April2016

InsidersPower
AnInterAnalystPublication

Whileoilpricesflashingacrosstradersterminalsareatthe
lowestinadecade,inrealtermsthecollapseisevendeeper.

COPYRIGHT2016INTERANALYST.ALLRIGHTSRESERVED.NOPARTOFTHISPUBLICATIONMAYBEREPRODUCED,DISTRIBUTED,ORTRANSMITTEDINANYFORMORBYANYMEANS,
INCLUDINGPHOTOCOPYING,RECORDING,OROTHERELECTRONICORMECHANICALMETHODS,WITHOUTTHEPRIORWRITTENPERMISSIONOFTHEPUBLISHER,EXCEPTINTHE
CASEOFBRIEFQUOTATIONSEMBODIEDINCRITICALREVIEWSANDCERTAINOTHERNONCOMMERCIALUSESPERMITTEDBYCOPYRIGHTLAW.FORPERMISSIONREQUESTS,WRITE

TOTHEPUBLISHER.ILLEGALFORWARDINGNOTICE:THEREISPDFENGRYPTIONSOFTWAREEMBEDDEDHEREINTHATTRACKSOPENPDFDOCUMENTSVIATHEINTERNET.ONCE
OURPDFDOCUMENTISOPENEDINANYCOMPUTERWITHACONNECTIONTOTHEINTERNETTHEORIGINATINGEMAILANDALLFORWARDINGEMAILADDRESSESARECAPTURED

ANDUSEDTOCOLLECTSUBSCRIPTIONFEESDUE.
 InsidersPower

2
Copyright2016InterAnalyst,LLC2

 InsidersPower

3
Copyright2016InterAnalyst,LLC3

 InsidersPower

4
Copyright2016InterAnalyst,LLC4

 InsidersPower

5
Copyright2016InterAnalyst,LLC5

 InsidersPower

CentralBanksShadowRates

6
Copyright2016InterAnalyst,LLC6

 InsidersPower

GlobalGovernmentDebt

7
Copyright2016InterAnalyst,LLC7

 InsidersPower

8
Copyright2016InterAnalyst,LLC8

 InsidersPower

9
Copyright2016InterAnalyst,LLC9

 InsidersPower

USGovernmentSpending

10
Copyright2016InterAnalyst,LLC10

 InsidersPower

11
Copyright2016InterAnalyst,LLC11

 InsidersPower

GlobalGovernmentDebt/GDPRatios&10
YearChange

12
Copyright2016InterAnalyst,LLC12

 InsidersPower

GlobalHouseholdDebtGDPRatios
10Yr.Change

13
Copyright2016InterAnalyst,LLC13

 InsidersPower

TotalUSCreditMarkets

14
Copyright2016InterAnalyst,LLC14

 InsidersPower

GlobalForeignCurrencyReserves

15
Copyright2016InterAnalyst,LLC15

 InsidersPower

16
Copyright2016InterAnalyst,LLC16

 InsidersPower

GlobalStockValuations

17
Copyright2016InterAnalyst,LLC17

 InsidersPower

18
Copyright2016InterAnalyst,LLC18

 InsidersPower

19
Copyright2016InterAnalyst,LLC19

 InsidersPower

20
Copyright2016InterAnalyst,LLC20

 InsidersPower

21
Copyright2016InterAnalyst,LLC21

 InsidersPower

22
Copyright2016InterAnalyst,LLC22

 InsidersPower

TotalCentralBankAssets

23
Copyright2016InterAnalyst,LLC23

 InsidersPower

CentralBankAssetsasA%ofGDP

24
Copyright2016InterAnalyst,LLC24

 InsidersPower

25
Copyright2016InterAnalyst,LLC25

 InsidersPower

26
Copyright2016InterAnalyst,LLC26

 InsidersPower

27
Copyright2016InterAnalyst,LLC27

 InsidersPower

USLiquidityCrisisBuilding

28
Copyright2016InterAnalyst,LLC28

 InsidersPower

IsAT&TForewarningUs?
Withitslowbetaandhighdividendpayout,AT&T(NYSE:T)haslongbeenadarlingamong
conservativeinvestors.Currently,AT&T'sbetaof0.28makesitlessthanonethirdasvolatileas
thebroadermarketS&P500index,whileitshighdividendpayoutofsome5%annuallyputsthe
stockamongthemarket'stopdividendpayers.

What'smore,AT&T'sdividendhasbeenraisedeveryyearforover30years,qualifyingthestock
tobeincludedinanelitemembershipknownastheDividendAristocrats.Ifareliableincome
streamandprotectionofcapitalareamongyourinvestmentpriorities,AT&Twillserveyouvery
wellindeed.

