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Monthly Market Analytics & Technical Analysis

APRIL 2016 Edition

SECTIONAL REPORT

MATA- APRIL 2016

4/11/2016

1 APRIL 2016 Edition


Copyright 2016 Gordon T. Long All Rights Reserved

Restricted & Confidential


general@GordonTLong.com

Monthly Market Analytics & Technical Analysis


APRIL 2016
HIGHLIGHTS - WHAT YOU NEED TO KNOW ................................................................................................................................. 18
SUMMARY ANALYSIS ............................................................................................................................................................................................ 18
Era of Delusional Distortions & the Super Cycle Pivot b .................................................................................................................................... 33
Defining Chart #1 - "Delusional Distortion" Expectations & the Log-Periodic Cycle ......................................................................................... 35
Defining Chart #2 - Finding the Longer Term Super Cycle Pivot b ................................................................................................................ 36
Defining Chart #3 - The Big M and Super Cycle b ....................................................................................................................................... 37
Defining Chart #4 Intermediate Term Topping Process ................................................................................................................................. 39
Boundary Conditions ......................................................................................................................................................................................... 40
Channels & Regressions ................................................................................................................................................................................... 41

OUR APPROACH - MACRO ANALYTICS ...................................................................................................................................... 50


APRIL 2016: Global Macro Drivers .......................................................................................................................................................................... 52
NEW-WEALTH .................................................................................................................................................................................................. 54
UPDATED-HARD ASSETS - Gold ................................................................................................................................................................ 54
UPDATED-HARD ASSETS Silver .............................................................................................................................................................. 57
NEW-UPDATED-HARD ASSETS - Gold;Silver Ratio ................................................................................................................................... 59
UPDATED-HARD ASSETS - Commodities .................................................................................................................................................. 61
NEW-EXCHANGE ............................................................................................................................................................................................. 62
UPDATED-CURRENCIES - USD .................................................................................................................................................................. 62
UPDATED-CURRENCIES - EURO ............................................................................................................................................................... 63
UPDATED-CURRENCIES - YEN .................................................................................................................................................................. 64
UPDATED-CARRY TRADE - The : Cross ............................................................................................................................................... 65
UPDATED-CARRY TRADE - The $: Cross ............................................................................................................................................... 67
NEW-YIELD, CREDIT & SPREAD .................................................................................................................................................................... 68
NEW-EQUITIES - Global ................................................................................................................................................................................... 70
CHARTS & RESEARCH OF NOTE .................................................................................................................................................................. 71
CREDIT .......................................................................................................................................................................................................... 71
CREDIT Current Gauge of US Credit Markets ....................................................................................................................................... 72
CREDIT Credit versus S&P versus Fed Actions .................................................................................................................................... 73
CREDIT US CLOs Down Significantly .................................................................................................................................................... 73
CREDIT US CLOs Issuances Falling Off ................................................................................................................................................ 74
CREDIT Gross Leverage for Typical IG/HY in Debt-to-EBITDA ............................................................................................................ 74
CREDIT Leveraged Loans and HY Corporate Bond Yields Point to Lower Equities ............................................................................. 75
CREDIT SP500 Financial Stocks versus UST 2-10s ............................................................................................................................. 76
CREDIT UST 2-10s 2003-2008 versus 2014-Present ......................................................................................................................... 76
CREDIT SP500 Financials (Sub) Credit Risk ......................................................................................................................................... 77
CREDIT US Financials Stocks versus Credit ...................................................................................................................................... 77
CREDIT US Sovereign Credit Risk ......................................................................................................................................................... 78
CREDIT Sector Distress Ratios in US HY (over 1,000bps).................................................................................................................... 79
CREDIT Deep Distress (over 2,000bps) ................................................................................................................................................. 80
CREDIT Number of Distressed Bonds.................................................................................................................................................... 80
CREDIT Leveraged Loan Credit Steadily Falling ................................................................................................................................... 81
CREDIT US High Yield CCC or Below ................................................................................................................................................... 81
CREDIT Credit Index Tranches Slicing & Dicing Credit ...................................................................................................................... 82
CREDIT S&P 500 and US High Yield Spreads (Ex Energy) .................................................................................................................. 83
CREDIT S&P 500 / LSTA US Leveraged Loan 100 Index ..................................................................................................................... 83
CREDIT US High Yield Corporate Bond Default Rate ........................................................................................................................... 84
CREDIT Weak Balance Sheets under Pressure - Concerns about Credit Risk..................................................................................... 84
CREDIT Something Up in the Repo Market? ......................................................................................................................................... 85
CREDIT High Yield Credit 2007 versus Today .................................................................................................................................... 85
CREDIT High Yield Spread the Largest Since June 2012 ..................................................................................................................... 86
CREDIT The spread between BAA and 10-year treasuries is the widest since July 2012 .................................................................... 86
CREDIT The spread between BAA and Industrial Production ............................................................................................................... 86
CREDIT High Yield Spreads to 10Y UST & 10Y Breakeven Inflation .................................................................................................... 87
CREDIT Credit Stress Intensifies US Corporate HY ........................................................................................................................... 88
YIELD ............................................................................................................................................................................................................. 89
NEW-YIELD historic correlation between stock and bond prices is now very distorted ........................................................................ 89
YIELD US Corporate Bond Market - $1T in HY & $4.5T in IG ............................................................................................................... 89
YIELD Negative Interest Rates on 40% Of Outstanding European Government Bonds ....................................................................... 90
YIELD Global Bond Yields ...................................................................................................................................................................... 90
YIELD Less Than ZIRP Global Comparisons ......................................................................................................................................... 91
YIELD Flattening UST Yield Curve Moving Towards Inversion .......................................................................................................... 91
YIELD US Financials Subordinated Bonds .......................................................................................................................................... 92
YIELD Global Bond Yields ...................................................................................................................................................................... 92
YIELD HY Spreads by Industry Have Widened Across Industries ...................................................................................................... 93
YIELD Aggregate Treasury Future Net Position ..................................................................................................................................... 93
YIELD 10 UST Yield Technical Breakdown ......................................................................................................................................... 94
YIELD Flattening US Yield Curve -2-10s ................................................................................................................................................ 94
YIELD The Smart Money Has Never Been This Long the Long Bond ................................................................................................... 95
YIELD Goldman Joins Chorus Warning on Bank Market Liquidity ......................................................................................................... 95

APRIL 2016 Edition


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YIELD Change In Trend May Be About Concerns With Credit & Cash Flows ....................................................................................... 95
YIELD Expect 1.00% Yield on 10Y UST ................................................................................................................................................. 96
YIELD Primary Dealer: Investment Grade Net Positions ....................................................................................................................... 96
YIELD Primary Dealers: Junk Bond Net Positions ................................................................................................................................. 97
YIELD 10Y EU Country Government Bond Yields ................................................................................................................................. 98
YIELD UST Note Yields Fall the Most Since 2009 after the Fed Goes On Hold ................................................................................... 98
YIELD German & US 10Y Bonds Fall Dramatically In Yield Trend is Now Down ............................................................................... 98
CURRENCIES ............................................................................................................................................................................................. 100
NEW-CURRENCIES USDJPY Correlation to S&P 500 ....................................................................................................................... 100
CURRENCIES Retreating USD Index .................................................................................................................................................. 101
CURRENCIES Stunning is the collapse in the USDJPY since Kuroda unleashed NIRP .................................................................... 101
CURRENCIES Energy Currencies versus USD and Oil Price ............................................................................................................. 102
CURRENCIES EURUSD continues to weaken as Draghi reinforces the ECB's dovish stance .......................................................... 102
CURRENCIES Strong USD a Driver of Falling Commodities, Falling Energy and EM Problems ....................................................... 103
CURRENCIES It is Still About the Japanese Carry Trade But Concerns Growing ........................................................................... 104
CURRENCIES Everyone Is Probably Wrong About the US Dollar ...................................................................................................... 104
COMMODITIES ........................................................................................................................................................................................... 108
COMMODITIES YTD Commodity Result Comparisons ....................................................................................................................... 108
COMMODITIES WTI- Log Scale of Price and Percentage Change..................................................................................................... 108
COMMODITIES Real Oil and Average Oil Price Since 1861 ............................................................................................................... 108
COMMODITIES Copper Falls To Fresh 6 Years Low After $GS Says Metal "Poised To Move Even Lower" .................................... 110
COMMODITIES Algos Locked into WTI Crude & Alternatively the USDJPY ...................................................................................... 111
COMMODITIES Why commodities are dying the death of 1,000 cuts ................................................................................................. 111
COMMODITIES The Weak Trend In EM currencies and Commodities Isnt Abating .......................................................................... 112
COMMODITIES How Saudi Arabia Sets the Global (Currency) Markets ............................................................................................ 113
INFLATION .................................................................................................................................................................................................. 117
INFLATION Probability of March Fed Rate Hike = Zero = Weak Inflation ........................................................................................... 117
INFLATION March Rate Hike Odds Falling Rapidly ............................................................................................................................. 118
INFLATION Expected Inflation- One Year and Three Years Ahead .................................................................................................... 118
INFLATION Inflation Expectations & Relative Performance................................................................................................................. 118
INFLATION US CPI 1958 2015 Annual Percentage Change ........................................................................................................ 120
INFLATION The Rise of Deflation ......................................................................................................................................................... 121
INFLATION World Inflation Falls To 59-Month Low ..................................................................................................................... 121
PRECIOUS METALS ................................................................................................................................................................................... 123
PRECIOUS METALS HARD ASSETS - Classic Ending Diagonal in Gold .......................................................................................... 123
PRECIOUS METALS HARD ASSETS - Gold;Silver Ratio Long Term ............................................................................................. 124
PRECIOUS METALS HARD ASSETS - Gold;Silver Ratio Intermediate Term Term-1 .................................................................... 124
PRECIOUS METALS HARD ASSETS - Gold;Silver Ratio Intermediate Term Term-2 .................................................................... 125
PRECIOUS METALS Gold Breaking Out Deutsche Bank Driven? ................................................................................................... 125
PRECIOUS METALS Gold Breaks Out At Exactly Year Beginning? ................................................................................................... 125
PRECIOUS METALS Barrels of Oil per Ounce of Gold ....................................................................................................................... 126
PRECIOUS METALS Gold-Oil Ratio .................................................................................................................................................... 126
PRECIOUS METALS Gold Breakout Percentage Move Comparable to 2008 Financial Crisis .......................................................... 128
PRECIOUS METALS Long Term Perspective of YB Gold Breakout ................................................................................................... 128
PRECIOUS METALS Gold demand in Asia hit by weak local currencies; Indian prices at discount .................................................. 129
PRECIOUS METALS Gold Tracked US Debt Until Recently Will Likely Re-Establish Long Term Pattern .................................. 130
RISK: Risk-On versus Risk-Off .............................................................................................................................................................................. 131
CHARTS OF NOTE ......................................................................................................................................................................................... 132
NEW-RISK 2016 Y-o-Y Flows By BoAML Client Type ............................................................................................................................. 132
NEW-RISK BoAML Client Type Net Buys 4WMA v S&P 500 2008-Present ...................................................................................... 132
NEW-RISK BoAML Client Type Cumulative Flows Since January 2008-Present ................................................................................. 133
NEW-RISK USDJPY Correlation to S&P 500 ............................................................................................................................................ 133
NEW-RISK Breadth Has Turned Counter Rally Stalling ........................................................................................................................ 134
NEW-RISK Wall Street's recent rise is stretched relative to the real U.S. economy ................................................................................ 135
NEW-RISK Diverging gap between stocks and corporate-profit expectation ........................................................................................... 135
NEW-RISK historic correlation between stock and bond prices is now very distorted ............................................................................. 135
RISK Nasdaq risk is dramatically higher than S&P risk ........................................................................................................................... 136
RISK Draghis ECB Announcement Triggers Bull Reversal To Evercore ................................................................................................ 138
RISK High Probability US Recession in 2016 .......................................................................................................................................... 139
RISK Price-to-Sales Presently Second Highest to the Dotcom Bubble Collapse .................................................................................... 139
RISK Industrial Production Is Rolling Over ............................................................................................................................................... 140
RISK NYSE Margin Debt at Record Levels .............................................................................................................................................. 141
RISK Margin Debt to GDP Higher then 2000 and 2007 ........................................................................................................................... 142
RISK Margin Debt to GDP and 3-Year Stock Returns ............................................................................................................................. 143
RISK Margin Debt to GDP and 3-Year Stock Returns ............................................................................................................................. 144
RISK Investors Sell Dividend Funds, MLPs, REITs and High Yield......................................................................................................... 145
RISK Bull to Bear Ratio Unprecedented Optimism ............................................................................................................................... 146
RISK Turmoil in High Yield Bonds ............................................................................................................................................................ 147
RISK New Global Risk US Growth European Financial Conditions ................................................................................................... 148
RISK Leveraged Loans and HY Corporate Bond Yields Warn of Possible SPX of 1100 ........................................................................ 148
RISK Global Financial Risk ....................................................................................................................................................................... 149
RISK US Financials Stocks versus Credit ............................................................................................................................................. 149
RISK Something Is Seriously Wrong Somewhere in Deutsche Bank 5Y Sub CDS ............................................................................. 150
RISK Something Is Seriously Wrong Somewhere in Deutsche Bank Lehman Comparison ................................................................ 150
RISK Something Is Seriously Wrong Somewhere in Deutsche Bank Ending Diagonal Goes Lower .................................................. 151
RISK Small Cap Stocks versus HY Bond Spread .................................................................................................................................... 151

