 All right. I'd like to start with this table that's on your handout and then get into what I do with forecasting. But this table, this is a very useful table. One of the first things I did when I got hired into Solomon Brothers in 1986 into the marketing analysis department and I worked in market analysis equity research for a while. Proprietary trading, I ended up with the last several years I was there. We were prop trading, directional trading, international markets on the equity side. So that's what I did. In the process of being there and previously I developed a unique form of forecasting. It's a form of time series analysis. It's different than what I learned at the Berkeley Business School. I spent a lot of time there in the stat department, Berkeley Business School, Janet Yellen's home base. Anyways, I cut my teeth on Box Jenkins, Arima models, and Fourier and things like that, multi regression models. In the process of my career I found that they were not very useful for forecasting. They gave you a slight advantage, sort of like a crooked coin to us. But I developed something that's based on rates of change and I discovered basically a non-random component of rates of change and I came up with a complex algorithm. Unfortunately I can't demonstrate it here because it's going to be on YouTube today. What I do when I go around in, I don't want the Chinese to re-engineer, reverse engineer what I'm doing. All you're going to get is my conclusions of what I do. There's a little explanation of it there. Basically the model is looking for inflection points. Most of the time it's looking to buy things that are down, buy low and sell high. I'm going to present you with some, what I think are some opportunities in the buy low, sell high department. Let's start with this table. This table is not really the model but it's the business cycle overlaid with the Dow Jones. A lot of data here, let's not get lost in the numbers at the top. Can you see where the cursor is? Is it showing up? Yes. Okay. Okay, so let's look at the bottom line because we don't have all the time in the world. The average recession from 1902 to the present is 15 months. The average expansion is 45 months. Pre-1990 the average expansion was 37 months. An expansion only lasts three or four years on average. Three years before Greenspan. Greenspan kind of a lengthen thing. What the Federal Reserve does is try to eliminate the oscillations in the business cycle. This cycle is now 54 months old, which is more than the average. It's not as long as the last three. The previous one was 73 months long. The expansion 120 months and 92 months before that. The Fed believes very strongly that they can control what they call the cyclical component of the economy, which is the recession. They think that they have banned recessions. That's the Fed's viewpoint. They believe that with absolute certainty that there will not be any more recessions that they control it. They're stochastic model. If you talk to Fed officials, this is what they say. Well, they certainly lengthened it. Just a side note on that. I think what they've done is just increase layers of debt. Basically they've just kept leverage up the system, leveraging it up, leveraging it up. Now we have a very leveraged up system. Let's not spend a lot of time on that. The point of this table is the Dow Jones has declined in every recession. That's the next to last column here where the cursor is. These are the percentage declines that have ranged from 6% to 89%. 89% of course in the 29-33 period, 6% following World War II. The pattern is, if you focus on this last line, the bottom down here, it peaks two and a half months before the recession starts. It's a good thing to know. Of course, you don't know when the recession starts. They don't tell you until much later. The National Bureau of Economic Research does the cycle dates. Basically, the stock market is a leading economic indicator. It starts going down for no reason while the news is still good. Then at bottoms, the average, by the way, the Dow Jones has declined, if you measure it this way that I do, in every recession, no exceptions. The average decline is about 31%. It bottoms four months before the next expansion starts. That's the idea. The point of this table is, if you're a portfolio manager, you basically want to be long from when you want to be a buyer when it looks like the end of the world at the depth of a recession. Nobody will ever get it to the right day or anything. That's when stocks are cheap. They go down. Stocks go down because earnings go down. Here are the earnings declines in S&P 500 earnings, four quarter trailing sum and reported earnings over the last three recessions. In the 1991 recession, earnings declined 37%. This is on the back of that page. 54% in the 2002 recession and 92% because of a lot of write-offs in 2009. Earnings go down, recessions, stocks go down. If you think there's a recession and the likelihood going back to that table as one happens every four or five years after the expansion lasts for four or five years, then there's a recession. It's sort of like clockwork. My forecast is that we're going to