Monthly Market Analytics & Technical Analysis: Full May Report - All Sections

Monthly Market Analytics & Technical Analysis
MAY 2015 Edition
FULL MAY REPORT ALL SECTIONS
MATA- MAY 2015
5/10/2015
1 MAY 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved
Restricted & Confidential

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Monthly Market Analytics & Technical Analysis

MAY 2015
HIGHLIGHTS - WHAT YOU NEED TO KNOW ................................................................................................................................. 11
SUMMARY ANALYSIS ............................................................................................................................................................................................ 12
Valuation Summary ........................................................................................................................................................................................... 20
Era of Delusional Distortions & the Super Cycle Pivot b .................................................................................................................................... 23
Defining Chart #1 - "Delusional Distortion" Expectations & the Log-Periodic Cycle ......................................................................................... 25
Defining Chart #2 - Finding the Longer Term Super Cycle Pivot b ................................................................................................................ 26
Defining Chart #3 - The Big M and Super Cycle b ....................................................................................................................................... 28
Defining Chart #4 Intermediate Term Topping Process ................................................................................................................................. 29
The Bottom Line................................................................................................................................................................................................. 31
OUR APPROACH - MACRO ANALYTICS ...................................................................................................................................... 33

MAY 2015: Global Macro Drivers ............................................................................................................................................................................ 35
NEW-WEALTH .................................................................................................................................................................................................. 38
HARD ASSETS - Gold ................................................................................................................................................................................... 38
HARD ASSETS Silver ................................................................................................................................................................................. 40
HARD ASSETS - Commodities ..................................................................................................................................................................... 41
NEW-EXCHANGE ............................................................................................................................................................................................. 42
CURRENCIES - USD .................................................................................................................................................................................... 42
CURRENCIES - EURO .................................................................................................................................................................................. 43
CURRENCIES - YEN ..................................................................................................................................................................................... 45
CARRY TRADE - The : Cross .................................................................................................................................................................. 47
CARRY TRADE - The $: Cross .................................................................................................................................................................. 50
NEW-YIELD, CREDIT & SPREAD .................................................................................................................................................................... 51
NEW-EQUITIES - Global ................................................................................................................................................................................... 53
CHARTS OF NOTE ........................................................................................................................................................................................... 54
YIELD ............................................................................................................................................................................................................. 54
NEW-YIELD Violent bond moves signal tectonic shifts in global markets ............................................................................................. 54
NEW-YIELD The great German government bond sell-off mystery ....................................................................................................... 57
NEW-YIELD Deja Vu All Over Again for the Long Bond? ...................................................................................................................... 59
NEW-YIELD The Smart Money Is Getting Long Treasury Bonds Again ................................................................................................ 60
NEW-YIELD How Much Lower Can The 30-Year Treasury Yield Go? .................................................................................................. 62
NEW-YIELD High Yield Bonds and Equities Still Haven't Converged and Corporate Yields At Historic Lows ..................................... 64
YIELD Fed versus ECB Rate Hike Expectations ..................................................................................................................................... 68
YIELD 10 Year UST versus German Bund Once in a Quarter Century Phenomenom ....................................................................... 69
YIELD First Time Ever, Central Banks Will Monetize More Than 100% Of Global Sovereign Debt ..................................................... 69
YIELD 10 Year Global Sovereign Yield Approaches 1%......................................................................................................................... 71
YIELD Likely Bounce in 10Y UST Yield Near Term ................................................................................................................................ 71
YIELD Take Away the Flows and Bad Things Begin to Happen to Yield ................................................................................................ 72
YIELD Take Away the Flows and Bad Things Begin to Happen to Yield Eurozone 10Y Bond Yields ................................................ 73