APRIL 2016 Edition


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RISK Net Cash Companies Scarce EBITDA Cash Flow ................................................................................................................... 152
RISK Falling Animal Spirits - Sinking CEO Confidence ........................................................................................................................... 152
RISK Bull-Bear Ratio Collapses ............................................................................................................................................................... 153
RISK SPX Percent off 2009 High ............................................................................................................................................................. 154
RISK SPX Price-Earnings-PE Ratio ......................................................................................................................................................... 154
RISK Stock market more Over-valued than prior to Previous Crashes! .................................................................................................. 155
RISK Coppock Signaling Problems Ahead ............................................................................................................................................... 155
RISK Junk Bond Movements Have Been Dependable Warning Indicators Since Dotcom Bubble Burst ............................................... 156
RISK Corporate Profits and Wages Diverge ............................................................................................................................................ 156
RISK Russell 1000 Equal Weight: Cap-Weight Ratio ........................................................................................................................... 157
RISK Long Term Monthly Reversal Signal ............................................................................................................................................... 157
RISK Markets Historically Fail after Three months of Falling Margin Debt We Have 2 Months ........................................................... 158
RISK Margin Debt Channel is Pretty Clear High Odds of Troubles Ahead........................................................................................... 158
RISK Goldman Joins the Chorus Warning on Bond Market Liquidity ...................................................................................................... 159
RISK So Goes Retail So Goes the US Economy .................................................................................................................................. 159
RISK Consumer Discretionary Sending Signals....................................................................................................................................... 160
RISK Net EBITDA 2x Highest since 2006 % of companies with net cash Lowest since 2006 ................................................................ 162
RISK US Corporate Net Debt Has Exploded & Now Massively Exceeds EBITDA .................................................................................. 162
RISK CBOE Skew Index ........................................................................................................................................................................... 163
RISK Gap Between Uncertainties Priced in the Debt & Equity Markets .................................................................................................. 163
RISK Beware of EPS manipulation........................................................................................................................................................... 164
RISK Total NYSE Short Interest & Monthly Change ................................................................................................................................ 165
RISK Contrasting Post October Market Drawdowns 1973s Slow Pain versus 1987 Crash............................................................... 165
RISK Historical Post-Crash Price Actions 1950 to 2015 ....................................................................................................................... 166
RISK Historical Post-Crash Price Pattern Has Taken an Average of 27 days to Double Bottom ........................................................... 166
RISK Credit Fleeing IG,HY & EM ............................................................................................................................................................. 167
RISK Credit Fleeing IG,HY & EM ............................................................................................................................................................. 167
RISK Margin Debt in NYSE Accounts versus S&P 500 ........................................................................................................................... 168
RISK Credit Risk Increasing ..................................................................................................................................................................... 169
RISK TED Spread Increasing ................................................................................................................................................................... 169
RISK VIX Pricing in Credit Problems ........................................................................................................................................................ 170
RISK Credit Always Leads Markets Its the Life Blood! ...................................................................................................................... 170
RISK The Pattern is Clear QE the Market Driver .................................................................................................................................. 171
RISK Internal deterioration in the market is more consistent with the development of more major bull market peaks ........................ 172
RISK A huge gap has opened up between reality and perceptions ......................................................................................................... 173
RISK Economic Surprise Index lower highs, lower lows and a reluctant bounce ................................................................................. 174
TECHNO-FUNDAMENTALS ................................................................................................................................................................................. 175
CHARTS OF NOTE ......................................................................................................................................................................................... 175
NEW-CHARTS A Major Rounded Top Pattern ........................................................................................................................................ 175
NEW-CHARTS Nov 1994-March 2000 Internet Bubble Comparison to March 2009-Current ................................................................. 175
NEW-CHARTS Is This Rally About Keeping Averages in the Green as We Enter IRA/RSP Tax Deposit Time? .................................. 176
NEW-CHARTS An Established Downward Trend Channel Since High in June 2015............................................................................. 176
NEW-CHARTS Divergence in DJ Industrial Average and Transportation Average ................................................................................ 177
NEW-CHARTS SPX has returned into the area of congestion that contained it prior to the January sell-off ......................................... 178
NEW-CHARTS Analogy: DJIA, 1961 1962 ........................................................................................................................................... 179
NEW-CHARTS Current Counter Rally Comparison to 2000 Tech Bubble Collapse ............................................................................... 179
NEW-CHARTS Current Counter Rally Comparison to 2007 Financial Crisis .......................................................................................... 180
CHARTS Cumulative Flows by BoAML Client - January 2008-Present .................................................................................................. 180
CHARTS 2016 YTD Flows by BoAML Client Type .................................................................................................................................. 181
CHARTS Upside Break of 2010 => 2085, Downside Break => 1963-1931 and 1902-1891 ................................................................... 182
CHARTS 4 Week MA of Total Net Buys by BoAML Client - January 2008-Present .............................................................................. 183
CHARTS BoAML Corporate Clients 4 Wk Average Buybacks Y-o-Y % Change .................................................................................... 184
CHARTS S&P 500 versus Forward EPS .................................................................................................................................................. 185
CHARTS Clear Signs Of A Market Trying To Roll-Over Against Corporate Buybacks Mysterious Buying ............................................ 185
CHARTS Classic Ending Diagonal In Gold .............................................................................................................................................. 187
CHARTS Value Line Geometric Composite Short Term A 38.2% Retracement ............................................................................... 187
CHARTS Value Line Geometric Composite Long Term A 38.2% Retracement with 23.6% Bounce ............................................... 188
CHARTS MSCI World Index 7.5 Year Cycle ......................................................................................................................................... 189
CHARTS World Equity Markets Have Now Lost Over $16.8 Trillion ....................................................................................................... 189
CHARTS Global Bear Markets ................................................................................................................................................................. 190
CHARTS Possible Head & Shoulders in Play with a Target of 1600 ....................................................................................................... 191
CHARTS Possible Small Degree Head & Shoulders in Play with a Target of 1725 ................................................................................ 191
CHARTS Possible Corrective A-B-C Near Completion .......................................................................................................................... 192
CHARTS Cumulative Flows By Client Type January 2008-Present ..................................................................................................... 192
CHARTS Total World Index Fund versus Long Term Fund ..................................................................................................................... 193
CHARTS Global DOW Drops To Next Support Level .............................................................................................................................. 193
CHARTS VIM remains negative across the board since mid-Nov. .......................................................................................................... 194
CHARTS A falling VIGOR shows net distribution ..................................................................................................................................... 195
CHARTS The RRG reflects a defensive or risk off market....................................................................................................................... 196
CHARTS The average stock in the developed world is off 23% from its 1-year high .............................................................................. 197
CHARTS The average stock in the developed world is down 8% over the past year ............................................................................. 197
CHARTS 52% of all developed world stocks are in a bear market over the past 200-days .................................................................... 198
CHARTS The average energy company is down an astounding 40% of its 1-year high. ........................................................................ 198
CHARTS The average stock in DM Americas is down 14%in the last year ............................................................................................ 199
CHARTS International and Emerging Market Divergence ....................................................................................................................... 199
CHARTS US versus World Stocks ........................................................................................................................................................... 200

APRIL 2016 Edition


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CHARTS S&P 500 With and Without FOMC Meeting Dates ................................................................................................................... 201
CHARTS The Median Stock In The World Is Flat YTD ............................................................................................................................ 202
CHARTS 70% of EM Stocks are Still Down More Than 20% from 200-Day Highs ................................................................................. 202
CHARTS Year End Overhead Resistance to Santa Claus Rally ............................................................................................................. 203
CHARTS Professionals Are Leaving the Party Early ............................................................................................................................... 203
CHARTS NYSE Advance-Decline Line versus S&P ................................................................................................................................ 204
CHARTS A month-long bearish divergence for the US 15 most active advance-decline line ................................................................. 205
CHARTS A-D line preceded or coincided with big breakdowns for the S&P 500 in 2000 and 2007 ....................................................... 205
CHARTS A major bearish divergence for global A-D line in US Dollars .................................................................................................. 206
CHARTS Be Alert to Oversold Pull Back Before Seasonal YE Strength ................................................................................................. 207
CHARTS Leading Indicators Support View The Current Weakness May Turn into a Buying Opportunity ............................................. 208
CHARTS Problem in US Retail Developing ............................................................................................................................................. 209
CHARTS Gold Reacted to Chinese Devaluation ..................................................................................................................................... 210
CHARTS The DOW Theory & DOW Transports ...................................................................................................................................... 211
CHARTS October- A Month for the History Books ................................................................................................................................... 212
CHARTS The Smart Money Has Never Been This Long the Long Bond ................................................................................................ 213
CHARTS Real S&P 500 Index Cycles with Recessions .......................................................................................................................... 214
CHARTS Quarterly Overbought Cycles ................................................................................................................................................... 214
CHARTS Monetary Velocity Declines as Excess Leverage Weights on Consumption ........................................................................... 214
CHARTS The Real Value of Cash ............................................................................................................................................................ 215
CHARTS Consumer Sentiment versus S&P 500 ..................................................................................................................................... 215
CHARTS Hedgers Net Long Record of S&P 500 Futures ....................................................................................................................... 216
CHARTS Fed Balance Sheet Changes versus S&P 500 ......................................................................................................................... 217
CHARTS S&P Futures versus Relative Volumes ..................................................................................................................................... 217
CHARTS Japanese Buying Foreign Stocks ............................................................................................................................................. 218
CHARTS Monetary Initiatives versus S&P 500 ........................................................................................................................................ 219
CHARTS Bull Trend Line Support ............................................................................................................................................................ 219
CHARTS DOW Industrial 200 WMA Boundary Condition & Trend Direction Change Indicator.............................................................. 220
CHARTS DOW Industrial 200 WMA Boundary Condition & Trend Direction Change Trigger ................................................................ 220
CHARTS Global 150 Equity Index Bounces off Lower Support Channel ................................................................................................ 221
CHARTS Global 150 Equity Index Potential Key Support Levels ......................................................................................................... 221
CHARTS The Rout May Have Just Began According to Some ............................................................................................................... 222
CHARTS The VIX Termination Algo ......................................................................................................................................................... 222

OUTLOOK - ANALYTICAL ANALYSIS .......................................................................................................................................... 224


MARKET BOUNCE A Retracement or Market Turn?......................................................................................................................................... 224
CHARTS OF NOTE ......................................................................................................................................................................................... 224
NEW-BOUNCE Current Counter Rally Comparison to 2000 Tech Bubble Collapse .............................................................................. 224
NEW-BOUNCE Current Counter Rally Comparison to 2007 Financial Crisis ......................................................................................... 225
NEW-BOUNCE Biggest short squeeze on record .................................................................................................................................... 225
NEW-BOUNCE Long Term MACD suggesting a high probability rebound top ....................................................................................... 226
NEW-BOUNCE Major Divergence of S&P 500 and NYSE McClellan Oscillator ..................................................................................... 226
NEW-BOUNCE Weekly Momentum Reaching Overbought Territory ...................................................................................................... 227
NEW-BOUNCE New Hedging Strategies Employed in this Counter Rally .............................................................................................. 228
NEW-BOUNCE Breadth Has Turned Counter Rally Stalling ................................................................................................................ 228
NEW-BOUNCE Wall Street's recent rise is stretched relative to the real U.S. economy ........................................................................ 229
NEW-BOUNCE Diverging gap between stocks and corporate-profit expectation ................................................................................... 230
NEW-BOUNCE Historic correlation between stock and bond prices is now very distorted .................................................................... 230
NEW-BOUNCE Historical Topping Process Structural Momentum Analysis ....................................................................................... 231
NEW-BOUNCE Current Topping Process Structural Momentum Analysis .......................................................................................... 232
BOUNCE Credit and Equity Will Converge. ............................................................................................................................................. 233
BOUNCE Value Line Geometric Composite Short Term A 38.2% Retracement .............................................................................. 234
BOUNCE Value Line Geometric Composite Long Term A 38.2% Retracement with 23.6% Bounce ............................................... 234
BOUNCE Bear Market Rally Trend Support Line Is Gone ....................................................................................................................... 235
BOUNCE AAII Investor Sentiment Bears/Bulls Triggered a BUY at the recent market lows .................................................................. 236
BOUNCE Percent of S&P 500 Stocks above 50 and 200 DMA ............................................................................................................... 236
BOUNCE NYSE Overbought / Oversold .................................................................................................................................................. 237
BOUNCE Trend Channel Now Down ....................................................................................................................................................... 237
BOUNCE Important Overhead Resistance .............................................................................................................................................. 238
RESEARCH OF NOTE .................................................................................................................................................................................... 239
NEW-BOUNCE Inside The Biggest Short Squeeze Ever, A Surprise Emerges ...................................................................................... 239
NEW-BOUNCE JPM: The Short Squeeze Is Largely Over ...................................................................................................................... 240
NEW-BOUNCE Warning: We're In a Bear-Market Rally .......................................................................................................................... 245
BOUNCE Key Equity Index (VLG) Climbs Back Up the Elevator Shaft ................................................................................................... 248
BOUNCE Is This Whole Rally Just One Big TRAP? ................................................................................................................................ 250
BOUNCE Famed Short Seller Muddy Waters Says It's Just A "Dead Cat Bounce" ................................................................................ 251
BOUNCE The "Smart Money" Is Quietly Getting Out Of Dodge: Sells for A Sixth Straight Week .......................................................... 252
BOUNCE JPM's Head Quant Explains Who Unleashed The S&P Rally, And What May Happen Next ................................................. 253
Q1 EARNINGS An impending macroeconomic and profits implosion ............................................................................................................. 256
STUDY: Q1 EARNINGS ..................................................................................................................................................................................... 256
CHARTS OF NOTE ......................................................................................................................................................................................... 256
NEW-Q1 EARNINGS S&P Forward Earnings Expectations versus S&P 500 ......................................................................................... 256
NEW-Q1 EARNINGS Falling Profits Now in Contraction Territory Lowest Levels Since 2008 ............................................................ 257
NEW-Q1 EARNINGS Top Line Sales and Revenue Growth is Clearly Falling ....................................................................................... 257
NEW-Q1 EARNINGS Pro-Forma and GAAP Earnings Diverge Significantly .......................................................................................... 258
NEW-Q1 EARNINGS Profits Fall the Most Since 2008 ........................................................................................................................... 258