have a decline in earnings. A good fit for where earnings go is a 100-month average. I have a monthly-ized number. That's down about, earnings could, it's an interpolated number. Of course, earnings are not monthly, but anyways, about half. Earnings look like, my economic forecast is we're probably turning down, it's about time for it. A lot of the economic series that I forecast such as auto sales, consumer sentiment, industrial production, things like that, which we don't really have time to get into unfortunately, should be turning down soon. They're not turning down yet, but we're probably on the verge of it. Then looking at the index, of course, the index has declined 50% in the last two recessions. Pretty much in touch with earnings. S&P from the 2000 peak to the 2002 October bottom down 49%. October 2007 peak to the March 2009 low minus 57%. I don't know how much, down 50%. The 200-month average is down 33% in the index. Anyway, some kind of downside risk. That's the overall view. That comes out of the model forecast. I'm not just picking that out of the air. Again, unfortunately, I can't demonstrate it. I encourage you to take my card or bring your card up. Next time I come through Zurich, I can show you what I do do is do the presentation to clients and prospective clients from the laptop, but for obvious reasons I can't do that here. Now, here's how that looks with the recession bands overlaid with the S&P. This is not on your chart. This is just on my screen. Now, this is the 2000 advance. They have the National Bureau of Economic Research has the recession starting in April 2001 and declining and ending in November 2001. It looks like the S&P bottomed after the recession, which contradicts what I just told you. However, S&P earnings kept going down. The low in S&P earnings was in the fourth quarter of 2002, which is down here. The market actually bottomed in October. If you go by earnings, I would argue with this date that they have here, that we didn't have a recovery following that November 2001 date. That looks like a contradiction. Let's focus on the last one here. The last recession, market peaked in October 2007. They have the recession band starting in December. Declined, you know, 50%. They have the bottomed in March. They have the expansion starting, ending in June, starting in July. Now we're 54 months along. That's the basic idea. I don't want to spend too much time on this because we don't have a lot of time. If there's one thing I can leave with you, it's investing over the business cycle. They didn't teach me anything about this in business school, finance, textbooks, anything. I think it's one of the most fundamental things about being a portfolio manager and running investments is understanding the business cycle and being long and short at the right times or being long and out, adapting your asset allocation to economic conditions. It's a simple story. Let me speak for a second about what the model does. I have a form of time series analysis similar to Box Jenkins, modeling autoregressive integrated moving average. Different concept. I'm using rates of change. I give the forecast for Box Jenkins, if you've ever used an ARIMA model, it looks basically like this. They have these bands that go like a megaphone, so you're 100% sure it's either going to go up or down, which is not very useful. Mine is pretty black and white. It gives you direction, up or down, or uncertain. It's black or white. It's going to go up or go down. It gives you position, beginning, middle, end, and it gives you confidence levels. This is a stronger week signal. It's a 12-period forecast, so with monthly data, which I call long-term, one year, weekly data, one quarter, 12 weeks, three months, one quarter. The model likes to buy low and sell high. It's looking for inflection points. I'll be flipping over some of those real quickly in a second here. At the buy low sentiment points, everybody hates it. The news is bad. British petroleum after the oil spill, solar stocks 18 months ago, things like that. Nobody wants to touch them with a 10-foot pole. I like that. I like bad sentiment for buying opportunities. It has to fit with the model forecast, of course, but sell high. Everybody loves them. High sentiment. Everybody's invested. They're already situated. Portfolio managers are already committed. A lot of what happens is the portfolio flows. If you think of people on one side of a boat, they run to the other side of the boat. I've seen this over and over. Wherever people are positioned at inflection points, then it's them reallocating and going in the other direction that makes these things happen. I really think there are some real opportunities now, just besides for market direction within sectors. I'll show you. I think there's some really excellent opportunities in sector allocation at the moment. Of course, the ones that I like, everybody hates. The ones that I hate, everybody likes. The model's best at emerging markets. Over time, it's been caught the cycles really well in emerging markets. Major market inflection points like 2000 top, 2002 bottom, 2007 top, 2009 bottom. I'm not a perimeter. I like models at