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WHAT TWO WORDS WHEN COMBINED HAVE THE MOST LETTERS

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1 WHAT TWO WORDS WHEN COMBINED HAVE THE MOST LETTERS
WHILE YOU WAIT WHAT TWO WORDS WHEN COMBINED HAVE THE MOST LETTERS POST OFFICE

2 THE FIVE TACKIEST ADVISOR WEBSITE PHOTOS
5. Retired couple posed with toddler grandchildren 4. Advisor meeting with clients 3. Smiling young couple 2. Advisor and team at a meeting 1. Retired couple walking on the beach

3 Redtail Info! DAVID

4 BIGFOOT INVESTMENTS - OPEN FORUM
Sep 13, 2018 WELCOME! Volume #345

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

6 NOWEB

7 The man who reads nothing at all……
“QUOTE” OF THE DAY: The man who reads nothing at all…… ….....is better educated than the man who reads nothing but newspapers. Thomas Jefferson

8 Optimism Gauge As of: 9/13/2018

9 Measuring Our Economy Indicator Current Value Prior/Metric Value
Change Measuring Our Economy Last Update: 9/13/2018 Weekly Updates New Monthly Updates Indicator Current Value Prior/Metric Value St Louis Fed Financial Stress Index -1.267 (Rev) +1.0 Chicago Fed National Act Index (3 Mon M/A) 0.05 (Jul) +0.20 Jun (Rev) -.50 Unemployment 3.9% (Aug) 3.9% (Jul) +2.00 Weekly Jobless Claims (4Wk Mov Av) 208,000 210,000 (Rev) +.50 ECRI Weekly Index (Against 52 Wk Av) 147.3 Conf Board Leading Indicators (NEW) 110.7 (Ju7/1/2018) 110.0 (Jun) University of Michigan Sentiment – Final 96.2 (Final – Jul 2018) 97.9 (Final – Jun 2018) Monthly Retail Sales – ex Autos (Adjusted) 404,441 (Jul) 402,058 (Jun) Rev (402,883) NFIB Small Business Sentiment 108.8 (Aug) 107.9 (Jul) ISM Manufacturing 63.1 (Aug) Expansion >50 58.1 (Jul) Economic Capacity Utilization 78.05% (Jul) 78.11% (Jun) (Rev) Stock Market Moving Averages Weekly Data Points N/A S&P Case-Shiller 20 City Comp Index (YoY) 6.3% (Jun) 6.5% (May) Rev

10 Economic Optimism Index
Measuring our Economy 10 20 30 40 50 60 70 80 90 100 Economic Optimism Index Current: Prior: 91.98% READING AS OF: 9/13/2018 Current Reading: 91.98% Trend: Negative Prior Reading: 92.17% (Rev) Bias: Positive

11 STEADY MQ index Source: BigFoot Investments 01/26/2016: -0.162
Current: Last: Aver over period: Source: BigFoot Investments

12 Week of: Sep 10th, 2018 BigFoot Investments
Market Diagnostics Week of: Sep 10th, 2018 BigFoot Investments

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

14 0% Prior: 11.76%

15 Evans Chicago Williams New York Bostic Atlanta Kashkari Minneapolis
MEMBER DISTRICT TOPIC LINK TO SOURCE Evans Chicago Effective lower bound looms closer than should feel comfortable. I believe {facilitating the long run} will entail moving policy first toward a neutral setting and then likely a bit beyond neutral to help transition the economy onto a long-run sustainable growth path with inflation at our symmetric 2 percent target. Williams New York “I don’t see the flat yield curve or inverted yield curve as being the deciding factor in terms of where we should go with policy,” he said. What is happening with bond yields this year is natural. I’m not worried about inflationary pressures picking up any time soon, and that means we can continue to be relatively patient about normalizing monetary policy and allow this economy to continue to grow and be strong,” Bostic Atlanta U.S. central bank needs to keep raising interest rates… it’s my view that we should be trying to move our policy back to a more neutral stance, Kashkari Minneapolis Believes the economy is not overheating yet, prompting him to continue his objection to rate increases. Kaplan Dallas hinks the Fed should raise rates three or four more times over the next nine to 12 months to lift interest rates to the 2.5 percent to 2.75 percent range he views as neutral, Rosengren Boston “So the path for the next three or four hikes, unless something happens in the economy that we’re not anticipating—there’s no reason we couldn’t gradually get up to that point.” Mester Cleveland ontinued job growth and the fastest wage increases in nearly a decade leave the Federal Reserve’s current plans for interest rate increases intact Beige Book (See Notes) Brainard FOMC Signs of overheating showed up in financial-sector imbalances rather than in accelerating inflation (leverage, loose credit, low spreads) Trade policy has introduced uncertainty. Continued gradual increases in the federal funds rate are likely to be appropriate

