RPT MTA 2015 12 PEEK

Monthly Market Analytics & Technical Analysis
DECEMBER 2015 Edition
SECTIONAL REPORT
MATA- DECEMBER 2015
12/14/2015
1 DECEMBER 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved
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Monthly Market Analytics & Technical Analysis

DECEMBER 2015
HIGHLIGHTS - WHAT YOU NEED TO KNOW ................................................................................................................................. 15
SUMMARY ANALYSIS ............................................................................................................................................................................................ 15
Era of Delusional Distortions & the Super Cycle Pivot b .................................................................................................................................... 28
Defining Chart #1 - "Delusional Distortion" Expectations & the Log-Periodic Cycle ......................................................................................... 30
Defining Chart #2 - Finding the Longer Term Super Cycle Pivot b ................................................................................................................ 31
Defining Chart #3 - The Big M and Super Cycle b ....................................................................................................................................... 32
Defining Chart #4 Intermediate Term Topping Process ................................................................................................................................. 34
The Bottom Line................................................................................................................................................................................................. 37
OUR APPROACH - MACRO ANALYTICS ...................................................................................................................................... 40

DECEMBER 2015: Global Macro Drivers ................................................................................................................................................................ 42
NEW-WEALTH .................................................................................................................................................................................................. 44
UPDATED-HARD ASSETS - Gold ................................................................................................................................................................ 44
UPDATED-HARD ASSETS Silver .............................................................................................................................................................. 46
UPDATED-HARD ASSETS - Commodities .................................................................................................................................................. 48
UPDATED-NEW-EXCHANGE .......................................................................................................................................................................... 49
CURRENCIES - USD .................................................................................................................................................................................... 49
UPDATED-CURRENCIES - EURO ............................................................................................................................................................... 50
CURRENCIES - YEN ..................................................................................................................................................................................... 52
UPDATED-CARRY TRADE - The : Cross ............................................................................................................................................... 54
UPDATED-CARRY TRADE - The $: Cross ............................................................................................................................................... 57
NEW-YIELD, CREDIT & SPREAD .................................................................................................................................................................... 58
NEW-EQUITIES - Global ................................................................................................................................................................................... 60
CHARTS & RESEARCH OF NOTE .................................................................................................................................................................. 61
CREDIT .......................................................................................................................................................................................................... 61
NEW-CREDIT Sector Distress Ratios in US HY (over 1,000bps) .......................................................................................................... 62
NEW-CREDIT Deep Distress (over 2,000bps) ....................................................................................................................................... 63
NEW-CREDIT Number of Distressed Bonds .......................................................................................................................................... 63
NEW-CREDIT Leveraged Loan Credit Steadily Falling .......................................................................................................................... 64
NEW-CREDIT US High Yield CCC or Below .......................................................................................................................................... 64
NEW-CREDIT Credit Index Tranches Slicing & Dicing Credit ............................................................................................................ 65
NEW-CREDIT S&P 500 and US High Yield Spreads (Ex Energy) ........................................................................................................ 66
NEW-CREDIT S&P 500 / LSTA US Leveraged Loan 100 Index ........................................................................................................... 66
NEW-CREDIT US High Yield Corporate Bond Default Rate .................................................................................................................. 67
CREDIT Weak Balance Sheets under Pressure - Concerns about Credit Risk..................................................................................... 67
CREDIT Something Up in the Repo Market? ......................................................................................................................................... 68
CREDIT High Yield Credit 2007 versus Today .................................................................................................................................... 68
CREDIT High Yield Spread the Largest Since June 2012 ..................................................................................................................... 69
CREDIT The spread between BAA and 10-year treasuries is the widest since July 2012 .................................................................... 69
CREDIT The spread between BAA and Industrial Production ............................................................................................................... 69
CREDIT High Yield Spreads to 10Y UST & 10Y Breakeven Inflation .................................................................................................... 70
CREDIT Credit Stress Intensifies US Corporate HY ........................................................................................................................... 71
YIELD ............................................................................................................................................................................................................. 72
YIELD The Smart Money Has Never Been This Long the Long Bond ................................................................................................... 72
YIELD Goldman Joins Chorus Warning on Bank Market Liquidity ......................................................................................................... 72
YIELD Change In Trend May Be About Concerns With Credit & Cash Flows ....................................................................................... 73
YIELD Expect 1.00% Yield on 10Y UST ................................................................................................................................................. 73
YIELD Primary Dealer: Investment Grade Net Positions ....................................................................................................................... 73
YIELD Primary Dealers: Junk Bond Net Positions ................................................................................................................................. 74
YIELD 10Y EU Country Government Bond Yields ................................................................................................................................. 75
YIELD UST Note Yields Fall the Most Since 2009 after the Fed Goes On Hold ................................................................................... 75
YIELD German & US 10Y Bonds Fall Dramatically In Yield Trend is Now Down ............................................................................... 75
CURRENCIES ............................................................................................................................................................................................... 77
CURRENCIES EURUSD continues to weaken as Draghi reinforces the ECB's dovish stance ............................................................ 77
CURRENCIES Strong USD a Driver of Falling Commodities, Falling Energy and EM Problems ......................................................... 77
CURRENCIES It is Still About the Japanese Carry Trade But Concerns Growing ............................................................................. 78
CURRENCIES Everyone Is Probably Wrong About the US Dollar ........................................................................................................ 78
COMMODITIES ............................................................................................................................................................................................. 82
COMMODITIES Copper Falls To Fresh 6 Years Low After $GS Says Metal "Poised To Move Even Lower" ...................................... 82
COMMODITIES Algos Locked into WTI Crude & Alternatively the USDJPY ........................................................................................ 83
COMMODITIES Why commodities are dying the death of 1,000 cuts ................................................................................................... 83
COMMODITIES The Weak Trend In EM currencies and Commodities Isnt Abating ............................................................................ 84
COMMODITIES How Saudi Arabia Sets the Global (Currency) Markets .............................................................................................. 85
INFLATION .................................................................................................................................................................................................... 89
INFLATION Expected Inflation- One Year and Three Years Ahead ...................................................................................................... 89
INFLATION Inflation Expectations & Relative Performance................................................................................................................... 89
INFLATION US CPI 1958 2015 Annual Percentage Change .......................................................................................................... 91
INFLATION The Rise of Deflation ........................................................................................................................................................... 92
INFLATION World Inflation Falls To 59-Month Low ............................................................................................................................... 92
PRECIOUS METALS ..................................................................................................................................................................................... 94


PRECIOUS METALS Gold demand in Asia hit by weak local currencies; Indian prices at discount .................................................... 94
PRECIOUS METALS Gold Tracked US Debt Until Recently Will Likely Re-Establish Long Term Pattern .................................... 95
RISK: Risk-On versus Risk-Off ................................................................................................................................................................................ 96
CHARTS OF NOTE ........................................................................................................................................................................................... 97
NEW-RISK Stock market more Over-valued than prior to Previous Crashes!........................................................................................... 97
NEW-RISK Coppock Signaling Problems Ahead ....................................................................................................................................... 97
NEW-RISK Junk Bond Movements Have Been Dependable Warning Indicators Since Dotcom Bubble Burst ....................................... 98
NEW-RISK Corporate Profits and Wages Diverge ..................................................................................................................................... 98
NEW-RISK Russell 1000 Equal Weight: Cap-Weight Ratio .................................................................................................................... 99
NEW-RISK Long Term Monthly Reversal Signal ....................................................................................................................................... 99
RISK Markets Historically Fail after Three months of Falling Margin Debt We Have 2 Months ........................................................... 100
RISK Margin Debt Channel is Pretty Clear High Odds of Troubles Ahead........................................................................................... 100
RISK Goldman Joins the Chorus Warning on Bond Market Liquidity ...................................................................................................... 101
RISK So Goes Retail So Goes the US Economy .................................................................................................................................. 101
RISK Consumer Discretionary Sending Signals....................................................................................................................................... 102
RISK Net EBITDA 2x Highest since 2006 % of companies with net cash Lowest since 2006 ................................................................ 104
RISK US Corporate Net Debt Has Exploded & Now Massively Exceeds EBITDA .................................................................................. 104
RISK CBOE Skew Index ........................................................................................................................................................................... 105
RISK Gap Between Uncertainties Priced in the Debt & Equity Markets .................................................................................................. 105
RISK Beware of EPS manipulation........................................................................................................................................................... 106
RISK Total NYSE Short Interest & Monthly Change ................................................................................................................................ 107
RISK Contrasting Post October Market Drawdowns 1973s Slow Pain versus 1987 Crash............................................................... 107
RISK Historical Post-Crash Price Actions 1950 to 2015 ....................................................................................................................... 108
RISK Historical Post-Crash Price Pattern Has Taken an Average of 27 days to Double Bottom ........................................................... 108
RISK Credit Fleeing IG,HY & EM ............................................................................................................................................................. 109
RISK Credit Fleeing IG,HY & EM ............................................................................................................................................................. 109
RISK Margin Debt in NYSE Accounts versus S&P 500 ........................................................................................................................... 110
RISK Credit Risk Increasing ..................................................................................................................................................................... 111
RISK TED Spread Increasing ................................................................................................................................................................... 111
RISK VIX Pricing in Credit Problems ........................................................................................................................................................ 112
RISK Credit Always Leads Markets Its the Life Blood! ...................................................................................................................... 112
RISK The Pattern is Clear QE the Market Driver .................................................................................................................................. 113
RISK Internal deterioration in the market is more consistent with the development of more major bull market peaks ........................ 114
RISK A huge gap has opened up between reality and perceptions ......................................................................................................... 115
RISK Economic Surprise Index lower highs, lower lows and a reluctant bounce ................................................................................. 116
RISK Weekly Equity Outflows ................................................................................................................................................................... 116
RISK Weekly EM Fund Outflows .............................................................................................................................................................. 117
RISK Net Outflows as a % of AUM by Year ............................................................................................................................................. 118
RISK HG Spread Per Point of Equity Volume .......................................................................................................................................... 119
RISK Widening Gap between Debt & Equity ............................................................................................................................................ 119
RISK HY Bond ETF (HYG) versus S&P 500 ............................................................................................................................................ 119
RISK HY Credit versus 2007-2008 Credit Always Leads Equity ........................................................................................................ 120
RISK Leutholds High/Low Logic Index Sending a Clear Signal .............................................................................................................. 121
RISK Just Too Many One in a Million Standard Deviation Events! ....................................................................................................... 122
RISK Days with > 100 NYSE & NASDAQ New Highs AND New Lows ................................................................................................... 122
RISK Correlated, Confirmed Hindenburg Omens .................................................................................................................................... 123
RISK Broad Global Equity Index Sitting on the Precipice ........................................................................................................................ 124
RESEARCH OF NOTE .................................................................................................................................................................................... 124
NEW-RISK Apple Accounted For 20% Of All U.S. Margin Expansion Since 2010 - Why This Matters .................................................. 124
NEW-RISK 27 Major Global Stocks Markets That Have Already Crashed By Double Digit Percentages In 2015 ................................. 126
NEW-RISK A major long-term momentum indicator is flashing, sell. .................................................................................................... 131
NEW-RISK Malinvestment Lunacy Exposed As US Money Supply Growth Finally Begins To Crack .................................................... 132
NEW-RISK The Coming Economic Collapse Will Crash Stocks .............................................................................................................. 135
NEW-RISK "Coppock Guide" Signals a Bear Market Is At Hand ............................................................................................................. 137
RISK Goldman's Clients Are Suddenly Very Worried About Collapsing Market Breadth ........................................................................ 139
RISK Classic sign of diminishing breadth for global equity market indices .............................................................................................. 143
RISK 10 Signs That Stocks Are Way Overpriced ..................................................................................................................................... 147
RISK The Biggest Short Squeeze In Years" Says Bank of America ........................................................................................................ 149
RISK NYSE Margin Debt Declines Again In August ................................................................................................................................ 153
RISK Economic Surprises Are Turning Back Over In The US ................................................................................................................. 155
RISK Interbank Credit Risk Is Rising Ominously Again In America ......................................................................................................... 158
RISK Doug Kass: There is a Blizzard Ahead! ........................................................................................................................................ 160
RISK Oblivious To Risk - Complacency Still Reigns ................................................................................................................................ 161
RISK Why Selling the Blips Makes Sense ................................................................................................................................................ 165
RISK Biggest Outflow from Equity Funds In 2015 Offset By Longest Treasury Inflow Streak In 4 Years............................................... 166
RISK The 17-year river [of reserve currency buildup and QE around the world] is no longer flowing .................................................... 170
TECHNO-FUNDAMENTALS ................................................................................................................................................................................. 171
CHARTS OF NOTE ......................................................................................................................................................................................... 171
NEW-CHARTS International and Emerging Market Divergence ............................................................................................................. 171
NEW-CHARTS US versus World Stocks ................................................................................................................................................. 171
NEW-CHARTS S&P 500 With and Without FOMC Meeting Dates ......................................................................................................... 172
NEW-CHARTS The Median Stock In The World Is Flat YTD .................................................................................................................. 173
NEW-CHARTS 70% of EM Stocks are Still Down More Than 20% from 200-Day Highs ....................................................................... 173
NEW-CHARTS Year End Overhead Resistance to Santa Claus Rally ................................................................................................... 174
CHARTS Professionals Are Leaving the Party Early ............................................................................................................................... 174
CHARTS NYSE Advance-Decline Line versus S&P ................................................................................................................................ 175