major inflection points. It's been very positive. We have that in our intro file. I can show you the reports I wrote. Anyways, sectors really, really good. People really rely, even if they disagree with my market view, a lot of people, professional money managers, look at my sector. In the report that I do, there's a breakout of sectors, industry groups, and individual stocks in the U.S., Europe, and Japan. Not individual stocks in Japan, just sectors, groups, and then economic data. That's what the model is good at. I do everything foreign exchange commodities. It's not quite as good at the other things. That's what it's best at. What's the story? My major call this year has been emerging markets, short emerging markets. Here's how it's worked out. It's actually kind of strange. This is from this week's report. I think it's on the last page of your thing, but you can just look on the screen. The emerging market index relative to the S&P is underperformed by 33%. That comes from the index being down 6% and the S&P up 26%. Now, beneath that index only being down 6%, a lot of countries have really cracked enormously. Peru is down 35% year-to-date in dollars. Indonesia down 21%, Brazil 13%, and 11%. There are other ones that are down 20%, 30%. That isn't all of them. That's just some primary ones. Let's look at that. Indonesia. This is Indonesia going back. The left side, this doesn't have a time scale on the bottom. These are months, and this is 1990. Left end is 1990, beginning January. This is the 1997 Asia crisis. Remember that one? That's the Asia markets collapse. This is 2008, and this is now. Now, I'm presenting you the markets in my highest confidence level. This one is a favorite short of mine, and it has been for a while. It's down 30 something percent from the peak. It's down 20 something percent on the year. Peaked in mid-year, spring, April, May, I believe. Let's notice one thing here. The 200-month average, I'm going to be flipping across a lot of charts here in a minute. The 200-month average, the model doesn't give you a level. It's not like a regression model where it predicts of a level of something based on other variables. It's a different technique completely. Go away. Sorry. Just what I need in the middle of this presentation. My forecast is direction down, intensity strong, position about one-third of the way. The point about these 200-period averages, you tend to get there. This is where it got there. It's basically equilibrium level that things return to. As we start flipping over markets, you'll see that example over and over in weekly and monthly data. There's nothing magical about it. It's just markets are, in my theory of the universe, markets are a process that goes out of equilibrium. You can think of that as a bull market when they're going up and back was a correction, so that would be mean reversion or something. The model catches both of those pretty accurately away from mean and then back to mean. We're going back down here in this direction and that level is down 43%. Indonesia, down. Very quickly a couple others. Here's Thailand. Thailand, that's the 2000, it's 1997 Asia crisis. This hasn't broken as much as Indonesia. I have an early forecast down, no bottom in sight. It's down 50%. I'm calling Thailand 50%. Philippines, looks like Thailand. Just breaking 200 month averages down here. I have direction down, intensity strong position early minus 49%. Just a couple quick other ones. Mexico, hasn't really broken yet. You notice that these all topped out months ago. This is the strange thing that the major markets are at new highs and emerging markets are rolling over. The 200 month average is down 47%. In Turkey, these are the strongest ones. They're all over the map. They're not just Asia, but they're basically Asia, Tiger, Latin America. Here's one that in the middle of Asia and Europe, Turkey. Not as much downside in Turkey. Let's talk about emerging markets for a second. When the good times roll, the money goes, think about the investment philosophy of the last three or four years, the last cycle, the emerging market boom. Remember that one? China, we're going to export materials to China for the Chinese and the growth in the middle class. It's all one ball of wax. We're going to invest in cyclical stocks in the West that export to the new emerging middle class in China. That was the story. That was the investment thesis. It's all going wrong. On the way up, the money goes into emerging markets, the capital inflows from investments. Their currency strengthens. Their interest rates go down. The central bank absorbs. They don't like the capital inflows, so they buy the dollars and euros. That means they're putting out their domestic currency, so their money supply is expanding. It's very stimulative. When it goes into reverse, I don't know if any of you are from the U.S., this is a product called Roche Motel. Have you ever heard of that? It's for cockroaches. It's like a little mousetrap. It's a box with a flap. You can't get out once they go in. The sales pitch is Roche Motel, you can check in, but you can't check out. That's how emerging markets are. That's the joke where you