1. WHILE YOU ARE WAITING ANSWER: 190 HOW? There are N people (20)
You can’t shake hands with yourself (N-1)
You can only shake one hand of each person: divide by 2 = (N-1)/2
So: N(N-1)/2
= 20*19/2
= 380/2 = 190

2. IT WAS BAD AFTER IT WAS BAD????

3. OFF WE GO!

4. BIGFOOT INVESTMENTS - OPEN FORUM
Oct 19, 2017
WELCOME!
Volume #310

5. AGENDA WELCOME! ADMIN NOTES QUOTE OF THE DAY SWAPS AND SPREADS
OPTIMISM GAUGE
DIAGNOSTICS GAGE
FED TRACKER
SUM AND SUBSTANCE
WEEKLY INTELLIGENCE
HIGH IMPACT - RISK
GLOBAL PERSPECTIVE
DAVID’S CORNER
ADVISOR INPUT
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. Gone again?????
AQR Conference!
Sorry

10. Presentation to the Peterson Institute Oct 12, 2017
“QUOTE” OF THE DAY:
They {Central Bankers} are looking forward to an era of relative financial and
economic stability in which the pressing economic issues will relate to growth, globalization, and distribution issues….
…....that are the responsibility of other policymakers and not primarily the province of central bankers.
Ben Bernanke
Presentation to the Peterson Institute Oct 12, 2017

11. Optimism Gauge
As of: 10/19/2017

12. >50-day MA/>100-Day MA
Change
Measuring Our Economy
Last Update: 10/19/2017
Weekly Updates
New Monthly Updates
Indicator
Current Value
Prior/Metric Value
St Louis Fed Financial Stress Index
(Rev)
+1.0
Chicago Fed National Act Index (3 Mon M/A)
- 0.04
0.00 (Rev)
-.50
Unemployment
4.2% (Sep)
4.4% (Aug)
+2.00
Weekly Jobless Claims (4Wk Mov Av)
248,250
257,750 (Rev)
+.50
ECRI Weekly Index (Against 52 Wk Av)
145.2
144.5 (Rev)
Conf Board Leading Indicators (NEW)
128.6 (Sep)
128.8 (Aug)
-1.0
University of Michigan Sentiment – Final
95.1 (Final – Sep 2017)
96.8 (Final – Aug 2017)
Monthly Retail Sales – ex Autos (Adjusted)
383,834 (Sep -2017)
379,849 (Aug-2017) Rev
NFIB Small Business Sentiment
103.0 (Sep -2017)
105.3 (Aug -2017)
ISM Manufacturing
60.8 (Expansion Line = 50)
58.8
Economic Capacity Utilization
76.0%
75.8% (Rev)
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% (Jul)
5.6% (Jun)

13. Economic Optimism Index
Measuring our Economy 10 20 30 40 50 60 70 80 90
100
Economic Optimism Index
Current:
Prior:
90.13%
READING AS OF: 10/19/2017
Current Reading:
90.13%
Trend: Negative
Prior Reading:
91.37% (Rev)
Bias: Positive

14. Week of: Oct 16th, 2017 BigFoot Investments
Market Diagnostics
Week of: Oct 16th, 2017
BigFoot Investments

15. SENTIMENT INDICATORS Week of Oct 16th - 2017
1. AAII Investor Survey
2. TSP Sentiment Survey
3. NAAIM Survey of Manager Sentiment
4. CBOE Volatility Index
INTERNAL INDICATORS
5. S&P D MA and 200D MA AND 2/10 MA
6. NYSE Bullish %
7. S&P 500 Bullish % ($BPSPX)
8. Percent of NYSE stocks above 200DMA
9. Percent of NYSE stocks above 10WMA
or 50DMA ($NYA50R)
10. NYSE 52-Week New Highs and New Lows
11. Percent of S&P500 stocks above 200DMA
12. Percent of S&P500 stocks above 50DMA
ADDED INDICATORS
13. Option Sentiment
14. Option Buyers Sentiment Gauge (OBSG)
15. Consumer Sentiment Index
16. Nasdaq Sentiment Index
17. Rydex Nova/Ursa Sentiment Indicator