YIELD 10Y UST versus 10Y BUND ........................................................................................................................................................ 73
YIELD 1-2% YTD Drop in Global 10Y Bonds ......................................................................................................................................... 74
YIELD US stock market indices have become massively decoupled from the bond markets. .............................................................. 74
YIELD 10Y UST Disconnected from Fed Expectations Deutsche Bank ............................................................................................. 75
YIELD 10Y UST Disconnected from Fed Expectations Deutsche Bank ............................................................................................. 76
CREDIT .......................................................................................................................................................................................................... 77
NEW-CREDIT Financial Conditions Tighter Now Than At Any Point Since 2009 According To Chicago Fed ...................................... 77
CREDIT Global EM 5 Yr CDS ................................................................................................................................................................. 79
CREDIT Nothing Left to Buy In EM ......................................................................................................................................................... 81
CREDIT US Equities versus Credit ......................................................................................................................................................... 82
CREDIT Its Only About Flows Liquidity to Credit to Debt .................................................................................................................... 82
CREDIT Credit only becomes Debt through Collateral WHICH IS Created through Government Backing .......................................... 83
CREDIT US stock market indices have become massively decoupled from the Credit markets. ......................................................... 83
CURRENCIES ............................................................................................................................................................................................... 84
CURRENCIES The Rate of Change of the US$ is Disruptive ................................................................................................................ 84
CURRENCIES US$ Parabolic Surge the 2nd Biggest & Fastest Rally Ever - Extreme 11.9 Year High, ............................................. 84
CURRENCIES Inverse Pattern of USDX versus Gold ........................................................................................................................... 85
CURRENCIES Recent (more than 10% QoQ) slide in the euro is a two-standard deviation event ...................................................... 86
CURRENCIES EM Dollar Victims ........................................................................................................................................................... 86
CURRENCIES Dollar Bull May Have A Lot Longer To Run ................................................................................................................... 87
CURRENCIES EM Currencies Just Fell to 15 Year Low ....................................................................................................................... 87
CURRENCIES Yen Breaks 25 Year Trend Support ............................................................................................................................... 88
CURRENCIES Euro Falls to Lowest Level since August 2012 .............................................................................................................. 88
CURRENCIES A Rout in Emerging Market Currencies Going On with a US Short Dollar Squeeze .................................................... 89
CURRENCIES Traded Weighted Euro versus $%/Euro ........................................................................................................................ 90
COMMODITIES ............................................................................................................................................................................................. 90
NEW-COMMODITIES Are Commodities And EM Stocks Becoming Less Sensitive To The Dollar? ................................................... 90
NEW-COMMODITIES Don't Waste Your Time On Commodity ETFs ................................................................................................... 92
MAY 2015 Edition


COMMODITIES Iron Ore Prices Tell the Real Story of Global Deflation ............................................................................................. 100
COMMODITIES Global Shipping Index has Crashed To Its Lowest Level Ever ................................................................................. 101
COMMODITIES Baltic Dry, WTI Crude and 30Y Treasury All Say the Same Thing S&P Only Disenter? ....................................... 102
COMMODITIES Our Real Dr Taking Hold .......................................................................................................................................... 103
COMMODITIES Commodities in Technical Danger Zone as Global Growth Slows .......................................................................... 105
COMMODITIES Copper at Critical Support Level. ............................................................................................................................... 105
INFLATION .................................................................................................................................................................................................. 107
NEW-INFLATION Inflation Expectations & Relative Performance ....................................................................................................... 107
INFLATION US CPI 1958 2015 Annual Percentage Change ........................................................................................................ 108
INFLATION The Rise of Deflation ......................................................................................................................................................... 109
INFLATION World Inflation Falls To 59-Month Low ..................................................................................................................... 109
PRECIOUS METALS ................................................................................................................................................................................... 111
NEW-PRECIOUS METALS Gold demand in Asia hit by weak local currencies; Indian prices at discount ......................................... 111
PRECIOUS METALS Gold Tracked US Debt Until Recently Will Likely Re-Establish Long Term Pattern .................................. 112
RESEARCH OF NOTE .................................................................................................................................................................................... 113
NEW-DRIVER$ - XXX ................................................................................................................................................................................. 113