can get in, but the liquidity disappears when they go into liquidation. Deleveraging cycle. We're in a deleveraging cycle in emerging markets. What happens? The money goes out. The currency weakens. The interest rates go up. The central bank defends the currency. By raising interest rates, we're seeing that in India and Brazil. It's not fun. The inflation rate goes up. The economy goes down. You don't get out of it until the deleveraging cycle is over. I would argue that is the transmission mechanism back into major markets on the part of the whole, member of the whole investment thesis about investing in emerging markets. What was it? Industrial companies, German exporters, gas turbines, locomotives, and you name it, machinery, equipment, caterpillar tractors, all that kind of stuff. The marginal, I think this is going to impact the exporters. Of course, even consumer product companies, Unilevers, has been saying things like that. I don't think this is a theme that's going to disappear. I think it's going to be the theme going forward for the night the next year or so at least. I think that's something to put into your radar screen of continued decline in emerging markets impacting Western multinationals that have businesses that have expanded into emerging markets. Where does that leave? Let's go to very quickly on the sector. I have not sectors, major markets. This is a synthetic composite index of global stock indexes monthly. Isn't it interesting how in this imaginary thing that I developed, it's just an equi-weighted average of the S&P, Hang-Sang DAX, bunch of European indexes. It's a synthetic, just a good way of saying what is the world equity index is doing. It's got a heavy European weight. That's why it's not at a new high. It's got Italy and Spain in it, some depressed markets. But anyways, the 200-month average has worked pretty well. It gets down there. I'm showing this thing running out of steam pretty soon, should begin to roll over maybe not this afternoon or this tomorrow or next week. But in the important investment timeframe for portfolio managers, this is supposed to be an inflection point on the order of 2007 or 2000. We're supposed to have significant downside risk. Enough said about that, I'm not here to say sell everything and head for the hills. What I would like to point out are the opportunities. How do you arrive at your confidence? Yeah, it's a strong or weak signal. Unfortunately, I can't demonstrate it here because I don't want it to be on YouTube. So it's a No, I'd rather not. Just so it's very clear. Basically, what the model gives you is a probability distribution and it's the strength of the probability distribution. So it's basically, I am predicting the model predicts a probability distribution of something going up or down 12 periods ahead. And it's the confidence level you can see in the way that I've developed it of the probability distribution if it's a stronger weak signal. I'm sorry, I can't give a better answer than that. But anyways, let's look at where the opportunities lie. Okay, now here's something I love to buy. This is something that's despised. It's a sector divided by the index. So this is relative. This is stocks Eurozone 600. Anybody get take a guess at what we're looking at or what index what sector relative to the index? Utilities. This is utilities divided by your stocks monthly. The ratio has gone from 1.8 to the current point eight. So it's down more than 50%. And I have direction up intensely strong positions just starting. So 12 month view. Utilities are supposed to outperform. And nobody likes them. I know there's a lot of bad news. But remember, that's bad news by low. That's what the bad news is always bad by low. So I'm not saying this is off to the races and you get huge absolute gains. I'm just this is relative, right? They're supposed to outperform the index. So I also do have I think they could go up. But let's just think about where there's 200 week averages. Notice the 200 month, I'm sorry, notice the 200 month has become into play here, gets there, takes off, comes back, bounces, we're down below. So I think we've headed for an intersection somewhere up here somewhere, which is up significantly. I think there's 30 40% upside out potential in this sector. Now here's another one, telecom. Here's telecom divided by Euro stocks. It doesn't look as depressed, but it is simply because this one, this was the TMT peak when telecom was was it was very popular. In that rally phase, telecom outperformed. In the recent rally phase, it's underperformed massively, for obvious reasons, you know, the revenues are falling, and you have to invest in every new network. And it's a huge invest, you know, for I don't need to tell you about all the problems with telecom companies. But remember, news by low news is bad. So it turns out the 200 month average is on this ratio is up 64%. So and I think we are headed up in this direction. So those are the two 12 months. So long term, which I call what long term one year forecast by utilities and telecom. If you're a hedge fund and short the index against it. It's also, of course, if you're a long only portfolio