Andsofarthisyearithas,ratherhandsomelytoo.Despitebeinglessthanonethirdcorrelated
totheS&Pindex,AT&Thasoutperformedthebroadermarketduringthefirstquarterofthis
yearbyafactorof6to1!Thetortoiseisoutrunningthehare,postinggainsof12%totheS&P's
2%riseyeartodate.

Butwhenthistelecommunicationsgiantturnsfrombeingastabledarlingtoanoutperforming
superstar,thatjustmightbetoomuchofagoodthing.Howso?Havingalowbetastock
outperformthebroadermarketisusuallyastrongindicationthataflighttosafetyistaking
placeamonginstitutionalinvestors,anominoussignthatadarkfinancialstormmaybeheaded
ourway.

29
Copyright2016InterAnalyst,LLC29

 InsidersPower

AsaconfirmationthatAT&T'srecentsurgeisindeedadesperateflighttosaferharborsisthe
recentperformanceoftheU.S.10YearTreasuryNote.Haveyounoticedhowthebenchmark
bond'syieldhas
plummetedsince
theU.S.Federal
Reserveraisedits
FederalFunds
[interest]Ratelast
December?
Normally,interest
ratehikesdrive
bondandTreasury
pricesdown,
wideningtheir
yields.Yetthistimetheywenttheotherway.Andsincethen,the10Year'syieldhasremained
below2%,despitetheexpectationofstillanotherratehikesoontocome.

Itisnocoincidencethatthe10Year'syield'sdownhillplungeandAT&T'sskywardsurgehave
mirroredeachother,asgraphedbelow.This,myinvestorfriends,iswhatamarketwithout
confidencelookslike.

"Butwhythejitterynerves?",onemayask."Afterall,themarkethasbeenonanupwardslope
forthepastsevenyearssincethelastmarketcollapseendedinearly2009."

Yes,andthatispreciselythepoint,isn'tit?
Sevenyearsaremuchtoolongtogowithoutabearmarket.AsisclearlynoticeableintheS&P
500'sperformanceoverthatperiodasgraphedbelow,thisthirdlongestbullruninstock
markethistoryhasbeenshowingsignsofexhaustion.Thisbullisdeadtiredandisabouttokeel
over.

30
Copyright2016InterAnalyst,LLC30

 InsidersPower

Asnotedinredon
thecharttothe
right,thebroader
markethasbeen
tradingina
downwardchannel
forwelloverayear
now,bouncing
betweenlower
highsandlower
lows.IftheS&P's
latestrallysince
midFebruaryfailstoovertake2,100,afallthroughthefloorofitslatestlowsinthemid1800s
isalmostassured.Andiftheindexdoesindeedfallthroughthatfloor,itwillhavealotofairto
fallthroughbeforestoppingatitslongtermlevelofsupportnearitspreviousalltimehighjust
under1,600(inyellow),andevenfurthertoitsnextclusterofrestingstopsnear1,400(inblue).

Incidentally,ifyousubscribetomodernstockanalysistheoriesderivedfromthe13thcentury
ItalianmathematicianFibonacci'stheoriesofnumbersinnature,themodern"Fibonacci50%
retracementrule"wouldhavetheS&Pindexgiveback50%ofitslastupleg(whichranfrom
700in2009to2,100in2015),necessitatingaretreatbackdowntothemiddleofthatrange,or
tothesame1,400leveldrawninblueabove.

SowhatexactlydoesAT&T'sstockhavetosayaboutallofthis?Itsstellarperformanceasof
latehassomethingratherforebodingtosay,tobesure.Andwewoulddowelltolistentoit,for
ithasbeenthesmartmoney'searlywarningbell,timeandagain.

Webeginouranalysisbybreakingdownthelast13yearssincetheendofthe20002003bear
marketintofoursegments:

a. the200305"riskon"bullmarket,
b. the200609"riskoff"crestingtransitionandbearmarket,
c. the200915"riskon"bullmarket,and
d. the201516"riskoff"crestingtransition.

Notethatwhilesegment"b"tracesbothacrestingtransitionandthebearmarketthat
followedit,the20152016crestingtransitioninsegment"d"doesnotcomewithitsownbear

31
Copyright2016InterAnalyst,LLC31

 InsidersPower

market.Butonlybecausethiscrestingisnotyetcomplete.Itisthethesisofthisarticlethatthe
currentcrestingwilltransitionintoabearmarketofitsownsoon.

A)The20032005"RiskOn"BullMarket

Asgraphedbelow,U.S.equitiesenjoyedaninvigoratedbullrunfromtheendofthe20002003
bearmarketin
Marchof2003until
theendof2005.