CHARTS A month-long bearish divergence for the US 15 most active advance-decline line ................................................................. 176
CHARTS A-D line preceded or coincided with big breakdowns for the S&P 500 in 2000 and 2007 ....................................................... 176
CHARTS A major bearish divergence for global A-D line in US Dollars .................................................................................................. 177
CHARTS Be Alert to Oversold Pull Back Before Seasonal YE Strength ................................................................................................. 178
CHARTS Leading Indicators Support View The Current Weakness May Turn into a Buying Opportunity ............................................. 179
CHARTS Problem in US Retail Developing ............................................................................................................................................. 180
CHARTS Gold Reacted to Chinese Devaluation ..................................................................................................................................... 181
CHARTS The DOW Theory & DOW Transports ...................................................................................................................................... 182
CHARTS October- A Month for the History Books ................................................................................................................................... 183
CHARTS The Smart Money Has Never Been This Long the Long Bond ................................................................................................ 184
CHARTS Real S&P 500 Index Cycles with Recessions .......................................................................................................................... 185
CHARTS Quarterly Overbought Cycles ................................................................................................................................................... 185
CHARTS Monetary Velocity Declines as Excess Leverage Weights on Consumption ........................................................................... 185
CHARTS The Real Value of Cash ............................................................................................................................................................ 186
CHARTS Consumer Sentiment versus S&P 500 ..................................................................................................................................... 186
CHARTS Hedgers Net Long Record of S&P 500 Futures ....................................................................................................................... 187
CHARTS Fed Balance Sheet Changes versus S&P 500 ......................................................................................................................... 188
CHARTS S&P Futures versus Relative Volumes ..................................................................................................................................... 188
CHARTS Japanese Buying Foreign Stocks ............................................................................................................................................. 189
CHARTS Monetary Initiatives versus S&P 500 ........................................................................................................................................ 190
CHARTS Bull Trend Line Support ............................................................................................................................................................ 190
CHARTS DOW Industrial 200 WMA Boundary Condition & Trend Direction Change Indicator.............................................................. 191
CHARTS DOW Industrial 200 WMA Boundary Condition & Trend Direction Change Trigger ................................................................ 191
CHARTS Global 150 Equity Index Bounces off Lower Support Channel ................................................................................................ 192
CHARTS Global 150 Equity Index Potential Key Support Levels ......................................................................................................... 192
CHARTS The Rout May Have Just Began According to Some ............................................................................................................... 193
CHARTS The VIX Termination Algo ......................................................................................................................................................... 193
CHARTS The VIX Termination Algo ......................................................................................................................................................... 194
CHARTS Pick-Up In Buyback Activity ...................................................................................................................................................... 195
CHARTS Buybacks Are Tied to Investment Grade Credit Spreads ........................................................................................................ 195
CHARTS Coincident / Lagging Indicator Ratio ......................................................................................................................................... 196
CHARTS Annual Change in Durable Goods Orders ................................................................................................................................ 196
CHARTS Durable Goods v Core-Durable Goods (Ex Defense) .............................................................................................................. 197
CHARTS Real Gross Domestic Investment ............................................................................................................................................. 197
CHARTS Total Real Private Fixed Investment as % of Real GDP .......................................................................................................... 198
CHARTS Businesses Operate Against Actual Demand ........................................................................................................................... 198
CHARTS ISM Composite Index ................................................................................................................................................................ 199
CHARTS Capacity Utilization versus Industrial Production ..................................................................................................................... 199
CHARTS Retail Sales (NSA) Annual % Chg of 12 Month Average ......................................................................................................... 200
CHARTS Monthly Retail Control Purchases Y-o-Y % Chg ................................................................................................................. 201
CHARTS Major Economic Trends ............................................................................................................................................................ 201
CHARTS $9T Loss In Global Market Cap ................................................................................................................................................ 202
CHARTS Median EV/EBITDA Ratio for MSCI World (ex Financials) ...................................................................................................... 202
CHARTS 15 Developed Country Aggregate Bond PLUS Stock Valuations ............................................................................................ 203
CHARTS 15 Developed Country Aggregate -83% are in their top 20% of valuations through history .................................................... 203
CHARTS Death Cross .............................................................................................................................................................................. 203
CHARTS Asian Dollar Index Flags Crisis Events ..................................................................................................................................... 205
CHARTS TSY 2s30s Spread .................................................................................................................................................................... 205
CHARTS S&P versus HY(High Yield) & IG (Investment Grade) .............................................................................................................. 206
CHARTS Fed Balance Sheet versus HYG (HY Bond ETF) ..................................................................................................................... 206
CHARTS Commodity Carnage ................................................................................................................................................................. 207
CHARTS Market Expectations of Support & Resistance ......................................................................................................................... 208
CHARTS Russell 2000 Head & Shoulders versus AD Line ..................................................................................................................... 208
CHARTS NYSE - NYA Head & Shoulders versus AD Line ..................................................................................................................... 209
CHARTS Dotcom Bubble Burst 2 Year Process and a Year After the Long Trend Broken Was Broken ............................................ 210
OUTLOOK - ANALYTICAL ANALYSIS .......................................................................................................................................... 211

BUYBACKS Slowing Due to Debt-Credit Rating Concerns ............................................................................................................................... 211
STUDY: BUYBACKS ............................................................................................................................................................................................. 211
CHARTS OF NOTE ......................................................................................................................................................................................... 211
NEW-BUYBACKS Buybacks & Dividends as a Percentage of Net Income ............................................................................................ 211
NEW-BUYBACKS After Historic Buybacks the Y-o-Y Change in 12 Month Profits Per Share Still Shrinks! .......................................... 212
NEW-BUYBACKS Buybacks & Dividends as a Percentage of Net Income Against Spending on Buybacks ......................................... 213
BUYBACKS Outperformance of Stocks with Large Buybacks Programs vs S&P 500 ............................................................................ 213
BUYBACKS Gross Leverage for Typical IG/HY Non-Financial Debt-EBITDA ..................................................................................... 213
BUYBACKS Equity Market Performance v S&P 500 Uses of Cash ........................................................................................................ 215
BUYBACKS Default Rate v Net Equity Buybacks .................................................................................................................................... 215
BUYBACKS S&P 500 Buyback Index 200 DMA ................................................................................................................................... 216
BUYBACKS S&P 500 v Buyback Index Performance.............................................................................................................................. 216
BUYBACKS S&P 500 Annualized Share Buybacks, Dividends and Earnings ........................................................................................ 217
BUYBACKS Falling Investment Grade Spreads Hurting Buybacks ......................................................................................................... 217
BUYBACKS Quarterly Share Repurchases & No. of Companies Repurchasing Shares Slows ............................................................. 217
BUYBACKS Dollar-Value Buybacks to Free Cash Flow Trailing Twelve Month Basis ........................................................................ 218
BUYBACKS Nearly 25% of Annual Buybacks Occur in November & December .................................................................................... 219
RESEARCH OF NOTE .................................................................................................................................................................................... 220
NEW-BUYBACKS The Cannibalized Corporation- Corporate America is undermining itself. ................................................................. 220