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NEW-Q1 EARNINGS Corporate Profits as a Percentage of GDP ........................................................................................................... 259


NEW-Q1 EARNINGS Peaks in Real Profit Margins versus S&P 500 ...................................................................................................... 259
NEW-Q1 EARNINGS Biggest Quarterly Drop in Profits Since 2009 ....................................................................................................... 259
Q1 EARNINGS Largest S&P Q1 EPS Drop in first 2 Mo of a Quarter Since Q1 2009............................................................................ 260
Q1 EARNINGS S&P 500 Earnings Growth Q1 2016 Down -8.3% .......................................................................................................... 261
Q1 EARNINGS S&P 500 EPS: GAAP vs. Non-GAAP ............................................................................................................................. 261
Q1 EARNINGS S&P 500 EPS: GAAP vs. Non-GAAP for FY 2015 vs. 2014 .......................................................................................... 262
Q1 EARNINGS Non-GAAP EPS Writeoffs ............................................................................................................................................... 263
Q1 EARNINGS 2015 Y-o-Y % Change in EPS GAAP vs Non-GAAP ..................................................................................................... 263
Q1 EARNINGS S&P Trailing 4-Quarter GAAP vs. Non-GAAP Net Margins ........................................................................................... 264
RESEARCH OF NOTE .................................................................................................................................................................................... 264
NEW-Q1 EARNINGS Behind U.S. GDP Data - Weak Profits ................................................................................................................. 264
NEW-Q1 EARNINGS When the "Mother's Milk" of Earnings Runs Dry ................................................................................................... 265
Q1 EARNINGS Why Companies Don't Want You To Look At GAAP Earnings ...................................................................................... 267
Q1 EARNINGS Largest Drop in S&P 500 EPS Estimate Over First Two Months of a Quarter since Q1 2009 ...................................... 272
Q1 EARNINGS Non-GAAP Earnings Are About To Plunge The Most Since 2009; As For GAAP Don' Even Ask ................................ 273
BUYBACKS Slowing Due to Debt-Credit Rating Concerns ............................................................................................................................... 279
STUDY: BUYBACKS ............................................................................................................................................................................................. 279
CHARTS OF NOTE ......................................................................................................................................................................................... 279
NEW-BUYBACKS Buybacks Tend to be Absent During Earnings Season Window ............................................................................... 279
NEW-BUYBACKS Shrinking Monetary Base Will Put Pressures on Buybacks ...................................................................................... 280
NEW-BUYBACKS Buybacks to Net Income ............................................................................................................................................ 280
NEW-BUYBACKS Top 10 Buyback Queens versus Stock Performance ................................................................................................ 281
NEW-BUYBACKS Underwhelming Performance of Buyback Queens .................................................................................................... 281
NEW-BUYBACKS Seasonal Slowdown in Buybacks .............................................................................................................................. 282
NEW-BUYBACKS Buyback Activity at Two-Year High ............................................................................................................................ 282
BUYBACKS Cost of Buybacks In Increasing ........................................................................................................................................... 282
BUYBACKS BoAML Corporate Clients Buybacks in the First 9 Weeks of Each Year ......................................................................... 283
BUYBACKS BoAML Corporate Clients 4 Wk Average Buybacks Y-o-Y % Change ............................................................................... 283
BUYBACKS Buybacks Have Accounted for Around 1/3 of EPS Growth Since Q3 2011 ........................................................................ 284
BUYBACKS Net Cash Companies Are Increasingly Scarce .................................................................................................................. 285
BUYBACKS EBITDA Growth Is the Worst Since 2000 ............................................................................................................................ 285
BUYBACKS Buybacks v SPX Total Return Indices ................................................................................................................................. 286
BUYBACKS Proof that Buybacks Mainly Funded By Debt ...................................................................................................................... 286
BUYBACKS US Companies Continuing to Borrow To Buyback Stock .................................................................................................... 287
BUYBACKS Debt/EBITDA v FCF-Cost of Debt - 2013 ............................................................................................................................ 287
BUYBACKS Debt/EBITDA v FCF-Cost of Debt 2015 ........................................................................................................................... 288
BUYBACKS Buybacks & Dividends as a Percentage of Net Income ...................................................................................................... 289
BUYBACKS After Historic Buybacks the Y-o-Y Change in 12 Month Profits Per Share Still Shrinks! .................................................... 289
BUYBACKS Buybacks & Dividends as a Percentage of Net Income Against Spending on Buybacks................................................... 290
BUYBACKS Outperformance of Stocks with Large Buybacks Programs vs S&P 500 ............................................................................ 290
BUYBACKS Gross Leverage for Typical IG/HY Non-Financial Debt-EBITDA ..................................................................................... 290
BUYBACKS Equity Market Performance v S&P 500 Uses of Cash ........................................................................................................ 292
BUYBACKS Default Rate v Net Equity Buybacks .................................................................................................................................... 292
BUYBACKS S&P 500 Buyback Index 200 DMA ................................................................................................................................... 293
BUYBACKS S&P 500 v Buyback Index Performance.............................................................................................................................. 293
BUYBACKS S&P 500 Annualized Share Buybacks, Dividends and Earnings ........................................................................................ 294
BUYBACKS Falling Investment Grade Spreads Hurting Buybacks ......................................................................................................... 294
BUYBACKS Quarterly Share Repurchases & No. of Companies Repurchasing Shares Slows ............................................................. 294
BUYBACKS Dollar-Value Buybacks to Free Cash Flow Trailing Twelve Month Basis ........................................................................ 295
BUYBACKS Nearly 25% of Annual Buybacks Occur in November & December .................................................................................... 296
RESEARCH OF NOTE .................................................................................................................................................................................... 297
NEW-BUYBACKS Month-End Market Weakness Looms As Monetary Base Trumps Buybacks ........................................................... 297
NEW-BUYBACKS Share Buybacks Turn Toxic ....................................................................................................................................... 300
BUYBACKS Buybacks Soar ..................................................................................................................................................................... 304
BUYBACKS Buybacks Must Continue: AAPL, IBM Unveil Major Debt Issuance to Fund Shareholder-Friendliness .............................. 305
BUYBACKS This Is the Biggest EBITDA Drop Outside Of A Recession Since 2000 .............................................................................. 306
BUYBACKS Stock Buybacks In Jeopardy: Investment Grade Bond Funds See Biggest Outflow In 17 Weeks ...................................... 308
BUYBACKS MacroStrategy Explains Why Most Stocks Have Already "Crossed The Rubicon" ............................................................ 311
BUYBACKS The Cannibalized Corporation- Corporate America is undermining itself. ........................................................................... 316
BUYBACKS The Fly In The Buyback Ointment- Corporate Leverage Is At Record Levels .................................................................... 323
BUYBACKS Why Stocks Are Sliding: For The First Time Since 2009 Spending On Buybacks Surpasses Free Cash Flow ................ 328
BUYBACKS When Buybacks Fail... ......................................................................................................................................................... 332
BUYBACKS "Risky Business": Companies Are Now Funding Share Buybacks By Selling Bonds To Other Companies ...................... 333
US RECESSION RUMBLINGS ............................................................................................................................................................................. 337
CHARTS OF NOTE ......................................................................................................................................................................................... 337
NEW-RECESSION US Pretax Domestic Non-Financial Profits Falling more steeply than in 1998 ..................................................... 338
NEW-RECESSION US Pretax Domestic Non-Financial Profits Falling and Leading Business Investment ........................................ 339
NEW-RECESSION It is Always Falling Business Investment that Causes Recessions ......................................................................... 339
NEW-RECESSION Manufacturing New Orders Falling ........................................................................................................................... 340
NEW-RECESSION Annual Growth Rate in Income & Employment Taxes Withheld Has Collapsed in 2016 ........................................ 341
NEW-RECESSION Recession Risks Rising as Profits Fall the Most Since 2008 ................................................................................... 341
NEW-RECESSION Corporate Profits Y-o-Y versus Employment Y-o-Y ................................................................................................. 342
RECESSION A US Recession is now a VERY Likely Outcome! ............................................................................................................. 342
RECESSION Manufacturing Indicators & Industrial Production In Recession Territory ......................................................................... 344
RECESSION The Real Employment Economic Picture & Recessionary Driver .................................................................................... 344

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RECESSION Inflation Creeping Into Recessionary Statistics ................................................................................................................. 345