DRIVER$ - The unseen downside of strength in the dollar - The speed of the move is disruptive ............................................................ 113
DRIVER$ - Trading the Parabolic Dollar ..................................................................................................................................................... 114
DRIVER$ - Charting The Winners And Losers Of The Latest Surge In The USD ...................................................................................... 119
RISK: Risk-On versus Risk-Off .............................................................................................................................................................................. 123
RESEARCH OF NOTE .................................................................................................................................................................................... 124
NEW-RISK Countdown to the stock-market Crash of 2016 is ticking louder ........................................................................................... 124
NEW-RISK Total Assets At The Fed At Six Month Lows ......................................................................................................................... 126
NEW-RISK Economic Releases Are "Missing" In The Two Largest Countries In The World ................................................................. 129
NEW-RISK NYSE Margin Debt Charged To New All-Time Highs In March ............................................................................................ 134
NEW-RISK The Step Down In Long-Term US Growth Rates Breaks Lower........................................................................................... 136
NEW-RISK Are Asset Prices In The Midst Of A Change In Trend Or Simply A Counter-Trend Rally? .................................................. 139
NEW-RISK Equity Performance Trends Have Completely Flip-Flopped In April .................................................................................... 144
NEW-RISK Chinese Companies Keeping the Dream Alive with Leverage and Channel Stuffing .......................................................... 146
NEW-RISK Divergent Trends in Market Breadth...................................................................................................................................... 146
NEW-RISK The Plunge in Policy Uncertainty ........................................................................................................................................... 154
NEW-RISK Unbelievably, Chinese Companies Massively Increased Leverage Ratios in 2014 to Highest Ever ................................... 158
NEW-RISK Where Positive Economic Surprises Are (And Aren't) Happening ........................................................................................ 159
RISK Where Positive Economic Surprises Are (And Aren't) Happening ................................................................................................. 163
RISK Surge in European Equity Valuations ............................................................................................................................................. 167
RISK US Bond Update: High Yield Bonds and Equities Still Haven't Converged and Corporate Yields At Historic Lows ..................... 172
RISK Leadership Trends Among Developed World Sectors .................................................................................................................... 175
RISK Is the Fall in the EUR Overdone? ................................................................................................................................................... 178
RISK $20 Billion Jump In Margin Debt In February .................................................................................................................................. 181
RISK 1/4 Of All MSCI World Stocks Are Trading Above 30x PE and 4x BV ........................................................................................... 183
RISK Look to Asia for the Strongest Under the Surface Market Trends .................................................................................................. 184
RISK Country Allocation Matters .............................................................................................................................................................. 189
RISK European QE is a Sideshow, Investors Should Focus on the Real Breakout in Japan ................................................................. 191
RISK The Market Is Pricing In Two Rate Hikes In 2015 (And Four In 2016) ........................................................................................... 194
RISK Q: How Many Stocks Trade for Below Book Value? A: 12% .......................................................................................................... 195
RISK Beware the Ides of March? ............................................................................................................................................................. 196
RISK No Matter How You Slice It, Stocks Everywhere Are Just Downright Expensive, Especially in DM ............................................. 198
RISK The Strong USD Is Negatively Impacting US Trade ....................................................................................................................... 207
RISK The Dollar Is Breaking Out Again And What That Means For Stocks ............................................................................................ 210
RISK Where in the World is the Growth? EM Asia, and That's It! ............................................................................................................ 215
RISK Changes in EPS Estimates Have Been the Driver of Stock Prices Recently ................................................................................. 217
RISK Import And Export Prices Are Tumbling Downward Worldwide ..................................................................................................... 219
RISK Market Breadth Finally Confirms a New High in World Stocks ....................................................................................................... 225
RISK Most Companies In Most Countries Are Underperforming ............................................................................................................. 227
RISK CAPE Suggests Stocks Are Potentially Poised to Lose 50%-90% in the Next Two Years............................................................ 228
RISK Just One Chart ................................................................................................................................................................................ 230
RISK Stockman: "The Bottom's Not In", Why This Market Is Dumber Than A Mule ............................................................................... 231
RISK China's Stock Bubble Leaves BNP Speechless: "What Happens Next Is An Unknown-Unknown" .............................................. 235
RISK Are We in A Biotech Bubble? You Decide ...................................................................................................................................... 238
RISK Margin and Record Stock Highs...................................................................................................................................................... 243
