1. THE CATCHER AND THE UMPIRE
WHILE YOU WAIT
WHO ARE THE TWO GUYS ?
 A GIRL LEAVES HOME AND TURNS LEFT THREE TIMES, ONLY TO FACE TWO GUYS WEARING MASKS
THE CATCHER AND THE UMPIRE

2. TIPS FOR LIVING

3. BIGFOOT INVESTMENTS - OPEN FORUM
Sep 6, 2018
WELCOME!
Volume #344

4. AGENDA WELCOME! ADMIN NOTES QUOTE OF THE DAY SWAPS AND SPREADS
OPTIMISM GAUGE
DIAGNOSTICS GAGE
FED TRACKER
SEP GROWTH PORTFOLIO
SUM AND SUBSTANCE
WEEKLY INTELLIGENCE
GLOBAL PERSPECTIVE
DAVID’S CORNER
ADVISOR INPUT
QUESTIONS/COMMENTS

5. NOWEB

6. The key to successful managing is to……
“QUOTE” OF THE DAY:
The key to successful managing is to……
…....keep the five guys who hate you away from the four guys who haven’t made up their minds!
Casey Stengel

7. Optimism Gauge
As of: 9/6/2018

8. Measuring Our Economy Indicator Current Value Prior/Metric Value
Change
Measuring Our Economy
Last Update: 9/6/2018
Weekly Updates
New Monthly Updates
Indicator
Current Value
Prior/Metric Value
St Louis Fed Financial Stress Index
-1.302
(Rev)
+1.0
Chicago Fed National Act Index (3 Mon M/A)
0.05 (Jul)
+0.20 Jun (Rev)
-.50
Unemployment
3.9% (Jul)
4.0% (Jun)
+2.00
Weekly Jobless Claims (4Wk Mov Av)
209,500
212,250
+.50
ECRI Weekly Index (Against 52 Wk Av)
147.3
Conf Board Leading Indicators (NEW)
110.7 (Ju7/1/2018)
110.0 (Jun)
University of Michigan Sentiment – Final
96.2 (Final – Jul 2018)
97.9 (Final – Jun 2018)
Monthly Retail Sales – ex Autos (Adjusted)
404,441 (Jul)
402,058 (Jun) Rev
(402,883)
NFIB Small Business Sentiment
107.9 (Jul)
107.2 (Jun)
ISM Manufacturing
63.1 (Aug) Expansion >50
58.1 (Jul)
Economic Capacity Utilization
78.05% (Jul)
78.11% (Jun) (Rev)
Stock Market Moving Averages
Weekly Data Points
N/A
S&P Case-Shiller 20 City Comp Index (YoY)
6.3% (Jun)
6.5% (May) Rev

9. Economic Optimism Index
Measuring our Economy 10 20 30 40 50 60 70 80 90
100
Economic Optimism Index
Current:
Prior:
91.86%
READING AS OF: 9/6/2018
Current Reading:
91.86%
Trend: Positive
Prior Reading:
89.69% (Rev)
Bias: Positive

10. NON CONFRONTATIONAL MQ index Source: BigFoot Investments
01/26/2016:
MQ index
Current:
Last:
Aver over period:
Source: BigFoot Investments

11. Week of: Sep 3rd, 2018 BigFoot Investments
Market Diagnostics
Week of: Sep 3rd, 2018
BigFoot Investments

12. SENTIMENT INDICATORS
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

13. 11.76%
Prior: 17.64%

14. Powell Chair Evans Chicago Bullard St Louis Williams New York Kashkari
MEMBER
DISTRICT
TOPIC
LINK TO SOURCE
Powell
Chair
See notes
Evans
Chicago
NOT AVAILABLE
Bullard
St Louis
Continuing to raise the policy rate in such an environment could cause the FOMC to go too far, raising recession risk unnecessarily.
Williams
New York
Kashkari
Minneapolis
Bostic
Atlanta
Friday