RECESSION 15-month Continuous Y-o-Y drop in Factory orders Historically Has Signaled A Recession for 60 Years ...................... 346
RECESSION Productivity Slows As Recoveries Age (Y-o-Y%) .............................................................................................................. 346
RECESSION St.Louis Recession Probability ........................................................................................................................................... 347
RECESSION Recession Probability Based on Probit Model ................................................................................................................... 347
RECESSION Recession Probability The Economic Output Composite Index ..................................................................................... 348
RECESSION Recession Probability HY Spreads Have not Traded at Current Levels Outside a US Recession ................................ 348
RECESSION Recession Probability Market Sentiment Can Become A Driver of Recessions ............................................................ 349
RECESSION Recession Probability Inflation tends to Rise Into and During a Recession ................................................................... 349
RECESSION Wholesale Inventories -to - Sales....................................................................................................................................... 350
RECESSION S&P Trailing 4-Quarter GAAP vs. Non-GAAP Net Margins ............................................................................................... 350
RECESSION We are already in a US GDP Recession ........................................................................................................................... 351
RECESSION HY Close to 2001 Recession Levels .................................................................................................................................. 351
RECESSION Industrial Production Is Rolling Over .................................................................................................................................. 352
RECESSION US Recession Cycle Suggests Economic & Earnings Cycle May Be Close To Ending ................................................... 353
RECESSION US Recession Cycle Suggests Cycle May Be Close To Ending ....................................................................................... 353
RECESSION Current Economic Cycle Is Getting Old In The Tooth ..................................................................................................... 354
RECESSION Average Monthly Job Growth Deteriorating ....................................................................................................................... 354
RECESSION Annual Percent Change In Real GDP ................................................................................................................................ 355
RECESSION US Manufacturing Sector Recession ................................................................................................................................. 355
RECESSION Large Profit Margin Declines Coincides With Recessions ................................................................................................. 356
RECESSION Buybacks Drop on Reduced Free Cash Flow Drop Compared to Previous Recession ................................................. 356
RECESSION Annual % Change in 12Mo Forward EPS Expectations Turn Negative ............................................................................ 357
RECESSION US Recession Estimates Pop ............................................................................................................................................ 357
RECESSION US Recession Indicator & Relative Performance of Stocks & Bonds................................................................................ 358
RECESSION Real S&P 500 Index with Historical Recessions ................................................................................................................ 358
RECESSION September Survey Data versus Non Farm Payrolls .......................................................................................................... 359
RECESSION Regional Surveys for September versus ISM PMI (August) .............................................................................................. 359
RECESSION Regional Manufacturing Surveys versus Forward EPS Estimates .................................................................................... 360
RECESSION Historical Regional Index Comparisons Last Seen in 2008 ............................................................................................ 360
RECESSION Global Oil Consumption Leads Economic Growth Trend is Down Global Headwinds ................................................ 361
RECESSION Gross Domestic Income versus Wilshire 5000 Tells the Story ....................................................................................... 362
RECESSION CT 2015 Revenue Recession ............................................................................................................................................ 362
RECESSION Q2 2015 Revenue Recession ............................................................................................................................................ 363
RECESSION 4 Consecutive months of y/y Spending Declines ............................................................................................................... 363
RECESSION BOA: Retail sales ex-autos, plunged 0.8% mom seasonally adjusted............................................................................ 364
RECESSION Top 10 US Market Areas Signal Retail Problem Underway .............................................................................................. 364
RECESSION Wholesale Inventories to Sales Spiking To Areas Seen During Recession Trends ......................................................... 365
RECESSION Wholesale Inventories Less Wholesale Sales ................................................................................................................... 366
RECESSION Wholesale Inventories vs GDP Trends .............................................................................................................................. 366
RECESSION Auto Inventories to Sales ................................................................................................................................................... 367
RECESSION Falling Collateral and Residuals Undermine Real Growth .............................................................................................. 367
RECESSION Coincident / Lagging Indicator Ratio versus Recessions ................................................................................................... 368
RECESSION Annual Change in Durable Goods Orders v Recessions ................................................................................................... 368
RECESSION Durable Goods v Core-Durable Goods (Ex Defense) versus Recessions ........................................................................ 369
RECESSION Real Gross Domestic Investment versus Recessions ....................................................................................................... 369
RECESSION Total Real Private Fixed Investment as % of Real GDP versus Recessions .................................................................... 370
RECESSION Businesses Operate Against Actual Demand versus Recessions .................................................................................... 370
RECESSION ISM Composite Index versus Recessions.......................................................................................................................... 371
RECESSION Capacity Utilization versus Industrial Production versus Recessions ............................................................................... 371
RECESSION Retail Sales (NSA) Annual % Chg of 12 Month Average versus Recessions ................................................................... 372
RECESSION Monthly Retail Control Purchases Y-o-Y % Chg versus Recessions........................................................................... 372
RECESSION Major Economic Trends...................................................................................................................................................... 373
RESEARCH OF NOTE .................................................................................................................................................................................... 374
NEW-RECESSION SocGens "One Failsafe Indicator" Of An Inevitable Recession .............................................................................. 374
NEW-RECESSION Here Comes The Big Flush - Recession Pending, Fed "Put" Ending ...................................................................... 377
NEW-RECESSION Behind U.S. GDP Data Is Reason for Recession Worry - Weak Profits ................................................................. 385
NEW-RECESSION This (Crashing) Trend Is Not Your Friend ................................................................................................................ 386
RECESSION Economists are starting to warn about the risk of a new U.S. recession........................................................................... 388
RECESSION Economists Finally Admit, Odds Of A US Recession Are On The Rise ............................................................................ 391
RECESSION Retail Sales Slump on Deck ............................................................................................................................................... 393
RECESSION This Is another "Subprime" Waiting To Blow ..................................................................................................................... 396
RECESSION Record Gap between US Inventories and Sales Screams Recession .............................................................................. 399
RECESSION August spending was the weakest in nominal dollar terms since 2012 ............................................................................. 401
RECESSION The Next Recession Will Definitely Not Happen In 2018 ................................................................................................... 406
SUPPORT & RESISTANCE .................................................................................................................................................................................. 408
Gann Analysis .................................................................................................................................................................................................. 408
Boundary Conditions ....................................................................................................................................................................................... 409
Channels & Regressions ................................................................................................................................................................................. 410
Fibonacci - Controlling Time Extensions ......................................................................................................................................................... 413
Fibonacci - Controlling Price Extensions ......................................................................................................................................................... 418
Elliott Wave ...................................................................................................................................................................................................... 418
The Bottom Line............................................................................................................................................................................................... 421

SHORT TERM SENTIMENT ..................................................................................................................................................... 424


BUSINESS CYCLE - CONSUMER & BUSINESS SENTIMENT ........................................................................................................................... 424

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SENTIMENT & CONFIDENCE Shifting Trend ................................................................................................................................................... 424


NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................... 425
NEW-Consumer Confidence - Conference Board .......................................................................................................................................... 425
NEW-Consumer Sentiment - Michigan ........................................................................................................................................................... 428
NEW-Consumer Comfort - Bloomberg ............................................................................................................................................................ 430
NEW-American Association of Independent Investors ................................................................................................................................... 432
NEW-Investors Intelligence ............................................................................................................................................................................. 432
NEW-National Association of Active Investment Managers (NAAIM) ............................................................................................................ 433
NEW-Small Business Optimism ...................................................................................................................................................................... 434
NEW-Percentage Stocks above 50 & 200 DMA ............................................................................................................................................. 436
NEW-Margin Levels ......................................................................................................................................................................................... 437
Real Margin Debt as % of GDP ....................................................................................................................................................................... 442
Margin Debt versus S&P 500 .......................................................................................................................................................................... 442
Mutual Fund Cash Levels v S&P 500 .............................................................................................................................................................. 443
NEW-OSCILLATORS & BREADTH: Indicators of Importance ............................................................................................................................ 445
NEW-NYSE Overbought / Oversold ................................................................................................................................................................ 445
NEW-OEX Open Interest (Puts/Calls) ............................................................................................................................................................. 446
NEW-TRIN ....................................................................................................................................................................................................... 447
NEW-McClellan Oscillator ............................................................................................................................................................................... 448
CHARTS OF NOTE ............................................................................................................................................................................................... 449
CHARTS Small Business Sentiment Trending Down Strongly .................................................................................................................... 449
CHARTS Small Business Sentiment Margin Squeeze ............................................................................................................................. 449
CHARTS Bloomberg Consumer Comfort versus Nasdaq ........................................................................................................................... 450
CHARTS Goldmans Short Term Sentiment Indicator Shows Low Suggests Near Term Counter Rally Likely ...................................... 451
CHARTS Global Consumer Confidence Begins Reversal from Trend Resistance ..................................................................................... 452
CHARTS US Economic Index Steadily Eroding ........................................................................................................................................... 453
CHARTS UMich Consumer Confidence with Biggest Miss on Record ........................................................................................................ 453
CHARTS Economic Surprise Index lower highs, lower lows and a reluctant bounce .............................................................................. 453
CHARTS Cumulative Flows by Client Type - YTD ....................................................................................................................................... 455
CHARTS Historical Risk versus Returns ...................................................................................................................................................... 455
CHARTS Cumulative Flows by Client Type January 2008-Present ......................................................................................................... 456
CHARTS Q Ratio Since 1900 ....................................................................................................................................................................... 456
CHARTS Nominal & Real Household Spending Expectations .................................................................................................................... 457
CHARTS Household Spending Expectations by Income Bucket ................................................................................................................ 457
CHARTS A Very Neutral (Highly Unusual) Bull Market ............................................................................................................................... 458
CHARTS Historical Swings in Sentiment ..................................................................................................................................................... 458
CHARTS Investors Intelligence Bulls & Bears ............................................................................................................................................. 459
CHARTS A/D Line Diverging from Price, Suggesting Weakening Momentum ........................................................................................... 460
CHARTS Smart Money OEX Open Interest Put/Call Ratio Now Off the Charts! .................................................................................... 460
CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ........................................................................................................... 461
CHARTS Consumer Comfort Plunges Most In 10 Months .......................................................................................................................... 462
CHARTS Only 16% Think Future Employment Opportunities Will Be Better .............................................................................................. 463
CHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ............................................................................. 463
CHARTS - NFIB Small Business Sentiment ................................................................................................................................................... 464
CHARTS - Orange Book .................................................................................................................................................................................. 464
CHARTS Asset Allocation Global Equities ................................................................................................................................................ 465
CHARTS Asset Allocation Global Bonds .................................................................................................................................................. 465
CHARTS Active versus Passive Funds Allocation ....................................................................................................................................... 466
CHARTS Investors Intelligence Survey of % Bears ..................................................................................................................................... 466
CHARTS Sentiment at Post 2008 Crisis Highs ............................................................................................................................................ 467
CHARTS CNBC Viewership Steadily Falling ............................................................................................................................................... 468
CHARTS Investor Allocation Trends for Stocks, Bonds and Cash .............................................................................................................. 469
CHARTS Uptick in Feds Financial Stress Index Composite ....................................................................................................................... 470
CHARTS Fear Barometer Diverges with VIX, CDS IG Index ...................................................................................................................... 471
CHARTS Extreme Complacency Seen Near End of Cycles ........................................................................................................................ 471
CHARTS Complacency Seen In PE/VIX ....................................................................................................................................................... 472
CHARTS Post Crisis Sentiment Profile Shows a Clear Ending Pattern ...................................................................................................... 472
CHARTS Smart Money Flows ...................................................................................................................................................................... 473
CHARTS Fed Assets versus Bullish Sentiment ........................................................................................................................................... 473
CHARTS Macro Support Has Technically Broken Down ............................................................................................................................. 474
CHARTS US Surprise Index Setting Up for Downturn ................................................................................................................................. 474
CHARTS The Public No Longer Trusts the Market Feel it is Manipulated and Ineffectively Regulated ............................................... 475
RESEARCH OF NOTE .......................................................................................................................................................................................... 476
NEW-SENTIMENT: NFIB Slams Fed, Obama As Small Business Optimism Crashes To 2 Year Lows ....................................................... 476

INTERMEDIATE TERM RISK ANALYSIS ................................................................................................................................. 478


UPDATED-AGGREGATED GLOBAL FINANCIAL RISK INDEX .......................................................................................................................... 478
NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 479
NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 479
NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 480
NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 480
NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 481
NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 481
NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 483
NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 483

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MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 484


NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 485
AGGREGATED RISK LEVEL ................................................................................................................................................................................ 486
STUDY OF IMPORTANCE .................................................................................................................................................................................... 488
NEW-STUDY - The Killer Wave Confirms a Big Bear Market Lies Ahead ................................................................................................. 488
CHARTS OF NOTE ............................................................................................................................................................................................... 494
NEW-RISK Nasdaq risk is dramatically higher than S&P risk .................................................................................................................. 494
NEW-RISK Draghis ECB Announcement Triggers Bull Reversal To Evercore ...................................................................................... 495
NEW-RISK High Probability US Recession in 2016 ................................................................................................................................. 496
NEW-RISK Price-to-Sales Presently Second Highest to the Dotcom Bubble Collapse .......................................................................... 496
NEW-RISK Industrial Production Is Rolling Over ..................................................................................................................................... 497
NEW-RISK NYSE Margin Debt at Record Levels .................................................................................................................................... 498
NEW-RISK Margin Debt to GDP Higher then 2000 and 2007 ................................................................................................................. 499
NEW-RISK Margin Debt to GDP and 3-Year Stock Returns ................................................................................................................... 500
NEW-RISK Margin Debt to GDP and 3-Year Stock Returns ................................................................................................................... 501
NEW-RISK Investors Sell Dividend Funds, MLPs, REITs and High Yield ............................................................................................... 502
NEW-RISK Bull to Bear Ratio Unprecedented Optimism ..................................................................................................................... 503
NEW-RISK Turmoil in High Yield Bonds .................................................................................................................................................. 504
NEW-RISK New Global Risk US Growth European Financial Conditions .......................................................................................... 505
NEW-RISK Leveraged Loans and HY Corporate Bond Yields Warn of Possible SPX of 1100 .............................................................. 505
NEW-RISK Global Financial Risk ............................................................................................................................................................. 506
NEW-RISK US Financials Stocks versus Credit ................................................................................................................................... 506
NEW-RISK Something Is Seriously Wrong Somewhere in Deutsche Bank 5Y Sub CDS ................................................................... 507
NEW-RISK Something Is Seriously Wrong Somewhere in Deutsche Bank Lehman Comparison ...................................................... 507
NEW-RISK Something Is Seriously Wrong Somewhere in Deutsche Bank Ending Diagonal Goes Lower ......................................... 508
NEW-RISK Small Cap Stocks versus HY Bond Spread .......................................................................................................................... 508
NEW-RISK Net Cash Companies Scarce EBITDA Cash Flow .......................................................................................................... 509
NEW-RISK Falling Animal Spirits - Sinking CEO Confidence .................................................................................................................. 509
NEW-RISK Bull-Bear Ratio Collapses ...................................................................................................................................................... 510
NEW-RISK SPX Percent off 2009 High .................................................................................................................................................... 511
NEW-RISK SPX Price-Earnings-PE Ratio ............................................................................................................................................... 511
NEW-RISK Stock market more Over-valued than prior to Previous Crashes!......................................................................................... 512
NEW-RISK Coppock Signaling Problems Ahead ..................................................................................................................................... 512
NEW-RISK Junk Bond Movements Have Been Dependable Warning Indicators Since Dotcom Bubble Burst ..................................... 513
NEW-RISK Corporate Profits and Wages Diverge ................................................................................................................................... 513
NEW-RISK Russell 1000 Equal Weight: Cap-Weight Ratio .................................................................................................................. 514
NEW-RISK Long Term Monthly Reversal Signal ..................................................................................................................................... 514
NEW-RISK Markets Historically Fail after Three months of Falling Margin Debt We Have 2 Months ................................................. 515
NEW-RISK Margin Debt Channel is Pretty Clear High Odds of Troubles Ahead ................................................................................. 515
NEW-RISK Goldman Joins the Chorus Warning on Bond Market Liquidity ............................................................................................ 516
NEW-RISK So Goes Retail So Goes the US Economy ........................................................................................................................ 516
NEW-RISK Consumer Discretionary Sending Signals ............................................................................................................................. 517
NEW-RISK Net EBITDA 2x Highest since 2006 % of companies with net cash Lowest since 2006 ...................................................... 519
NEW-RISK US Corporate Net Debt Has Exploded & Now Massively Exceeds EBITDA ........................................................................ 519
NEW-RISK CBOE Skew Index ................................................................................................................................................................. 520
NEW-RISK Gap Between Uncertainties Priced in the Debt & Equity Markets ........................................................................................ 520
NEW-RISK Beware of EPS manipulation ................................................................................................................................................. 521
NEW-RISK Total NYSE Short Interest & Monthly Change ...................................................................................................................... 522
NEW-RISK Contrasting Post October Market Drawdowns 1973s Slow Pain versus 1987 Crash ..................................................... 522
NEW-RISK Historical Post-Crash Price Actions 1950 to 2015 ............................................................................................................. 523
NEW-RISK Historical Post-Crash Price Pattern Has Taken an Average of 27 days to Double Bottom .................................................. 523
NEW-RISK Credit Fleeing IG,HY & EM .................................................................................................................................................... 524
NEW-RISK Credit Fleeing IG,HY & EM .................................................................................................................................................... 524
NEW-RISK Margin Debt in NYSE Accounts versus S&P 500 ................................................................................................................. 525
NEW-RISK Credit Risk Increasing ............................................................................................................................................................ 526
NEW-RISK TED Spread Increasing ......................................................................................................................................................... 526
NEW-RISK VIX Pricing in Credit Problems .............................................................................................................................................. 527
NEW-RISK Credit Always Leads Markets Its the Life Blood!............................................................................................................. 527
NEW-RISK The Pattern is Clear QE the Market Driver......................................................................................................................... 528
NEW-RISK Internal deterioration in the market is more consistent with the development of more major bull market peaks .............. 529
NEW-RISK A huge gap has opened up between reality and perceptions ............................................................................................... 530
NEW-RISK Economic Surprise Index lower highs, lower lows and a reluctant bounce ....................................................................... 531
NEW-RISK Weekly Equity Outflows ......................................................................................................................................................... 531
NEW-RISK Weekly EM Fund Outflows .................................................................................................................................................... 532
NEW-RISK Net Outflows as a % of AUM by Year ................................................................................................................................... 533
NEW-RISK HG Spread Per Point of Equity Volume ................................................................................................................................ 534
NEW-RISK Widening Gap between Debt & Equity .................................................................................................................................. 534
NEW-RISK HY Bond ETF (HYG) versus S&P 500 .................................................................................................................................. 535
NEW-RISK HY Credit versus 2007-2008 Credit Always Leads Equity .............................................................................................. 535
NEW-RISK Leutholds High/Low Logic Index Sending a Clear Signal .................................................................................................... 536
RISK: Only a Few Key Stocks Holding Up the Market .................................................................................................................................... 537
RISK: Economic Output Composite Failing .................................................................................................................................................... 538
RISK: 5 Year Cyclically Adjusted P/E Ratio versus S&P Price ....................................................................................................................... 539
RISK: Margin Debt Shrinking .......................................................................................................................................................................... 539
RISK: Leutholds High/Lpw Logic Index Warns .............................................................................................................................................. 540
RISK: Megaphone Top with Confirming Oscillator .......................................................................................................................................... 540

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RISK: We Have Confirmed and Unusual Hindenburg Omens ........................................................................................................................ 541


RISK: It's been a while since we corrected! .................................................................................................................................................... 542
RISK: "Seven Signs" Flash Red ...................................................................................................................................................................... 544
RISK: When these Two Charts Appear Simultaneously, Bad Things Normally Follow!................................................................................. 545
RISK: Well That's Never Happened Before - Exhibit 1 US Macro versus S&P 500 .................................................................................... 545
RISK: Well That's Never Happened Before - Exhibit 2 Long- and Short-end of the Treasury yield curve so anti-correlated. ................... 546
RISK: Well That's Never Happened Before - Exhibit 3 Fed-Fueled, Mal-Investment Boom ....................................................................... 547
RISK: Well That's Never Happened Before - Exhibit 4 Market breadth diverge from performance for such an extended period.............. 548
RISK: Well That's Never Happened Before - Exhibit 5 More trades per second in stocks ......................................................................... 550
RISK: Well That's Never Happened Before - Exhibit 6 The "Smart Money" Has Never Been More Bearish .............................................. 551
RISK: Well That's Never Happened Before - Exhibit 7 Big decoupling in recent weeks between US equity flows and prices ................... 551
RISK: Well That's Never Happened Before - Exhibit 8 Cumulative 3 Mo net flows out of equities, is now the largest on record ............... 552
RISK: World Stocks versus World 2015 GDP Estimate.................................................................................................................................. 554
RISK: World Stocks versus World 2014 & 2015 GDP Estimates ................................................................................................................... 554
RISK: World Stocks versus 10Y UST Yield, WTI Crude 2015 GDP Estimates .............................................................................................. 555
RISK: Fat Tails Have Disproportionately Large Impact on Returns................................................................................................................ 556
RISK: Statistically We Are Due for a Drawdown ............................................................................................................................................. 557
RISK: The Buffett Indicator .............................................................................................................................................................................. 558
RISK: Speculation Has Taken Control of the Markets .................................................................................................................................... 559
RISK: MSCI versus World GDP Divergence - Unsustainable ........................................................................................................................ 559
RISK: High Yield Credit Risk At Elevated Levels ............................................................................................................................................ 559
RISK: Active Hindenburg Omen ...................................................................................................................................................................... 560
RISK: An Over-Levered Hedge Fund Index Ending ABC Consolidation Pattern ........................................................................................... 560
RESEARCH OF NOTE .......................................................................................................................................................................................... 562
RISK: Expert That Correctly Predicted Market Moves In July, August And September Says Stocks Will Crash In November .................... 562
RISK: 4 Warnings And Why You Should Pay Attention .................................................................................................................................. 564
RISK: According To Bank of America, This Is "The Biggest Risk to Global Equities" .................................................................................... 569
RISK: The "Smartest Money" Liquidating At a Record Pace: "Selling Everything ........................................................................................ 571
RISK: Top CEO Warns Of Global Reset: "It's In The Cards For Sure... It Could Happen This Year" ........................................................... 574
RISK: $140 Billion Bond Fund Goes To Cash As It "Braces For Bond-Market Collapse" ............................................................................. 575
RISK: "It's Time To Hold Physical Cash", Fidelity Manager Warns Ahead Of "Systemic Event" ................................................................... 578
RISK: Sweden's Largest Fund Manager Is Quietly Dumping Stocks Before The "Herd" Is Caught In A Selling Vortex ............................... 580
RISK: 12 Signs That An Imminent Global Financial Crash Has Become Even More Likely .......................................................................... 581
RISK: World's Largest Sovereign Wealth Fund Is About To Become A Seller .............................................................................................. 582
RISK: When Hindenburg Omens Are Ominous .............................................................................................................................................. 586
RISK: The Canaries Continue To Drop like Flies ............................................................................................................................................ 588
RISK: Deutsche Suggests 'Caution' As "Seven Signs" Flash Red ................................................................................................................. 590
RISK: "The Top's In" David Stockman Warns Of "Epochal Deflation" ............................................................................................................ 591
RISK: When Hindenburg Omens Are Ominous .............................................................................................................................................. 592
RISK: Two Point Three Sigmas Above the Norm ........................................................................................................................................... 594
RISK: No Really, Who is Buying? ................................................................................................................................................................... 602
RISK: Curious Sightings .................................................................................................................................................................................. 603
RISK: Even the BIS Is Shocked At How Broken Markets Have Become ....................................................................................................... 610
RISK: The Line between Rational Speculation and Market Collapse ............................................................................................................. 614
RISK: Global Economy Will Shrink By $2.3 Trillion In 2015 ........................................................................................................................... 619
RISK: Market Action Suggests Abrupt Slowing in Global Economic Activity.................................................................................................. 619
RISK: Warnings Signs Are Everywhere .......................................................................................................................................................... 623
RISK: Hindenburg Signals a Warning ............................................................................................................................................................. 624
RISK: Americans say they're too broke to invest ............................................................................................................................................ 626
RISK: The Biology of Risk ............................................................................................................................................................................... 630
RISK: More Signs Of Bullish Excess ............................................................................................................................................................... 634
RISK: Markets Have Left the "Complacency" Phase, Have Entered Full Blown "Mania" .............................................................................. 636
RISK: VIX Sends Message of Complacency ................................................................................................................................................... 637
RISK: CS Warns Volume & DeMark Raise "Topping Threat" In Stocks ......................................................................................................... 638
RISK: No One Will Ring the Bell at the Top .................................................................................................................................................... 642
Cassandra's - New Additions to the List ................................................................................................................................................................ 649
CASSANDRA: "Severe Correction Or Cyclical Bear" Ahead: Leuthold Major Trend Index Turns Negative ................................................. 650
CASSANDRA: CANARIES - Warnings Everywhere! ...................................................................................................................................... 651
CASSANDRA: Stephen Schork: The Commodity Crash Is "A Canary In The Coal Mine For The Global Economy" ................................... 653
CASSANDRA: Emerging Market Mayhem: Gross Warns Of "Debacle" As Currencies, Bonds Collapse ..................................................... 655
CASSANDRA: "Another Crisis Is Coming": Jamie Dimon Warns Of the Next Market Crash ........................................................................ 662
CASSANDRA: Steen Jakobsen: Get Ready For The Biggest Margin Call In History .................................................................................... 663
CASSANDRA: Wynn Calls "Big" Recovery "Complete Dream" As Gaming Revenues Collapse .................................................................. 665
CASSANDRA: Stan Druckenmiller's "Horrific Sense" Of Deja Vu: "This Will End Very Badly" ..................................................................... 667
CASSANDRA: Hedge Fund Legend Julian Robertson Warns Of A "Complete Explosion" Unless Fed Contains "Boiling, Bubble" ............ 672
CASSANDRA: Kyle Bass Warns "The Fed Is Backed Into A Corner... Equities Are My Biggest Liquidity Worry" ........................................ 673
CASSANDRA: Paul Tudor Jones Warns "Disastrous Market Mania" Will End In "Revolution, Taxes, or War" ............................................ 674
CASSANDRA: John Hussman - A Who's Who Of Awful Times To Invest ..................................................................................................... 676
CASSANDRA: Carl Icahn - One Day You'll See A Break Like A Few Weeks Ago But The Market Won't Come Back ................................ 679
CASSANDRA: Sam Zell Warns Of Stock Market Correction On CNBC ........................................................................................................ 680
CASSANDRA: Billionaire Carl Icahn warns on US stock prices ..................................................................................................................... 680
CASSANDRA: Soros Bets $2 Billion on Stock Market Collapse .................................................................................................................... 681
CASSANDRA: Dont Ignore Janet Yellens Stock Market Warnings 07-21-14 Fiscal Times ......................................................................... 682
CASSANDRA: Doug Kass: We're Heading for a Bear Market So Plan Accordingly ...................................................................................... 685
CASSANDRA: Comstock Funds Weighs In .................................................................................................................................................... 687
CASSANDRA: Michael Lombardi Weighs In ................................................................................................................................................... 689

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CASSANDRA: Ron Paul Portfolio, 'Craziest' we've ever seen? ..................................................................................................................... 691
CASSANDRA: John Mauldin Goes Negative .................................................................................................................................................. 692
CASSANDRA: Hayman Capital Dramatically Reduces Risk .......................................................................................................................... 700
CASSANDRA: Byron Wien Warns "Oblivious Markets" Of 20% Correction ................................................................................................... 701
CASSANDRA: Harry Dent Warns Stocks to Sink More than 60% by End of 2014 ........................................................................................ 701
CASSANDRA: Stanley Druckenmiller: "When You Get This Kind Of Rigging, It Will End Badly".................................................................. 702
CASSANDRA: Mohamed El-Erian: "Prices Are Artificially High - Its Time to Take Profits" .......................................................................... 703
CASSANDRA: Felix Zulauf: World Headed Toward 1987 Style Market Collapse .......................................................................................... 704
CASSANDRA: Doug Kass: 'I'm Getting The Summer Of 1987 Feeling' In The Market Right Now ............................................................... 704
CORRELATION & COMPLACENCY A PROBLEM .............................................................................................................................................. 706
EVENT RISK A PROBLEM .................................................................................................................................................................................... 709
Q2 EARNINGS & THE R WORD .............................................................................................................................................................. 709
POLITICAL-ECONOMIC TENSIONS .......................................................................................................................................................... 709
CENTRAL BANK POLICY MISCUES.......................................................................................................................................................... 709
ASIAN ECONOMIC SLOWDOWN SPILLAGE ............................................................................................................................................ 709
PETRO$ CRISIS BREWING IN BRIICS...................................................................................................................................................... 709