RISK 7 Signs That A Stock Market Peak Is Happening Right Now ......................................................................................................... 246
RISK Global Economies are headed for Recession ................................................................................................................................. 250
RISK The Last 3 Times This Happened, Stocks Rolled Over .................................................................................................................. 252
RISK The Biggest Risks To Stocks In 2015: A 10-Point Analysis............................................................................................................ 254
RISK 2015 Roadmap to Crisis .................................................................................................................................................................. 257
TECHNO-FUNDAMENTALS ................................................................................................................................................................................. 261
CHARTS OF NOTE ......................................................................................................................................................................................... 261
NEW-CHARTS US Macro Surprise Index Falls at Fastest Rate Ever! ................................................................................................. 261
NEW-CHARTS US Macro Surprise Index Drop Since Bullards Fall 2014 QE4 Quote ........................................................................ 261
NEW-CHARTS Longer Term View of US Macro Surprise Index ............................................................................................................. 262
NEW-CHARTS Classic Ending Diagonal ................................................................................................................................................. 262
NEW-CHARTS Technical Pattern in Sentiment Suggests Trend Turn Approaching .............................................................................. 263
NEW-CHARTS Margin Debt & Credit Balances ....................................................................................................................................... 263
NEW-CHARTS Wedges And Triangles: Big Move Ahead? 1-SPX ...................................................................................................... 264
NEW-CHARTS Wedges And Triangles: Big Move Ahead? 2- VIX ....................................................................................................... 264
NEW-CHARTS Wedges And Triangles: Big Move Ahead? 3- GOLD .................................................................................................. 265
MAY 2015 Edition


NEW-CHARTS Wedges And Triangles: Big Move Ahead? 4- US$ ...................................................................................................... 265
NEW-CHARTS DOW Transports versus WTI Crude ............................................................................................................................... 266
CHARTS CAPE is at its 3rd highest reading going back to 1890. ........................................................................................................... 266
CHARTS Investors Intelligence Bearish Percent ..................................................................................................................................... 266
CHARTS Biotech versus S&P 500 Performance Since 1999 .................................................................................................................. 267
CHARTS US Macro Data versus Q1 15 GDP Expectations versus S&P 500 ........................................................................................ 267
CHARTS Shanghai Composite At Record Highs as Chinas Slowdown Accelerates ............................................................................. 269
CHARTS Margin Debt At Historical Levels but Showing Signs of Weakening ........................................................................................ 269
CHARTS Net Worth / GDP May Be Signaling Asset Bubble ................................................................................................................... 270
CHARTS Monthly Retail Sales v S&P 500 ............................................................................................................................................... 270
CHARTS Extreme divergence between retail-related stocks and what is actually happening at the retail sales level ........................... 271
CHARTS Momentum versus the S&P 500 index through the end of February ....................................................................................... 272
CHARTS Have the Central Bankers Lost Control? Japan & Swiss Actions Say, Yes! ............................................................................ 272
CHARTS US Dollar as compared to the annual percentage change in exports on a quarterly basis ..................................................... 273
CHARTS Bull Market In Stock Buybacks ................................................................................................................................................. 274
CHARTS "New" highs look much like the Old highs ................................................................................................................................ 274
CHARTS Only for the 4th time since 1995 have margin debt levels fallen below their 12-month moving average ................................ 275
CHARTS Only for the 4th time since 1995 have margin debt levels fallen below their 12-month moving average ................................ 276
CHARTS Have the Central Bankers Lost Control? Japan & Swiss Actions Say, Yes! ............................................................................ 278
CHARTS A Global Deflationary Shock Which May Be De-Stabilizing ..................................................................................................... 279
CHARTS Even the Bogus CPI is Falling No Pricing Power! ................................................................................................................. 280
CHARTS UST 10Y, World Exports & Copper all Suggest Mounting Global Deflationary Pressures ...................................................... 281
CHARTS Rising US Trade Deficit Says US Exporters Are Feeling Pinch ............................................................................................... 282
CHARTS Global Slowing is Real .............................................................................................................................................................. 283
CHARTS European Markets Are More Dependent on Fed B/S than ECBs B/S .................................................................................... 284
CHARTS Net New US Firms Plummets How do Markets Continue to Advance Against this? ............................................................ 285
CHARTS China Suggests Economic Growth is Steadily Slowing............................................................................................................ 286
CHARTS The Fed is Allowing the Monetary Base To Fall ....................................................................................................................... 287