15. THOUGHTS FROM THE TOP
Good reason to expect that this strong performance {the economy} will continue
Gradual process of normalization is appropriate
There are risk factors, but “today I will step back from these.”
Issues beyond the reach of the Fed: real wages; economic mobility; budget deficit; and low productivity
Two counterbalancing issues: why are we not tightening faster; why are we tightening so fast as to cut off the expansion
In the run-up to the past two recessions, destabilizing excesses appeared mainly in financial markets rather than in inflation
No single, simple approach to monetary policy is likely to be appropriate across a broad range of plausible scenarios
Brainard principle, which recommends that when you are uncertain about the effects of your actions, you should move conservatively – but this has limits when doing too little comes with higher costs than doing too much; i.e. the financial crisis – then it’s “whatever it takes.”
I “see the current path of gradually raising interest rates as the FOMC’s approach to taking seriously both of these risks” (moving too fast or slow)
Source: Federal Reserve: Chair Remarks

16. THE VOTERS

17. NOW
Next:
Dec: 69.7% % (67%)
New: 100%
Prior: 96.0%
Source: CME; Federal Reserve

18. September 2018 Stock Picks TOP 25 STOCKS September-18 RANK TICKER NAME
RANK
TICKER
NAME
SECTOR
INDUSTRY 1
NVDA
NVIDIA Corporation
10 - Technology
Semiconductors 2
AMZN
Amazon.com, Inc.
09 - Services
Retail (Catalog & Mail Order) 3 V
Visa Inc
Business Services 4
LNG
Cheniere Energy, Inc.
06 - Energy
Oil & Gas Operations 5
ISRG
Intuitive Surgical, Inc.
08 - Health Care
Medical Equipment & Supplies 6
FANG
Diamondback Energy Inc 7
COST
Costco Wholesale Corporation
Retail (Specialty Non-Apparel) 8
PYPL
Paypal Holdings Inc
07 - Financial
Consumer Financial Services 9
WLK
Westlake Chemical Corporation
01 - Basic Materials
Chemicals - Plastics and Rubbers 10 FB
Facebook Inc
Computer Services 11 HD
Home Depot Inc
Retail (Home Improvement) 12
AAPL
Apple Inc.
Communications Equipment 13
GOOGL
Alphabet Inc 14
BABA
Alibaba Group Holding Ltd 15
URI
United Rentals, Inc.
Rental & Leasing 16
KEY
KeyCorp
Regional Banks 17 GD
General Dynamics Corporation
02 - Capital Goods
Aerospace and Defense 18
BAC
Bank of America Corp 19
FDX
FedEx Corporation
11 - Transportation
Air Courier 20
DEO
Diageo plc (ADR)
05 - Consumer Non-Cyclical
Beverages (Alcoholic) 21
ATVI
Activision Blizzard, Inc.
Software & Programming 22
SYK
Stryker Corporation 23 GS
Goldman Sachs Group Inc
Investment Services 24
DWDP
DowDuPont Inc
Chemical Manufacturing 25 C
Citigroup Inc
CONVICTION
As of August 31st, Subject to change.

19. Credit Anticipates-Equity Confirms
Rate
Prior
Current
Status*
Libor/OIS
0.41
0.40
Euribor/Eonia
-0.042
-0.034
Markit CDX NA - IG Spread
59.90
60.64
Markit CDX NA- HY Index
106.90
106.77
DTCC Repo - MBS
1.995
2.035
DTCC Repo – Treasury
1.981
2.028
High Yield
3.52
3.46
Fed Reserve Currency Swaps-Short
105 (ECB)
1 (BOJ)
90 (ECB)
2 (BOJ)
Fed Reserve Currency Swaps-Long
2-Year Swap Spread
0.212
0.193
TED Spread
0.241
0.175
Bond Equity Earnings Yield Ratio
.698
.7278
Stocks
Undervalued
As of: 9/5/2018 COB
*Note: Status = No major impact
Status = Moving Worse
Status = Negative Impact