Thisiswhatatrue
bullmarketlooks
like,withthe
broadermarket
soaring(beige),and
safeharborslike
AT&Tboringly
trendingsideways,
completelyoffof
investors'radars(black).Indeed,AT&Theldtruetoitslowbetanature.

B)The20062009"RiskOff"CrestingTransitionandBearMarket

Butbeginninginearly2006,marketsentimenthadchanged.Forthenext2.5yearsasgraphed
below,U.S.equitieswouldbestuckinasidewaystransitioningphaseontheirwayintothe
secondnastiestbearmarketinU.S.history:thedevastating20072009financialcrisis.

Althoughthebull
marketcontinued
throughtothe
thirdquarterof
2007,withtheS&P
500indexrising
some93%from
March9,2003to
October9,2007,
marketsentiment
hadbegunshifting

32
Copyright2016InterAnalyst,LLC32

 InsidersPower

asearlyasFebruaryof2006evenwhilethebullwasstillrunning.Sometwothirdsoftheway
intothebull's4.5yearrun,investorshadalreadybegunpouringintoAT&T'sstock,afull1.5
yearsbeforethebullstartedcollapsinginQ3of2007.

Livinguptoitsbellwetherimage,AT&T'sstockhadgiveninvestorsamplewarningthatthebull
wasgettingtiredandwouldsoonhavetolaydowntotakeanap,whichitdidduringthe1.5
yearbearmarketofmid2007toearly2009.

Clearly,then,whenalowbetastocklikeAT&Toutperformsthebroadermarketbyalarge
degreeoverasustainedperiodofseveralquarters,investorsoughttotakeheed:abearis
approaching.Institutionalinvestorscanhearabearamileaway,evenwhiletherestofthe
marketislulledintolethargybythebountifulpicnic.

Thatneatandtidylittlecycleof"bullmarketfollowedbyacrestingtransitionintoabear
market",whichspannedfromearly2003toearly2009asoutlinedinpartsAandBabove,has
repeateditselfthroughouthistoryoverandoveragain.Thequestionwewantanswerednowis:
Atwhatstagewithinthisrepeatingcyclearewetoday?

C)The20092015"RiskOn"BullMarket

Thistimearound,theriskonbullphaseofthecycleranfromearlyMarchof2009tomidApril
of2015,asgraphedbelow.

WhyhaveIpicked
thosemonthsas
thestartandend
timesofcycle's
upwardslope?
Becausebothofthe
necessary
conditions
qualifyingaperiod
asatruebull
marketwerebeing
met;namely,a
spiritedperformancebyourbroadermarkethare,andasleepyperformancebyourlowbeta
AT&Ttortoise.Alliswellaslongasstockpricesreflecttheirstocks'betas.

33
Copyright2016InterAnalyst,LLC33

 InsidersPower

Butonceagain,asthebullgrewtiredofrunningupsuchasteephill,thesmartmoneyknewit
wastimetorepositionitselfintoamoredefensiveposture.

D)The20152016"RiskOff"CrestingTransition

Thetimetosetsailforsaferharborshadarrived,andonApril21,2015,AT&Tbegansounding
thecallforallshipstoheadforshore,asgraphedbelow.Theflighttosafetyhadbegun.

Thecurrent
transitiontoamore
defensiveposture
beganratherslowly
atfirst.Butitpicked
upagreatdealof
momentuminmid
Decemberof2015.
Dowerecallwhat
happenedataround
thattime?Itwas
thenthattheU.S.
FederalReserveannounceditwouldraiseitsovernightinterbanklendingratebyaquarterofa
percentagepointthefirstratehikeinnineyears.

Asoftoday,wearealmostonefullyearintothecurrentcrestingtransition,wellonourwayto
thenextbearmarket.Rememberthatthelastcycle'stransitionphase(coveredinpartBabove)
lastedonly1.5yearsbeforeitgavewaytoabear.Doesthatmeanwecanexpectthenextbear
tostompalloverourpicnicblanketinthenextfewmonths?

Yes,thatispreciselywhatitmeans.Anditwillbethenextinterestratehikeofanotherquarter
pointinJunethatwillfinallypushthisexhaustedbullover.Normally,aquarterofapercentage
pointincreaseininterestrateswouldhaveanegligibleimpactonmarkets.Butasnotedinour
secondgraphuptop,thebull'sfrontlegsarealreadykneelingdown.Whenabullisthis
exhausted,youcanknockitoverwithafeather.

Keepinmind,too,thatthissevenyearbullmarketisthethirdlongestinU.S.history.Thereisa
lotofairinsidethisequitycake;somuchsothattheslightestthudcancauseittocollapse.