BUYBACKS The Fly In The Buyback Ointment- Corporate Leverage Is At Record Levels .................................................................... 227
BUYBACKS Why Stocks Are Sliding: For The First Time Since 2009 Spending On Buybacks Surpasses Free Cash Flow ................ 232
BUYBACKS When Buybacks Fail... ......................................................................................................................................................... 236
BUYBACKS "Risky Business": Companies Are Now Funding Share Buybacks By Selling Bonds To Other Companies ...................... 237
WEAKENING BREADTH FANG & NOSH Become the NIFTY NINE! ............................................................................................................... 241
STUDY: WEAKENING BREADTH......................................................................................................................................................................... 241
CHARTS OF NOTE ......................................................................................................................................................................................... 241
NEW-BREADTH S&P 500 versus Eql/Market Capitalization Weight ...................................................................................................... 241
NEW-BREADTH Nifty and the FANGS in 2015 ....................................................................................................................................... 242
NEW-BREADTH FANG versus Original 4 Horsemen (Cisco, Intel, Microsoft, Qualcomm) .................................................................... 242
NEW-BREADTH 55% of DM Americas Index Down More Than 10% From Highs ................................................................................. 243
NEW-BREADTH Where Are All Of The New 52-Week Highs? ............................................................................................................... 243
BREADTH Need to Understand FANG and NOSH ............................................................................................................................. 244
BREADTH NYSE Advance-Decline Line versus S&P .............................................................................................................................. 244
BREADTH A month-long bearish divergence for the US 15 most active advance-decline line .............................................................. 244
BREADTH A-D line preceded or coincided with big breakdowns for the S&P 500 in 2000 and 2007 .................................................... 245
BREADTH A major bearish divergence for global A-D line in US Dollars ............................................................................................... 246
BREADTH Goldman Sachs Breadth Index Near Historic Lows ............................................................................................................... 246
RESEARCH OF NOTE .................................................................................................................................................................................... 247
NEW-BREADTH The Nifty Nine Never Mattered More ............................................................................................................................ 247
NEW-BREADTH xxxxx ............................................................................................................................................................................. 250
BREADTH Goldman's Clients Are Suddenly Very Worried About Collapsing Market Breadth ............................................................... 250
BREADTH Classic sign of diminishing breadth for global equity market indices ..................................................................................... 254
RECESSION RUMBLINGS Revenue, Earnings & Economic ............................................................................................................................ 259
STUDY: RECESSION SIGNALS ........................................................................................................................................................................... 259
CHARTS OF NOTE ......................................................................................................................................................................................... 259
NEW-RECESSION Y-o-Y Factory Orders ................................................................................................................................................ 259
NEW-RECESSION Probability of Recession From Multivariate Models ................................................................................................. 259
NEW-RECESSION US Corporate Financing Gap Has Turned Strongly Negative ................................................................................. 260
NEW-RECESSION Profits / GDP versus Forecast Derived From Wages / GDP .................................................................................... 260
NEW-RECESSION Decline in Corporate Margins Relative to Cycle Peak ............................................................................................. 261
NEW-RECESSION Industrial Production & Index of Freight Services .................................................................................................... 261
NEW-RECESSION Rolling Over Trend in US ISM Manufacturing and ISM Services ............................................................................. 262
NEW-RECESSION Three giant booms caused by the expansion of money and credit ......................................................................... 262
NEW-RECESSION Nominal Y-o-Y GHDP tells the Real Story Slowing Growth .................................................................................. 263
RECESSION US Inventories .................................................................................................................................................................... 263
RECESSION US Flattening US Yield Curve ............................................................................................................................................ 263
RECESSION US Manufacturing Sector Recession ................................................................................................................................. 265
RECESSION Large Profit Margin Declines Coincides With Recessions ................................................................................................. 266
RECESSION Buybacks Drop on Reduced Free Cash Flow Drop Compared to Previous Recession ................................................. 266
RECESSION Annual % Change in 12Mo Forward EPS Expectations Turn Negative ............................................................................ 267
RECESSION US Recession Estimates Pop ............................................................................................................................................ 267
RECESSION US Recession Indicator & Relative Performance of Stocks & Bonds................................................................................ 268
RECESSION Real S&P 500 Index with Historical Recessions ................................................................................................................ 268
RECESSION September Survey Data versus Non Farm Payrolls .......................................................................................................... 269
RECESSION Regional Surveys for September versus ISM PMI (August) .............................................................................................. 269
RECESSION Regional Manufacturing Surveys versus Forward EPS Estimates .................................................................................... 270
RECESSION Historical Regional Index Comparisons Last Seen in 2008 ............................................................................................ 270
RECESSION Global Oil Consumption Leads Economic Growth Trend is Down Global Headwinds ................................................ 271
RECESSION Gross Domestic Income versus Wilshire 5000 Tells the Story ....................................................................................... 272
RECESSION CT 2015 Revenue Recession ............................................................................................................................................ 272
RECESSION Q2 2015 Revenue Recession ............................................................................................................................................ 273
RECESSION 4 Consecutive months of y/y Spending Declines ............................................................................................................... 273
RECESSION BOA: Retail sales ex-autos, plunged 0.8% mom seasonally adjusted............................................................................ 274
RECESSION Top 10 US Market Areas Signal Retail Problem Underway .............................................................................................. 274
RECESSION Wholesale Inventories to Sales Spiking To Areas Seen During Recession Trends ......................................................... 275
RECESSION Wholesale Inventories Less Wholesale Sales ................................................................................................................... 276
RECESSION Wholesale Inventories vs GDP Trends .............................................................................................................................. 276
RECESSION Auto Inventories to Sales ................................................................................................................................................... 277
RECESSION Falling Collateral and Residuals Undermine Real Growth .............................................................................................. 277
RECESSION Coincident / Lagging Indicator Ratio versus Recessions ................................................................................................... 278
RECESSION Annual Change in Durable Goods Orders v Recessions ................................................................................................... 278
RECESSION Durable Goods v Core-Durable Goods (Ex Defense) versus Recessions ........................................................................ 279
RECESSION Real Gross Domestic Investment versus Recessions ....................................................................................................... 279
RECESSION Total Real Private Fixed Investment as % of Real GDP versus Recessions .................................................................... 280
RECESSION Businesses Operate Against Actual Demand versus Recessions .................................................................................... 280
RECESSION ISM Composite Index versus Recessions.......................................................................................................................... 281
RECESSION Capacity Utilization versus Industrial Production versus Recessions ............................................................................... 281
RECESSION Retail Sales (NSA) Annual % Chg of 12 Month Average versus Recessions ................................................................... 282
RECESSION Monthly Retail Control Purchases Y-o-Y % Chg versus Recessions........................................................................... 282
RECESSION Major Economic Trends...................................................................................................................................................... 283
RESEARCH OF NOTE .................................................................................................................................................................................... 284
NEW-RECESSION The Next Recession "Is Just Around the Corner" .................................................................................................... 284
NEW-RECESSION JPMorgan Warns Of "Eye-Catching" 76% Probability of Recession ....................................................................... 285
NEW-RECESSION Freight Charts Raise Alarm about The "Broader Health Of The US Economy" ...................................................... 290


RECESSION 18 Bullets Showing That A Global Recession Is Already Here.......................................................................................... 293

RECESSION The Recessions Are Underway .......................................................................................................................................... 295
RECESSION Retail Stocks Are Crashing At the Fastest Pace in Over 4 Years ..................................................................................... 305
RECESSION Economists Finally Admit, Odds Of A US Recession Are On The Rise ............................................................................ 307
RECESSION Retail Sales Slump on Deck ............................................................................................................................................... 309
RECESSION This Is another "Subprime" Waiting To Blow ..................................................................................................................... 312
RECESSION Record Gap between US Inventories and Sales Screams Recession .............................................................................. 315
RECESSION August spending was the weakest in nominal dollar terms since 2012 ............................................................................. 317
RECESSION The Next Recession Will Definitely Not Happen In 2018 ................................................................................................... 322
Q3 EARNINGS Earnings Recession .................................................................................................................................................................. 324
STUDY: Q3 EARNINGS - ...................................................................................................................................................................................... 324
CHARTS OF NOTE ......................................................................................................................................................................................... 324
NEW-Q3 EARNINGS Y-o-Y Change in 12 Month Profits Per Share ....................................................................................................... 324
NEW-Q3 EARNINGS Goldman Now Forecasts Flat Margin Growth in 2016 .......................................................................................... 324
NEW-Q3 EARNINGS US Corporate Profit Growth Turns Negative......................................................................................................... 325
NEW-Q3 EARNINGS Technology Sales Growth (ex AAPL & GOOG) .................................................................................................... 325
NEW-Q3 EARNINGS Percentage of US Companies Losing Money ....................................................................................................... 326
NEW-Q3 EARNINGS The stock market more Over-valued than prior to Previous Crashes! ................................................................. 326
Q3 EARNINGS Biggest Drop in Profits Since 2009 ................................................................................................................................. 327
Q3 EARNINGS Negative Sales Surprise Ran Significantly Higher than Average ................................................................................... 327
Q3 EARNINGS Y-o-Y Change in Quarterly Earnings and Revenue for S&P 500 ................................................................................... 328
Q3 EARNINGS Forward Earnings being Brought Down Rapidly............................................................................................................. 328
Q3 EARNINGS # S&P 500 Companies Citing Negative Q3 Impacts - Reasons ..................................................................................... 329
Q3 EARNINGS Q4 15 Estimated Earnings Growth Rate ........................................................................................................................ 329
Q3 EARNINGS Revenue & Earnings Consensus Estimated Growth Rate ............................................................................................ 330
Q3 EARNINGS Q3 EPS Expected to Fall -4.5% According to Factset ................................................................................................... 331
Q3 EARNINGS S&P 500 Average Earnings Growth Y-o-Y Not a Good Pattern .................................................................................. 331
Q3 EARNINGS Revenue Recession and Flat EPS Consensus .............................................................................................................. 332
Q3 EARNINGS Forward EPS Consensus Matches Manufacturing Surveys Declines ........................................................................... 332
Q3 EARNINGS Q3 Earnings Growth (Decline): Ex-BAC ......................................................................................................................... 333
Q3 EARNINGS IT Sector Q3 Earnings Forecast to be Down -5.9% Without Apple (-0.4% With) .......................................................... 333
Q3 EARNINGS A Good Sign that Goldman Must Be Selling? ................................................................................................................. 334
Q3 EARNINGS It Should Be Expected that Earnings Will Begin to fall ................................................................................................... 334
RESEARCH OF NOTE .................................................................................................................................................................................... 335
Q3 EARNINGS The Most Important Earnings Report You Should Know About ..................................................................................... 335
Q3 EARNINGS Q3 Earnings -Where We Stand - 4 Main Themes From Calls ....................................................................................... 337
Q3 EARNINGS Goldman's 4 Word Summary Of Q3 Earnings Season- -Adequate Earnings, Dismal Sales ......................................... 345
Q3 EARNINGS Do You See What Happens, Alcoa, When Your "Restructuring" Non-GAAP Add-backs Tumble ................................. 351
Q3 EARNINGS Q3 Earnings Bloodbath-Terrible Monsanto Results- Company Fires 2,600 - ................................................................ 352
Q3 EARNINGS Wall Street is preparing for the worst earnings season since 2009 ............................................................................. 354
Q3 EARNINGS The Truth About S&P 500 Earnings: No Growth For 7 Quarters, With A Revenue Recession On Top ........................ 358
SHORT TERM TECHNICAL ANALYSIS ..................................................................................................................................... 359