CHARTS Has Everyone Been Chasing Yield in the Equity Markets? ..................................................................................................... 287
CHARTS German CPI Sending an Unmistakable Signal ........................................................................................................................ 288
CHARTS Record Profits Yet Historically Low Capital Asset Growth? ..................................................................................................... 289
CHARTS Cascading Global Deflation Signals ......................................................................................................................................... 290
CHARTS World GDP Growth Does Not Support Stock Expectations ..................................................................................................... 291
CHARTS S&P 500 versus Q4 US GDP Expectations .............................................................................................................................. 291
CHARTS WTI at 2009 Levels and Marginally Above 2008 Crisis Levels ................................................................................................ 291
CHARTS Credit Has Been Signaling a Clear Problem Ahead Since Early 2013 .................................................................................... 292
CHARTS Current Economic Cycle is Getting Old in the Tooth ............................................................................................................. 293
CHARTS Signs That Something Is Broken Somewhere Bonds, Oil versus Stocks ............................................................................. 293
CHARTS Economic Activity and CRB YoY Rapidly Diverging ................................................................................................................. 294
CHARTS Federal Reserve Assets versus Stock Prices........................................................................................................................... 294
CHARTS 8th Hindenburg Omen Within 9 Days First Occurrence in 25 Years ...................................................................................... 295
OUTLOOK - ANALYTICAL ANALYSIS .......................................................................................................................................... 296

NEW-STUDY: A DEBT SUPERCYCLE ................................................................................................................................................................. 296
CHARTS OF NOTE ......................................................................................................................................................................................... 296
NEW-SUPERCYCLE Chinese Industrial Production ............................................................................................................................... 296
NEW-SUPERCYCLE Net Selling by Foreign Holders of US Assets....................................................................................................... 296
NEW-SUPERCYCLE Net Selling by Private Foreign Holders of US Assets .......................................................................................... 297
NEW-SUPERCYCLE Six Month Cumulative Change of Holdings of US $Assets .................................................................................. 297
NEW-SUPERCYCLE Trade Weighted US$ Index .................................................................................................................................... 298
NEW-SUPERCYCLE Six Month Cumulative Change of Banks Own $ Liabilities .................................................................................. 298
NEW-SUPERCYCLE Six Month Cumulative Change of Banks Own $ Liabilities -2 .............................................................................. 298
RESEARCH OF NOTE .................................................................................................................................................................................... 300
NEW- SUPERCYCLE A Debt Super-Cycle versus Secular Demand Stagnation ................................................................................... 300
NEW- SUPERCYCLE Direct Evidence For The Supercycle .................................................................................................................... 304
NEW-STUDY: LOOMING US MARKET LIQUIDITY PROBLEM .......................................................................................................................... 311
CHARTS OF NOTE ......................................................................................................................................................................................... 311
NEW-LIQUIDITY Q2 Net Government Borrowing Temporarily Keeping Liquidity Flowing ..................................................................... 311
NEW-LIQUIDITY Quarterly Distortions? ................................................................................................................................................... 312
NEW-LIQUIDITY Quantitative Easing By Quarter .................................................................................................................................... 312
NEW-LIQUIDITY Liquidity Determines The Direction of Asset Prices ..................................................................................................... 313
NEW-LIQUIDITY Richard Duncans Liquidity Gauge Projections Through 2020 ................................................................................. 314
NEW-STUDY: THE NEW RISK FREE PARANORMAL = LESS RISK! ........................................................................................................... 315
CHARTS OF NOTE ......................................................................................................................................................................................... 315
NEW-PARANORMAL HY (Junk) Issuances Q2 and Q3 2014 ............................................................................................................... 315
NEW-PARANORMAL Disconnect Between Flows and Price .................................................................................................................. 315
NEW-PARANORMAL Flows from Equities to Bonds (But Which Bonds?).............................................................................................. 316
RESEARCH OF NOTE .................................................................................................................................................................................... 317
NEW-PARANORMAL In The New Paranormal, Junk Bonds Are A "Haven Asset" ................................................................................ 317
NEW- SUPERCYCLE No Really, Who Is Buying? .................................................................................................................................... 319
NEW-STUDY: INCREASING VOLATILITY IN THE BOND BUBBLE ................................................................................................................. 321
CHARTS OF NOTE ......................................................................................................................................................................................... 322