LONGER TERM - FUNDAMENTAL ANALYSIS .............................................................................................................................. 710


HIGHLIGHTS ......................................................................................................................................................................................................... 710
ASSET & LIABILITY OWNERSHIP ................................................................................................................................................................. 710
PANIC TOTAL RETURN DISTRIBUTION SINCE 1974 ................................................................................................................................. 710
PANIC CHASE FOR YIELD ............................................................................................................................................................................ 711
REAL S&P MARKET CAP / REAL GDP ......................................................................................................................................................... 711
UNSUSTAINABLE GAP BETWEEN PROFITS AND INCOME ...................................................................................................................... 712
ADJUSTED CORPORATE PROFITS FROM DOMESTIC OPERATIONS .................................................................................................... 712
TRAILING 10Y 12 MONTH NET MARGINS ................................................................................................................................................... 713
INVESTMENT CLASS PERFORMANCE ....................................................................................................................................................... 714
NEW-VALUATION SUMMARY ....................................................................................................................................................................... 715
VALUATION: Alternative Methodologies ............................................................................................................................................................... 720
NEW-FOUR SET CONSOLIDATED MARKET VALUATION INDICATORS .................................................................................................. 720
NEW-Crestmont from the Arithmetic ............................................................................................................................................................... 724
NEW-Cyclical PE 10 Ratio............................................................................................................................................................................... 729
NEW-Q Ratio ................................................................................................................................................................................................... 736
NEW-S&P Composite Regression-to-the-Trend ............................................................................................................................................. 741
NEW-Reference Methodologies Analysis ....................................................................................................................................................... 743
CHARTS OF NOTE ......................................................................................................................................................................................... 750
NEW- VALUATIONS Price-to-Sales Presently Second Highest to the Dotcom Bubble Collapse .......................................................... 750
NEW- VALUATIONS Cumulative Flows ................................................................................................................................................... 750
NEW- VALUATIONS GAAP versus Non-GAAP Net Margins .................................................................................................................. 751
VALUATIONS Forward 12-Month P/E Ratio 10 Years.......................................................................................................................... 751
VALUATIONS Forward 12-Month EPS versus Change in Price 10 Years ........................................................................................... 752
VALUATIONS Net Margin Growth ............................................................................................................................................................ 753
VALUATIONS 10 Year Trailing 12 Mo Net Margin Growth Historically High ........................................................................................ 753
VALUATIONS Record Profits Yet Historically Low Capital Asset Growth ............................................................................................... 754
VALUATIONS Historical Ranking of PE Values ....................................................................................................................................... 755
VALUATIONS Median Price/Cash Flow Multiple for US Stocks .............................................................................................................. 756
VALUATIONS Median Price/Earnings Multiple for US Stocks ................................................................................................................. 757
VALUATIONS Median Price to Book Multiple for US Stocks ................................................................................................................... 758
VALUATIONS Price/Book; Price/Cash flow; Price/Sales ......................................................................................................................... 759
VALUATIONS Global Equities Reported PE, PE before XO & Fwd PE ............................................................................................... 760
NEW-2016 EARNINGS Earnings Projections .................................................................................................................................................... 761
STUDY: 2016 EARNINGS - ................................................................................................................................................................................... 761
CHARTS OF NOTE ......................................................................................................................................................................................... 761
2016 EARNINGS Historical Global Consensus Earnings Estimates ....................................................................................................... 761
2016 EARNINGS 12 Month Forward EPS Consensus ............................................................................................................................ 761
2016 EARNINGS SPX Earnings CY 2016 ............................................................................................................................................ 762
2016 EARNINGS A 2016 Hockey Stick Forecast Only the Nave Would Believe ................................................................................. 762
2016 EARNINGS US Forward PE versus Fed Funds Rate ..................................................................................................................... 763
2016 EARNINGS US Operating Profit Margin versus US Monetary Indicators ....................................................................................... 763
RESEARCH OF NOTE .................................................................................................................................................................................... 764
2016 EARNINGS 2016 EPS Growth Estimates Slashed By 50% Just One Month Into The Year ......................................................... 764
2016 EARNINGS Another Data Point To Ignore: Dividend Cuts Have Surpassed 2008 ........................................................................ 766
2016 EARNINGS Profit, Multiple & Margin Trouble Are In Store For Global Equities In 2016 ................................................................ 768
NEW-YE EARNINGS 2015 Forecasts ................................................................................................................................................................ 770
CHARTS OF NOTE ......................................................................................................................................................................................... 770
2015 EARNINGS 2015 & 2016 Annual Earnings EPS Estimate v Historical........................................................................................... 770
2015 EARNINGS Q3 Earnings Estimate Revisions v Change in Price ................................................................................................... 771
2015 EARNINGS Consumer Staples & Discretionary are sending a Pretty Clear ( Worsening Since Q1) Message ............................ 772
2015 EARNINGS Consensus Long-Term Growth versus Forward PE ................................................................................................... 773
2015 EARNINGS Consensus Analysts Estimates 1979-1995 ............................................................................................................. 774
2015 EARNINGS Consensus Analysts Estimates 1995-2014 ............................................................................................................. 774
2015 EARNINGS CY 2015 Earnings Growth ........................................................................................................................................... 775
2015 EARNINGS CY 2015 Revenue Growth ........................................................................................................................................... 775
2015 EARNINGS Q2 Forward 12 Mo EPS versus Change in Price ..................................................................................................... 776

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2015 EARNINGS Q1 Forward 12 PE Ratio ........................................................................................................................................... 777


RESEARCH OF NOTE .................................................................................................................................................................................... 778
2015 EARNINGS Q1 Earnings Guidance: Negative Guidance (84%) Above Average ........................................................................... 778
NEW-2015 Q4 EARNINGS Earnings Recession ............................................................................................................................................... 779
STUDY: Q4 EARNINGS - ...................................................................................................................................................................................... 779
CHARTS OF NOTE ......................................................................................................................................................................................... 779
Q4 EARNINGS SPX Earnings 2007-2009 versus 2014-Today ............................................................................................................ 779
Q4 EARNINGS Dividend Cuts Accelerate ................................................................................................................................................ 779
Q4 EARNINGS EBITDA Growth Is the Worst Since 2000 ....................................................................................................................... 780
Q4 EARNINGS All Country World Earnings and BCAs EPS Model ....................................................................................................... 780
RESEARCH OF NOTE .................................................................................................................................................................................... 781
Q4 EARNINGS Avondales CEO Feedback Company Notes Digest 02.12.15 .................................................................................... 781
Q4 EARNINGS Avondales CEO Feedback Company Notes Digest 02.05.15 .................................................................................... 785
Q4 EARNINGS Avondales CEO Feedback Company Notes Digest 01.29.15 .................................................................................... 791
Q4 EARNINGS Here's How Much The Strong Dollar Hurts US Companies ........................................................................................... 798
Q4 EARNINGS Q4 Will Be The Worst U.S. Earnings Season Since The Third Quarter Of 2009........................................................... 802
Q3 2015 EARNINGS Earnings Recession ......................................................................................................................................................... 805
STUDY: Q3 EARNINGS - ...................................................................................................................................................................................... 805
CHARTS OF NOTE ......................................................................................................................................................................................... 805
Q3 EARNINGS Y-o-Y Change in 12 Month Profits Per Share ................................................................................................................. 805
Q3 EARNINGS Goldman Now Forecasts Flat Margin Growth in 2016 ................................................................................................... 805
Q3 EARNINGS US Corporate Profit Growth Turns Negative .................................................................................................................. 806
Q3 EARNINGS Technology Sales Growth (ex AAPL & GOOG) ............................................................................................................. 806
Q3 EARNINGS Percentage of US Companies Losing Money ................................................................................................................. 807
Q3 EARNINGS The stock market more Over-valued than prior to Previous Crashes! ........................................................................... 807
Q3 EARNINGS Biggest Drop in Profits Since 2009 ................................................................................................................................. 808
Q3 EARNINGS Negative Sales Surprise Ran Significantly Higher than Average ................................................................................... 808
Q3 EARNINGS Y-o-Y Change in Quarterly Earnings and Revenue for S&P 500 ................................................................................... 809
Q3 EARNINGS Forward Earnings being Brought Down Rapidly............................................................................................................. 809
Q3 EARNINGS # S&P 500 Companies Citing Negative Q3 Impacts - Reasons ..................................................................................... 810
Q3 EARNINGS Q4 15 Estimated Earnings Growth Rate ........................................................................................................................ 810
Q3 EARNINGS Revenue & Earnings Consensus Estimated Growth Rate ............................................................................................ 811
Q3 EARNINGS Q3 EPS Expected to Fall -4.5% According to Factset ................................................................................................... 812
Q3 EARNINGS S&P 500 Average Earnings Growth Y-o-Y Not a Good Pattern .................................................................................. 812
Q3 EARNINGS Revenue Recession and Flat EPS Consensus .............................................................................................................. 813
Q3 EARNINGS Forward EPS Consensus Matches Manufacturing Surveys Declines ........................................................................... 813
Q3 EARNINGS Q3 Earnings Growth (Decline): Ex-BAC ......................................................................................................................... 814
Q3 EARNINGS IT Sector Q3 Earnings Forecast to be Down -5.9% Without Apple (-0.4% With) .......................................................... 814
Q3 EARNINGS A Good Sign that Goldman Must Be Selling? ................................................................................................................. 815
Q3 EARNINGS It Should Be Expected that Earnings Will Begin to fall ................................................................................................... 815
RESEARCH OF NOTE .................................................................................................................................................................................... 816
Q3 EARNINGS The Most Important Earnings Report You Should Know About ..................................................................................... 816
Q3 EARNINGS Q3 Earnings -Where We Stand - 4 Main Themes From Calls ....................................................................................... 818
Q3 EARNINGS Goldman's 4 Word Summary Of Q3 Earnings Season- -Adequate Earnings, Dismal Sales ......................................... 826
Q3 EARNINGS Do You See What Happens, Alcoa, When Your "Restructuring" Non-GAAP Add-backs Tumble ................................. 832
Q3 EARNINGS Q3 Earnings Bloodbath-Terrible Monsanto Results- Company Fires 2,600 - ................................................................ 833
Q3 EARNINGS Wall Street is preparing for the worst earnings season since 2009 ............................................................................. 835
Q3 EARNINGS The Truth About S&P 500 Earnings: No Growth For 7 Quarters, With A Revenue Recession On Top ........................ 839
Q3 EARNINGS Earnings Now Surfacing as a Problem ..................................................................................................................................... 840
CHARTS OF NOTE ......................................................................................................................................................................................... 840
Q3 EARNINGS Biggest Drop in Profits Since 2009 ................................................................................................................................. 840
Q3 EARNINGS Negative Sales Surprise Ran Significantly Higher than Average ................................................................................... 840
Q3 EARNINGS Y-o-Y Change in Quarterly Earnings and Revenue for S&P 500 ................................................................................... 841
Q3 EARNINGS Forward Earnings being Brought Down Rapidly............................................................................................................. 841
Q3 EARNINGS # S&P 500 Companies Citing Negative Q3 Impacts - Reasons ..................................................................................... 842
Q3 EARNINGS Q4 15 Estimated Earnings Growth Rate ........................................................................................................................ 842
Q3 EARNINGS Revenue & Earnings Consensus Estimated Growth Rate ............................................................................................ 843
Q3 EARNINGS Q3 EPS Expected to Fall -4.5% According to Factset ................................................................................................... 844
Q3 EARNINGS S&P 500 Average Earnings Growth Y-o-Y Not a Good Pattern .................................................................................. 844
Q3 EARNINGS Revenue Recession and Flat EPS Consensus .............................................................................................................. 845
Q3 EARNINGS Forward EPS Consensus Matches Manufacturing Surveys Declines ........................................................................... 845
Q3 EARNINGS Q3 Earnings Growth (Decline): Ex-BAC ......................................................................................................................... 846
Q3 EARNINGS IT Sector Q3 Earnings Forecast to be Down -5.9% Without Apple (-0.4% With) .......................................................... 847
Q3 EARNINGS A Good Sign that Goldman Must Be Selling? ................................................................................................................. 847
Q3 EARNINGS It Should Be Expected that Earnings Will Begin to fall ................................................................................................... 847
RESEARCH OF NOTE .................................................................................................................................................................................... 848
Q3 EARNINGS The Most Important Earnings Report You Should Know About ..................................................................................... 848
Q3 EARNINGS Q3 Earnings -Where We Stand - 4 Main Themes From Calls ....................................................................................... 850
Q3 EARNINGS Goldman's 4 Word Summary Of Q3 Earnings Season- -Adequate Earnings, Dismal Sales ......................................... 858
Q3 EARNINGS Do You See What Happens, Alcoa, When Your "Restructuring" Non-GAAP Add-backs Tumble ................................. 863
Q3 EARNINGS Q3 Earnings Bloodbath-Terrible Monsanto Results- Company Fires 2,600 - ................................................................ 864
Q3 EARNINGS Wall Street is preparing for the worst earnings season since 2009 ............................................................................. 866
Q3 EARNINGS The Truth About S&P 500 Earnings: No Growth For 7 Quarters, With A Revenue Recession On Top ........................ 870
Q2 2015 EARNINGS Reported Results ............................................................................................................................................................. 871

