1. MEAT!! WHILE YOU ARE WATING
MIKE IS A BUTCHER – He’s 5’10”, has brown hair, runs 2 miles a day, and wears “slim” blue jeans…..
….WHAT DOES HE WEIGH?
MEAT!!

2. THESE SHOES ARE JUST THE CUTEST THINGS
ANDY SPENDS TIME WITH HIS DOLL HOBBY
THESE SHOES ARE JUST THE CUTEST THINGS

3. LOGAN FINALLY GETS HIS TESLA

4. BIGFOOT INVESTMENTS - OPEN FORUM
Feb 18, 2016
WELCOME!
Volume #236

5. AGENDA WELCOME! ADMIN NOTES QUOTE OF THE DAY OPTIMISM GAUGE
SWAPS AND SPREADS
FED TRACKER
MACRO ASSESSMENT
READING THE “TEA LEAVES”
DAVID’S COMMENTS
ADVISOR INPUT
LEE’S COMMENTS
QUESTIONS/COMMENTS

6. THANK YOU! “NOTES” IF YOU USE ANY OF OUR SLIDES, PLEASE REMEMBER TO
HAVE THEM APPROVED BY YOUR COMPLIANCE DEPARTMENT
WE’LL KEEP EVERYONE ON MUTE SO WE DON’T GET FEEDBACK
PLEASE SEND US A QUESTION – WE’LL GET TO IT ASAP
WE WILL TAKE YOU OFF MUTE IF YOU RAISE YOUR “HAND”
THANK YOU!

7. BigFoot Investments is now on Twitter, LinkedIn!

8. Don’t Forget To Join Our “Group”
BigFoot On LinkedIn!
Don’t Forget To Join Our “Group”

9. “QUOTE” OF THE DAY:
…we are in a precarious position in the U.S. with so many of our institutions going down. Many of those pushing against the system have no idea how precarious it is or what they will be destroying…..
…Those defending it don’t know how precarious its position is or even what they’re defending, or why. But people lose respect for a reason.
Peggy Noonan - WSJ

10. Optimism Gauge
As of: 2/18/2016

11. >50-day MA/>100-Day MA
Change
Measuring Our Economy
Last Update: 2/18/2016
Weekly Updates
New Monthly Updates
Indicator
Current Value
Prior/Metric Value
St Louis Fed Financial Stress Index
(Revised)
-1.0
Chicago Fed National Act Index (3 Mon M/A)
-0.24
-0.19 (Revised)
-.50
Unemployment
4.9
5.0
+2.0
Weekly Jobless Claims (4Wk Mov Av)
273,250
281,250 (Revised)
+.50
ECRI Weekly Index (Against 52 Wk Av)
130.0
129.6
Conf Board Leading Indicators (NEW)
123.2
(Revised)
University of Michigan Sentiment – Final
92.0 (Final – Jan 2016)
92.6 (Final – Dec 2015)
Monthly Retail Sales – ex Autos (Adjusted)
354,159 (Jan-2016)
353,978 (Dec) Revised
NFIB Small Business Sentiment
93.9
95.2
ISM Manufacturing
48.2 (Expansion Line = 50)
48.0 (Revised)
Economic Capacity Utilization
77.1
76.4 (Revised)
Stock Market Moving Averages
Weekly Data Points
>50-day MA/>100-Day MA
N/A
S&P Case-Shiller 20 City Comp Index (YoY)
5.8%
5.5%

12. Economic Optimism Index
Measuring our Economy 10 20 30 40 50 60 70 80 90
100
Economic Optimism Index
Current:
Prior:
46.98%
READING AS OF: 2/18/2016
Current Reading: %
Trend: Negative
Prior Reading: 52.48%
Bias: Negative
POSITIVE SINCE: 8/22/2012

13. STRESS INDICATOR UP STRONGLY
FROM
HIGHEST SINCE DEC 2011
Source: FRED

14. WEBSITE VERSION

15. FINANCIAL STRESS INDEX

16. 2/10 INDICATOR

17. Credit Anticipates-Equity Confirms
Swaps and Spreads
Rate
Prior
Current
Status*
Libor/OIS
0.24
Euribor/Eonia
-0.066
-0.055
DTCC Repo - Agency
0.504
0.522
DTCC Repo - MBS
0.507
0.525
DTCC Repo – Treasury
0.495
0.506
High Yield
8.62
8.45
Fed Reserve Currency Swaps-Short 91 90
Fed Reserve Currency Swaps-Long
2-Year Swap Spread
0.0460
0.0249
TED Spread
0.2740
0.3097
As of: 2/17/2016
*Note: Status = No major impact
Status = Negative Impact
Status = Moving Worse

18. FED BET
Source: Federal Reserve Board staff calculations based on an econometric model described in the appendix to Janet L. Yellen (2015),
“Inflation Dynamics and Monetary Policy,” speech delivered at the Philip Gamble Memorial Lecture, University of Massachusetts,
Amherst, Mass., September 24,