NEW-BOND BUBBLE Bund Rout-1 ......................................................................................................................................................... 322
NEW-BOND BUBBLE US versus German 10 Year Government Yields ................................................................................................. 323
MAY 2015 Edition


NEW-BOND BUBBLE Price Decline in 30 Year Bunds in the Last Two Weeks ..................................................................................... 324
NEW-BOND BUBBLE US 10 Year Yield .................................................................................................................................................. 324
NEW-BOND BUBBLE Euro 10 Year Yield ............................................................................................................................................... 325
NEW-BOND BUBBLE Canada 10 Year Yield .......................................................................................................................................... 325
NEW-BOND BUBBLE UK 10 Year Yield .................................................................................................................................................. 326
NEW-BOND BUBBLE Australian 10 Year Yield ....................................................................................................................................... 326
NEW-BOND BUBBLE Japanese 10 Year Yield ....................................................................................................................................... 327
RESEARCH OF NOTE .................................................................................................................................................................................... 328
NEW-BOND BUBBLE Violent bond moves signal tectonic shifts in global markets ................................................................................ 328
NEW-BOND BUBBLE The great German government bond sell-off mystery ......................................................................................... 331
NEW-BOND BUBBLE Explaining German bond yields ........................................................................................................................... 333
NEW-BOND BUBBLE Bund investors lose 25 years worth of yield in two weeks! .................................................................................. 334
NEW-BOND BUBBLE Global Bond Rout - Bund Has Sharpest Weekly Selloff In History ...................................................................... 336
NEW-BOND BUBBLE Mohamed El-Erian warns of trouble as bond liquidity dries up............................................................................ 338
NEW-BOND BUBBLE Global Bond Rout Spreads to Japan as Three-Day Break Ends ........................................................................ 339
NEW-BOND BUBBLE European 10-Year Bond Yields Spike Higher; Contagion Already? Something Worse?.................................... 340
NEW-STUDY: BUYBACKS .................................................................................................................................................................................... 345
CHARTS OF NOTE ......................................................................................................................................................................................... 345
NEW-BUYBACKS During 2014 virtually 100% of S&P 500s reported profits of $1T were disgorged as shareholder distributions ....... 345
NEW-BUYBACKS 2015 US Equity Flows Forecast ................................................................................................................................. 345
NEW-BUYBACKS Announced Gross Share Buybacks ........................................................................................................................... 346
NEW-BUYBACKS Global IPO /Secondary Offerings versus Announced Gross Share Buybacks ......................................................... 346
NEW-BUYBACKS Actual Net Share Buybacks........................................................................................................................................ 347
NEW-BUYBACKS US IPOs-Actual Buybacks and LBO .......................................................................................................................... 347
RESEARCH OF NOTE .................................................................................................................................................................................... 348
NEW-BUYBACKSOne Heckuva Bull Market ............................................................................................................................................. 348
NEW-BUYBACKS - The US Equity Bubble Depends On Corporate Buybacks; Here's The Proof ............................................................ 349
NEW-BUYBACKS - Why Markets Are Manic - The Fed Is Addicted To the "Easy Button"........................................................................ 353
NEW-BUYBACKS - When $140 Billion In Buybacks Isn't Enough... .......................................................................................................... 355
NEW-BUYBACKS - "Obsessive" Buybacks Could Be Big Mistake, "Serious" People Tell Unserious People .......................................... 355
SHORT TERM TECHNICAL ANALYSIS ..................................................................................................................................... 360

SUPPORT & RESISTANCE .................................................................................................................................................................................. 360
Gann Analysis .................................................................................................................................................................................................. 360
Boundary Conditions ....................................................................................................................................................................................... 362
Channels & Regressions ................................................................................................................................................................................. 363
Fibonacci - Controlling Time Extensions ......................................................................................................................................................... 366
Fibonacci - Controlling Price Extensions ......................................................................................................................................................... 369
Elliott Wave ...................................................................................................................................................................................................... 370
The Bottom Line............................................................................................................................................................................................... 372
SHORT TERM SENTIMENT ANALYSIS ......................................................................................... ERROR! BOOKMARK NOT DEFINED.