34
Copyright2016InterAnalyst,LLC34

 InsidersPower

Inthemeantime,seriouslyconsidertakingsomeprofitfromyourwinningpositions,especially
thehighbetaones,andincreaseyourlowbetadefensiveholdings.Thesmartmoneycansmell
abearclosinginonourposition.Don'ttakemywordforit.TakeAT&T'swordforit.

Epilogue

Forthosewhoreallylovehistoricalpatterns,hereisaninterestingwatercoolertidbit

Thisyearistheelectionyearattheendofatwotermpresidency(BarackObama's).Buttake
heed:attheendofeachofthelastthreetwotermpresidencies,thestockmarketcrashed.

In2008theelectionyearattheendofGeorgeW.Bush'stwotermpresidencythe
S&P500experiencedacrashof47%fromthatyear'speaktothatyear'strough.
In2000theelectionyearattheendofBillClinton'stwotermpresidencytheS&P500
experiencedacrashof18%fromthatyear'speaktothatyear'strough.
In1987justoneyearbeforetheelectionyearattheendofRonaldReagan'stwoterm
presidencytheS&P500experiencedacrashof45%fromthatyear'speaktothat
year'strough.

Okay,sothatlastexamplewasoffbyoneyear.Butthemajorindicesdidnotreturntotheir
pre1987crashhighsuntillate1989.Hence,thepatternisvalid.Infact,inallthreeinstances
notedabove,themarkettookfrom2to4yearstoreturntoprecrashlevels.

Willthe"curseofthetwotermpresidency"smiteusagainin2016?

Troublesarepresenteverywhere.
Bemindful,preparedandverydiversifiedandmostimportantly...watchyourWealthPreserver
SubscriptionGreenandRedArrowsontheequitymarkets.
PayattentiontoGold&Silverastheyshouldrestartadeclinetoabottom,thenwewillbelookingto
enteragain.

35
Copyright2016InterAnalyst,LLC35

 InsidersPower

Abodyofresearchinpositivepsychologysuggeststhatoptimismhasanumberofbenefits:social,
psychologicalandphysical(Schneider,Grumman,&Coutts,2011).Optimismhasbeencorrelatedwith
improvedmentalandphysicalhealth,betterworkandeducationaloutcomes,andrichersocial
relationships.
Whileoptimismappearstobeahealthyorientation,thingsarenotquitesosimple.Someresearchers
identifytwoclassesofoptimism:realisticandunrealistic(Weinstein,1980).Unrealisticoptimistsareat
riskforselfdeception,especiallyindomainssuchasriskassessment(Collingwood,n.d.).Realistic
optimists,ontheotherhand,moresuccessfullyincorporatedataaboutsituationsandevents,balancing
thebestofoptimisticandpessimisticperspectives.Therealisticoptimistpointofviewcouldbesummed
upbytheadage:"hopeforthebest,preparefortheworst".

36
Copyright2016InterAnalyst,LLC
 InsidersPower


Tomakemattersmorecomplex,theideaofoptimismandpessimismasdispositionalattributesisgiving
waytoamorenuancedviewoftheseconstructs(Paul,2011).Neitherperspectiveisinherentlygood
nor"bad",bothcanbeadoptedasneeded,bothmaybeconsideredhighlyfunctionaldependingonthe
situationalcontext.
Insomesituations,"defensivepessimism"canbeapowerfulmotivatortomakebetterchoices.For
example,beingpessimisticabouttheeconomymaybeamotivatortoavoiddebtandmanageyour
moneymoreeffectively.
Personally,I'vealwaysconsideredmyselfsomethingofarealist.
Onascaleofhalfemptytohalffull,mostofthetimeIthink"oh,there'saglasswithsomewaterinit,
let'smeasureit".
Insomecontexts,I'mmoreoptimistic(e.g.,ifI'mworkingonthisnewsletterandIhaveasufficient
degreeofcontroloverit,I'musuallyreasonablyoptimisticthatitwillsucceed),inothercontexts,I'm
lessoptimistic(e.g.,ifI'moutfishingonaSundaymorning,andthetidesareallwrongandI'moutof
bait,I'mreasonablypessimisticaboutbringinghomedinner).