19. DOWNSIDE RISK/VOLATILITY REMAIN HIGH
Source: AlphaSimplex

20. MARKET REPEATS: NO RATE INCREASE THIS YEAR
Source: CME; Federal Reserve

21. FED TALK? MEMBER DISTRICT TOPIC LINK Harker Philadelphia
These {inflation} considerations make me a bit more conservative in my approach to policy, at least in the very near term. Although I cannot give you a definitive path for how policy will evolve, it might prove prudent to wait until the inflation data are stronger before we undertake a second rate hike.
Dudley
New York
Two main dangers to expansions: Inflation, adverse impacts Fed can’t control.
Inflation risk low so current focus on adverse shocks.
Assets/Liabilities of households crucial to economy absorbing shocks
Household debt situation much better than previous years
Rosengren
Boston
"In my own view, if inflation is slower to return to target, monetary policy normalization should be unhurried. A more gradual approach is an appropriate response to headwinds from abroad that slow exports, and financial volatility that raises the cost of funds to many firms."
FOMC Minutes
- Jan -
See Slide
Bullard
St Louis
Federal Open Market Committee’s (FOMC) case for monetary policy normalization in 2015 rested on several key assumptions and that two of these assumptions have now been called into question in 2016
Williams
San Francisco
Later Today
Mester
Cleveland
Friday
Kaplan

22. MORE TALK MEMBER DISTRICT TOPIC LINK Kashkari Minneapolis
Large banks must similarly be able to make mistakes—even very big mistakes—without requiring taxpayer bailouts and without triggering widespread economic damage. That must be our goal. TBTF Speech
Kaplan
Dallas
No statements on monetary policy

23. PRETTY STRONG STUFF
Source:

24. Language of dissent (Bullard)
WHAT THE FED SAID
Language of dissent (Bullard)
“The Committee would be concerned if inflation were running persistently above or below this objective.”
Real PCE decreasing – held down by costs of non-energy imports
Housing – continued gradual recovery
Manufacturing output declined
CAPEX slower/Inventory investment decreased
Energy pulling down inflation globally
Financial markets hampered by oil and concerns about global growth
Assessment of financial vulnerabilities as moderate on balance
Estimate that negative effects of lower equity prices and FX would be offset by low oil prices and better fiscal results
Expect real GDP to expand somewhat faster moving forward
Forecast for inflation revised down slightly but would increase gradually through 2018
Premature to change outlook over the medium-term
Assessed inconsistencies with consumer spending against strong gains in household income
Extended discussion about China’s economy/financial imbalances and impact on EMEs
Tighter financial conditions evident – stock market & credit markets
Many see increasing downside risks economy
Source: Federal Reserve

25. IT’S BETTER, THE SAME, AND WORSE
MACRO DATA
IT’S BETTER, THE SAME, AND WORSE

26. UNTIL WE FIX SOME THINGS MARKETS WILL NOT SETTLE
OIL
CHINA
DOLLAR
FED
INTEREST RATES
INFLATION
RECESSION

27. KEY WEEKLY DATA

28. LOOKING FOR A HOME
Source:

29. NOTABLE EARNINGS COMMENTS:
WITH 76% REPORTING
NOTABLE EARNINGS COMMENTS:
69% reported earnings above mean estimate – 49% below
Blended earnings decline of -3.7% (12/31/2015 est was -3.9%)
Without energy +2.4%
68 companies negative guidance – 17 positive
More companies beating EPS estimates – fewer beating Sales estimates
12-month forward P/E is 14.7 based on closing price of (10-year aver = 14.2)
With forward EPS of $ market valuation is ≈1827
Themes:
Dollar
Oil prices (Nets against currencies)
Slow global economic growth
Labor/wage impacts
Source: FactSet

30. TWO DOWN IN A ROW
123.2
0.2% Decline
Source: Conference Board

31. STILL DECIDEDLY NEGATIVE
CFTC S&P 500 speculative net positions
- 234,321
Source: CME

32. WE’LL TAKE IT!
Source: Federal Reserve Bank of Atlanta

33. IMPROVEMENT
+0.2%
+3.4%
Source: Census Bureau

34. PRELIMARY DATA FOR FEB FALLS… AS EXPECTED
90.7 DOWN FROM 92.0
Source: Univ of Michigan

35. IMPORT/EXPORT PRICE INDICIES IMPROVE
-1.1 VERSUS
-1.4 FORECAST
-0.8 VERSUS
-0.9FORECAST
Source: BLS

36. BUSINESS SALES – INVENTORIES JUST BLAH
NEEDS TO START FALLING
Source:

37. COMMENTS REQUIRED! Source: WSJ Junk spreads are mainly in energy
Lots of +50 miscues
Stocks are still strangely correlated to oil
Those darn macro indicators ruin another “theory”
Source: WSJ

38. EMPIRE STATE MANUFACTURING SURVEY
NOT GREAT..OUTLOOK WEAK
Source: Federal Reserve Bank of New York

39. HOPEFULLY JUST A BREATHER
Source: NAHB

40. NOT BAD…
Down 4%
Up 16%
Source: MBA

41. NEW YORK FED SURVEY ON INFLATION/WAGES
Steady decline
Source: Federal Reserve Bank of New York

42. IMPROVEMENT
Highest since Nov 2015
Source: Federal Reserve

43. HOUSEHOLD DEBT HIGHER BUT LESS RISK
Source: Federal Reserve Bank of New York

44. STILL GROWING mb
Source: EIA

45. U.S. Macro
-0.400
-0.450

46. Oil deal is not a deal – expect lower prices
A level of “stress” prevails in credit markets and will cause short-term problems. The Fed should change their “tune.” Thinking they will
Bond market volatility will continue until they do
No recession at this point
Markets trading in a “news range”: Oil – Dollar – Fed – Interest Rates
Markets need 2Q to reassess – no relief for now
Politics will be a bigger market driver after super Tuesday. March 1st
Sidelines (Cash) is fine

47. David’s Corner

48. ADVISOR INPUTS

49. Lee’s Comments

50. QUESTIONS & COMMENTS
THANKS FOR JOINING US!

51. IMPORTANT DISCLOSURE INFORMATION
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