SUPPORT & RESISTANCE .................................................................................................................................................................................. 359
Gann Analysis .................................................................................................................................................................................................. 359
Boundary Conditions ....................................................................................................................................................................................... 360
Channels & Regressions ................................................................................................................................................................................. 361
Fibonacci - Controlling Time Extensions ......................................................................................................................................................... 364
Fibonacci - Controlling Price Extensions ......................................................................................................................................................... 367
Elliott Wave ...................................................................................................................................................................................................... 368
The Bottom Line............................................................................................................................................................................................... 370
BUSINESS CYCLE - CONSUMER & BUSINESS SENTIMENT ........................................................................................................................... 373
SENTIMENT & CONFIDENCE Shifting Trend ................................................................................................................................................... 373
A GRAPHIC HIGHLIGHT ................................................................................................................................................................................ 373
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................... 375
NEW-Consumer Confidence - Conference Board .......................................................................................................................................... 375
NEW-Consumer Sentiment - Michigan ........................................................................................................................................................... 378
NEW-Consumer Comfort - Bloomberg ............................................................................................................................................................ 380
NEW-American Association of Independent Investors ................................................................................................................................... 382
NEW-Investors Intelligence ............................................................................................................................................................................. 382
NEW-National Association of Active Investment Managers (NAAIM) ............................................................................................................ 383
NEW-Small Business Optimism ...................................................................................................................................................................... 384
NEW-Percentage Stocks above 50 & 200 DMA ............................................................................................................................................. 386
NEW-Margin Levels ......................................................................................................................................................................................... 387
Real Margin Debt as % of GDP ....................................................................................................................................................................... 392
Margin Debt versus S&P 500 .......................................................................................................................................................................... 392
Mutual Fund Cash Levels v S&P 500 .............................................................................................................................................................. 393
NEW-OSCILLATORS & BREADTH: Indicators of Importance ............................................................................................................................ 395
NEW-NYSE Overbought / Oversold ................................................................................................................................................................ 395
NEW-OEX Open Interest (Puts/Calls) ............................................................................................................................................................. 396
NEW-TRIN ....................................................................................................................................................................................................... 397
NEW-McClellan Oscillator ............................................................................................................................................................................... 398
CHARTS OF NOTE ............................................................................................................................................................................................... 399
NEW-CHARTS Small Business Sentiment Trending Down Strongly .......................................................................................................... 399


NEW-CHARTS Small Business Sentiment Margin Squeeze .................................................................................................................... 399

NEW-CHARTS Bloomberg Consumer Comfort versus Nasdaq .................................................................................................................. 400
NEW-CHARTS Goldmans Short Term Sentiment Indicator Shows Low Suggests Near Term Counter Rally Likely ............................. 401
NEW-CHARTS Global Consumer Confidence Begins Reversal from Trend Resistance ........................................................................... 402
NEW-CHARTS US Economic Index Steadily Eroding ................................................................................................................................. 403
NEW-CHARTS UMich Consumer Confidence with Biggest Miss on Record .............................................................................................. 403
NEW-CHARTS Economic Surprise Index lower highs, lower lows and a reluctant bounce .................................................................... 403
NEW-CHARTS Cumulative Flows by Client Type - YTD ............................................................................................................................. 405
NEW-CHARTS Historical Risk versus Returns ............................................................................................................................................ 405
NEW-CHARTS Cumulative Flows by Client Type January 2008-Present ............................................................................................... 405
NEW-CHARTS Q Ratio Since 1900 ............................................................................................................................................................. 406
CHARTS Nominal & Real Household Spending Expectations .................................................................................................................... 407
CHARTS Household Spending Expectations by Income Bucket ................................................................................................................ 407
CHARTS A Very Neutral (Highly Unusual) Bull Market ............................................................................................................................... 408
CHARTS Historical Swings in Sentiment ..................................................................................................................................................... 408
CHARTS Investors Intelligence Bulls & Bears ............................................................................................................................................. 409
CHARTS A/D Line Diverging from Price, Suggesting Weakening Momentum ........................................................................................... 410
CHARTS Smart Money OEX Open Interest Put/Call Ratio Now Off the Charts! .................................................................................... 410
CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ........................................................................................................... 411
CHARTS Consumer Comfort Plunges Most In 10 Months .......................................................................................................................... 412
CHARTS Only 16% Think Future Employment Opportunities Will Be Better .............................................................................................. 413
CHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ............................................................................. 413
CHARTS - NFIB Small Business Sentiment ................................................................................................................................................... 414
CHARTS - Orange Book .................................................................................................................................................................................. 414
CHARTS Asset Allocation Global Equities ................................................................................................................................................ 415
CHARTS Asset Allocation Global Bonds .................................................................................................................................................. 415
CHARTS Active versus Passive Funds Allocation ....................................................................................................................................... 416
CHARTS Investors Intelligence Survey of % Bears ..................................................................................................................................... 416
CHARTS Sentiment at Post 2008 Crisis Highs ............................................................................................................................................ 417
CHARTS CNBC Viewership Steadily Falling ............................................................................................................................................... 418
CHARTS Investor Allocation Trends for Stocks, Bonds and Cash .............................................................................................................. 419
CHARTS Uptick in Feds Financial Stress Index Composite ....................................................................................................................... 420
CHARTS Fear Barometer Diverges with VIX, CDS IG Index ...................................................................................................................... 421
CHARTS Extreme Complacency Seen Near End of Cycles ........................................................................................................................ 421
CHARTS Complacency Seen In PE/VIX ....................................................................................................................................................... 422
CHARTS Post Crisis Sentiment Profile Shows a Clear Ending Pattern ...................................................................................................... 422
CHARTS Smart Money Flows ...................................................................................................................................................................... 423
CHARTS Fed Assets versus Bullish Sentiment ........................................................................................................................................... 423
CHARTS Macro Support Has Technically Broken Down ............................................................................................................................. 424
CHARTS US Surprise Index Setting Up for Downturn ................................................................................................................................. 424
CHARTS The Public No Longer Trusts the Market Feel it is Manipulated and Ineffectively Regulated ............................................... 425
RESEARCH OF NOTE .......................................................................................................................................................................................... 426
NEW-SENTIMENT: Its like someone just flipped the Switch to OFF? ........................................................................................................ 426
NEW-SENTIMENT: Oblivious To Risk - Complacency Still Reigns ............................................................................................................... 430
NEW-SENTIMENT: UMich Consumer Confidence Tumbles to 12-Month Lows with Biggest Miss on Record ............................................. 434
NEW-SENTIMENT: Elderly Americans' Confidence Collapses To 11-Month Lows (As Middle-Aged Hope Surges) ................................... 435
NEW-SENTIMENT: Post Q2 Quadruple Witch - Institutional Money Changing Direction ............................................................................. 437
NEW-SENTIMENT: The Worst Time In History To Be Invested In Stocks ..................................................................................................... 441
SENTIMENT: This Wasn't Supposed To Happen: Household Spending Expectations Crash ...................................................................... 446
SENTIMENT: Something's Happened To Investor Sentiment Since The Financial Crisis............................................................................. 447
SENTIMENT: The "Smart Money" Has Never Been More Bearish ................................................................................................................ 449
SENTIMENT: US Economic Confidence Crashes Most Since July to Lowest Since December ................................................................... 452
SENTIMENT: We Are All Bulls Now ................................................................................................................................................................ 454
SENTIMENT: No More Greater Fools: Retail Traders Are "Pretty Fully Invested" In Stocks, TD CEO Says ................................................ 455
SENTIMENT: One Heckuva Bull Market but Momentum Weakening! ........................................................................................................... 456
SENTIMENT: Small Business Confidence is a Major Problem in America .................................................................................................... 458
SENTIMENT: Americas Crisis of Trust ........................................................................................................................................................... 460
SENTIMENT: "Everything Is Awesome" American Consumers Are The Happiest In 11 Years .................................................................... 461
SENTIMENT: For CNBC, 2014 Was The Worst Year. Ever. .......................................................................................................................... 462
SENTIMENT: An Astounding Number Of Americans Aren't Investing A Cent ............................................................................................... 464
SENTIMENT: US Households to Withdraw $430 Billion From Stocks In 2014 .............................................................................................. 469
SENTIMENT: Elliott Wave's View from the Top .............................................................................................................................................. 472
SITUATIONAL SUMMARY & ANALYSIS .................................................................................................................................................... 476
INTERMEDIATE TERM RISK ANALYSIS ................................................................................................................................. 480

UPDATED-AGGREGATED GLOBAL FINANCIAL RISK INDEX .......................................................................................................................... 480
NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 481
NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 481
NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 482
NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 482
NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 483
NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 483
NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 485
NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 485
MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 486
NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 486


AGGREGATED RISK LEVEL ................................................................................................................................................................................ 487