12

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CHARTS OF NOTE ......................................................................................................................................................................................... 871


Q2 EARNINGS Q2 Earnings Growth by Sector ....................................................................................................................................... 871
Q2 EARNINGS Q2 Revenue Growth by Sector ....................................................................................................................................... 871
Q2 EARNINGS Q2 Earnings Growth by Sector - Estimates .................................................................................................................... 872
Q2 EARNINGS Q2 Revenue Growth by Sector Estimates ................................................................................................................... 872
RESEARCH OF NOTE .................................................................................................................................................................................... 874
Q2 EARNINGS Q2 Summary ................................................................................................................................................................... 874
Q2 EARNINGS Percentage of Companies Beating Revenue Estimates (52%) is Below 5 Year Average ............................................. 875
Q2 EARNINGS Forward Earnings, Revenue and Margins ...................................................................................................................... 876
Q2 EARNINGS First Decline in Earnings (-1.3%) Since Q3 2012 (-1.06%) ............................................................................................ 877
Q2 EARNINGS First Back-to-Back Declines in Revenue Since Q2 2009 and Q3 2009 ......................................................................... 878
Q1 2015 EARNINGS Reported Results ............................................................................................................................................................. 879
CHARTS OF NOTE ......................................................................................................................................................................................... 879
Q1 EARNINGS Q1 Earnings Growth by Sector ....................................................................................................................................... 879
Q1 EARNINGS Q1 Revenue Growth by Sector ....................................................................................................................................... 879
Q1 EARNINGS Q1 Earnings Growth by Sector - Estimates .................................................................................................................... 880
Q1 EARNINGS Q1 Reveue Growth by Sector - Estimates ...................................................................................................................... 880
RESEARCH OF NOTE .................................................................................................................................................................................... 881
Q1 EARNINGS Q1 Summary ................................................................................................................................................................... 881
Q1 EARNINGS Fewer Companies Beating Estimates and Sales Estimates Than Average .................................................................. 881
Q1 EARNINGS Forward Earnings, Revenue and Margins ...................................................................................................................... 883
Q1 EARNINGS First Decline in Earnings (-0.4%) Since Q3 2012 (-1.06%) ............................................................................................ 884
Q1 EARNINGS First Decline in Revenues (-2.6%) Since Q3 2012 (-11.5%) .......................................................................................... 885
BUYBACKS Widening Credit Spreads Become A Problem ............................................................................................................................... 886
CHARTS OF NOTE ......................................................................................................................................................................................... 886
NEW-BUYBACKS Cost of Buybacks In Increasing .................................................................................................................................. 886
NEW-BUYBACKS BoAML Corporate Clients Buybacks in the First 9 Weeks of Each Year ............................................................... 886
NEW-BUYBACKS BoAML Corporate Clients 4 Wk Average Buybacks Y-o-Y % Change ..................................................................... 887
NEW-BUYBACKS Buybacks Have Accounted for Around 1/3 of EPS Growth Since Q3 2011 .............................................................. 887
NEW-BUYBACKS Net Cash Companies Are Increasingly Scarce ........................................................................................................ 888
NEW-BUYBACKS EBITDA Growth Is the Worst Since 2000 .................................................................................................................. 888
NEW-BUYBACKS Buybacks v SPX Total Return Indices ....................................................................................................................... 889
NEW-BUYBACKS Proof that Buybacks Mainly Funded By Debt ............................................................................................................ 889
NEW-BUYBACKS US Companies Continuing to Borrow To Buyback Stock .......................................................................................... 890
NEW-BUYBACKS Debt/EBITDA v FCF-Cost of Debt - 2013 .................................................................................................................. 890
NEW-BUYBACKS Debt/EBITDA v FCF-Cost of Debt 2015 ................................................................................................................. 891
NEW-BUYBACKS Buybacks & Dividends as a Percentage of Net Income ............................................................................................ 892
NEW-BUYBACKS After Historic Buybacks the Y-o-Y Change in 12 Month Profits Per Share Still Shrinks! .......................................... 892
NEW-BUYBACKS Buybacks & Dividends as a Percentage of Net Income Against Spending on Buybacks ......................................... 893
NEW-BUYBACKS Outperformance of Stocks with Large Buybacks Programs vs S&P 500 .................................................................. 893
BUYBACKS Gross Leverage for Typical IG/HY Non-Financial Debt-EBITDA ..................................................................................... 894
BUYBACKS Equity Market Performance v S&P 500 Uses of Cash ........................................................................................................ 895
BUYBACKS Default Rate v Net Equity Buybacks .................................................................................................................................... 895
BUYBACKS S&P 500 Buyback Index 200 DMA ................................................................................................................................... 896
BUYBACKS S&P 500 v Buyback Index Performance.............................................................................................................................. 896
BUYBACKS S&P 500 Annualized Share Buybacks, Dividends and Earnings ........................................................................................ 897
BUYBACKS Falling Investment Grade Spreads Hurting Buybacks ......................................................................................................... 897
BUYBACKS Quarterly Share Repurchases & No. of Companies Repurchasing Shares Slows ............................................................. 897
BUYBACKS Dollar-Value Buybacks to Free Cash Flow Trailing Twelve Month Basis ........................................................................ 898
BUYBACKS Nearly 25% of Annual Buybacks Occur in November & December .................................................................................... 899
BUYBACKS Outperformance of Stocks with Large Buybacks Programs vs S&P 500 ............................................................................ 900
BUYBACKS Gross Leverage for Typical IG/HY Non-Financial Debt-EBITDA ..................................................................................... 900
BUYBACKS Equity Market Performance v S&P 500 Uses of Cash ........................................................................................................ 901
BUYBACKS Default Rate v Net Equity Buybacks .................................................................................................................................... 901
BUYBACKS S&P 500 Buyback Index 200 DMA ................................................................................................................................... 902
BUYBACKS S&P 500 v Buyback Index Performance.............................................................................................................................. 902
BUYBACKS S&P 500 Annualized Share Buybacks, Dividends and Earnings ........................................................................................ 903
BUYBACKS The real reason for the slowdown has to do with the spread on investment grade debt .................................................... 903
BUYBACKS Falling Investment Grade Spreads Hurting Buybacks ......................................................................................................... 904
BUYBACKS Quarterly Share Repurchases & No. of Companies Repurchasing Shares Slows ............................................................. 904
BUYBACKS Dollar-Value Buybacks to Free Cash Flow Trailing Twelve Month Basis ........................................................................ 905
BUYBACKS Nearly 25% of Annual Buybacks Occur in November & December .................................................................................... 905
RESEARCH OF NOTE .................................................................................................................................................................................... 907
NEW-BUYBACKS Buybacks Soar ........................................................................................................................................................... 907
NEW-NEW-BUYBACKS Buybacks Must Continue: AAPL, IBM Unveil Major Debt Issuance to Fund Shareholder-Friendliness .......... 908
NEW-BUYBACKS This Is the Biggest EBITDA Drop Outside Of A Recession Since 2000 ..................................................................... 909
NEW-BUYBACKS Stock Buybacks In Jeopardy: Investment Grade Bond Funds See Biggest Outflow In 17 Weeks ............................ 911
BUYBACKS MacroStrategy Explains Why Most Stocks Have Already "Crossed The Rubicon" ............................................................ 914
NEW-BUYBACKS The Cannibalized Corporation- Corporate America is undermining itself. ................................................................. 919
NEW-BUYBACKS The Fly In The Buyback Ointment- Corporate Leverage Is At Record Levels .......................................................... 926
NEW-BUYBACKS Why Stocks Are Sliding: For The First Time Since 2009 Spending On Buybacks Surpasses Free Cash Flow ....... 931
NEW-BUYBACKS When Buybacks Fail... ................................................................................................................................................ 935
NEW-BUYBACKS "Risky Business": Companies Are Now Funding Share Buybacks By Selling Bonds To Other Companies ............ 936
BUYBACKS The Fly In The Buyback Ointment- Corporate Leverage Is At Record Levels .................................................................... 939
BUYBACKS Why The Stock Buyback Party Is Ending ............................................................................................................................ 943
BUYBACKS Goldman Finds Buybacks No Longer Work To Boost Stock Prices: Two Reasons Why ................................................... 945

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BUYBACKS Why Stocks Are Sliding: For The First Time Since 2009 Spending On Buybacks Surpasses Free Cash Flow ................ 948
BUYBACKS When Buybacks Fail... ......................................................................................................................................................... 952
BUYBACKS "Risky Business": Companies Are Now Funding Share Buybacks By Selling Bonds To Other Companies ...................... 953
BUYBACKS 94% of total S&P in 2015 will go back to shareholders, as dividends and buybacks ......................................................... 956
BUYBACKS CEO Pay Boosted from Giving Shareholders Cash ............................................................................................................ 957
BUYBACKS Investor-CEO Feedback Loop ............................................................................................................................................. 958
BUYBACKS Buybacks Account for Substantial Share of Corporate Profits ............................................................................................ 959
BUYBACKS Quarterly History of Buyback Announcments ...................................................................................................................... 959
BUYBACKS Buybacks as a Percentage of Total Cash Use at the Highest Level Since 2007................................................................ 960
BUYBACKS Weekly Buybacks and Rolling 3 Month Sum ....................................................................................................................... 960
BUYBACKS What Sustained Buybacks Look Like To Rating Agencies IBM Example ........................................................................ 961
BUYBACKS Dollar Volume of Share Buybacks and Dividends at Record Levels ................................................................................... 961
BUYBACKS Buybacks & Dividends Hurdle $900B in 2014 ..................................................................................................................... 961
BUYBACKS The Growth of Stock Buybacks............................................................................................................................................ 962
BUYBACKS Buybacks & Dividends as a Percentage of Operating Earnings ......................................................................................... 963
BUYBACKS Executive Compensation Structure...................................................................................................................................... 963
BUYBACKS During 2014 virtually 100% of S&P 500s reported profits of $1T were disgorged as shareholder distributions ................ 964
BUYBACKS 2015 US Equity Flows Forecast ........................................................................................................................................... 964
BUYBACKS Announced Gross Share Buybacks ..................................................................................................................................... 965
BUYBACKS Global IPO /Secondary Offerings versus Announced Gross Share Buybacks ................................................................... 965
BUYBACKS Actual Net Share Buybacks ................................................................................................................................................. 966
BUYBACKS US IPOs-Actual Buybacks and LBO .................................................................................................................................... 966
BUYBACKS Cash to Stockholders Exceeds 90% of Profits .................................................................................................................... 967
BUYBACKS Stock Repurchases Surge 30% in Q3 ................................................................................................................................. 967
BUYBACKS Stock Repurchases 2nd Highest on Record at $145B.......................................................................................................... 967
BUYBACKS 2914 YTD Stock Repurchases By Corporation 20 Corporations Over $4B ..................................................................... 968
BUYBACKS Operating EPS With / Without Buybacks ............................................................................................................................. 968
BUYBACKS Sales & Revenue Doesnt Support Reported EPS Due to Buyback Distortion ................................................................... 969
BUYBACKS S&P 500 Buyback Index versus S&P 500 ........................................................................................................................... 970
BUYBACKS The New S&P 500 Buyback Index TR ................................................................................................................................. 970
BUYBACKS The New S&P 500 Buyback Index Since Start of QE ......................................................................................................... 971
BUYBACKS IBM Total Debt to Equity (to Fund Buybacks) ..................................................................................................................... 971
BUYBACKS IBM Debt Issuance v Buybacks ........................................................................................................................................... 972
BUYBACKS Global FDI into Finance versus Productive Assets ............................................................................................................. 973
BUYBACKS Total Corporate Debt 35% Higher than 2008 Peak Used for Buybacks .......................................................................... 973
BUYBACKS Buyback Bonanza ................................................................................................................................................................ 974
BUYBACKS Buybacks Have Made a 1% Earnings Growth Distortion to Median S&P 500 Company ................................................... 974
BUYBACKS Top 10 Buyback Companies ................................................................................................................................................ 975
BUYBACKS Intel Buybacks ...................................................................................................................................................................... 975
BUYBACKS Shares Outstanding Back at 2000 Level ............................................................................................................................. 976
BUYBACKS Largest Volumes of Buybacks by US Listed Corporation in Last Year ............................................................................... 976
BUYBACKS Corporations Are No Longer Investing But Rather Financial Engineering Stock Prices ..................................................... 977
BUYBACKS Q2 Drop-Off Closer to Normal .......................................................................................................................................... 978
BUYBACKS Borrowing to Buy back Shares ............................................................................................................................................. 978
BUYBACKS Cyclical Nature of Buybacks Evident ................................................................................................................................... 978
BUYBACKS Major Q2 Repurchases ........................................................................................................................................................ 979
BUYBACKS Major Q1 Repurchases ........................................................................................................................................................ 979
BUYBACKS Quarterly Repurchase & Buyback Yield ............................................................................................................................... 980
BUYBACKS US Corporate Cash versus Buybacks .................................................................................................................................. 981
BUYBACKS Net Debt/EBITDA of American Non-Financial Corporations ............................................................................................... 981
BUYBACKS Stock Buybacks To Grind To A Halt Following Massive Credit Fund Outflows, "Bond Carnage" ....................................... 982
BUYBACKS"The End Of The Road" - Debt-Funded Buyback Boosts Are Finite ..................................................................................... 984
BUYBACKS Why There Is No Growth: The Entire S&P 500 Free Cash Flow Is Going Back To Shareholders ...................................... 987
BUYBACKS Do Share Buybacks Create Value? (Spoiler Alert: No) ........................................................................................................ 988
BUYBACKS Surprise! CEOs Are Getting Rich by Buying Back Stock ..................................................................................................... 990
BUYBACKSThe End of Buybacks? Goldman Warns Political Pressure On Share Repurchases Is Rising ............................................ 995
BUYBACKSCorporate Buybacks: Connecting the Dots to the F-Word .................................................................................................... 997
BUYBACKS Capex Recovery Is Worst In History, BoAML Says ............................................................................................................ 1002
BUYBACKS Stock Buybacks Move to the "Terminal" Next Stage .......................................................................................................... 1005
BUYBACKSOne Heckuva Bull Market .................................................................................................................................................... 1007
BUYBACKS - The US Equity Bubble Depends On Corporate Buybacks; Here's the Proof ..................................................................... 1008
BUYBACKS - Why Markets Are Manic - The Fed Is Addicted To the "Easy Button" ............................................................................... 1012
BUYBACKS - When $140 Billion In Buybacks Isn't Enough... .................................................................................................................. 1014
BUYBACKS - "Obsessive" Buybacks Could Be Big Mistake, "Serious" People Tell Unserious People .................................................. 1014
BUYBACKS - Q3 Buybacks Surging, These Are The Top 20 Repurchasers Of Their Own Stock .......................................................... 1018
BUYBACKS - Accounting Magic ................................................................................................................................................................ 1020
BUYBACKS - The largest source of overall US equity demand in recent years....................................................................................... 1022
BUYBACKS - Has Boosted Median Earnings Growth by 100 bps for S&P 500 ....................................................................................... 1025
BUYBACKS - Companies Spend Almost All Profits On Buybacks ........................................................................................................... 1030
BUYBACKS - Buyback At Biggest Pace Since 2007 ................................................................................................................................ 1035
BUYBACKS - Buyback Party Slowing ....................................................................................................................................................... 1037
BUYBACKS - Buyback Party Slowing ....................................................................................................................................................... 1042
THE $2T TAX RUSE Its a Free Ride for US Corporations ....................................................................................................................... 1047
UNPRECEDENTED BUYBACKS LEVELS ............................................................................................................................................... 1047
A FREE TAX RIDE..................................................................................................................................................................................... 1049
GENERIC TAX EXAMPLE ......................................................................................................................................................................... 1049

