rates over the past six or seven years since the almost decade now since the 2008 recession with the quantitative easing that the Fed was playing with however that has begun to turn around we are seeing yields start to rise interest rates start to rise not quite sure what they're going to do next luckily we have a hard and fast forecasting method all you do is line up our Fed chairmen and chairwomen by their tenure if they're getting shorter and shorter interest rates are going down luckily we know Jeremy Powell is about six and a half feet tall so interest rates have to be going up but you don't have to listen to us for it we can ask the Federal Reserve themselves here we have the Federal Open Market Committee member interest rate projections so each one of these docs for each year is one of the members of the Federal Reserve who is responsible for targeting interest rates and where they expect interest rates to be in 2017, 18, 19 2020 and beyond these blue dots were then being pulled as of 3Q17 and you can see they expect to rise into the 2% range in 2018 before hitting about 3% in 2019 and beyond when they were pulled at the close of 2017 you can see very little changed we're still expecting 3% interest rates by the end of 2019 in the long term as well likely a healthy thing for the US economy getting back to fiscal normalness fiscal normalcy but it does bring with it a pricier cost of doing business in addition to rising labor costs in addition to rising input costs you will have to be dealing with these rising borrowing costs moving to the 2019 recessionary period as well so largely good things for the US economy moving throughout 2018 the 2019 period is going to bring with it some weakness, some managerial hurdles that you have to pass especially if you're tied to the industrial sector as opposed to the consumer sector but overall no serious points of weakness for the US economy over the next 2 to 3 years but there are some lingering long term concerns once again that developing burgeoning trade war with China still in development nothing is finalized yet stay tuned to hear what we here at ITR have to say in the coming weeks in the coming months competitive business cycle problems wages are rising, retention is going to continue being an issue and costs in general are going to be going up through 2018 if you don't deal with that you risk running into that profitless prosperity issue that we've talked a little bit about in previous months and that's the last thing you want knowing that there is a mild recessionary period in 2019 where it would help to have cash on hand couple that with some slowing growth in developing nations and we're really talking about your brick here your Brazil, Russia, India, China Russia, India, China specifically have seen growth rates that are very subdued compared to what they saw even a decade ago and they likely won't be growing at a robust enough pace to help carry us through any cyclical weakness next year and then finally in the longer term US debt and world demographics the CBO just raised their budgetary deficit for the US to one trillion dollars by 2020 and we are moving toward a crisis point in the late 2020s, early 2030s couple that with world demographics, population demographics that are skewing toward the older side a very very aging population in the EU China, especially Japan to drive that point home a funny anecdote I heard about Japan as they set a record in 2017 the first year in history that I know of where they sold more adult diapers than they did infant diapers and again you don't have to be an economist to know that that does not bode well for a robust, useful, vigorous workforce in the decades to come but now let's move away from the macro and jump into a few of the niche sectors that we're looking at for PMMI and now when we look at the industry drivers here it's important to notice that historical data revision that the US industrial production figures were subject to also are affecting the majority of these industries found in the PMMI report in your next quarterly update your quarterly report provided by ITR you will see the finalized forecasts for these industries accounting for that mild historical data revision US food and food preparation production again this is all processed food basically any kind of food including meat that touches machinery other than transportation at any point currently ripping up about 4% year over year phase B accelerating growth trend an imminent slow down is coming phase C is going to characterize most of 2018 with the year closing out up about not quite 2% 2019 also going to be positive up about 2% no weakness in the next three years as far as food production goes as we saw earlier the US consumer is making money they love to spend money and more so than anything except maybe beer and wine as we saw the US consumer loves to spend money on food and they will continue to do that over the next three years if you sell into the food sector you're going to have to grapple with some slowing growth rates but nothing overtly negative similar outlook for US beverages coffee and tea production not quite as rapid pace of rise also in a phase B accelerating growth trend up about 1.7% year over year going to accelerate through year end 2018 finishing up 3% before slowing to about half a percentage to 1% point in 2019 again at less than 1% growth for some periods in 2019 depending on where you're looking in the beverage coffee and tea space this sector may begin to feel recessionary but overall plan for general albeit mild growth through 2018 19 and into 2020 major period of weakness that drove the recession last year was other beverage production not including beer wine and distilled liquors we're talking sodas any any processed non-water drink that was in a relatively deep recession just now coming up to the zero line just now we're beginning to see some growth and that's what's going to drive that phase B accelerating growth trend through year end now we move on to some of the more dour outlooks for this report pharmaceutical and medical device production currently in a phase D this industry is running just below our expectations it's really having trouble kicking itself into gear largely as the conversation around long term healthcare spending has been very nebulous and very undefined however we do expect imminent phase D to phase A transition not going to see any growth until late late in 2018 when it will be up about 2.1% but again the period of growth is going to be mild we're largely going to plateau and oscillate around the zero line for the majority of 2019 growth prospects for this sector aren't looking good until 2020 and beyond so if you're playing in the medical device space 2018 2019 there's going to be some respite but largely driving growth in this sector is going to be a story of market share market share market share similarly but to a lesser extent us personal care products production it has made that phase D to phase A transition we are in that light at the end of the tunnel phase marginally more growth in 2018 the whole second half of the year is going to be positive finishing up about 2.4% year over year but again 2019 as a whole is likely going to be a wash similarly with 2020 where we'll get up to about 2.3% year over year growth showing a 0% for 2020 here that is a mistake please don't be too overtly concerned about 3 years of no growth in the sector but what is important again that consumer who has money to spend is responding well in the consumer healthcare sector this is things that you're going to find at retail pharmacies CVS Walgreens and the like and once you see some of that growth taking hold