20. BREAKING DOWN 'Bond Equity Earnings Yield Ratio - BEER'
VALUING THE MARKET
“BEER” RATIO
Bond Equity Earnings Yield Ratio
𝐵𝑜𝑛𝑑 𝑌𝑖𝑒𝑙𝑑 10 𝑦𝑟
E/Y S&P 500
2.904/3.99=.7278
BREAKING DOWN 'Bond Equity Earnings Yield Ratio - BEER'
A BEER of 1 would indicate equal levels of perceived risk in the bond market and the stock market. Analysts often feel that BEER ratios greater than 1 imply that equity markets are overvalued, while numbers less than 1 mean they are undervalued, or that prevailing bond yields are not adequately pricing risk.
Source: Investopedia

21. WEEKLY MACRO DATA
LONG AND WINDING ROAD

22. SUM
SUBSTANCE

23. MARKET CYCLE MARKET EVENTS TRADE FEED BACK LOOP TECHNICALS
FUNDAMENTALS
FEED BACK LOOP
TECHNICALS
TRADE
DOLLAR
EMERGING MARKETS
INFLATION

24. OUR “FRIENDS” THE VOLATILE BEASTS
Source: Investing.com

25. INCREASING INTEREST RATESOK
TRENDING
NEGATIVE
PARSING RECESSION
JUMP IN GROWTH
INCREASING BANK LOANS
INCREASING Y/Y
INCREASING INTEREST RATES
INCREASING
JUMP IN LENDING OF EXCESS RESERVES
RESERVES DECREASING
GROWTH OF MONEY SUPPLY
FALLING
GROWTH IN VELOCITY OF MONEY SUPPLY
SLIGHTLY
QUICK CHANGES IN INFLATION
INDICATIONS BUT SLOWLY
SIGNIFICANT CHANGE/TREND IN LEADING INDICATORS
MAJOR CHANGES IN CONSUMER SENTIMENT
DECREASE IN 10-YEAR/2-YEAR TREASURY SPREAD
VERY LOW (0.24)
But slight increase

26. COMPARING INFLATION DATA*
THE INFLATION PICTURE – YOU BE THE JUDGE
COMPARING INFLATION DATA*
TYPE
RATE (Prior)
SOURCE
CPI
2.9 (2.9)
BLS
CORE CPI
2.4 (2.3)
STICKY CPI
2.5 (2.6)
Atlanta Fed
CORE STICKY CPI
2.5 (2.4)
FLEXIBLE CPI
4.1 (3.7)
CORE FLEXIBLE CPI
1.1 (0.3)
16% TRIMMED MEAN CPI
2.2 (2.2)
Cleveland Fed
PPI
3.3 (3.4)
CORE PPI
2.8 (2.7)
PCE
2.3 (2.2)
BEA
CORE PCE
2.0 (1.9)
TRIMMED MEAN PCE (Core)
Dallas Fed
10-YEAR TIPS
0.78 (0.79)
Treasury Dept
UNDERLYING INFLATION GAUGE
3.33 (3.28)
New York Fed
AS OF: 9/5/2018
Note: All data annualized
INCREASE
DECREASE
Source: New York Fed; Cleveland Fed; Atlanta Fed; BLS; BEA; Dallas Fed

27. A NEW KERFUFFLE
Source: CNBC

28. BULLARD INFLATION ARGUMENT

29. Third decline in past 4 months
KERPLUNK – BUT…
Third decline in past 4 months
OTHER NOTES:
Inventories up 1.3% most since 2011
Book-to-Bill ratio up to 101.4% -8 mon high
(Both indicate improving business conditions)
Source: Census Bureau

30. NON-DURABLE GOODS LOWER ALSO
Source: Census Bureau

31. PRODUCTION AND HOUSING THE CULPRITS
Source: Chicago Fed

32. INDEX POINTS TO A MODERATION IN ECONOMIC GROWTH IN JULY
Source: Chicago Fed

33. DOWN TO 96.2 FROM 97.9 – LOWEST SINCE JAN 2018
Source: University of Michigan; dShort

34. CONSUMER CONFIDENCE SOARS – UP 5.5% (Consensus was a 0.9% decline)
NOTES
Indicates above trend expansion
Expectations index up 5.2 pts
12-month inflation outlook eased
Consumer purchasing plans up
Source: Conference Board; dShort