CHARTS OF NOTE ............................................................................................................................................................................................... 489
NEW-RISK: Only a Few Key Stocks Holding Up the Market .......................................................................................................................... 489
NEW-RISK: Economic Output Composite Failing ........................................................................................................................................... 489
NEW-RISK: 5 Year Cyclically Adjusted P/E Ratio versus S&P Price ............................................................................................................. 490
NEW-RISK: Margin Debt Shrinking ................................................................................................................................................................. 491
NEW-RISK: xxxx.............................................................................................................................................................................................. 491
RISK: Leutholds High/Lpw Logic Index Warns .............................................................................................................................................. 491
RISK: Megaphone Top with Confirming Oscillator .......................................................................................................................................... 492
RISK: We Have Confirmed and Unusual Hindenburg Omens ........................................................................................................................ 493
RISK: It's been a while since we corrected! .................................................................................................................................................... 494
RISK: "Seven Signs" Flash Red ...................................................................................................................................................................... 496
RISK: When these Two Charts Appear Simultaneously, Bad Things Normally Follow!................................................................................. 497
RISK: Well That's Never Happened Before - Exhibit 1 US Macro versus S&P 500 .................................................................................... 497
RISK: Well That's Never Happened Before - Exhibit 2 Long- and Short-end of the Treasury yield curve so anti-correlated. ................... 498
RISK: Well That's Never Happened Before - Exhibit 3 Fed-Fueled, Mal-Investment Boom ....................................................................... 499
RISK: Well That's Never Happened Before - Exhibit 4 Market breadth diverge from performance for such an extended period.............. 500
RISK: Well That's Never Happened Before - Exhibit 5 More trades per second in stocks ......................................................................... 502
RISK: Well That's Never Happened Before - Exhibit 6 The "Smart Money" Has Never Been More Bearish .............................................. 503
RISK: Well That's Never Happened Before - Exhibit 7 Big decoupling in recent weeks between US equity flows and prices ................... 503
RISK: Well That's Never Happened Before - Exhibit 8 Cumulative 3 Mo net flows out of equities, is now the largest on record ............... 504
RISK: World Stocks versus World 2015 GDP Estimate.................................................................................................................................. 506
RISK: World Stocks versus World 2014 & 2015 GDP Estimates ................................................................................................................... 506
RISK: World Stocks versus 10Y UST Yield, WTI Crude 2015 GDP Estimates .............................................................................................. 507
RISK: Fat Tails Have Disproportionately Large Impact on Returns................................................................................................................ 508
RISK: Statistically We Are Due for a Drawdown ............................................................................................................................................. 509
RISK: The Buffett Indicator .............................................................................................................................................................................. 510
RISK: Speculation Has Taken Control of the Markets .................................................................................................................................... 511
RISK: MSCI versus World GDP Divergence - Unsustainable ........................................................................................................................ 511
RISK: High Yield Credit Risk At Elevated Levels ............................................................................................................................................ 511
RISK: Active Hindenburg Omen ...................................................................................................................................................................... 512
RISK: An Over-Levered Hedge Fund Index Ending ABC Consolidation Pattern ........................................................................................... 512
RESEARCH OF NOTE .......................................................................................................................................................................................... 514
NEW- RISK: Expert That Correctly Predicted Market Moves In July, August And September Says Stocks Will Crash In November ......... 514
NEW- RISK: 4 Warnings And Why You Should Pay Attention ....................................................................................................................... 516
NEW- RISK: According To Bank of America, This Is "The Biggest Risk to Global Equities" ......................................................................... 521
NEW- RISK: The "Smartest Money" Liquidating At a Record Pace: "Selling Everything ............................................................................. 523
NEW- RISK: Top CEO Warns Of Global Reset: "It's In The Cards For Sure... It Could Happen This Year" ................................................. 526
NEW- RISK: $140 Billion Bond Fund Goes To Cash As It "Braces For Bond-Market Collapse" ................................................................... 527
NEW- RISK: "It's Time To Hold Physical Cash", Fidelity Manager Warns Ahead Of "Systemic Event" ........................................................ 530
NEW- RISK: Sweden's Largest Fund Manager Is Quietly Dumping Stocks Before The "Herd" Is Caught In A Selling Vortex .................... 532
RISK: 12 Signs That An Imminent Global Financial Crash Has Become Even More Likely .......................................................................... 533
RISK: World's Largest Sovereign Wealth Fund Is About To Become A Seller .............................................................................................. 534
RISK: When Hindenburg Omens Are Ominous .............................................................................................................................................. 538
RISK: The Canaries Continue To Drop like Flies ............................................................................................................................................ 540
RISK: Deutsche Suggests 'Caution' As "Seven Signs" Flash Red ................................................................................................................. 542
RISK: "The Top's In" David Stockman Warns Of "Epochal Deflation" ............................................................................................................ 543
RISK: When Hindenburg Omens Are Ominous .............................................................................................................................................. 544
RISK: Two Point Three Sigmas Above the Norm ........................................................................................................................................... 546
RISK: No Really, Who is Buying? ................................................................................................................................................................... 554
RISK: Curious Sightings .................................................................................................................................................................................. 555
RISK: Even the BIS Is Shocked At How Broken Markets Have Become ....................................................................................................... 562
RISK: The Line between Rational Speculation and Market Collapse ............................................................................................................. 566
RISK: Global Economy Will Shrink By $2.3 Trillion In 2015 ........................................................................................................................... 571
RISK: Market Action Suggests Abrupt Slowing in Global Economic Activity.................................................................................................. 571
RISK: Warnings Signs Are Everywhere .......................................................................................................................................................... 575
RISK: Hindenburg Signals a Warning ............................................................................................................................................................. 576
RISK: Americans say they're too broke to invest ............................................................................................................................................ 578
RISK: The Biology of Risk ............................................................................................................................................................................... 582
RISK: More Signs Of Bullish Excess ............................................................................................................................................................... 586
RISK: Markets Have Left the "Complacency" Phase, Have Entered Full Blown "Mania" .............................................................................. 588
RISK: VIX Sends Message of Complacency ................................................................................................................................................... 589
RISK: CS Warns Volume & DeMark Raise "Topping Threat" In Stocks ......................................................................................................... 590
RISK: No One Will Ring the Bell at the Top .................................................................................................................................................... 594
Cassandra's - New Additions to the List ................................................................................................................................................................ 601
CASSANDRA: "Severe Correction Or Cyclical Bear" Ahead: Leuthold Major Trend Index Turns Negative ................................................. 602
CASSANDRA: CANARIES - Warnings Everywhere! ...................................................................................................................................... 603
CASSANDRA: Stephen Schork: The Commodity Crash Is "A Canary In The Coal Mine For The Global Economy" ................................... 605
CASSANDRA: Emerging Market Mayhem: Gross Warns Of "Debacle" As Currencies, Bonds Collapse ..................................................... 607
CASSANDRA: "Another Crisis Is Coming": Jamie Dimon Warns Of the Next Market Crash ........................................................................ 614
CASSANDRA: Steen Jakobsen: Get Ready For The Biggest Margin Call In History .................................................................................... 615
CASSANDRA: Wynn Calls "Big" Recovery "Complete Dream" As Gaming Revenues Collapse .................................................................. 617
CASSANDRA: Stan Druckenmiller's "Horrific Sense" Of Deja Vu: "This Will End Very Badly" ..................................................................... 619
CASSANDRA: Hedge Fund Legend Julian Robertson Warns Of A "Complete Explosion" Unless Fed Contains "Boiling, Bubble" ............ 624
CASSANDRA: Kyle Bass Warns "The Fed Is Backed Into A Corner... Equities Are My Biggest Liquidity Worry" ........................................ 625
CASSANDRA: Paul Tudor Jones Warns "Disastrous Market Mania" Will End In "Revolution, Taxes, or War" ............................................ 626


CASSANDRA: John Hussman - A Who's Who Of Awful Times To Invest ..................................................................................................... 628
CASSANDRA: Carl Icahn - One Day You'll See A Break Like A Few Weeks Ago But The Market Won't Come Back ................................ 631
CASSANDRA: Sam Zell Warns Of Stock Market Correction On CNBC ........................................................................................................ 632
CASSANDRA: Billionaire Carl Icahn warns on US stock prices ..................................................................................................................... 632
CASSANDRA: Soros Bets $2 Billion on Stock Market Collapse .................................................................................................................... 633
CASSANDRA: Dont Ignore Janet Yellens Stock Market Warnings 07-21-14 Fiscal Times ......................................................................... 634
CASSANDRA: Doug Kass: We're Heading for a Bear Market So Plan Accordingly ...................................................................................... 637
CASSANDRA: Comstock Funds Weighs In .................................................................................................................................................... 639
CASSANDRA: Michael Lombardi Weighs In ................................................................................................................................................... 641
CASSANDRA: Ron Paul Portfolio, 'Craziest' we've ever seen? ..................................................................................................................... 643
CASSANDRA: John Mauldin Goes Negative .................................................................................................................................................. 644
CASSANDRA: Hayman Capital Dramatically Reduces Risk .......................................................................................................................... 652
CASSANDRA: Byron Wien Warns "Oblivious Markets" Of 20% Correction ................................................................................................... 653
CASSANDRA: Harry Dent Warns Stocks to Sink More than 60% by End of 2014 ........................................................................................ 653
CASSANDRA: Stanley Druckenmiller: "When You Get This Kind Of Rigging, It Will End Badly".................................................................. 654
CASSANDRA: Mohamed El-Erian: "Prices Are Artificially High - Its Time to Take Profits" .......................................................................... 655
CASSANDRA: Felix Zulauf: World Headed Toward 1987 Style Market Collapse .......................................................................................... 656
CASSANDRA: Doug Kass: 'I'm Getting The Summer Of 1987 Feeling' In The Market Right Now ............................................................... 656
CORRELATION & COMPLACENCY A PROBLEM .............................................................................................................................................. 658
EVENT RISK A PROBLEM .................................................................................................................................................................................... 661
Q2 EARNINGS & THE R WORD .............................................................................................................................................................. 661
POLITICAL-ECONOMIC TENSIONS .......................................................................................................................................................... 661
CENTRAL BANK POLICY MISCUES.......................................................................................................................................................... 661
ASIAN ECONOMIC SLOWDOWN SPILLAGE ............................................................................................................................................ 661
PETRO$ CRISIS BREWING IN BRIICS...................................................................................................................................................... 661
LONGER TERM - FUNDAMENTAL ANALYSIS .............................................................................................................................. 662