manager, it's also an overweight position. So instead of being overweight, something else, you know, whatever, luxury goods companies or, or so 12 month view, that's my best outperform ideas. And it really, I think it's an arbitrage opportunity really. And here's the other side of the arbitrage. Industrial goods and services relative to the index. It's the mirror image right. And think about what my scenario is emerging markets and exporting and all these companies. So this is what people and back to here sell high popular optimistic sentiment. So what are where are people situated? I think they're situated overweight. This stuff, the there and it's a stale theme left over from the previous boom. So one thing. So this is supposed this is direction down intensity medium strong position just starting. And since we don't have an all day, unfortunately, I do drill down on to individual names. And in the report, I do names relative to the index. And I'm coming up with names like Valerec, like a lot of these companies, they're they are already going down, even though this hasn't looked like it's broken yet. So that's one thing I am seeing in the market at the moment where individual stocks are acting a lot weaker than the indexes and the groups themselves, which is basically a sign of distribution. So you may have noticed that if you're running a long portfolio, you, you, you notice the in the DAX just hit a new recent hire, the S&P or something about what my stock is not added. You know, my stocks are not doing that. They're not there's only 100, a couple hundred stocks hitting new highs with the indexes in the US. So anyways, you put those two together. Here's the old Solomon Brothers synthetic position. Tele here's telecom divided by industrial goods and services. So this has gone from 1.5 to to blow 0.5 currently, and it's right at the lows. So here you could be market neutral for a hedge fund. If anybody's hedge funds in here, totally don't care what the market does, all you care about is the difference between the telecom sector and the industrial sector. And I think one thing about sector spread trades, if you've never done them, they're really low volatility. They're not like the market or they're not like you don't have the volatility of an individual stock where it's going up and down 5, 10% a day sometimes. These are really like sleep, you know, really slow, really low volatility. It's kind of capital intensive because if you have to short something, you your prime, you have to work it out with your prime broker, the kind of so if you have like, say $100 million and you want $100 million of exposure, you're going to have to be leveraged because you're going to have to have 100 million long and 100 million short. So depending on your prime broker, the kind of leverage they will give you, they might, some prime brokers might consider that just 100 million position because it's market neutral, others would charge you, you know. So that's a whole other complex issue. Anyways, but if you're, I imagine most people, that's not their primary, they're not, you know, we're not gunslingers, probably most of us in this room. But in from a more portfolio management perspective, this is the difference of performance you could have by overweighting and underweighting something. Like you have a potential, the 200 week average on this position is up 150%. So where this might not be the whole portfolio position that you have, if at the margin, I would, I would encourage you to lighten up on industrial stocks, industrial sector ETF and ease into utilities and telecom 12 month view. Okay. Next, let's move to the intermediate term forecast. Now I have 12. So remember monthly data, one year, that's what we've been looking at 12 period forward forecast. And then weekly data, 12 weeks, three months, one quarter, next quarter. So it looks a little bit different in that timeframe. The utilities and telecom are still there, but they're not the highest priority ones. Here are the highest priority ones. Food and beverage, relative to stocks, model fresh signal, upward direction up intensity strong positions just starting. Notice we're right at the 200 week average. And if you think about, now here we're looking at back to 2003 is the beginning of this chart. So that's 2003 over here. Food, the, the two classic defensive sectors in this cycle have been not utilities and telecom yet they've underperformed. They've been food and beverage and healthcare. So food, so people have kind of flocked into these for a while. And while the market was at European markets were acting sloppy, and then they flocked out while the year, while the indexes have been stronger. These have underperformed to buy a lot. The ratio has gone from 1.8 to 0.4. So down 0.4, you know, four on 18. So, you know, it's about 20%, almost a 20% move, 20% underperformance of food and beverage. But anyways, so fresh signal for me last few weeks outperform. Food and beverage should be heading back up. We are in the kind of equilibrium zone where it's, it's also, it's had the correction, you know, it's kind of thing where you, where it was like down here. Okay. The other one is