35. SOME MODERATION IN PRICE GROWTH

36. DOWN IN THREE OF THE PAST FOUR MONTHS
NOTE:
For 2018, the NAR expects existing home sales to contract 1.0% to 5.46 million units, and prices to increase about 5.0%.
Source: NAR

37. SIGNS OF A TURN?
Source: FHFA

38. Q2 GDP REVISED UP, PROFITS STRENGTHEN
NOTES:
Average for first half of year 3.2% - fastest in 3 yrs
Corp profits from production up 3.3% - most in 3 yrs
GDI much softer than GDP so aver GDP/GDI at 3.0%
Surge due to temp factors:
Rebound in consumer spending after bad wx
Delay in tax refunds
Business purchases were also pulled forward for tariffs
Next quarter closer to trend – 3%
Source: BEA

39. NO CHANGES IN JULY PERCENTAGES – MAY/JUN UPDATED
Source: BEA

40. SHORT-TERM LAGGING
Source: Dallas Fed

41. GROWTH DESPITE NINE-MONTH LOW – OUTPUT AT 1 YEAR LOW
NOTES
Production growth slowing – estimated a 0.2% in 3Q
Exports the key source of weakness ($)
Slowdown reflects shortages of inputs
Order books are starting to increase (a positive)
Tariffs and “trade wars” cited as common factors in companies building safety stocks – exacerbating shortages
Source: IHS Markit

42. WEAKER RISE IN BUSINESS ACTIVITY
Third quarter is unlikely to see the pace of economic growth seen in the second quarter
Third quarter signal annualized GDP growth of just under 3.0%.
Aug: 54.7
Jul: 55.7

43. BIGGEST MONTHLY GAIN SINCE MARCH 2010 - HIGHEST LEVEL SINCE MAY 2004
NOTES
Current level consistent with above trend growth
16 of 18 industries reporting indicated broad-based expansion
All index components advanced
Backlogs recovered to trend
Price index slipped 1.1 pts
Source: ISM

44. STRONG REPORT
The ISM Non-Manufacturing PMI index for the United States rose to 58.5 in August of 2018 from 55.7 in July, beating market expectations of Out of 17 industries 16 reported growth while 1 declined
Source: ISM

45. A MISS BUT ECONOMY IS STRONG AND EXPANDING
1 year aver
192K
Source: ADP

46. SOME IMPROVEMENT
Source: BLS

47. WEEKLY

48. OIL – OIL – OIL : THE PRICES ARE ROILED
2018 EST:
BRENT – AVER: $73.65
WTI – AVER: $68.00
2019 EST: (LOWERED)
BRENT – AVER: $74.55
WTI – AVER: $69.75
Source: WSJ

49. NO WONDER OPEC IS WORRIED

50. NO SIGNS OF STRESS
Source: Chicago Fed

51. ANOTHER VIEW
Aug: 99.06
Jul: 99.11
Jun 99.1
Source: Goldman Sachs

52. OVERALL: MAJOR MARKET IMPACTS STATUS COMMENTS Trade
Goods trade deficit shot up $4.3 billion in July to $72.2 billion, a five-month high
Housing
Prices weaken – Building and sales data ebb
Sentiment
Good but: Michigan down – CB up
GDP
Solid data for now - some weakening in output data
Manufacturing
Holding in expansion range
Solid for now
Inflation
Not moving much – markets are not pricing
Employment
Strong but skills lacking
Auto Sales
Still good but dropping below 17M
Income & Spending
Income
Output
Durable goods orders decline – Non durable

53. GLOBAL OUTLOOK
China
Eurozone
Emerging Markets

54. GLOBAL MANUFACTURING PMI AT 21-MONTH LOW IN AUGUST
Source:

55. PMIs SLIP FURTHER IN AUG BUT GDP GROWTH HOLDING UP REASONABLY WELL

56. ON THE “RISE”
Source: Goldman Sachs

57. EM OUTLOOK OK EMXCAT
EM growth appears to have dipped toward its trough in the middle quarters of this year. To be sure, this dip has been concentrated in Turkey and Argentina, which appear to have entered recession as a result of a sharp tightening in financial conditions related to deep imbalances and policy credibility concerns. Outside China, the slowdown across the rest of EM has been more modest and we forecast growth to bounce back beginning next quarter

