1. Got Income? 24 April 2014 War Room

2. HiddenLevers War Room Open Q + A Macro Coaching Archived webinars CE Credit Idea Generation Presentation deck Product Updates Scenario Updates

3. I.Market Update II.Scenarios – First World Deflation III.Got Income? IV.Do Income Strategies Work? Got Income?

4. HiddenLevers MARKET UPDATE

5. Market Update Canada Middle Class New Cold War Greece celebration BRICS baton passing

6. Macro Snapshot Nasdaq saw a slight correction - Was that it? S&P earnings good, driving down P/E. New home sales are bucking the uptrend.

7. SCENARIOS – FIRST WORLD DEFLATION HiddenLevers

8. Deflation Review – How did we get here? sources: HiddenLevers, TSPstrategies, MoneyCafeTSPstrategies MoneyCafe Fed Funds Rate Near 0% = CDs Near 0%. Falling 10-Year Interest Rate = Shrinking Annuity Income

9. Deflation Review – Global sources: HiddenLevers, Economist,Economist technology automation commodities sinking first world baby bust decreasing birth rate sluggish GDP growth

10. Deflation Review – USA ZIRP = Zero Interest Rate Policy - max that monetary policy can do - ensures housing loans are cheap - will outlast quantitative easing - makes returning to normalcy hard (Japan) sources: HiddenLevers, LA Times, BloombergLA TimesBloomberg 5 years no inflation zero rates 5 years USD d ZIRP – the costs No interest ZIRP has cost savers 760 billion usd in interest Just inflation Bank customers 100 billion in purchasing power each year since 2009 because inflation, while low, isn’t zero

11. Scenario: First World Deflation Good rates and inflation at 0 Bad worldwide ex-US Ugly worldwide including US The Goldilocks scenario – can the Fed keep the bowl warm but not hot? Sweden and Japan already at/near deflation – if EU tips, this might push US to correction. If entire first world falls into deflation, a global recession is likely close behind.

12. HiddenLevers GOT INCOME?

13. Got Income? – Overview MLPs and Energy Trusts Municipal CEFsBuy-Write on Dividend Stocks REITs + mREITs

14. Got income? – MLPs + Trusts source: HiddenLevers Master Limited Partnerships Many with 7%+ yields Almost all in energy sector Be aware of MLP tax complexity ETFs and MFs exist as well Energy Trusts Simply a share of royalties in certain oil/gas fields Double-digit yields common Beware new finite life trusts! Older is often better here

15. Got income? – REITs source: HiddenLevers Correlation Screener Diversified REITsYieldS&P beta Omega Healthcare Investment (OHI)OHI5.90%.80 Arbor Realty Trust (ABR)ABR7.2%2.06 Apollo Commercial RE Finance (ARI)ARI9.6%.50 Mortgage REITsYieldS&P beta Hatteras Financial Corp (HTS)HTS10.6%.52 American Capital Agency (AGNC)AGNC11.9%.52 iShares Mortgage Real Estate (REM)REM15.77%.92

16. Got income? – Muni Bond Closed-End Funds Muni Closed-End Funds Trade like stocks and ETFs Tax-equivalent yields of 10-15% for many clients Less liquid than MFs and large ETFs source: HiddenLevers, CEFConnect.comCEFConnect.com High leverage = risk Discount to NAV = opportunity

17. Got income? – Dividend Equities + Call Writing Buy-Write Strategy Buy the stock, sell the call If the call expires, repeat If call is exercised, capital gains realized Quarterly writes work well source: HiddenLevers, Yahoo FinanceYahoo Finance GE Example Sell July $27 call for 0.57 4 writes/year = 8.5% income 11.8% total yield Equity downside remains

18. HiddenLevers DO INCOME STRATEGIES WORK?

19. Risk versus Income – MLP review source: HiddenLevers MLPs have generally outperformed the S&P over the last 10 years. 5 years shows MLPs keep pace, struggle to outperform recent bull market. Master Limited PartnershipsYieldS&P beta TC Pipelines, LP (TCP)TCP6.6%0.83 Fiduciary/Claymore MLP Fund (FMO)FMO6.1%1.1 Enbridge Energy Partners, LP (EEP)EEP7.5%0.95

20. Risk versus Income – REITs review source: HiddenLevers Mortgage REITs have been crushed by rising rates – bonds in equity clothing? REIT Fund vs mREITYieldS&P beta Annaly Capital Management (NLY)NLY10.9%0.55 SPDR Dow Jones REIT ETF (RWR)RWR3.2%1.16 Traditional REITs have recovered with S&P in current bull market.

21. Is income generation really that difficult? boomers more used to volatility pervasive marketing of ETFs and MFs easy to give up and chase S&P no one wants to do the homework short term thinking Bonds + CDs suck Life of Pi “You might think I lost all hope at that point. I did. And as a result I perked up and felt much better.” Yann Martel Meredith Whitney

22. yes, you too can generate income sky high yields = caveat emptor global deflation happening under your nose Got income? – Recap demographics = destiny

23. HiddenLevers Use Cases scenario End of QE War Room Demographic Shift War Room Tech Bubble 2.0 scenario Commodities Perfect Storm scenario First World Deflation Got Income? Data Center CPI + 10y rates Macro Theme Mega Caps with Yield Macro Theme MLPs with 5%+ Yield

24. Overall Performance improvements Risk Monitoring – export to MS Excel, re-run stress test Proxy mapping improvements Cross Correlations - Color Highlighting in Matrix Coming soon: - Annuities Support (Fixed / Variable / Equity Indexed) - Advisor Fees Support - Options Support – Call Writing Product Update