16. Week of Oct 16th, 2017
29.41%
Prior: 23.52%

17. THE BATTLE RAGES Kaplan Dallas Evans Chicago Williams San Francisco
VOTING MEMBER
MEMBER
DISTRICT
TOPIC
LINK TO SOURCE
Kaplan
Dallas
concerned that globalization and technology are keeping inflation muted
Evans
Chicago
We should not fear 2.5% inflation…if inflation expectations don’t start to move up….next couple of moves may not be constructive
Williams
San Francisco
…expects the U.S. central bank to raise interest rates later this year, three times next year, and a little bit further in In the new world of moderate economic growth, we all need to plan for relatively low rates for the foreseeable future.
Brainard
FOMC
Federal Reserve could better time interest rate hikes following future recessions by pledging to hold fire until inflation rises above its target.. policymakers will likely need to lower rates to near zero again in the future and will likely also struggle with worrisomely low inflation.
Powell
….challenges posed to EMEs by the normalization of global financial conditions will be manageable.

18. FED CONTINUED Yellen Chair Rosengren Boston Harker Philly Dudley
MEMBER
DISTRICT
TOPIC
LINK TO SOURCE
Yellen
Chair
our framework for understanding inflation dynamics could be mis-specified in some way.,,, neutral rate currently appears to be quite low by historical standards, implying that the federal funds rate would not have to rise much further to get to a neutral policy stance
Rosengren
Boston
Policy should not adhere to rules-based approach. Fed will probably need to raise rates in Dec and then 3-4 times next year
Harker
Philly
One more rate hike this year is appropriate but cautioned his forecast could change if inflation doesn’t pick up. No firm commitments
Dudley
New York
Overhaul to U.S. tax code should foster business investments and productivity
Kaplan
Dallas
Slippage in the10-year Treasury may be an indicator of expectations for slower long-term domestic growth
George
Kansas City
N/A

19. THE INFLATION “FIGHT” – FED MINUTES
Anecdotal reports from the hurricane-affected regions, as well as daily data on capacity outages in selected Gulf Coast industries, indicated that production had already started to recover
Real PCE was likely increasing at a slower rate in the third quarter than in the second
Median of longer-run inflation expectations from the Desk’s Survey of Primary Dealers and Survey of Market Participants were relatively little changed in September
Hurricanes were expected to reduce real GDP growth in the third quarter and to boost it in the fourth quarter as production returned to its pre-hurricane path and as a portion of the lost spending was made up
Most participants had not assumed enactment of a fiscal stimulus package in their economic projections or had marked down the expected magnitude of any stimulus
Many participants thought that another increase in the target range later this year was likely to be warranted if the medium term outlook remained broadly unchanged
Several others noted their decision on whether to take such a policy action would depend importantly on whether the economic data in coming months increased their confidence that inflation was moving up toward the Committee’s objective
A few thought additional increases in the federal funds rate should be deferred
Source: Federal Reserve Minutes – Sep 2017

20. SHORT VERSION OF THE BEIGE BOOK
Source: Federal Reserve

21. THE PLAYERS FOR FED CHAIR
LATEST (DOWN TO 5)
LAST
Source: PREDICTIT

22. IT IS UNTIL IS ISN’T!
Now: 93.1%
Previous: 82.9%
Source: CME; Federal Reserve

23. Credit Anticipates-Equity Confirms
Swaps and Spreads
Rate
Prior
Current
Status*
Libor/OIS
0.27
0.19
Euribor/Eonia
-0.027
-0.032
Markit CDX NA - IG Spread
54.45
54.10
Markit CDX NA- HY Index
108.04
108.20
DTCC Repo - MBS
1.145
1.169
DTCC Repo – Treasury
1.094
1.161
High Yield
3.55
3.50
Fed Reserve Currency Swaps-Short
35 (ECB)
2 (BOJ)
1 (BOJ)
Fed Reserve Currency Swaps-Long
2-Year Swap Spread
0.261
TED Spread
0.270
0.267
As of: 10/18/2017 COB
*Note: Status = No major impact
Status = Moving Worse
Status = Negative Impact

24. EARNINGS NOTES THAT ARE NOT FOR THE FAINT HEARTED

25. At the start of the year, the forward 12-month P/E ratio was 16. 8
At the start of the year, the forward 12-month P/E ratio was From December 31 through October 11, the price of the S&P 500 increased by 14.1%, while the forward 12-month EPS estimate increased by 6.9%. Thus, the increase in the “P” has been the main driver of the increase in the P/E ratio since the beginning of the year.
Source:

26. the more you want, the less you get. Goldman Sachs
We find that selling equities at elevated valuations in anticipation of more attractive entry points
is a weak investment strategy. That is because those entry points have often taken years to materialize. In other words,
the more you want, the less you get Goldman Sachs

27. HOPE SPRINGS ETERNAL
Source: FactSet

28. UP, UP, AND AWAY
Source: Yardeni

29. SUM
SUBSTANCE

30. WEEKLY MACRO DATA
FINDING THE LOVE

31. 6 OF 10 COMPONENTS DROP BUT OVERALL STILL HIGH
Source: NFIB

32. MOSTLY GAS AND AUTOS – BUT HECK
1.0%
Forecast: 1.7%
Actual: 1.6
Prior: -0.1
Source: Census Bureau

33. HURRICANES – BUT STILL STRONG
Source: Conference Board

34. STINKS AT THE CORE
Forecast: 0.2%
Actual: 0.1%
Prior: 0.2%
Source: BLS

35. PRODUCER PRICES SHOW SOME “LIFE”
Forecast: 0.4%
Actual: 0.4%
Prior: 0.2%
PRODUCER PRICES SHOW SOME “LIFE”
Source: BLS

36. SOME SIGNS OF LIFE ON IMPORTS/EXPORTS
Source: BLS

37. BUT, THE “TECHNICAL” PICTURE LOOKS OMINOUS

38. BETTER BUT NOT SO GREAT 10 Year Mean 76.54 2 High/2 Low Out
Current: From: (Rev)
10 Year Mean 76.54
2 High/2 Low Out
Source: Federal Reserve

39. NOT BAD
Source: New York Fed

40. LOTS OF SEASONAL AND STORM THINGS
Source: Census Bureau

41. A SMALL DIP – FIRST IN 12 MONTHS…..AS THEY SAY: “HURRICANES”
Source: Conference Board

42. PHILLY BETTER/MIXED – OUTLOOK ???
Source: Philly Fed

43. WEEKLY

44. TWO INTERESTING PREDICTIONS

45. JUST “SAYIN”
Source:

46. IF YOU SAY SO
Source: WSJ; Bloomberg

47. THE FED IS MOVING
Source: NY Fed

48. Although the global recovery is slow, it is quite steady
WHY SUCH LOW VOL
Investors appear to be in the “freeze” vs “flight” mode according to Nobel price winner Richard Thaler
Many equity investors entered at lower levels and feel they can withstand fairly sizeable negative shocks
Although the global recovery is slow, it is quite steady
Inflation, although sticky at low levels, is steady
Central Banks have contributed to low volatility by pegging yields (BOJ) or keeping bond yields low through easing (ECB and Fed) so there is a strong legacy effect for both the bond and stock markets
But we are at the lower limits:
Inflation is stubborn but is a worry
Because of low volatility, central banks feel they can press forward
The mechanics of the Fed’s balance sheet are untested
Source: Deutsche Bank

49. COULD BE A THAW IN THE MAKING

50. ALL OVER THE PLACE
Source:

51. “LIVIN IS EASY”
Source: Bloomberg; Chicago Fed

52. THE SWORDS OF DAMOCLES
Source: Investing.com

53. OVERALL: DATA POINTS STATUS Comments Inflation Manufacturing Sentiment
Which one?
Manufacturing
Good
Sentiment
Holding
Housing
Some issues: costs/supplies/land/specific markets
Employment
Good – structural issues
Retail Sales
Not so great
Fed
To many words
Interest Rates
Subject to interpretation
Oil
Volatile
Dollar
In our favor

54. EUROZONE
CHINA

55. STABLE AT 1.5% IN THE EURO AREA - UP TO 1.8% IN THE EU
Source: Eurostat

56. CAN THE EUROZONE HOLD ON?

57. TYPICAL
Source: National Bureau of Statistics; Treading Economics

58. STEADY OR STUCK?
Source: National Bureau of Statistics; Investing.com

59. BUT IF YOU DON’T BELIEVE
Source: Capital Economics

60. 0.325
0.275
U.S. Macro
Last
New

61. DAVID’S CORNER

62. ADVISOR INPUTS

63. QUESTIONS & COMMENTS
THANKS FOR JOINING US!

64. IMPORTANT DISCLOSURE INFORMATION
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