58. ONE SIDE OF THE ARGUMENT?
The Official NBS Manufacturing PMI in China unexpectedly edged up to 51.3 in August of 2018 from 51.2 in the previous month and beating market consensus of 51. Output (53.3 vs 53 in July) and buying activity (51.8 vs 51.5) rose faster while new orders continued to grow (52.2 vs 52.3) amid strengthening sentiment (57 vs 56.6).
Source: Trading Economics; NBS - China

59. THE OTHER SIDE
The Caixin China General Manufacturing PMI fell to a 14-month low of 50.6 in August of 2018 from 50.8 in the previous month and matching market consensus. New orders grew the least since May 2017; new export orders shrank for the fifth month in a row; and employment remained on a downward trend, which, in turn, contributed to an increase in outstanding workloads. Also, confidence remained stuck near June's six-month low, affected by the ongoing China-US trade war and relatively subdued market conditions.
Source: Caixen; Trading Economics

60. BROADLY STEADY IN AUGUST BUT EXPECTATIONS WEAKEN
The Eurozone PMI shows the recent run of robust growth of business activity, new orders and employment extending into August. However, the expansion is looking increasingly uneven and the business mood has become more unsettled during the summer….. area is on course to at least match the 0.4% expansion of GDP seen in the second quarter, yet the downturn in optimism raises questions over whether this pace of growth can be sustained into the fourth quarter.
Source: IHS Markit; Eurostat

61. NOT GOOD – EMERGING MARKETS IN TURMOIL
Lingering downtrends upend futures and options contracts, forcing traders to take losses. They also lock up investors’ collateral in the form of enhanced margin calls, leaving them little room to make other trading decisions.
Source: Bloomberg

62. ON THE “RISE”
Source: JPM

63. 0.225
U.S. Macro
0.10
Last
New

64. DAVID’S CORNER

65. ADVISOR INPUTS

66. QUESTIONS & COMMENTS
THANKS FOR JOINING US!

67. IMPORTANT DISCLOSURE INFORMATION
Content is intended for investment professional use/review only. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot Investments.com), or any non-investment related content, made reference to directly or indirectly in this presentation will be profitable, equal any corresponding indicated historical performance level(s), be suitable for any investment professional’s clients portfolio or individual situation, or prove successful. The investment professional retains all decision making authority as to whether or not to follow and/or implement any of the presentation content. BigFoot has absolutely no responsibly for any suitability determination pertaining to any of the investment professional’s clients, such obligation being exclusively the initial and ongoing responsibility of the investment professional. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot Investments.com. BigFoot Investments.com. is neither a law firm nor a certified public accounting firm and no portion of the content should be construed as legal or accounting advice. Investment Professional acknowledges that to the extent required to do so, it is his/her/its exclusively responsibility to advise his/her/its employer/broker-dealer of its BigFoot subscription. BigFoot Investments.com is a service of Lee Johnson Capital Management, an SEC registered investment adviser located in Fort Worth, Texas. A copy of the Lee Johnson Capital Management LLC’ current written disclosure statement discussing our advisory services and fees is available for review upon request.
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68. Clarida (Vice Chair-Nom) NOTE: One BOG seat open with no nominees
DOVES AND HAWKS
DOVE
DOVISH
CENTERIST
HAWKISH
HAWK
BRAINARD
POWELL (Chair)
WILLIAMS
EVANS
KAPLAN
Rosengren
George
KASHKARI
HARKER
Mester
BULLARD
QUARLES
BARKIN
Brainard
BOSTIC
Goodfriend (Nom)
Clarida (Vice Chair-Nom)
Bowman (Nom)
NOTE: One BOG seat open with no nominees
BOG MEMBER
DISTRICT VOTE
Nominations approved in committee now to full Senate

69. Source:

70. Politics/Geopolitical
ImPACT
Financial Stress
Output/Production
Inflation
Politics/Geopolitical
Dollar
Oil
Interest Rates
Sentiment
Employment
Central Bank
Trade