in the consumer health sector you know that the institutional health sector is likely going to be about a quarter behind chemicals and cleaning products production phase B accelerating growth trend up not quite 3% year over year that phase B is going to persist into the fourth quarter of 2018 finishing the year up about 5% year over year so some solid growth prospects in the cleaning sector before 2019 as a whole is going to be characterized by that phase C but with its ties to the commercial sector again we're going to be seeing more of a soft landing more of that low 1% maybe 0% growth at times for this sector throughout 2019 and again 2020 looking good for the front side of that business cycle to really kick these growth rates in the butt durables hard goods components and parts perhaps one of the more vague names for an economic data series and there's not much we can do about that but basically durables hard goods components and parts are any materials consumer goods or pieces of equipment that are meant to last for 2 to 3 years or more these are things like automotive parts airplane parts on the consumer sector we have furniture computers appliances household fixtures and it's going to be that consumer sector especially tied to the single unit housing market those beds that furniture personal computers fixtures large appliances that's what's going to be driving that phase B accelerating growth trend for much of 2018 after years of the older generations griping about the millennial generation and I consider myself a part of that millennial generation for better or worse depending on who you ask we are finally starting to begin buying houses and mass and so that demand for household appliances is going to help give some lift over the next year, year and a half to this sector we are looking at a technical recession in 2019 with an upside risk of just about flatlining for the year but overall again that weakness is going to be tied more towards the manufacturing sector in the automotive sector as opposed to the retail consumer sector in 2019 so if you are able to shift your focus between the consumer and the industrial over the next two years begin focusing on the consumer sector as we move toward 2019 now we'll take a moment to look at what's happening abroad and you can see just like we're looking at that inflection point in the US economy that phase B to phase C slowing growth transition later this year if we look at the majority of the global leading indicators the Eurozone manufacturing PMI the total EU PMI the JP Morgan global manufacturing PMI forget specifics forget growth rates they have all turned the corner to that phase C slowing growth trend so the same trend that inflection point that slowing growth period that worsening of business conditions that we're expecting for the US is also going to be affecting Asia it's going to be affecting much of South America and the Eurozone as a whole so we're not going to be able to rely on demand from international economies to help kind of drag us through this 2019 period they're largely going to be following suit as of now though the global economy is doing very well on the next few heat maps that we'll be looking at we'll be looking at industrial production by country the more green we are the more positive the more red we are the more negative Canada up 5% US up 2.5% both countries responding very well to rising natural gas rising oil prices as well as just a general inflationary environment Mexico dealing with a lot of uncertainty about the future of long-term investment from the US in their country down less than 1% growth prospects to return by year end but definitely not going to be a rising star over the next year South America one of the weakest regions in the world we're looking at right now a lot of red a lot of mild growth the main driver of growth in the region Brazil up 2.7% but that's a little misleading based off the depths of the industrial recession they're coming out of with the petro brass scandal and the natural gas and oil crash 2% growth off of a very low low line is not going to feel like much if you're involved in this market weakness is going to persist through 2019 for Brazil if you are either tied to their demand or selling directly into their country the EU doing very well growth taking hold in the less developed Eastern European region that it is in the west but largely green across the board good to see the UK up at about 1.9% which is lack luster but still positive given some of the weakness that we saw in their financial markets last year based around the Brexit speculation and some massant protectionism Scandinavian countries just now recovering from the oil and natural gas crunch but again overall we're looking at phase B for much of 2019 before things turn down and really slow down to null in the 2019 time period as far as the EU is concerned more green here when we look at Asia China up 6.5% India 4% Australia lagging behind at about 1.2% but it's important to note while all of these countries are expanding on a year over year basis the growth rate that we're seeing right now in China about 6% is less than half of the growth rates that we were seeing only about 5 years ago in 2013 so while 6.5% sounds good for a developing nation like China it's really not enough to get us excited and it's not a fast enough pace of growth for China to be able to carry us through any potential recessionary periods and really give kind of bolster international demand similar with India we're seeing low single digit growth best case scenario to help mitigate some of the weakness we're seeing next year would like to see high single digits maybe even low double digits growth in India and China but right now structurally it's looking like that's not going to happen and so that slower growth trend and a lot of the major developing nations that we're seeing is really going to be concentrated in this China Indo-China region for 2019 especially but also beyond until they find a way to really reignite and reorient their markets to enjoy the growth rates that we were seeing about a decade ago now it's not enough to know what is going to happen you have to know what to do about it and what is going to happen so I've listed some managerial objectives for you here but for almost a year now all of the changes in the U.S. economy over the last few months only heighten the fact that you have to use this period of rise this period of phase B into 3Q18 to your advantage economic growth period of acceleration reward risk takers really expose yourself to some new opportunities in 2018 use the last half of the year to build up your cash reserves and position yourself to either that period of slower growth if you're tied to GDP or that recessionary period if you're tied to USIP in 2019 now we're coming up on time now so I want you all to kind of internalize these and disseminate these managerial objectives within your company but I'm not going to go through them all instead Rebecca I'm going to turn it over to you to see if we have any questions Thank you Chris for the great reflection of the current economy and the issues at hand in the emerging and processing industry we do actually have a couple of questions the first question is most of us and that's the people attending the webinar produce capital equipment if capacity utilization is forecast to decline what is the reason for that is it possibly because people will be using newer or faster equipment so there's a two prong answer here first off the main reason that capacity utilization is going to decline later in this year into 2019 is basically going to be a tick down and aggregate demand we're going