HIGHLIGHTS ......................................................................................................................................................................................................... 662
ASSET & LIABILITY OWNERSHIP ................................................................................................................................................................. 662
PANIC TOTAL RETURN DISTRIBUTION SINCE 1974 ................................................................................................................................. 662
PANIC CHASE FOR YIELD ............................................................................................................................................................................ 663
REAL S&P MARKET CAP / REAL GDP ......................................................................................................................................................... 663
UNSUSTAINABLE GAP BETWEEN PROFITS AND INCOME ...................................................................................................................... 664
ADJUSTED CORPORATE PROFITS FROM DOMESTIC OPERATIONS .................................................................................................... 664
TRAILING 10Y 12 MONTH NET MARGINS ................................................................................................................................................... 665
INVESTMENT CLASS PERFORMANCE ....................................................................................................................................................... 666
NEW-VALUATION SUMMARY ....................................................................................................................................................................... 667
VALUATION: Alternative Methodologies ............................................................................................................................................................... 672
NEW-FOUR SET CONSOLIDATED MARKET VALUATION INDICATORS .................................................................................................. 672
NEW-Crestmont from the Arithmetic ............................................................................................................................................................... 676
NEW-Cyclical PE 10 Ratio............................................................................................................................................................................... 681
NEW-Q Ratio ................................................................................................................................................................................................... 688
NEW-S&P Composite Regression-to-the-Trend ............................................................................................................................................. 693
NEW-Reference Methodologies Analysis ....................................................................................................................................................... 695
CHARTS OF NOTE ......................................................................................................................................................................................... 701
VALUATIONS Forward 12-Month P/E Ratio 10 Years.......................................................................................................................... 701
VALUATIONS Forward 12-Month EPS versus Change in Price 10 Years ........................................................................................... 701
VALUATIONS Net Margin Growth ............................................................................................................................................................ 702
VALUATIONS 10 Year Trailing 12 Mo Net Margin Growth Historically High ........................................................................................ 702
VALUATIONS Record Profits Yet Historically Low Capital Asset Growth ............................................................................................... 703
VALUATIONS Historical Ranking of PE Values ....................................................................................................................................... 704
VALUATIONS Median Price/Cash Flow Multiple for US Stocks .............................................................................................................. 705
VALUATIONS Median Price/Earnings Multiple for US Stocks ................................................................................................................. 706
VALUATIONS Median Price to Book Multiple for US Stocks ................................................................................................................... 707
VALUATIONS Price/Book; Price/Cash flow; Price/Sales ......................................................................................................................... 708
VALUATIONS Global Equities Reported PE, PE before XO & Fwd PE ............................................................................................... 709
YE EARNINGS 2015 Forecasts.......................................................................................................................................................................... 710
CHARTS OF NOTE ......................................................................................................................................................................................... 710
2015 EARNINGS 2015 & 2016 Annual Earnings EPS Estimate v Historical........................................................................................... 710
2015 EARNINGS Q3 Earnings Estimate Revisions v Change in Price ................................................................................................... 711
2015 EARNINGS Consumer Staples & Discretionary are sending a Pretty Clear ( Worsening Since Q1) Message ............................ 712
2015 EARNINGS Consensus Long-Term Growth versus Forward PE ................................................................................................... 713
2015 EARNINGS Consensus Analysts Estimates 1979-1995 ............................................................................................................. 714
2015 EARNINGS Consensus Analysts Estimates 1995-2014 ............................................................................................................. 714
2015 EARNINGS CY 2015 Earnings Growth ........................................................................................................................................... 715
2015 EARNINGS CY 2015 Revenue Growth ........................................................................................................................................... 715
2015 EARNINGS Q2 Forward 12 Mo EPS versus Change in Price ..................................................................................................... 716
2015 EARNINGS Q1 Forward 12 PE Ratio ........................................................................................................................................... 717
RESEARCH OF NOTE .................................................................................................................................................................................... 718
2015 EARNINGS Q1 Earnings Guidance: Negative Guidance (84%) Above Average ........................................................................... 718
Q3 EARNINGS Earnings Now Surfacing as a Problem ..................................................................................................................................... 719
CHARTS OF NOTE ......................................................................................................................................................................................... 719
NEW-Q3 EARNINGS Biggest Drop in Profits Since 2009 ....................................................................................................................... 719
NEW-Q3 EARNINGS Negative Sales Surprise Ran Significantly Higher than Average ......................................................................... 719
NEW-Q3 EARNINGS Y-o-Y Change in Quarterly Earnings and Revenue for S&P 500 ......................................................................... 720


NEW-Q3 EARNINGS Forward Earnings being Brought Down Rapidly ................................................................................................... 720
NEW-Q3 EARNINGS # S&P 500 Companies Citing Negative Q3 Impacts - Reasons ........................................................................... 721
NEW-Q3 EARNINGS Q4 15 Estimated Earnings Growth Rate .............................................................................................................. 721
NEW-Q3 EARNINGS Revenue & Earnings Consensus Estimated Growth Rate .................................................................................. 722
NEW-Q3 EARNINGS Q3 EPS Expected to Fall -4.5% According to Factset .......................................................................................... 723
NEW-Q3 EARNINGS S&P 500 Average Earnings Growth Y-o-Y Not a Good Pattern ........................................................................ 723
NEW-Q3 EARNINGS Revenue Recession and Flat EPS Consensus .................................................................................................... 724
NEW-Q3 EARNINGS Forward EPS Consensus Matches Manufacturing Surveys Declines ................................................................. 724
NEW-Q3 EARNINGS Q3 Earnings Growth (Decline): Ex-BAC ............................................................................................................... 725
NEW-Q3 EARNINGS IT Sector Q3 Earnings Forecast to be Down -5.9% Without Apple (-0.4% With) ................................................. 725
NEW-Q3 EARNINGS A Good Sign that Goldman Must Be Selling? ....................................................................................................... 726
NEW-Q3 EARNINGS It Should Be Expected that Earnings Will Begin to fall ......................................................................................... 726
RESEARCH OF NOTE .................................................................................................................................................................................... 727
NEW-Q3 EARNINGS The Most Important Earnings Report You Should Know About ........................................................................... 727
NEW-Q3 EARNINGS Q3 Earnings -Where We Stand - 4 Main Themes From Calls .............................................................................. 729
NEW-Q3 EARNINGS Goldman's 4 Word Summary Of Q3 Earnings Season- -Adequate Earnings, Dismal Sales ............................... 737
NEW-Q3 EARNINGS Do You See What Happens, Alcoa, When Your "Restructuring" Non-GAAP Add-backs Tumble ....................... 742
NEW-Q3 EARNINGS Q3 Earnings Bloodbath-Terrible Monsanto Results- Company Fires 2,600 - ...................................................... 743
NEW-Q3 EARNINGS Wall Street is preparing for the worst earnings season since 2009 ................................................................... 745
NEW-Q3 EARNINGS The Truth About S&P 500 Earnings: No Growth For 7 Quarters, With A Revenue Recession On Top .............. 749
Q2 EARNINGS Reported Results....................................................................................................................................................................... 750
CHARTS OF NOTE ......................................................................................................................................................................................... 750
Q2 EARNINGS Q2 Earnings Growth by Sector ....................................................................................................................................... 750
Q2 EARNINGS Q2 Revenue Growth by Sector ....................................................................................................................................... 750
Q2 EARNINGS Q2 Earnings Growth by Sector - Estimates .................................................................................................................... 751
Q2 EARNINGS Q2 Revenue Growth by Sector Estimates ................................................................................................................... 751
RESEARCH OF NOTE .................................................................................................................................................................................... 753
Q2 EARNINGS Q2 Summary ................................................................................................................................................................... 753
Q2 EARNINGS Percentage of Companies Beating Revenue Estimates (52%) is Below 5 Year Average ............................................. 754
Q2 EARNINGS Forward Earnings, Revenue and Margins ...................................................................................................................... 755
Q2 EARNINGS First Decline in Earnings (-1.3%) Since Q3 2012 (-1.06%) ............................................................................................ 756
Q2 EARNINGS First Back-to-Back Declines in Revenue Since Q2 2009 and Q3 2009 ......................................................................... 757
Q1 EARNINGS Reported Results....................................................................................................................................................................... 758
CHARTS OF NOTE ......................................................................................................................................................................................... 758
Q1 EARNINGS Q1 Earnings Growth by Sector ....................................................................................................................................... 758
Q1 EARNINGS Q1 Revenue Growth by Sector ....................................................................................................................................... 758
Q1 EARNINGS Q1 Earnings Growth by Sector - Estimates .................................................................................................................... 759
Q1 EARNINGS Q1 Reveue Growth by Sector - Estimates ...................................................................................................................... 759
RESEARCH OF NOTE .................................................................................................................................................................................... 760
Q1 EARNINGS Q1 Summary ................................................................................................................................................................... 760
Q1 EARNINGS Fewer Companies Beating Estimates and Sales Estimates Than Average .................................................................. 760
Q1 EARNINGS Forward Earnings, Revenue and Margins ...................................................................................................................... 762
Q1 EARNINGS First Decline in Earnings (-0.4%) Since Q3 2012 (-1.06%) ............................................................................................ 763
Q1 EARNINGS First Decline in Revenues (-2.6%) Since Q3 2012 (-11.5%) .......................................................................................... 764
BUYBACKS Widening Credit Spreads Become A Problem ............................................................................................................................... 765
CHARTS OF NOTE ......................................................................................................................................................................................... 765
NEW-BUYBACKS Outperformance of Stocks with Large Buybacks Programs vs S&P 500 .................................................................. 765
NEW-BUYBACKS Gross Leverage for Typical IG/HY Non-Financial Debt-EBITDA............................................................................ 765
NEW-BUYBACKS Equity Market Performance v S&P 500 Uses of Cash ............................................................................................... 766
NEW-BUYBACKS Default Rate v Net Equity Buybacks .......................................................................................................................... 766
NEW-BUYBACKS S&P 500 Buyback Index 200 DMA ......................................................................................................................... 767
NEW-BUYBACKS S&P 500 v Buyback Index Performance .................................................................................................................... 767
NEW-BUYBACKS S&P 500 Annualized Share Buybacks, Dividends and Earnings .............................................................................. 768
NEW-BUYBACKS The real reason for the slowdown has to do with the spread on investment grade debt .......................................... 768
NEW-BUYBACKS Falling Investment Grade Spreads Hurting Buybacks ............................................................................................... 769
NEW-BUYBACKS Quarterly Share Repurchases & No. of Companies Repurchasing Shares Slows ................................................... 769
NEW-BUYBACKS Dollar-Value Buybacks to Free Cash Flow Trailing Twelve Month Basis ............................................................... 769
NEW-BUYBACKS Nearly 25% of Annual Buybacks Occur in November & December .......................................................................... 770
RESEARCH OF NOTE .................................................................................................................................................................................... 772
NEW-BUYBACKS The Fly In The Buyback Ointment- Corporate Leverage Is At Record Levels .......................................................... 772
NEW-BUYBACKS Why The Stock Buyback Party Is Ending .................................................................................................................. 776
NEW-BUYBACKS Goldman Finds Buybacks No Longer Work To Boost Stock Prices: Two Reasons Why ......................................... 778
NEW-BUYBACKS Why Stocks Are Sliding: For The First Time Since 2009 Spending On Buybacks Surpasses Free Cash Flow ....... 781
NEW-BUYBACKS When Buybacks Fail... ................................................................................................................................................ 785
NEW-BUYBACKS "Risky Business": Companies Are Now Funding Share Buybacks By Selling Bonds To Other Companies ............ 786
NEW-BUYBACKS 94% of total S&P in 2015 will go back to shareholders, as dividends and buybacks................................................ 789
NEW-BUYBACKS CEO Pay Boosted from Giving Shareholders Cash .................................................................................................. 790
NEW-BUYBACKS Investor-CEO Feedback Loop .................................................................................................................................... 791
NEW-BUYBACKS Buybacks Account for Substantial Share of Corporate Profits .................................................................................. 792
NEW-BUYBACKS Quarterly History of Buyback Announcments ............................................................................................................ 792
NEW-BUYBACKS Buybacks as a Percentage of Total Cash Use at the Highest Level Since 2007 ...................................................... 793
NEW-BUYBACKS Weekly Buybacks and Rolling 3 Month Sum ............................................................................................................. 793
NEW-BUYBACKS What Sustained Buybacks Look Like To Rating Agencies IBM Example .............................................................. 794
NEW-BUYBACKS Dollar Volume of Share Buybacks and Dividends at Record Levels ......................................................................... 794
NEW-BUYBACKS Buybacks & Dividends Hurdle $900B in 2014 ........................................................................................................... 794
NEW-BUYBACKS The Growth of Stock Buybacks .................................................................................................................................. 795
10