healthcare. Similar picture. Healthcare has been outperforming for about six weeks now. Above the 200 week average. Again, outperformed while the market was sloppy over here, underperformed recently by a lot. The ratio has gone from 2.5 to 2. So down five on 25 is 20%. The ratio, so underperformed by 20%. And it's supposed to go back up, direction up, intensity strong, three month view, food and beverage and healthcare. And when we look at my report, so here's the report. I have, if you guys, if anybody wants to get a sample of this, you can leave a business card. I could put you on the list for a while or something, if it's something, something you're interested in. I have a, I have a, I have the outperform and underperform ideas in the US. Here's outperform stocks, the group and the stocks, the stocks relative to the group. And here are the underperform. And since we're just looking at Europe, let's look at the Europe page. Here's the European page. So remember I said healthcare. So here's the top picks, outperform, healthcare, food and beverage, real estate, utilities and telecom. Didn't mention real estate, but that has an intermediate term forecast. And the underperform ideas are banks, industrials, construction and materials, luxury, financial services, technology, retail, travel and leisure. I had ACOR. I guess ACOR just missed or something. Then they, they had some disappointment yesterday or something I saw overnight. Then they, something, ACC or our French company hotels, they had some, some, some news I saw. Anyways, that was on my cell list. So this is what I do with this report. I'll just spend a second on it. So my, you know, sophisticated institutional investors take a look at this and they print out this page and they're looking for long and short ideas and they, they print out this page and I encourage them to take a red pen and circle this for long ideas and circle this for short ideas. So maybe we can just take a quick look at a couple of those. So Santa Fe Aventus relative to health care equally weighted average. So here's, remember the health care looks positive relative to the index stocks. Here's Santa Fe relative to the group and equally weighted group and it's a by low situation. Looks like that. Absolute. Looks like that. So it's up. It's not, you know, unfortunately this is how this market is so picked over that to try to find us something that isn't up a lot. This is kind of the best I can come up with. It's already, it is kind of up, but that's the best of, the best of the, that I can come up with. Okay, so that's an idea. Let's look at some of the stuff that doesn't look so great. So we end up with things like this. Here's Unicredit. So banks relative to stocks three month view looks like this. Direction down, intensity strong, position just starting. So I have banks as my number one underperform group in Europe at the moment. Fresh signal. This is, it's kind of hard to see on this, this chart should be more short term, but it's not. Sorry. Anyways, they've been underperforming for about five or six weeks. The forecast is down. And so, and I have things like here's Unicredit relative to the equally weighted bank group turning down absolute, turning down. It's, I'm sorry this is not a very good, let me get a shorter view. You can't see anything on that. Even that. I don't know. Anyways, some of these, so the names that I have are Royal Bank of Scotland, Unicredit, Intessa, Lloyds, UBS Barclays, Spanish banks, and a couple of Swiss banks. Sorry. Industrial goods and services, Valerex, Schneider, BAE Systems, Vestas, which has had a huge run, Atlantia, Volvo, Scania, things like that. So those, these are the names that I'm telling people to lighten up on or for hedge funds to short. Short, these are my short ideas. Construction materials, Spanish construction companies, luxury companies, I think they're vulnerable to the emerging market thing. And I think their people are over-positioned in those. And they've worked, but they've kind of underperformed actually for a little while. But I wouldn't put them as my number one short idea, but I think that they, they're, let's just say they're over-owned and that they're vulnerable to the kind of economic environment that I see. And then technology, there's a lot of technology stocks that don't look so great. And I'd like to spend a minute on the U.S. I feel like I'm in a rock concert. So the U.S. here's the idea. Consumer staples. This is weekly. Consumer staples relative to the S&P. The left side of this chart is beginning of 2003. Has underperformed in the rally. The defensive stuff underperforms when the market goes up usually. Which, by the way, even though I'm fighting the tape at the moment on thinking that the stock market's going to go down where they keep going up, what I'm seeing, this is what I'm seeing beneath the surface where the defensive stuff has actually been outperforming for about four or five weeks. Here, not at a new low. Consumer staples. So this is supposed to go up, outperform. And what is supposed to go down is similar to Europe. Here's industrial. So I have a fresh, this is industrial sector divided by the S&P. So the