to be seeing less demand internationally and also the US market are basically just transitioning to the back half of that business cycle now as far as your intuition about smarter equipment and equipment doing more with less that's going to be a double edged sword if you supply these kind of AI oriented pieces of equipment these smart more technologically oriented pieces of equipment you're likely going to see some prolonged demand over the next one, five, ten years in general that's the trend of the US economy but if you supply more traditional low tech pieces of equipment in a market that is being impacted by AI you're likely going to be a shift in preference away from utilization of your goods to these new burgeoning goods okay and thank you for that and we do have another question the question is will the effects of the recession impact this industry, packaging and processing earlier in the economic cycle than for other industries? likely not with the amount of different verticals that are involved in the packaging and processing industry really you're likely going to be able to assume you're right around the median expectations of the mid 2019 trough for this recession again largely if you're more tied to consumer products and personal products those amplitudes will be less negative and if you're more tied to industrial packaging those amplitudes are going to be more negative thank you for that also on the slide showing growth in Asia it shows that Singapore has an 11.4% growth rate any idea what's driving that? it's partially just the overall rise in a relatively small economy in Asia is going to see very large swings in their growth rates as opposed to something like China or the US that are these massive institutions but overall we have a feeling there's a lot of trade going through Singapore through some other countries like Vietnam from China in order to avoid tariffs in the US but also tariffs in other countries as well China has a long history of trying to skirt or flout WTO rulings on where goods come from and a lot of times that kind of pass through demand can really bolster demand within some of those kind of gateway or harbor countries that's all the questions we have right now if anyone has further questions please feel free to type them into the text box at the bottom left of your screen and we'll give a moment just in case anyone else has any questions and while we wait for that Rebecca as always I just want to let all of your members know that they can submit any questions they have after the fact to you and you can forward them over to me or they can email them directly to questions at itreconomics.com and either me or the team will get back to them in the days to come Thank you Chris and if anybody, I mean please feel free to email Chris and team directly but if for some reason you forget the email or something you can always feel free to email either myself at armarkesatpmmi.org or Paula Feldman and we will be sure to get those questions over to Chris and his team Just out of curiosity Chris has anybody started conversations about the proposed new Silk Road? I haven't been discussing that specifically if that's something that you and your members are kind of muttering about internally we can definitely start putting together kind of an outlook or an opinion piece on that Just curious about that and it looks like we don't have any further questions let me just make sure and we have no further questions I think we can conclude Chris on behalf of PMMI Thank you for participating today As a final note for everyone who logged on you will receive an email to complete an evaluation on today's webinar We really would like to know how we're doing and so completing this webinar or excuse me completing this evaluation does let us know that please complete it as soon as possible it will only take a moment of your time and just let us know how we can improve and as well this webinar will be posted on PMMI.org tomorrow so for anyone who wants to review anything that we went over you may just visit PMMI.org webinars and view the webinar that way Thank you so much Chris Great Thank you all for coming Enjoy your week everyone


Sulfur is the 16th element of the periodic table and is a non-metal. In its elemental form it is a bright yellow crystalline solid at room temperature. In this video we are going to look at the basic physical and chemical properties of sulfur. We will also discover some real life applications of sulfur-containing compounds including how it is found in fuels and what happens when it is combusted and consequently reacts with oxygen. The most common allotrope of sulfur is octosulfur, where eight sulfur atoms join together to form this ring structure and its very prevalent nature. It is commonly found around volcanoes. Yellow elemental sulfur burns with a blue flame and melts into a deep red liquid. Its many compounds can be found in everyday life. Does cutting onions reduce you to tears? The sulfur-containing compound responsible for this is a known substance that makes your eyes produce tears. Stinky feet and bad breath blame those on sulfur-containing compounds too. Overcooked those boiled eggs? That blue-gray lining around the yolk is due to the reaction of the iron in the yolk and hydrogen sulfide created in the whites, forming iron sulfide. Ever smelled a natural gas leak? That is actually the smell of a spiking agent, which is a class of sulfur-containing compound called thiols or mercaptans, such as methane thiol. Methane is the gas. The thiol is the sulfur-smelling part. The sulfur smell is strong enough so that you can detect a potentially dangerous leak. In fact, fuel for cars and other vehicles also contain these sulfur compounds. The combustion of these fuels also means the combustion of these sulfur-containing compounds. This results in the production of sulfur dioxide, which reacts with the oxygen in the air, to create sulfur trioxide. Sulfur trioxide then reacts with water vapor in the atmosphere to produce sulfuric acid. Sulfuric acid then dissociates into its respective ions, meaning there is a higher concentration of hydrogen in our rainwater, and so the pH is lower. This means that it is acidic. Bicycle and car tyres would not exist without sulfur. White latex is tapped from rubber trees. In this natural state, it is not very useful, so it is vulcanized or cooked with sulfur to make it harder, stronger, and longer lasting. In its natural state, the rubber molecules are long chains that are tangled up and only weakly linked. When it is vulcanized, the sulfur helps form extra bonds, which are known as crosslinks. This makes it harder. Did you know that curly hair has a connection to sulfur? Keratin, the main protein component of hair, also has lots of disulfide bridges. The more bridges present, the curlier your hair. In fact, straightening curly hair involves breaking these bridges, either using heat or chemicals.  That distinct smell is actually from sulfur-containing compounds released by algae and decomposing seaweed, which is very toxic, but present in low enough concentrations so that it is safe for you to enjoy your time at the beach. And finally, and maybe most importantly, sulfur is an essential element to life. It is present in one of the 22 amino acids that make up proteins. So when living things die and get buried underground to form fossil fuels, the sulfur remains there, only to be released as an OSO when the fuels are burnt, again leading us back to acid rain. So there you have it, sulfur, not as dull as you might have imagined. Just remember volcanoes, onions, smelly feet and eggs, gas, fuel, acid rain, curly hair, the seaside, and amino acids.