NEW-BUYBACKS Buybacks & Dividends as a Percentage of Operating Earnings ................................................................................ 795

NEW-BUYBACKS Executive Compensation Structure ............................................................................................................................ 796
BUYBACKS During 2014 virtually 100% of S&P 500s reported profits of $1T were disgorged as shareholder distributions ................ 797
BUYBACKS 2015 US Equity Flows Forecast ........................................................................................................................................... 797
BUYBACKS Announced Gross Share Buybacks ..................................................................................................................................... 798
BUYBACKS Global IPO /Secondary Offerings versus Announced Gross Share Buybacks ................................................................... 798
BUYBACKS Actual Net Share Buybacks ................................................................................................................................................. 799
BUYBACKS US IPOs-Actual Buybacks and LBO .................................................................................................................................... 799
BUYBACKS Cash to Stockholders Exceeds 90% of Profits .................................................................................................................... 800
BUYBACKS Stock Repurchases Surge 30% in Q3 ................................................................................................................................. 800
nd
BUYBACKS Stock Repurchases 2 Highest on Record at $145B.......................................................................................................... 800
BUYBACKS 2914 YTD Stock Repurchases By Corporation 20 Corporations Over $4B ..................................................................... 801
BUYBACKS Operating EPS With / Without Buybacks ............................................................................................................................. 801
BUYBACKS Sales & Revenue Doesnt Support Reported EPS Due to Buyback Distortion ................................................................... 802
BUYBACKS S&P 500 Buyback Index versus S&P 500 ........................................................................................................................... 803
BUYBACKS The New S&P 500 Buyback Index TR ................................................................................................................................. 803
BUYBACKS The New S&P 500 Buyback Index Since Start of QE ......................................................................................................... 804
BUYBACKS IBM Total Debt to Equity (to Fund Buybacks) ..................................................................................................................... 804
BUYBACKS IBM Debt Issuance v Buybacks ........................................................................................................................................... 805
BUYBACKS Global FDI into Finance versus Productive Assets ............................................................................................................. 806
BUYBACKS Total Corporate Debt 35% Higher than 2008 Peak Used for Buybacks .......................................................................... 806
BUYBACKS Buyback Bonanza ................................................................................................................................................................ 807
BUYBACKS Buybacks Have Made a 1% Earnings Growth Distortion to Median S&P 500 Company ................................................... 807
BUYBACKS Top 10 Buyback Companies ................................................................................................................................................ 808
BUYBACKS Intel Buybacks ...................................................................................................................................................................... 808
BUYBACKS Shares Outstanding Back at 2000 Level ............................................................................................................................. 809
BUYBACKS Largest Volumes of Buybacks by US Listed Corporation in Last Year ............................................................................... 809
BUYBACKS Corporations Are No Longer Investing But Rather Financial Engineering Stock Prices ..................................................... 810
BUYBACKS Q2 Drop-Off Closer to Normal .......................................................................................................................................... 811
BUYBACKS Borrowing to Buy back Shares ............................................................................................................................................. 811
BUYBACKS Cyclical Nature of Buybacks Evident ................................................................................................................................... 811
BUYBACKS Major Q2 Repurchases ........................................................................................................................................................ 812
BUYBACKS Major Q1 Repurchases ........................................................................................................................................................ 812
BUYBACKS Quarterly Repurchase & Buyback Yield ............................................................................................................................... 813
BUYBACKS US Corporate Cash versus Buybacks .................................................................................................................................. 814
BUYBACKS Net Debt/EBITDA of American Non-Financial Corporations ............................................................................................... 814
BUYBACKS Stock Buybacks To Grind To A Halt Following Massive Credit Fund Outflows, "Bond Carnage" ....................................... 815
BUYBACKS"The End Of The Road" - Debt-Funded Buyback Boosts Are Finite ..................................................................................... 817
BUYBACKS Why There Is No Growth: The Entire S&P 500 Free Cash Flow Is Going Back To Shareholders ...................................... 820
BUYBACKS Do Share Buybacks Create Value? (Spoiler Alert: No) ........................................................................................................ 821
BUYBACKS Surprise! CEOs Are Getting Rich by Buying Back Stock ..................................................................................................... 823
BUYBACKSThe End of Buybacks? Goldman Warns Political Pressure On Share Repurchases Is Rising ............................................ 828
BUYBACKSCorporate Buybacks: Connecting the Dots to the F-Word .................................................................................................... 830
BUYBACKS Capex Recovery Is Worst In History, BoAML Says .............................................................................................................. 835
BUYBACKS Stock Buybacks Move to the "Terminal" Next Stage ............................................................................................................ 838
BUYBACKSOne Heckuva Bull Market ...................................................................................................................................................... 840
BUYBACKS - The US Equity Bubble Depends On Corporate Buybacks; Here's the Proof ....................................................................... 841
BUYBACKS - Why Markets Are Manic - The Fed Is Addicted To the "Easy Button" ................................................................................. 845
BUYBACKS - When $140 Billion In Buybacks Isn't Enough... .................................................................................................................... 847
BUYBACKS - "Obsessive" Buybacks Could Be Big Mistake, "Serious" People Tell Unserious People .................................................... 847
BUYBACKS - Q3 Buybacks Surging, These Are The Top 20 Repurchasers Of Their Own Stock ............................................................ 851
BUYBACKS - Accounting Magic .................................................................................................................................................................. 853
BUYBACKS - The largest source of overall US equity demand in recent years......................................................................................... 855
BUYBACKS - Has Boosted Median Earnings Growth by 100 bps for S&P 500 ......................................................................................... 858
BUYBACKS - Companies Spend Almost All Profits On Buybacks ............................................................................................................. 863
BUYBACKS - Buyback At Biggest Pace Since 2007 .................................................................................................................................. 868
BUYBACKS - Buyback Party Slowing ......................................................................................................................................................... 870
BUYBACKS - Buyback Party Slowing ......................................................................................................................................................... 875
THE $2T TAX RUSE Its a Free Ride for US Corporations ......................................................................................................................... 880
UNPRECEDENTED BUYBACKS LEVELS ................................................................................................................................................. 880
A FREE TAX RIDE....................................................................................................................................................................................... 882
GENERIC TAX EXAMPLE ........................................................................................................................................................................... 882
CHARTS OF NOTE ............................................................................................................................................................................................... 887
CHARTS Finance the Biggest Source of Corporate Funds rising from 19% to 30% .................................................................................. 887
CHARTS Average Age of Private Fixed Assets ........................................................................................................................................... 888
CHARTS Percent of Families With Business Equity .................................................................................................................................... 888
CHARTS Percent of Families With Business Equity .................................................................................................................................... 889
CHARTS New England Patriots NFL Franchise Valuation ......................................................................................................................... 890
CHARTS US Equity Market is Not Outgrowing the Economy AS Measured by the Coincident Indicator .................................................. 891
CHARTS Deviation of Earnings Above / Below Long Term Growth Trend ................................................................................................. 892
CHARTS S&P 500, Moodys Baa Corporate & 30Y UST Yields ................................................................................................................. 892
CHARTS Corporations Carrying Higher Levels of Leverage than a Few Years Ago .................................................................................. 893
CHARTS US Corporate CFROI (Cash Flow ROI) ....................................................................................................................................... 894
CHARTS Weakening Sector Retunrs ........................................................................................................................................................... 894
CHARTS SPX, Corporate Profits versus Employed Population % .............................................................................................................. 895
CHARTS Executive Incentives Distort Earnings .......................................................................................................................................... 895
11


CAPITALIZATION Market Capitalization as a % of Nominal GDP .............................................................................................................. 896