ratio of the industrials to the S&P index should be peaking and should be heading down. Notice it's had a bit of a move. And materials, same thing, direction down, intensity strong position, just starting three month view. And these have really been bad performer. So this has had a bounce and a downtrend as far as I'm concerned. And we're headed lower. So materials companies. So that same kind of idea, cyclical underperform, tech as another one, tech. And then I just like to very quickly cover a couple things and then finish up here. So tech has underperformed by a lot in the US. That has a lot to do with Apple, of course. Apple is a big way in this cap weighted thing. But I have a lot, a real lot of tech stocks breaking down beneath the surface of this market. Let me give you an example. On my selling short list, I have all these stocks. By the way, Tesla has been my number one short name for about six weeks or so. It's been working like a charm. But I have NCR. These stocks are breaking down, not Apple yet. Apple has hit a new high this week. Sienna, I had Cisco on the sell list before that announced that order to decline in emerging markets. Erickson, Alcatel, a lot of semiconductor companies apply materials, AMD, semiconductor makers, internet companies, a lot of these Chinese internet companies that are listed in the US. Also Facebook. Facebook is, I think, is kind of finished its deal. A lot of cyclical companies. Cummins, Caterpillar, Mining, Joy Global is a mining manufacturing equipment. Okay, so that's the idea. Sell these, buy those. And one other idea for a buy is this. Here's gold stocks. I know you guys in Switzerland are attuned more to the issue of gold and gold equities than people in some other places. This is the XAU Gold Stock Index monthly going back to 1984 July. So go back, this is as far as data goes back that I have. And here we are in the 80s, low 80s, which is where it was in 1984. So no progress in the large cap gold stock universe and it's down approximately 70%. What is the benchmark or the relative comparison? Yeah, okay. XAU relative to S&P. Looks like that. That's the relative. And I have it almost. It's not quite there. There could be, I'm expecting maybe a little more pain for a few weeks or months in gold, but I would be, since I don't come through Switzerland very often, and in the terms of things that are buy low, bad sentiment unwanted, I would recommend gold stocks. And when I look at, just a quick aside on that, when I look at the individual names, I am getting a buy signal and they're down a lot more. Like here's one, BVN, Buena Ventura. It's a Peruvian miner. It's down, like some of these are down 80, 90%. At the bottom there's usually some volatility goes back and forth, but I would be accumulating, I would look to accumulate gold stocks. And if you think about it, the gold stocks have resumed negative correlation to the market. So if you're a law and only portfolio manager, this is almost like buying puts. This is something you can buy. If you're worried about market risk, gold stocks are probably going to go up when the market goes down. And that's my forecast. Not quite yet. I think maybe a little more sloppiness for a few weeks or months, but well worth being on your radar screen. So that's pretty much the story. Let me just review, let me just repeat the conclusions. And oh, dollar. Hang on a second. So dollar, dollar up. I have a fresh intermediate term, three month forecast for the dollar. This one I don't really have, I don't know what this means. I don't have a good explanation for how it fits into everything. Could be maybe tapering, who knows. So dollar up versus euro. We're right around the 200 week average. By the way, you notice the 200 week average has been worked pretty well in terms of inflection points in the currencies. But the currencies have been a hard, rough trade this year. You know, it hasn't been a lot of follow-through. There's been, if you're a currency trader, maybe the short-term traders have done okay, but it hasn't been easy. There's been a lot of whipsaws in that. Okay, so the idea is, back to the original thesis, we're 54 months into something that usually lasts 45 months. QE, which I didn't have a lot of time to spend on. I used to work for a government securities dealer and I've observed the process firsthand of the central bank monetizing debt by buying it from the government securities dealer with new money, which is basically counterfeiting, but they're allowed to do it. So the QE, just one quick aside on that. So the Fed's balance sheet is, you know, they're buying $85 billion a month and it looks like that. That's a weekly Fed balance sheet, total Fed credit. And the Fed is now 69 times leveraged. They have $55 billion in equity and they pay all their dividends from this huge pile of treasuries and mortgages that they own. They pay all the dividends to the treasury, so their capital stays the same. So every time they do add $85 billion, they're expanding leverage. So their leverage has gone up from 50 to 69 times and they're oblivious. They couldn't care less, nobody really... So not that they're going to go bankrupt or anything, but