Assalamu alaikum. Hello. Isn't this from Strasbourg? Can you speak Russian well? Do you speak Russian well? Strasbourg. Hello guys, I'm Jay Kim and here is... My name is Kamolid. He's from Uzbekistan and I... Land only I saw his YouTube channel and it was so interesting. Like, you wear the Uzbekistan clothes and interview Korean people. It was really fun so I invited him today. Hello guys. Thank you for coming. Thank you for invitation. Thank you. I will ask about Uzbekistan and their culture. And I heard there are many Muslims in Uzbekistan. So I will ask that too. So... Can you introduce yourself? Yes, of course. Hello everyone. My name is Kamolidin. I'm from Uzbekistan. I'm an engineering student in Hanyang University and I also do YouTube. Yeah, yeah. Google the link down. Oh, thank you. Thank you. Why did you come to Korea? Actually, I moved to Korea with my parents because of my father's job. So I went to Russian Embassy school. I finished Russian school and after this I entered Hanyang University. Oh... So you have Russian culture, Uzbekistan culture and Korean culture. Yes. You're still mixed. Yeah, a mixture. Oh, that's cool. I've never been Uzbekistan so... Can you introduce about Uzbekistan? Yes, of course. Uzbekistan is an amazing country with interesting history. Very beautiful places like mosques, maybe structures. And also very beautiful girls. And delicious food. I heard many times. So guys, visit Uzbekistan, come to Uzbekistan and enjoy our culture. I really want to go. Yeah, see you in Uzbekistan. What's the capital? Capital is Tashkent. Tashkent. Oh, I think I heard that. Oh, I think... Turks is Uzbekistan before. Yeah, it was a part of Turan. Turan? Turan is like Muslim countries. Ah, maybe it influences Uzbekistan. Yeah, it was part of Turan so that's why... So what language do Uzbekistan use usually? Usually in Uzbekistan we have our own language which is Uzbek language. And Uzbek language is a mixture of Arabic and Turkish. Arabic and Turkish? Yeah, so it's different from Russian. Many people think that... Yeah, yeah, I saw it, it's from Russia. No, no. So, but a lot of people, they also speak Russian. Especially the older generation. Soviet Union. Yeah, because of the Soviet Union they speak... Yeah, Uzbekistan was a part of Soviet Union and now it's like independent country. So now they use Uzbek language? Yeah, yeah. So Uzbek language, a hello is... Assalamu alaikum. Can you do this? Yeah, Assalamu alaikum. It's from Arabic. Yeah, it's from... I'm curious then. What do you think, what is the difference between Korea and Uzbekistan? I think there are differences about history, about culture. But other things are really common. Really similar. For example, we are friendly as Koreans. We also like spicy food. And also it's easier to learn Korean language as an Uzbek person. Because the construction of sentences is also similar. The grammar? The grammar is also similar, so that's why it's easier. I think that's true, because many Uzbekistan people learn Korean language so fast. Yeah, and if you know, they have not like a big issues with accents. Their accent is also quite nice. I've seen a lot of Uzbek people who speak Korean well. Even what I've seen, the pronunciation... The pronunciation is just Korean. So I think Korean is also similar. Korean traditional clothes. And my idea was to see the people's reaction on my own clothes. So what if I wear my own traditional clothes? Can they find some differences? That's a really good idea. Yeah, thank you. Do you like your traditional clothes? Yes, of course, I enjoy it. So that's why I wear it oftenly. Yeah, it's really cool. I'm curious this. Nowadays, there are many Uzbekistan Korean couples in Korea. How do you think about that? Actually, I have like neutral position on this. If you love each other, if you cannot live without each other, then it doesn't matter what is your religion, what is your nationality. So go ahead. Yeah, whatever. If you love, yeah. Yeah, whatever. Yeah, it's their choice. Doesn't matter. Yeah, yeah, yeah. Ah, yeah.  Yeah. Have you ever thought that marriage with Korean woman? Not yet. Your parents? I think my parents will not support this idea, but... So next question is you're Muslim? Yes, I'm Muslim. Yeah, so aren't there any uncomfortable things as a Muslim in Korea? I think there are not uncomfortable things. Everything is comfortable for Muslims. You know, we have all of the conditions. We have halal food. We have like halal markets, streets. So we have a lot of mosques also. Also in our university, we have our own mosque. Oh, really? Yeah. Here is mosque? Yeah, here. In my major building, we have mosque. Wow. Yeah, let's go. Oh. So in Jumanabad, a lot of Muslim students come to there. Oh, every Friday. Every Friday, yeah. Jumanabad, yeah. That's fine. Yeah, Han Yang University. I think Korea changed a lot because there was not Muslim. Before, there were not. But since we have a lot of Malaysian friends here, we have a lot of Muslim students, I think that's why they made it. Yeah, right. So many Muslims come to Korea nowadays. So I think making mosque or making halal food restaurant is really a good idea for them. For Korean too. Is there halal restaurant in here? We don't have halal restaurant, but we have a place to eat for students. And there, one of the menu is halal menu. Oh. Wow, that's cool. Wow, that's really cool. Han Yang University is really good. I was also shocked when I saw this. Wow. I didn't expect it. Yeah, really. They will respect like this. But this is really, I'm very happy. They respect students a lot. Yeah. Kind of funny question. Yeah. In Korea, there is a really famous rumor that there are a lot of beautiful women in Uzbekistan. Is it hard part? Yeah. Is it? How do you think about that? Is it true? When I met Korean people, top question is, oh, you're Uzbek, so you have very beautiful Uzbek girls. Sorry, but I cannot say it's not true. Maybe it is true, but I think that every girl is beautiful in her own way. Yeah, right. You support this idea. So it doesn't matter whether you are Korean Uzbek. Yeah, that's true. I didn't expect that there is pre-alumine university. So much respectful. It's awesome. Can I go inside? It's really nice. There is a man and a woman here. Oh, here is... Here is man and here is woman. Also, you can wash. Oh, you can wash your foot. Leg. Leg here and you can go inside. Yeah. Oh, so...