CAPITALIZATION Market Capitalization Adjusted by Gold and CPI ........................................................................................................... 897
CAPITALIZATION Market Capitalization versus Total Federal Reserve Assets ......................................................................................... 898
CAPITALIZATION Total Market Capitalization versus M2 ........................................................................................................................... 899
CAPITALIZATION Total Market Capitalization versus Monetary Base ....................................................................................................... 900
CAPITALIZATION Total Market Capitalization versus Gross Federal Debt ................................................................................................ 901
CAPITALIZATION Market Capitalization Ratios .......................................................................................................................................... 902
CAPITALIZATION Regional Corporate Loss Comparisons Problems in Japan....................................................................................... 902
CHARTS 7 Year Total Return Cycle ............................................................................................................................................................ 903
CHARTS Profit Margins Shrink as Proportion of GDP ................................................................................................................................. 903
CHARTS Q1 Earnings Pre-Announcements ................................................................................................................................................ 904
CHARTS Q1 Earnings Taken Down Dramatically ....................................................................................................................................... 904
CHARTS Q1 Earnings Already Taken Down By 5% since January ............................................................................................................ 905
CHARTS Positive & Negative Q1 Pre-Announcements .............................................................................................................................. 905
CHARTS Q1 Revenue Slippage in Last 60 Days ........................................................................................................................................ 906
CHARTS Forward 12 Month EPS vs Price: 10-Year ................................................................................................................................... 907
CHARTS Forward 12 Month EPS vs Price: 10-Year ................................................................................................................................... 907
RESEARCH OF NOTE .......................................................................................................................................................................................... 909
FUNDAMENTALS A Bad Equilibrium & How Speculative Distortion Ends ................................................................................................. 909
FUNDAMENTALS Valuations ...................................................................................................................................................................... 917
FUNDAMENTALS Corporate Profits Vaporizing .......................................................................................................................................... 922
FUNDAMENTALS Fundamentals No Longer Currently Matter - Proof ....................................................................................................... 926
FUNDAMENTALS Profit Margins - Is the Ladder Starting to Snap? ........................................................................................................... 927
FUNDAMENTALS The Great PE Multiple Expansion of 2011-2014 ........................................................................................................... 934
FUNDAMENTALS Stocks Have Never Been More Expensive Based On Long-Term Growth Forecasts .................................................. 938
FUNDAMENTALS Long Term Return Trends ............................................................................................................................................. 940
FUNDAMENTALS Profit Margins Contract as a Percentage of GDP .......................................................................................................... 942
FUNDAMENTALS Stagnant Wages a Major Contributor to Profits ............................................................................................................. 944
FUNDAMENTALS Worsening risk/reward fundamentals in US corporate credit ........................................................................................ 946
TARGETS ................................................................................................................................................................................ 950

CONCLUSIONS....................................................................................................................................................................... 954
MARKET MESSAGE ............................................................................................................................................................................................. 954
I DEFINING CHARTS ......................................................................................................................................................................................... 966
Defining Chart #3 - The Big M and Super Cycle b ..................................................................................................................................... 967
Defining Chart #4 Intermediate Term Topping Process ............................................................................................................................... 969
The Bottom Line............................................................................................................................................................................................... 972
II TARGETS ........................................................................................................................................................................................................ 975
III QUARTERLY SENTIMENT RISK AND FUNDAMENTALS ........................................................................................................................... 979
SENTIMENT .................................................................................................................................................................................................... 979
NEW-RISK ANALYSIS - Complacency .......................................................................................................................................................... 984
NEW-FUNDAMENTAL ANALYSIS Valuation Summary.............................................................................................................................. 985
IV STUDIES ........................................................................................................................................................................................................ 986
BUYBACKS Update ............................................................................................................................................................................................ 986
STUDY: BUYBACKS ............................................................................................................................................................................................. 986
CHARTS OF NOTE ......................................................................................................................................................................................... 986
NEW-BUYBACKS Buybacks & Dividends as a Percentage of Net Income ............................................................................................ 986
NEW-BUYBACKS After Historic Buybacks the Y-o-Y Change in 12 Month Profits Per Share Still Shrinks! .......................................... 987
NEW-BUYBACKS Buybacks & Dividends as a Percentage of Net Income Against Spending on Buybacks ......................................... 987
WEAKENING BREADTH Market Has Lost Momentum ..................................................................................................................................... 988
STUDY: WEAKENING BREADTH......................................................................................................................................................................... 988
CHARTS OF NOTE ......................................................................................................................................................................................... 988
NEW-BREADTH S&P 500 versus Eql/Market Capitalization Weight ...................................................................................................... 988
NEW-BREADTH Nifty and the FANGS in 2015 ....................................................................................................................................... 988
NEW-BREADTH FANG versus Original 4 Horsemen (Cisco, Intel, Microsoft, Qualcomm) .................................................................... 989
NEW-BREADTH 55% of DM Americas Index Down More Than 10% From Highs ................................................................................. 989
NEW-BREADTH Where Are All Of The New 52-Week Highs? ............................................................................................................... 990
RECESSION RUMBLINGS Revenue, Earnings & Economic ............................................................................................................................ 991
STUDY: RECESSION SIGNALS ........................................................................................................................................................................... 991
CHARTS OF NOTE ......................................................................................................................................................................................... 991
NEW-RECESSION Y-o-Y Factory Orders ................................................................................................................................................ 991
NEW-RECESSION Probability of Recession From Multivariate Models ................................................................................................. 991
NEW-RECESSION US Corporate Financing Gap Has Turned Strongly Negative ................................................................................. 992
NEW-RECESSION Profits / GDP versus Forecast Derived From Wages / GDP .................................................................................... 992
NEW-RECESSION Decline in Corporate Margins Relative to Cycle Peak ............................................................................................. 993
NEW-RECESSION Industrial Production & Index of Freight Services .................................................................................................... 993
NEW-RECESSION Rolling Over Trend in US ISM Manufacturing and ISM Services ............................................................................. 994
NEW-RECESSION Three giant booms caused by the expansion of money and credit ......................................................................... 994
NEW-RECESSION Nominal Y-o-Y GHDP tells the Real Story Slowing Growth .................................................................................. 995
Q3 EARNINGS Earnings Recession .................................................................................................................................................................. 995
STUDY: Q3 EARNINGS - ...................................................................................................................................................................................... 995
12


CHARTS OF NOTE ......................................................................................................................................................................................... 995

NEW-Q3 EARNINGS Y-o-Y Change in 12 Month Profits Per Share ....................................................................................................... 995
NEW-Q3 EARNINGS Goldman Now Forecasts Flat Margin Growth in 2016 .......................................................................................... 995
NEW-Q3 EARNINGS US Corporate Profit Growth Turns Negative......................................................................................................... 996
NEW-Q3 EARNINGS Technology Sales Growth (ex AAPL & GOOG) .................................................................................................... 996
NEW-Q3 EARNINGS Percentage of US Companies Losing Money ....................................................................................................... 998
NEW-Q3 EARNINGS The stock market more Over-valued than prior to Previous Crashes! ................................................................. 998
V - TRIGGER$ ZONES .......................................................................................................................................................................................... 999
VI - DRIVER$ & BIA$ ........................................................................................................................................................................................... 1000
13


MONTHLY PROCESS OF ABSTRACTION

The Monthly Market Analytics & Technical Analysis Report is an integral part of our monthly Process of Abstraction
research methodology. The process starts monthly from the Tipping Points and completes with a final Synthesis.
The sequence is optimized to align with the established Macro Economic Data releases.
Plan
III.
IV.
II.
Release
Date
Service
4th Week of the

Month
Coverage
Tipping Points
Tipping Points
Abstraction
Global Macro
Abstraction
US Economy
Technical Analysis
Technical Analysis
Market Analytics
Fundamental Analysis
Market Analytics
Risk Analysis
Synthesis
Commentary
Thesis
Conclusions
Global Macro Tipping Points

(GMTP)
2nd Week of the

month No later
than the 17th
Third Tuesday of
the Month
Focus
Market Analytics & Technical

Analysis (MTA)
Monthly Market Commentary

(MMC)
RISK LEVELS: HIGHLY ELEVATED
14



RPT MTA 2015 12 PEEK

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Monthly Market Analytics & Technical Analysis

DECEMBER 2015 Edition

MATA- DECEMBER 2015

1 DECEMBER 2015 Edition

Restricted & Confidential

Monthly Market Analytics & Technical Analysis

OUR APPROACH - MACRO ANALYTICS ...................................................................................................................................... 40

DECEMBER 2015 Edition

Restricted & Confidential

DECEMBER 2015 Edition

Restricted & Confidential

OUTLOOK - ANALYTICAL ANALYSIS .......................................................................................................................................... 211

DECEMBER 2015 Edition

Restricted & Confidential

DECEMBER 2015 Edition

Restricted & Confidential

RECESSION 18 Bullets Showing That A Global Recession Is Already Here.......................................................................................... 293

SHORT TERM TECHNICAL ANALYSIS ..................................................................................................................................... 359

DECEMBER 2015 Edition

Restricted & Confidential

NEW-CHARTS Small Business Sentiment Margin Squeeze .................................................................................................................... 399

INTERMEDIATE TERM RISK ANALYSIS ................................................................................................................................. 480

DECEMBER 2015 Edition

Restricted & Confidential

AGGREGATED RISK LEVEL ................................................................................................................................................................................ 487

DECEMBER 2015 Edition

Restricted & Confidential

LONGER TERM - FUNDAMENTAL ANALYSIS .............................................................................................................................. 662

DECEMBER 2015 Edition

Restricted & Confidential

DECEMBER 2015 Edition

Restricted & Confidential

NEW-BUYBACKS Buybacks & Dividends as a Percentage of Operating Earnings ................................................................................ 795

DECEMBER 2015 Edition

Restricted & Confidential

CAPITALIZATION Market Capitalization as a % of Nominal GDP .............................................................................................................. 896

TARGETS ................................................................................................................................................................................ 950

DECEMBER 2015 Edition

Restricted & Confidential

CHARTS OF NOTE ......................................................................................................................................................................................... 995

DECEMBER 2015 Edition

Restricted & Confidential

MONTHLY PROCESS OF ABSTRACTION

4th Week of the

Global Macro Tipping Points

2nd Week of the

Market Analytics & Technical

Monthly Market Commentary

RISK LEVELS: HIGHLY ELEVATED

DECEMBER 2015 Edition

Restricted & Confidential

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