it's kind of an example of the craziness. But my thesis is, yeah, it's worked so far. It's affected people's, you know, what they have, what they call the portfolio balance channel, which is basically they squeezed people by financial repression, by having ZERP, that's ZIRP zero interest rate policy, and constant QE, quantitative easing, buying, you know, monetizing debt. They have forced investors into risky securities, junk bonds, high yield debt, and equities. And there are actually speeches by Fed officials saying this was their objective a year ago. They call it the portfolio balance channel. We want to shift, we will force investors into doing it. So you're basically being manipulated by the Fed, and with so far it's worked. However, I think that they do not control the economic cycle, and the transmission mechanism is through the emerging markets, which they have lost control of, you know, it's not working anymore. That feeds back into a decline in earnings and a just a typical business cycle contraction. Not the end of the world, but earnings go down, stocks go down. You want to be in outperforming, if you have to have long exposure, be defensive. And there's a huge opportunity, 12-month view in utilities and telecom over here. And in the U.S., also for three-month view, it's the typical stuff, consumer staples, you know, personal products, things like that, house food and beverage. And you might get blown up individual names like we saw, you know, is it Quantro? You know, these companies are not immune to this process, because anybody that has emerging market exposure can get hit, and that could be a food and beverage company, too. So I think you're better off having actually ETF or sector exposure than individual company exposure, that you might have more risk from that. And so that's it. With that Rosy Villalos scenario, look out for downside risk and be defensive. That's the end of my... What's your take on Japan? I think it's the one market that is... I don't have a short position on. I think it could rally, but, you know, I'm very cognizant of the risk over there right now. There might be a military confrontation any day, so that's something, you know, with China, they've got the aircraft carriers, and they're all lining up. The model doesn't know anything about that, all that kind of stuff. But it does seem to be, just looking at the model forecast, I expect the yen to weaken. And so I think the idea of just monetization and getting away with it, I think without a military confrontation, yes, I think that that's actually the one place in the world. Oh, there's two other markets that I like, Ukraine and Bangladesh. But they look, you know, there are ones that are way down in the gutter. Bad news. I have one for you. In the big picture of the chart that you showed, you showed 2009 development just like a regular cyclical crisis or a business cycle downturn. Do you treat it, do you see it as just a cyclical downturn as well, a financial crisis like that, or is there a qualitative difference? Back then, you mean 2009? Well, it felt like the end of the world, didn't it? I mean with Lehman Brothers and everything. But my work turned bullish in April and I was bullish on financials. If you go back, I have that in the intro report. So the model actually said buy financials. Remember, buy low with bad sentiment. So sometimes the worst sentiment, it always looks the most bleak. And so actually that was an extreme buying opportunity in financials at that point. It's not at the moment. So I've studied financial crises in business and cycle depressions and they're not the end of the world. Somebody goes bankrupt. It's not like the system ends or something. We are not going back to living in caves and bartering. I think the market forces can sort things out. I'm not a big fan of government intervention. Maybe it had to happen then or something. If it was up to me, I would have let the market sort things out itself. But anyways, no, I don't think that that was just kind of an extreme example of a buying opportunity really in financials. Other questions? Do you have any personal opinion model based on gold? Yeah, same thing as like I showed you, XAU. Okay, so same thing like gold stocks. Right. Yeah. It's kind of a bottom. Right. Some kind of bottom for me. I'm nervous. The maybe the next few weeks or months, there might be some more sloppiness. It's not quite off to the races confirmed yet. But it's out there. And I'm actually speaking at a conference next week in London about gold mining stocks that kind of set like opportunities that exist in the gold mining stocks which are sort of like the banks were in 2009. Basically, that's the that's if there's anything like that now, that's really what else is down a lot, you know, the utilities and telecom and gold stocks basically haven't haven't gone out. There's not a lot of other things that aren't already, you know, haven't already been inflated. If there's no more questions, I'm sure that you can ask Michael about the more technical details of this all in the lunch. Yeah, yes. Opportunity. Let's give him a hand. Right. Thank you. Thanks very much. Thank you.