InsidersPower
Ibelievesocionomics,socialmood,andcapitalflowsdriveeconomiesincyclesglobally.Becauseofthe
WorldWideWebthereisnotimeinhistorythatallowsforeasierdatagatheringandtrackingbecause
allcountriesarenowhighlycorrelated.
ThisInsidersPowerNewsletterisacompilationofcurrenteconomicarticleswritten,notbyus,butby
globalauthorswithinthelast90days.Theyrepresentthecurrentglobalsocialmoodandcreatesa
globalPointofViewthathas,bytheway,beenextremelyaccuratefromancientGreeceandRometo
ourowncurrentsociety.
Itrepresentscurrenteconomicrealityonaglobalscalewhetheritspositiveornegative.Ultimately,Be
mindful,preparedandverydiversifiedandmostimportantly...watchyourWealthPreserver
SubscriptionGreenandRedArrowsontheequitymarkets.Itdeliverstheopportunityofanoptimistic,
positiveandprofitableoutcomeforyou.
Basedonthecriteriaalreadyoutlined,IbelieveInsidersPowertobeanextremelyREALISTICnewsletter
thatcarriesbothOPTIMISTICandPESSIMISTICcontentthatdeliversanOPPORTUNISTICoutcome.
Ultimately,Ijusthopeyouenjoyitscontentandprofithandsomely.
InsidersPowerhasreceivedbothpositiveandnegativecommentsbyreadersandweappreciatebothso
pleaseopineanytimetoInsidersPower@InterAnalyst.us.
Bytheway...whichpointofviewdominatesyourpersonality?Nowaskyourfriendorspousetosee
iftheyagree!

37
Copyright2016InterAnalyst,LLC


Thispublicationrepresentstheopinionoftheauthorregardingthesubjectmattercovered.Itisforeducationalpurposesonly.Thepublisherandauthorneither
implynorintendanyguaranteeofaccuracy.Whileeveryefforthasbeenmadetomakethisdocumentascompleteandaccurateaspossible,theremaybemistakes,
bothtypographicalandincontent.Itisofferedwiththeunderstandingthatneitherthepublishernortheauthorisengagedinrenderinglegal,tax,accounting,
investmentplanning,orotherprofessionalservicesnoristhisinformationintendedtobeasubstituteforsuchservices.Shouldspecificadvicebenecessaryor
appropriate the reader should seek that information from a competent professional? This document may contain information that includes or is based upon
forwardlookingstatementswithinthemeaningofthesecuritieslitigationreformactof1995.Forwardlookingstatementsgiveexpectationsoffutureevents.You
canidentifythesestatementsbythefactthattheydonotrelatestrictlytohistoricalorcurrentfacts.Theyusewordssuchasanticipate,estimate,project,
expect,intend,plan,believe,andotherwordsandtermssimilarinmeaninginconnectionwithpotentialfinancialperformance.Anyandallforwardlooking
statementscontainedherein,onourwebsite,oronanysalesmaterialareintendedtoexpressanopinionofpotentialfinancialperformance.Manyfactorswill
influenceyouractualresultsandnoguaranteesaremadethatyouwillachieveresultssimilartooursoranybodyelses.Infact,noguaranteesaremadethatyou
willachieveanyresultsfromtheideasandtechniquesdiscussed.Therearenoguaranteesimpliedorexpressed.Theinformationinthisdocumentis,tothebestof
myabilitytodetermine,alltrueandaccurate.Theywereprovidedwillinglyandwithoutcompensationofferedinreturn.Theydonotrepresenttypicaloraverage
resultsbecausemostcustomersdonotoffertosharetheirresultsnoraretheyrequiredto.Therefore,Ihavenowaytodeterminewhattypicaloraverageresults
havebeen.Ican'tmakeanyonefollowmyadvice,andIobviouslycan'tpromisethatmyadvice,asinterpretedandimplementedbyeveryone,isgoingtoachieve
foreveryonethekindsofresultsit'shelpedthefolksdescribedinthisdocumentachieve.Theincomestatementsandexamplesonthisdocumentarenotintended
torepresentorguaranteethateveryonewillachievethesameresults.Eachindividual'ssuccesswillbedeterminedbyhisorherdesire,dedication,persistence,
talents,resourcesandmuchmore.Thereisnoguaranteeyouwillduplicatetheresultsstatedhere.Yourecognizeanybusinessorinvestmenthasinherentriskfor

lossofcapitalandyoufullyacceptthatriskissolelyyourresponsibility.Theauthorandpublisherparticularlydisclaimanyliability,lossorrisktakenbyindividuals
whodirectlyorindirectlyactontheinformationcontainedherein.Theauthorandpublisherbelievetheeducationpresentedhereinissound,butreaderscannot
holdeitherpartyresponsibleforeithertheactionstheytakeortheresultsofthoseactions.Youaresolelyresponsibleforyouractions.Theeducationcontainedin
thisdocumentmaynotbesuitableforeveryone.Useatyourownrisk.