Are you a scholar? Has your social media use changed over time? As social media use by scholars continues to grow, it's becoming imperative to have a better understanding of the forces that drive changes in our social media habits. We'll tell you why. To do this, we're going to challenge you to think about two things. First, how your social media use has changed over time. And second, why studying changes in the social media use of scholars is important. Most scholars use social media in one way or another. The very act of watching this video is social media use. You may simply watch this video, or you may decide to leave a comment to engage in conversation with us. Regardless of whether you use social media in passive or active ways currently, your social media use and lack of use likely changes over time. With that in mind, think back to when you started using social media. Were you already working in a faculty position when social media use became mainstream?  Perhaps you were a student and then became faculty. Regardless of when you started using social media, you may have changed how and what you do on social media over time. Maybe you post more often, or maybe you've shifted to posting less frequently. Maybe the content you post has changed over time, shifting from personal to more professional content or vice versa. Maybe you now use social media for different purposes than you did before. Or maybe you've experienced some other event that impacted your use, like motherhood or tenure or retirement or a new position. Or following scandal after scandal, you began mistrusting social media companies and changed your ways. In reality, we don't know a whole lot about how scholars' social media habits change, and we also don't know much about what influences these changes. What we do know is that social media use among scholars is complicated. As scholars face pressure to adopt social media practices, they also express concerns about the negative outcomes they might encounter with social media use. Some concerns include adding social media activity on top of already heavy workload demands, possibly putting themselves at risk for online harassment, and the perceived effect of social media activity on their productivity and ability to concentrate. Do you share any of these concerns? Studying how scholars' social media use changes over time helps us to see the big picture. Through further research in this area, we can better understand the ways that social media are interwoven with the fabric of our lives. We can also better understand scholars' concerns and develop recommendations and plans to help reduce any negative outcomes. Thanks a lot for tuning in. If you liked this research short, please share it with your friends, colleagues, and students.


Well, hello and welcome to the 24 tags of Christmas 2016. My name is Sandy Allnock. I'm an artist and paper crafter here on YouTube and every year I do this series where I make 24 tags, six designs, and I make four of each. Sometimes they're the same and sometimes each one has just a little bit of an alternate and this year is no different. There are six videos coming six days in a row and I hope you're going to enjoy these. At the end of the video, I'll have links to all of the others as they go live, so you'll be able to watch them all. The one I'm going to do today uses this bunny wishes stamp set from Memory Box. So dang cute. I love when little bunnies get dressed up, little things. I want to show you this particular stamp, the snow globe. I cut out that little part in the center because I wanted to stamp the little images that are going to go inside it. If you're going to have wider images inside, you can just get rid of that whole line. But you can see here when I did my stamping and masking everything out, I didn't have to worry about masking out those particular images before stamping snow globe in there. I can just fill it in with a pen. I'm using a Copic multi-liner because I'm going to be coloring this with Copics. If you're using watercolor, you can use a Sharpie or another kind of a waterproof pen and just fill in that line that goes across. Or you could just put snow in there and not really worry about having a line at all. I know some people freak out about cutting your stamps, but I do that from time to time. With the bunnies, I've stamped all these of course with those different images as you saw. And each bunny I colored differently. I'm not going to show you all the different bunnies, but this one has a little more yellow tones to it. But when you make multiples of things, I find that that's a good time to practice different color combinations because you're going to color the same object. So I'm coloring the same bunnies over and over and over again with different kinds of browns, different kinds of grays. And I'll do the wood on the bottom of the snow globe several times.  If you're going to make 30 Christmas cards, then your first five, I would recommend just trying out a couple different combinations to see which one you like better. Nobody's going to know if they got one of your test ones or if they got one that you finally decided on, but don't let that practice go to waste and use them since you're making multiples as a chance to experiment with different colors. I'm using a bunch of YRs and it's going to give these bunnies a little bit of a yellower feel to them. But the YRs, when you get a little bit in the YR2s, at least when you get a little darker with the shades, they end up being a little bit of a brownish color. They're not as orangey as you might think by calling them a YR. So I thought they made for a very friendly looking kind of warm yellowy brown, golden brown for the bunny fur. And with their outfits, one of the things that I've noticed, and I've mentioned this before on YouTube as well, is that if you spend some time getting the shading right, say on the bunny's fur, you don't really have to worry about doing any shading at all on some of the other portions. So I'm going to focus my shading on the bunny's fur and not on the the clothing they're wearing. And that way I don't have to worry about shading everything, especially for making multiples of things. It's helpful not to have to stress out about that sometimes. I decided to give them a little color in their bellies and then a little tiny bit in the white on the hat. And now I'm going to work on the tree. The tree is in the background behind the snow globe. And I'm going to use the same greens that I used on the outfits. It's going to just tie everything together. On other ones of these you'll see later I've mixed in reds, I've thrown some blues in there, different kinds of colors. But this one was an experiment to see what it looked like with all greens. And I'm just matching up the same colors and doing them in an alternate rows back and forth. I'll do some browns here in the the base of this. And this is another area where you can do a little shading. And if you get a little bit creative with it, it'll distract from the fact that you may not do shading in everything on the entire image. So I'm just going to put some details in the areas that I want people's eyes to focus. And I'll show you another trick too for hiding the fact that there's no shading on the outfits as we get to the end of these tags. So now I'm going to use some of the same greens to color the hat on my little snowman. And now to do the snow globe, I'm using a B 000 as a pencil kind of to give myself a line. When you're doing something in glass it's helpful to leave a little bit of white on the outside edge. And I wanted it to look like you could see the tree a little bit through the glass. So I'm using the same two light greens, not the dark green because that'll be a little too much. And I'm just filling in that inside area. If you look through glass you're not going to see, you know, especially if it's round glass like this and it's going to have snow on it, you're not going to see real specifically the zigzag lines and that sort of thing. So what I did was go over it with my zero marker, which is both going to lighten it and make it a little fuzzier. And that's going to make it look like you can see that color through it from behind. But then I'm going to take my white pen. I use a signal gel pen, the uniball signal. Some people find that other white pens work great for them. So whatever white pen works great, just give it a couple of lines around the outside, curved lines. And that will look like the highlight. And I made the highlight go over that black line in the horizon because that looks like then it breaks the line and those things are in front of it. And then I'm just going to add white details onto the rest of the tag. I'll do a little bit on the tree and do a little bit on the zigzag. And you can see even on the snow globe, I put snow in front of the snowman's hat. So it ends up looking like he's got snow coming down in front of him. And now a little bit of detail onto the fabric of what they're wearing. And nobody will notice that there's no shading around it. And underneath of all of their clothing. I'll add a little bit of a blue-green here in the background, just really close to them. And then fade it out a little bit with that B-triple-zero just to soften it. And if you have too harsh a line, you can always go around it also with a colorless blender. But here's the rest of the tags. You can see I use different color combinations. To make it into a banner tag, I just, you can sort of see just off camera there a little bit, I cut a slit into the center of the tag. And then with my scissors, I'm just cutting in from the bottom corners into that center. And that's going to make a little banner flag end to it. So it'll just give it a little bit different shape rather than just a rectangle. And I'll do that to all of them. And then I tied it onto a package. I took a gift box and I stamped that same tree in a green pigment ink. And I did find that pigment ink worked, but I think the other kinds of dye inks and stuff would work as well. And used a matching ribbon to go on the outside of it. Wrap it up and send it off for Christmas. So I love the idea of making your packaging match your tag. So if you have the choice to buy some white packaging, then just use a little bit of your stamping tools and things from the card that's going with it or the tag that's going with it to decorate it on up. Now if you're watching this video on the first day, you won't have live annotations for any of these other videos. But if you're watching this later, then you can click on any of these that are already live. You can also click on the 2014 or 15 to get playlists of those particular tags. The supplies may not be available any longer, but the techniques are still good. Thank you so much and I will see you guys tomorrow. Bye bye.