16 Economic activity continued to expand across the United States with 10 of 12 Districts reporting moderate or modest growth (Dallas: strong; St Louis: slight All Districts reported that labor markets were tight Consumer spending was up in all Districts Prices increased in all Districts at a pace that was modest to moderate on average Pricing pressures are expected to intensify further moving forward in some Districts… while in others the outlook is for stable price increases at a modest to moderate pace. On balance, wage increases were modest to moderate Contacts in several Districts reported slow growth in existing home sales Commercial real estate was largely unchanged

17 Interest rates on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively Key ECB interest rates to remain at their present levels at least through the summer of 2019 APP at the current monthly pace of €30 billion until the end of this month September 2018, the Governing Council will reduce the monthly pace of the net asset purchases to €15 billion until the end of December 2018 – then end Staff projections, broadly confirm our previous assessment of an ongoing broad-based expansion of the euro area economy and gradually rising inflation Uncertainties relating to rising protectionism, vulnerabilities in emerging markets and financial market volatility have gained more prominence recently Outlook for real GDP growth has been revised down slightly for 2018 and 2019, mainly due to a somewhat weaker contribution from foreign demand Risks surrounding the euro area growth outlook can still be assessed as broadly balanced

18 NOW 4.0 Next: Dec: 81.8% (69.7%) New: 100% Prior: 100% Source: CME; Federal Reserve

19 Credit Anticipates-Equity Confirms
Rate Prior Current Status* Libor/OIS 0.40 Euribor/Eonia -0.034 -0.039 Markit CDX NA - IG Spread 60.64 57.85 Markit CDX NA- HY Index 106.77 107.06 DTCC Repo - MBS 2.035 2.032 DTCC Repo – Treasury 2.028 2.003 High Yield 3.46 Fed Reserve Currency Swaps-Short 90 (ECB) 2 (BOJ) 0 (BOJ) Fed Reserve Currency Swaps-Long 2-Year Swap Spread 0.193 0.173 TED Spread 0.175 0.169 Bond Equity Earnings Yield Ratio .7278 .7410 Stocks Undervalued As of: 9/12/2018 COB *Note: Status = No major impact Status = Moving Worse Status = Negative Impact

20 BREAKING DOWN 'Bond Equity Earnings Yield Ratio - BEER'
VALUING THE MARKET “BEER” RATIO Bond Equity Earnings Yield Ratio 𝐵𝑜𝑛𝑑 𝑌𝑖𝑒𝑙𝑑 10 𝑦𝑟 E/Y S&P 500 2.964/4.00=.741 BREAKING DOWN 'Bond Equity Earnings Yield Ratio - BEER' A BEER of 1 would indicate equal levels of perceived risk in the bond market and the stock market. Analysts often feel that BEER ratios greater than 1 imply that equity markets are overvalued, while numbers less than 1 mean they are undervalued, or that prevailing bond yields are not adequately pricing risk. Source: Investopedia

21 WEEKLY MACRO DATA AROUND AND AROUND WE GO

22 SUM SUBSTANCE

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

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

25 INCREASING INTEREST RATES
OK TRENDING NEGATIVE PARSING RECESSION JUMP IN GROWTH YES – TAX CUT AND SLOW START INCREASING BANK LOANS INCREASING Y/Y INCREASING INTEREST RATES INCREASING JUMP IN LENDING OF EXCESS RESERVES RESERVES DOWN BUT STILL HIGH GROWTH OF MONEY SUPPLY FALLING GROWTH IN VELOCITY OF MONEY SUPPLY SLIGHTLY QUICK CHANGES IN INFLATION INDICATIONS BUT SLOWLY SIGNIFICANT CHANGE/TREND IN LEADING INDICATORS MAJOR CHANGES IN CONSUMER SENTIMENT DECREASE IN 10-YEAR/2-YEAR TREASURY SPREAD VERY LOW (0.23)

26 COMPARING INFLATION DATA*
THE INFLATION PICTURE – YOU BE THE JUDGE COMPARING INFLATION DATA* TYPE RATE (Prior) SOURCE CPI 2.7 (2.9) BLS CORE CPI 2.2 (2.4) STICKY CPI 2.5 (2.6) Atlanta Fed CORE STICKY CPI 2.5 (2.4) FLEXIBLE CPI 4.1 (3.7) CORE FLEXIBLE CPI 1.1 (0.3) 16% TRIMMED MEAN CPI 2.2 (2.2) Cleveland Fed PPI 2.8 (3.3) CORE PPI 2.9 (2.8) PCE 2.3 (2.2) BEA CORE PCE 2.0 (1.9) TRIMMED MEAN PCE (Core) Dallas Fed 10-YEAR TIPS 0.84 (0.78) Treasury Dept UNDERLYING INFLATION GAUGE 2.90 (2.80) New York Fed AS OF: 9/13/2018 Note: All data annualized INCREASE DECREASE Source: New York Fed; Cleveland Fed; Atlanta Fed; BLS; BEA; Dallas Fed

