Kevin M. Wilson, ChFC, PhD President/CEO/CIO Dheenu Sivalingam, MBA AVP/CCO/Senior Analyst 1314 E. Superior Street Suite 2 Duluth, MN Office: Toll Free: Fax: Monthly Market Review “Groundhog Day 2012: Déjà vu All Over Again” February 16, 2012 Ted A. Pavlovich, WMS VP Wealth Management 1

INTRODUCTION TED A. PAVLOVICH 2

US SITUATION REPORT TED A. PAVLOVICH 3

4 The Job Train Has Jumped The Tracks

5 Good News On Short Term Unemployment Data

6 Tax Data (Down) Do Not Agree With Gov’t. Unemployment Data (Down) – Why?

7 Changing Need for Temp Workers Boosting Recovery But Making Data Hard To Interpret

8 Housing May Be Nearing The Bottom At Last

9 This Trend Can’t Be Sustained, So It Won’t Be (i.e., Profits Will Fall & Wages Will Rise)

10 Market May Be Topping Out Soon

11 Apples To Apples on Market Earnings Growth (“NBA”)

MARKETS SEE THEIR SHADOWS DHEENU V. SIVALINGAM 12

13 Economic Surprises About Used Up

S&P 500 S&P 500 Started 2011& Current Level

AAII Sentiment 2012: 02/09/12 Bullish: 51.64% Bearish: 20.19% 8 Week Bull Moving Avg: 41% Bull Bear Spread: 31.5% S&P 500 Weekly Close: : 02/10/11 Bullish: 49.40% Bearish: 26.91% 8 Week Bull Moving Avg: 52% Bull Bear Spread: 22.5% S&P 500 Weekly Close:

NYSE Short Interest 16

USD At Same Levels $DXY 79 Level 17

VIX Trading at Same Levels VIX Below 20 Level 18

GLOBAL ECONOMY AT PIVOT POINT KEVIN M. WILSON 19

20 IMF Forecasting Global Slowdown

21 China Slowdown Is Bigger Than Many Think

22 Fighting Inflation Has A Cost

23 Chinese Mfg. = Exports = GDP* *Note That Electricity Demand Has Fallen 7.5% in a Month (Example: Allete Sells Less Power If Mines Slow Down)

Asian Exports Plummeting 24

25 Euro-Zone Entering A Recession (In Spite of “De-Coupling We Might Too”)

26 Euro-Zone Unemployment Soaring As Austerity Plans Kick Into Gear

27 Euro-Zone Deficits Are Structural

28

29 Only Money Printing Has Held Off Another US Recession

30 Massive Money Printing Has Not Produced Massive Money Supply/Inflation

31

32 Other Signs Of Strain for Households

33 Industrial Production (=Exports) Has Been Pretty Good…

34 …And QE Has Made Dollar Fall, Which Is Good For Exports

35 Auto “Sales” & Inventory Data Imply A Recession Is Near (Floor Plan Lending)

36 …Falling Fuel Demand May Be A Negative Sign Though (Ships, Trains, Trucks, Autos)

37 Dollar Is In Short Term Up Trend

38 Treasuries Still Indicate Trouble Ahead

SUMMARY & CONCLUSIONS 39 KEVIN M. WILSON -Risk/Reward Very Dangerous, But Market Still Wants To Go Up Near Term -Economic Data and Earnings Should Cause Big Doubts Going Forward -We are Ready For Either Case, But Currently Positioned Against Risk -If Market Sells Off, Risk/Reward Will Be VG & Huge Opportunity Awaits

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