about a very confusing night on a variety of levels. A short time ago, James Harden met with the media and he talked to them and Michael Grady about that. Hey, James, the Kevin situation is confusing for everybody watching.   So I don't understand the whole thing where he couldn't play and then he came on the court and then they took him back. It's just a lot going on, it's too much going on. It's kind of overwhelming, you know, especially when we're in the midst of a tough game and like these games are gonna add up, especially if we're talking about playoff seeding, we're talking about, you know, positioning ourselves and to, you know, home court advantage and whatnot and catching rhythm and all that. You know, so I feel like, I don't know, I don't know. It's just, it's overwhelming, it's frustrating, yeah. Have you had an opportunity to message him or see where his head is at before he gets it?   If that was the case, the game should have been postponed. I feel like if, you know, we're talking about contract, contact tracing, he was around all of us, you know, so I don't understand why he was, wasn't allowed to play and then was able to play and then took back off the court. If that was the case, we should have just postponed the game. That's how I feel. But through the midst of it, it was tough, give Toronto credit, they made shots, they played well, but it was frustrating. Blake Andrews, ESPN. Hey, James, in the midst of sort of all that frustration, did you find it hard to sort of refocus? Did you kind of question going on in your head, like, hey, what's going on? I want to pay attention to that? Or what was kind of the balance there of trying to be like, oh, we still have a game to play? No, we definitely have a game to play, but now we're bringing in a huddle and coaches drawing up the first play of the game and, you know, we're like, where's Kevin? And Kevin can't play. It was like, all right, cool, whatever. All right, so then we were starting to game up and then Kevin was able to play. It's like, all right, let's go. Then Kevin can't play again. It's like, all right, come on, what are we doing?  We know we're not here to make excuses, but it was just, it's a lot, you know, it's a lot. Thank you. Alex Schiffer, the athletic.  Did you ask at all during the game the coaches or anything what was going on with Kevin or because it was, because you did have a game to play, you just kind of go in with the flow with all that and when he was around, he was around and when he wasn't, you ask questions later. Of course I asked what was going on. And they said, you know, they just said contact tracing. And I'm thinking to myself, what was contact tracing? Then we were all in the locker room together. That means there's no game, you know, if he's not going to be able to play. So, you know, that's what, that was my thought process. And, you know, once he, once we started the game, I kind of forgot about it. And then Kevin enters the game, I'm like, well, I don't know, it must have been a confusion or some mess up or something, you know.  We came back, started playing well, and then he can't come back on the floor. Oh no, it was a lot. Like I said, it was overwhelming. We're not taking anything away from Toronto. They played an exceptional game. They made shops when they counted. They played, you know, scrappy basketball, like we knew they were going to do. For us, we just couldn't catch a rhythm, you know. And when we finally did in that second quarter, we played, we started playing well, and then we just got kind of stagnant again in that second half. So, yeah. Christian Winfield, New York Daily News. Hey, James, does a night like tonight kind of make you look at the idea of an all-star game or all-star weekend or whatever, any differently? I mean, a lot of guys have been voicing different opinions. I wonder where you stand on the subject. I mean, I haven't said anything publicly, but I feel the same way as some of the players for us, like, you know, there's so much going on as far as we're trying to calm the virus down.   It's already draining. We playing a lot of games in a week. I feel like that was a week for us to kind of relax, be with our families and kind of take a step back away from basketball, you know, so, like I said, we're just in it.