27 NO WORRIES ABOUT INFLATION????
Source: WSJ

28 QUICK LOOK AT EARNINGS S&P NOTES (FactSet)
Bottom-up price target for S&P 500 is That is 9.5% above current price of 2889 Energy and materials expected to see largest price increases Utilities/Real Estate/Consumer Staples sectors lowest price increases 52.6% of S&P 500 rated Buy 41.7 rated Hold Forward P/E currently 16.7 (slightly above 5-year average of 16.3) Source: Yardeni; FactSet

29 INTERESTING! Source: Bloomberg; Barclays; GSAM

30 TOP LINE OK – KEY NUMBERS: PARTICIPATION/WAGES
3.9% Source: BLS

31 LABOR MARKET STRONG This month’s year-over-year increase being the strongest since May 2012 Suggesting that demand for labor is likely to remain strong August’s increase in the ETI was fueled by positive contributions from all eight components

32 PEAKS AND VALLEYS LATE STAGE MARKETS Volatility Widening spreads
Narrowing # of stocks leading rally

33 ALL-TIME HIGH!!! The August Index has more “muscle” than any past reading. The “hard” components of the Index (job creation plans, job openings, capital spending plans, inventory plans, and earnings) soared to a historic record reading of This caps a change in the complexion of the Index which was dominated by the “soft” components Source: NFIB; dShort

34 SO YOU NEED A JOB – A NEW RECORD?
Source: BL/JOLTs

35 PRODUCER PRICES MODERATE
SLOWEST PACE SINCE JAN Source: BLS

36 WRONG DIRECTION Source: BLS

37 WEEKLY

38 THE CAPE CAN BE DANGEROUS
Ranks in the third percentile of highest readings on this measure in nearly140 years The decade ahead?

39 AND THE PROBLEM IS… Source: YCharts

40 OVERALL: MAJOR MARKET IMPACTS STATUS COMMENTS Sentiment
Generally at all-time highs Employment Strong with wages. Weekly data lowest since 1968. Income/Wages Signs of wage increases Oil Volatile – driven by supply balances Interest Rates Still being moved by fringe market conditions Fed Hanging in there Inflation Generally in the 2% range but a few “cracks” Dollar Volatile

41 GLOBAL OUTLOOK Eurozone China

42 HOPEFULLY WE CALM DOWN A BIT
Source: WSJ

43 NOT SO GOOD Source: Eurostat

44 NOT GREAT Source: Eurostat

45 NOT A GOOD SIGN – HIGH JAN 2016 AT 2.70%
Source: Eurostat; Trading Economics

46 FALLING AGAIN Source: Sentix

47 China's trade surplus narrowed sharply to USD 27
China's trade surplus narrowed sharply to USD billion in August 2018 from USD billion in the same month a year earlier and below market consensus of USD billion. Imports jumped 20 percent to a record high while exports rose at a softer 9.8 percent. Balance of Trade in China averaged USD HML from 1981 until 2018, reaching an all time high of USD HML in October of 2015 Source: Trading Economics; General Administration of Customs (China)

48 0.20 U.S. Macro 0.10 Last New

49 DAVID’S CORNER

50 ADVISOR INPUTS

51 QUESTIONS & COMMENTS THANKS FOR JOINING US!

52 IMPORTANT DISCLOSURE INFORMATION
Content is intended for investment professional use/review only. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot Investments.com), or any non-investment related content, made reference to directly or indirectly in this presentation will be profitable, equal any corresponding indicated historical performance level(s), be suitable for any investment professional’s clients portfolio or individual situation, or prove successful. The investment professional retains all decision making authority as to whether or not to follow and/or implement any of the presentation content. BigFoot has absolutely no responsibly for any suitability determination pertaining to any of the investment professional’s clients, such obligation being exclusively the initial and ongoing responsibility of the investment professional. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot Investments.com. BigFoot Investments.com. is neither a law firm nor a certified public accounting firm and no portion of the content should be construed as legal or accounting advice. Investment Professional acknowledges that to the extent required to do so, it is his/her/its exclusively responsibility to advise his/her/its employer/broker-dealer of its BigFoot subscription. BigFoot Investments.com is a service of Lee Johnson Capital Management, an SEC registered investment adviser located in Fort Worth, Texas. A copy of the Lee Johnson Capital Management LLC’ current written disclosure statement discussing our advisory services and fees is available for review upon request. No Sharing of Content: You acknowledge that the presentation content is for investment professional use only. You warrant and represent not to share any portion of the presentation content with any non-subscriber, including but not limited to your clients or prospects

53 Clarida (Vice Chair-Nom) NOTE: One BOG seat open with no nominees
DOVES AND HAWKS DOVE DOVISH CENTERIST HAWKISH HAWK BRAINARD POWELL (Chair) WILLIAMS EVANS KAPLAN Rosengren George KASHKARI HARKER Mester BULLARD QUARLES BARKIN Brainard BOSTIC Goodfriend (Nom) Clarida (Vice Chair-Nom) Bowman (Nom) NOTE: One BOG seat open with no nominees BOG MEMBER DISTRICT VOTE Nominations approved in committee now to full Senate

54 Source:

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


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