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CHARTS OF NOTE ............................................................................................................................................................................................. 1054


CHARTS Finance the Biggest Source of Corporate Funds rising from 19% to 30% ................................................................................ 1054
CHARTS Average Age of Private Fixed Assets ......................................................................................................................................... 1055
CHARTS Percent of Families With Business Equity .................................................................................................................................. 1055
CHARTS Percent of Families With Business Equity .................................................................................................................................. 1056
CHARTS New England Patriots NFL Franchise Valuation ....................................................................................................................... 1057
CHARTS US Equity Market is Not Outgrowing the Economy AS Measured by the Coincident Indicator ................................................ 1058
CHARTS Deviation of Earnings Above / Below Long Term Growth Trend ............................................................................................... 1059
CHARTS S&P 500, Moodys Baa Corporate & 30Y UST Yields ............................................................................................................... 1059
CHARTS Corporations Carrying Higher Levels of Leverage than a Few Years Ago ................................................................................ 1060
CHARTS US Corporate CFROI (Cash Flow ROI) ..................................................................................................................................... 1061
CHARTS Weakening Sector Retunrs ......................................................................................................................................................... 1061
CHARTS SPX, Corporate Profits versus Employed Population % ............................................................................................................ 1062
CHARTS Executive Incentives Distort Earnings ........................................................................................................................................ 1062
CAPITALIZATION Market Capitalization as a % of Nominal GDP ............................................................................................................ 1063
CAPITALIZATION Market Capitalization Adjusted by Gold and CPI ......................................................................................................... 1064
CAPITALIZATION Market Capitalization versus Total Federal Reserve Assets ....................................................................................... 1065
CAPITALIZATION Total Market Capitalization versus M2 ......................................................................................................................... 1066
CAPITALIZATION Total Market Capitalization versus Monetary Base ..................................................................................................... 1067
CAPITALIZATION Total Market Capitalization versus Gross Federal Debt .............................................................................................. 1068
CAPITALIZATION Market Capitalization Ratios ........................................................................................................................................ 1069
CAPITALIZATION Regional Corporate Loss Comparisons Problems in Japan..................................................................................... 1069
CHARTS 7 Year Total Return Cycle .......................................................................................................................................................... 1070
CHARTS Profit Margins Shrink as Proportion of GDP ............................................................................................................................... 1070
CHARTS Q1 Earnings Pre-Announcements .............................................................................................................................................. 1071
CHARTS Q1 Earnings Taken Down Dramatically ..................................................................................................................................... 1071
CHARTS Q1 Earnings Already Taken Down By 5% since January .......................................................................................................... 1072
CHARTS Positive & Negative Q1 Pre-Announcements ............................................................................................................................ 1072
CHARTS Q1 Revenue Slippage in Last 60 Days ...................................................................................................................................... 1073
CHARTS Forward 12 Month EPS vs Price: 10-Year ................................................................................................................................. 1074
CHARTS Forward 12 Month EPS vs Price: 10-Year ................................................................................................................................. 1074
RESEARCH OF NOTE ........................................................................................................................................................................................ 1076
FUNDAMENTALS A Bad Equilibrium & How Speculative Distortion Ends ............................................................................................... 1076
FUNDAMENTALS Valuations .................................................................................................................................................................... 1084
FUNDAMENTALS Corporate Profits Vaporizing ........................................................................................................................................ 1089
FUNDAMENTALS Fundamentals No Longer Currently Matter - Proof ..................................................................................................... 1093
FUNDAMENTALS Profit Margins - Is the Ladder Starting to Snap? ......................................................................................................... 1094
FUNDAMENTALS The Great PE Multiple Expansion of 2011-2014 ......................................................................................................... 1101
FUNDAMENTALS Stocks Have Never Been More Expensive Based On Long-Term Growth Forecasts ................................................ 1105
FUNDAMENTALS Long Term Return Trends ........................................................................................................................................... 1107
FUNDAMENTALS Profit Margins Contract as a Percentage of GDP ........................................................................................................ 1109
FUNDAMENTALS Stagnant Wages a Major Contributor to Profits ........................................................................................................... 1111
FUNDAMENTALS Worsening risk/reward fundamentals in US corporate credit ...................................................................................... 1113

TARGETS .............................................................................................................................................................................. 1117


CONCLUSIONS..................................................................................................................................................................... 1121
MARKET MESSAGE ........................................................................................................................................................................................... 1121
I DEFINING CHARTS ....................................................................................................................................................................................... 1130
Defining Chart #3 - The Big M and Super Cycle b ................................................................................................................................... 1131
Defining Chart #4 Intermediate Term Topping Process ............................................................................................................................. 1132
Boundary Conditions ..................................................................................................................................................................................... 1133
Channels & Regressions ............................................................................................................................................................................... 1134
II TARGETS ...................................................................................................................................................................................................... 1143
III QUARTERLY SENTIMENT RISK AND FUNDAMENTALS ......................................................................................................................... 1147
SENTIMENT .................................................................................................................................................................................................. 1147
RISK ANALYSIS - Complacency.................................................................................................................................................................. 1155
NEW-FUNDAMENTAL ANALYSIS Valuation Summary............................................................................................................................ 1156
IV STUDIES ...................................................................................................................................................................................................... 1157
MARKET BOUNCE A Retracement or Market Turn?....................................................................................................................................... 1157
CHARTS OF NOTE ....................................................................................................................................................................................... 1157
NEW-BOUNCE Current Counter Rally Comparison to 2000 Tech Bubble Collapse ............................................................................ 1157
NEW-BOUNCE Current Counter Rally Comparison to 2007 Financial Crisis ....................................................................................... 1158
NEW-BOUNCE Biggest short squeeze on record .................................................................................................................................. 1158
NEW-BOUNCE Long Term MACD suggesting a high probability rebound top ..................................................................................... 1159
NEW-BOUNCE Major Divergence of S&P 500 and NYSE McClellan Oscillator ................................................................................... 1159
NEW-BOUNCE Weekly Momentum Reaching Overbought Territory .................................................................................................... 1160
NEW-BOUNCE New Hedging Strategies Employed in this Counter Rally ............................................................................................ 1161
NEW-BOUNCE Breadth Has Turned Counter Rally Stalling .............................................................................................................. 1161
NEW-BOUNCE Wall Street's recent rise is stretched relative to the real U.S. economy ...................................................................... 1162
NEW-BOUNCE Diverging gap between stocks and corporate-profit expectation ................................................................................. 1163
NEW-BOUNCE Historic correlation between stock and bond prices is now very distorted .................................................................. 1163
NEW-BOUNCE Historical Topping Process Structural Momentum Analysis ..................................................................................... 1164
NEW-BOUNCE Current Topping Process Structural Momentum Analysis ........................................................................................ 1165

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Q1 EARNINGS An impending macroeconomic and profits implosion ........................................................................................................... 1166


STUDY: Q1 EARNINGS ................................................................................................................................................................................... 1166
CHARTS OF NOTE ....................................................................................................................................................................................... 1166
NEW-Q1 EARNINGS S&P Forward Earnings Expectations versus S&P 500 ....................................................................................... 1166
NEW-Q1 EARNINGS Falling Profits Now in Contraction Territory Lowest Levels Since 2008 .......................................................... 1167
NEW-Q1 EARNINGS Top Line Sales and Revenue Growth is Clearly Falling ..................................................................................... 1167
NEW-Q1 EARNINGS Pro-Forma and GAAP Earnings Diverge Significantly ........................................................................................ 1168
NEW-Q1 EARNINGS Profits Fall the Most Since 2008 ......................................................................................................................... 1168
NEW-Q1 EARNINGS Corporate Profits as a Percentage of GDP ......................................................................................................... 1169
NEW-Q1 EARNINGS Peaks in Real Profit Margins versus S&P 500 .................................................................................................... 1169
NEW-Q1 EARNINGS Biggest Quarterly Drop in Profits Since 2009 ..................................................................................................... 1169
BUYBACKS Slowing Due to Debt-Credit Rating Concerns ............................................................................................................................. 1171
STUDY: BUYBACKS ........................................................................................................................................................................................... 1171
CHARTS OF NOTE ....................................................................................................................................................................................... 1171
NEW-BUYBACKS Buybacks Tend to be Absent During Earnings Season Window ............................................................................. 1171
NEW-BUYBACKS Shrinking Monetary Base Will Put Pressures on Buybacks .................................................................................... 1172
NEW-BUYBACKS Buybacks to Net Income .......................................................................................................................................... 1172
NEW-BUYBACKS Top 10 Buyback Queens versus Stock Performance .............................................................................................. 1173
NEW-BUYBACKS Underwhelming Performance of Buyback Queens .................................................................................................. 1173
NEW-BUYBACKS Seasonal Slowdown in Buybacks ............................................................................................................................ 1174
NEW-BUYBACKS Buyback Activity at Two-Year High .......................................................................................................................... 1174
US RECESSION RUMBLINGS ........................................................................................................................................................................... 1175
CHARTS OF NOTE ....................................................................................................................................................................................... 1175
NEW-RECESSION US Pretax Domestic Non-Financial Profits Falling more steeply than in 1998 ................................................... 1176
NEW-RECESSION US Pretax Domestic Non-Financial Profits Falling and Leading Business Investment ...................................... 1177
NEW-RECESSION It is Always Falling Business Investment that Causes Recessions ....................................................................... 1177
NEW-RECESSION Manufacturing New Orders Falling ......................................................................................................................... 1178
NEW-RECESSION Annual Growth Rate in Income & Employment Taxes Withheld Has Collapsed in 2016 ...................................... 1179
NEW-RECESSION Recession Risks Rising as Profits Fall the Most Since 2008 ................................................................................. 1179
NEW-RECESSION Corporate Profits Y-o-Y versus Employment Y-o-Y ............................................................................................... 1180
V - TRIGGER$ ZONES ........................................................................................................................................................................................ 1181
VI - DRIVER$ & BIA$ ........................................................................................................................................................................................... 1182

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