One of the things that we find in a lot of the attempts at improving governance in developing countries and to improve anti-corruption is that a lot of these programs or approaches fail because we don't ask what are the incentives and the capabilities of insiders to engage in this peer group monitoring and to provide the information, not only the information on which enforcement can be based but also have the capacity and the voice to engage in some of these enforcement themselves. In other words, unless information and enforcement are both at play, governance improvements don't happen. So this is a very fundamental observation of our whole approach to anti-corruption. In each case, the problem is that for the governance to work, you need to have a feedback loop which generates information about what's going wrong but also creates incentives to act on it by actors who have the incentive and the capacity to act. As a system, the top-down enforcement which you take for granted often in advanced countries where when you identify wrongdoing or you identify evidence which says something should happen, you can rely on enforcement mechanisms and systems which will enforce certain rules. This is absolutely not the case in developing countries to varying extents, ranging from very fragile countries and Jonathan will talk a little bit about that to even the relatively well-working developing countries, that loop is very weak. So unless you also ask yourself who is going to enforce this policy or use this information, then your attempts at governance or anti-corruption don't work. When the COVID-19 pandemic hit us last year, we started looking at some of the health systems in the countries we work in. The fear was that they would have catastrophic failures and the fear was that they would not be able to respond to this crisis at the scale and with the efficiency that was required. And indeed in many cases, the outcomes were extremely poor. But the really interesting thing is that the outcomes in many other cases were not as poor as many of us feared. And so we started looking at what was working and why and we found that there were some patterns in the bits of the system that were working better. Those patterns have some implications which go beyond the pandemic response and might help us to rethink how we think about systems organization for improved governance in developing countries. So this research is at a very early stage. A lot of information still has to be collected, but we wanted to share with you some approaches at this very initial phase. So we know that health systems are very centralized and for good reason health systems are centralized because you want to have coordination between different parts of the health system and a lot of these bits are interdependent. And so in every country, you find that the bulk of the health, I'm talking about developing countries, is provided by very centralized public sector health delivery systems with the private sector and so on operating side by side with that. Particularly in context of poor rule of law and poor governance, the monitoring of flows from the top down into this vast pyramid of activities which is the health system has always been very weak. And in most developing countries that has been organized with a lot of informal transactions which you can call corruption and sometimes it's just not corruption but informality, a lot of problems are solved informally. So when you start pumping massive amounts of resources into this really fragile and informally organized badly controlled system, you are likely to get catastrophic outcomes. The interesting thing is that the response was not linear. A bad and fragile system did not completely collapse in every case. There were many counter movements which emerged spontaneously with innovative health sector individuals, entrepreneurs, NGOs, concerned bureaucrats and politicians popping up spontaneously because they had strong incentives to find solutions. This did result in well known problems of coordination and corruption did spike but it also had a positive effect. We found that by allowing these multiple networks to mobilize, a number of things happened. It generated information about what was working and to what extent but it also created checks and balances between these parallel systems because there was a kind of friendly competition between them. And those, that peer group monitoring that actually we can deliver this cheaper than the state or the state's public saying actually it turns out that we can do it better, that check and balance had a remarkable effect in not only generating information but acting upon it. And this is the really missing thing often in developing country governance but there were a few conditions which made this work when it did work. The first condition was that you have to have more than one potential delivery agent with the capability to deliver. So there has to be a minimum, you know, multiplicity of capabilities. So this is not the case in every context even within the same country. So it only works where that condition is met. Secondly, there has to be some degree of coordination and feedback so that there is a coordinating body which is looking at these multiple deliveries and saying actually this is not working and that is working. And that coordinating body must have the incentive to do that. Now in a pandemic, there's a very strong incentive to do that because a prime minister or different levels of the health authority are under pressure to deliver and so that coordination happens. And this is a really strong learning that we have to identify the appropriate level of coordination where these different mechanisms can be assessed and then scaled up or scaled down. The third observation is that there was redundancy built in by definition but this redundancy, that is you are trying different things at the same time, actually was less costly than the alternative. And to make it less costly than the alternative, obviously the redundancy had to begin on a small scale. If you try to do the whole system in multiple ways, obviously that would not work. That kind of redundancy would cripple any fiscal system. And finally I want to end with a couple of observations before handing over to Jonathan. The first observation is that the least cost and most effective delivery system is not defined by who can procure at the lowest price and who has the lowest unit cost in terms of salaries. The least cost and most effective delivery system, as we all know, depends fundamentally on the internal governance of that system. In other words, if the governance is good and you are managing your delivery properly, then that is the least cost system. The second observation is that the implicit competition between these multiple delivery systems was extremely beneficial in triggering socially desirable behavior. Now, we often think of how to constrain public actors by removing or reducing their discretion because we are always worried that if they have discretion, they will do some bad things and often they do. But this is an example where by creating discretion but controlling it with this lateral competition, you actually generated a lot of pro-society or pro-social behavior. And finally, the final point is corruption did not go down by any means. There were many factors pushing corruption up during this pandemic but the improvements of governance meant that the corruption was contained and you had better outcomes in sectors where this multiple adaptive system could work. There is a different route forward perhaps which is to have coordination at the center of the public delivery system and have multiple adaptive systems on a small scale experimenting and competing amongst themselves to show effectiveness and then you scale that up. But you don't scale that up or scale it down permanently. It should be a continuous process of adaptation and experimentation. And I think this is the big learning from the pandemic. And I think it's incredibly important at this time. I think these learnings and the ability to formalize them as you're doing now is extremely important for health responses to pandemics but also other health crises. From a top line perspective, the most important contribution that this framework makes is it provides a set of anti-corruption solutions but in a way that doesn't inhibit but in fact actually advances some of the other key operating imperatives that you need in a health response. Namely, it promotes a resilient approach, an adaptive approach as Moustap mentioned, and also a scaling approach. You see a lot of inter-corruption work trying to limit and control and become very rigid, reduce discretion in performance but that comes at a great cost of then limiting experimentation and flexibility which is so important in emergency responses and longer-term engagements and factor basis. What's fascinating for me is that a lot of all of these different contributions of the framework, they all hinge on this notion of redundant capacities. The first one is this inter-corruption outcome about weeding out which is allowing through the process of invitation it to become clear who the high performers are, who are actually delivering on health outcomes. And in terms of lower performers on one level, they're probably low performers because they have very limited capacities, assets, human resources but there's another essence here of they could also be low performance because they're not really in the business of high performance. They're actually coming to this with a sort of a rent seeking mindset, this framework to sort of pet contracts, fine leakages, etc. And this framework, this redundant capacities, this competition as Mushna referred to it, kind of weeds that out. The other pieces I call sort of a disciplining measure or function here which is to say that you probably have some really high performing or high capacity to partners but who are doing corruption, who are opting for operations in the health sector for private gain. And when they enter this framework, this horizontal network as you've called it, they see pretty quickly that this is a competitive piece and that they need to move above board to actually deliver on these efficiencies and then produce effective outcomes. And so they're disciplined in this way. And the last piece is perhaps the most interesting for me, the last measure of anti-corruption that this model introduces, which I call the enabling function. And I think one of the most important contributions of ACE's work more broadly in the interruption space is to recognize that there are firms and other kinds of implementing partners that would, under other circumstances, choose not to be doing corruption. They actually want to be working in legitimate ways but there are such barriers to markets or particular sectors like health that they really have to use corrupt measures to kind of pay their way into functionality or survivorship. When these types of partners are allowed to enter the horizontal framework with its fast track mechanisms for bureaucratic permit licensing more streamlined approaches for procurement, which we would imagine in a kind of a highly politically supported type of framework or network, they then become able or enabled to act with more effectiveness and efficiency. And what I want to say now is just how I think this model enables as opposed to tracks from more adaptive resilient and scalable solutions as well because you can't have anti-corruption measures again that undercut other key imperatives for a health response. So the first one, as Moushtak alluded to as well, is this adaptive component. So it's very hard to know at the outset what the right solution is in a place. You have a technical set of solutions that you know you need to do, contact tracing, for example, lockdowns, etc. But how you do that in very different political, economic, and social contexts is not apparent from the outset. And we take the technical approach and align it to the political, social, and economic configuration that you need to actually make it work. For men in the adaptive community, something that they often see as a kind of a strange bedfellow with anti-corruption measures, which really try to have an ex-anti-pre-conceived solution and then create linearity and predictability so that they can control every step of the process. So what this model does is it provides a way to be adaptive, to find out what's working and how to build that up or scale it, but also in a way that advances anti-corruption. Anti-corruption isn't really talked about in the health sector, in the way it is, say, in the economic sector. So this brings into focus a way in which you can do anti-corruption in a way that promotes resilience as well. And as you know, Palafian particularly fond of the argument that Moustak articulated that sometimes when we talk about resilience, we talk about as creating excess capacity. And that seems to be at loggerheads with efficiency. But in fact, your arguments are that you need resilience in the system to promote efficiency. There's a very antiquated notion of scaling right now in the aid industry that sets up this notion that you have to do a pilot project, often a very small one somewhere. And if that works, then you scale it. And we're increasingly trying to move away from this and towards this idea of outcomes-based scaling, the idea that you're promoting an outcome like health, like anti-corruption, like resilience. And you're allowing multiple scaling partners to work in this kind of scaling consortium or horizontal network, as you called it, in a way that allows you to see variation, what's working where, who's working and where. And from there, scale up what's really working and scale down what's not working. The next part of the discussion, which is really exploring, in a sense, how can we bottle up these learnings from this framework on crisis response, the broader learnings, the broader intuition of this framework of scaling, which is really about scaling for revealed competencies, building resilience, and in the process emerges an efficient, relatively non-corrupt outcome. And one of the sectors that the anti-corruption evidence program in SOAS has done a lot of work on is the electricity sector. And it actually got us thinking, hang on a minute, are there aspects, as I said, within the broader intuition of the framework, are there aspects of which that can actually be transferable to the electricity sector? And obviously, at first here, this jump to the electricity sector might sound like a huge stretch. There are some broad mechanisms which might actually work. And just to give a brief headline of how the electricity sector works across many developing countries, the enforcement of rules in centralized electricity delivery systems is weak and can result in poor outcomes. So as in the health sector, the focus tends to be solely on procurement rules or it tends to be on let's just enforce the contracts, never mind whether there is the capacity to enforce or the incentive indeed to stick to the rules. And obviously, it doesn't work very well in the context where the rule of law is weak. Specifically, in the context of Lebanon and Nigeria, we also see that it's politically captured to the extent that any reform of the national grid within the short to medium term is actually not possible. And we're also looking at almost levels of crises, certainly in Lebanon to a lesser extent, but also through Nigeria or under supply to the extent that those countries productive capabilities are actually hugely constrained. So what we are suggesting is taking a step back and scaling down from the grid down to local networks. Now, the recent literature on decentralization has suggested that decentralization might lead to greater amounts of rent seeking. And that's probably true in the sense in the case of administrative decentralization. But like with health, it might just be the opposite in the case of electricity generation and supply. So downscaling to local networks using disaggregated decentralized mechanisms, sometimes involving efficient but informal arrangements is possibly the way forward in the short term. It's a way of thinking very differently of responding to an electricity supply challenge, which can't have a more sort of immediate response like we do in health, but it's certainly, you know, on a more achievable scale than looking at the entire grid and saying how do we improve transmission, then distribution, and all the political nature of capital that takes place from end to end. So essentially what we are talking about here is not the physical delivery mechanism. That's not the rapid scaling that we are talking about. What we are talking about are different de-risking strategies, different contractual mechanisms across segments of users within a country that can be scaled as required. In Nigeria, we worked with small and medium enterprises in what used to be the beating heart of Nigerian manufacturing in the Aba region, in the southeast of Nigeria. And it actually turns out that there is what we call willingness to pay. Consumers who were once forced to be corrupt, once they realize that there is a technologically efficient mechanism which provides them electricity at an optimal tariff for them, no longer want to be corrupt. This, you know, creates a virtuous cycle wherein you get an investor who sees the willingness to pay as proof for investing in that locality. And these investors tend to be more nimble, more technologically capable because they're coming in with either solar. And in the case of Nigeria, because it's really more a gas economy than an oil economy, we're looking at CNG. In sectors like power, investments are lumpy, and checks and balances have to be created by designing different delivery mechanisms. So you test, this is working in a particular cluster, a particular cluster might need a different kind of a supplier, a different kind of financing mechanism and what's very critical in countries like Lebanon and Nigeria. And this speaks to what Jonathan was talking about, the community aspect, you know, the community bind has to be very high. We worked in Zahle in Lebanon, which has its own sort of sectarian complexities in Nigeria with the SMEs, they have their own political economy complexities. Community bind is very important. But once you get that community bind, once you get that willingness to pay, you can actually get in less politically connected investors.  Because when you're improving development outcomes, which is you are ensuring that more electricity supply, rent capture isn't taking place and people are able to improve productivity by definition, by increasing efficiency, you are reducing corruption. This is not scale on the lines that Mushtaq talked about for the health sector. But as he said in the beginning, these are early days, and we are doing so much interesting research, we've been having conversations with Jonathan and his team of colleagues. And there are very interesting ways in which we can join this thinking up.