BUSINESS CYCLE - CONSUMER & BUSINESS SENTIMENT ........................................................................................................................... 374
A GRAPHIC HIGHLIGHT ................................................................................................................................................................................ 374
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................... 376
NEW-Consumer Confidence - Conference Board .......................................................................................................................................... 376
NEW-Consumer Sentiment - Michigan ........................................................................................................................................................... 382
NEW-Consumer Comfort - Bloomberg ............................................................................................................................................................ 383
NEW-American Association of Independent Investors ................................................................................................................................... 384
NEW-Investors Intelligence ............................................................................................................................................................................. 384
NEW-National Association of Active Investment Managers (NAAIM) ............................................................................................................ 385
NEW-Small Business Optimism ...................................................................................................................................................................... 386
NEW-Percentage Stocks above 50 & 200 DMA ............................................................................................................................................. 388
NEW-Margin Levels ......................................................................................................................................................................................... 389
Real Margin Debt as % of GDP ....................................................................................................................................................................... 395
Margin Debt versus S&P 500 .......................................................................................................................................................................... 395
Mutual Fund Cash Levels v S&P 500 .............................................................................................................................................................. 396
NEW-OSCILLATORS & BREADTH: Indicators of Importance ............................................................................................................................ 398
NEW-NYSE Overbought / Oversold ................................................................................................................................................................ 398
NEW-OEX Open Interest (Puts/Calls) ............................................................................................................................................................. 399
NEW-TRIN ....................................................................................................................................................................................................... 400
NEW-McClellan Oscillator ............................................................................................................................................................................... 401
CHARTS OF NOTE ............................................................................................................................................................................................... 402
NEW-CHARTS Investors Intelligence Bulls & Bears ................................................................................................................................... 402
NEW-CHARTS A/D Line Diverging from Price, Suggesting Weakening Momentum .................................................................................. 402
NEW-CHARTS Smart Money OEX Open Interest Put/Call Ratio Now Off the Charts! ........................................................................... 403
NEW-CHARTS XXXXX ................................................................................................................................................................................ 403
CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ........................................................................................................... 403
CHARTS Consumer Comfort Plunges Most In 10 Months .......................................................................................................................... 404
CHARTS Only 16% Think Future Employment Opportunities Will Be Better .............................................................................................. 406
CHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ............................................................................. 406
CHARTS - NFIB Small Business Sentiment ................................................................................................................................................... 407
CHARTS - Orange Book .................................................................................................................................................................................. 407
CHARTS Asset Allocation Global Equities ................................................................................................................................................ 408
CHARTS Asset Allocation Global Bonds .................................................................................................................................................. 408
MAY 2015 Edition


CHARTS Active versus Passive Funds Allocation ....................................................................................................................................... 409

CHARTS Investors Intelligence Survey of % Bears ..................................................................................................................................... 409
CHARTS Sentiment at Post 2008 Crisis Highs ............................................................................................................................................ 410
CHARTS CNBC Viewership Steadily Falling ............................................................................................................................................... 411
CHARTS Investor Allocation Trends for Stocks, Bonds and Cash .............................................................................................................. 412
CHARTS Uptick in Feds Financial Stress Index Composite ....................................................................................................................... 413
CHARTS Fear Barometer Diverges with VIX, CDS IG Index ...................................................................................................................... 414
CHARTS Extreme Complacency Seen Near End of Cycles ........................................................................................................................ 414
CHARTS Complacency Seen In PE/VIX ....................................................................................................................................................... 415
CHARTS Post Crisis Sentiment Profile Shows a Clear Ending Pattern ...................................................................................................... 415
CHARTS Smart Money Flows ...................................................................................................................................................................... 416
CHARTS Fed Assets versus Bullish Sentiment ........................................................................................................................................... 416
CHARTS Macro Support Has Technically Broken Down ............................................................................................................................. 417
CHARTS US Surprise Index Setting Up for Downturn ................................................................................................................................. 417
CHARTS The Public No Longer Trusts the Market Feel it is Manipulated and Ineffectively Regulated ............................................... 418
RESEARCH OF NOTE .......................................................................................................................................................................................... 419
NEW-SENTIMENT: The "Smart Money" Has Never Been More Bearish ...................................................................................................... 419
NEW-SENTIMENT: US Economic Confidence Crashes Most Since July to Lowest Since December ......................................................... 421
NEW-SENTIMENT: We Are All Bulls Now ...................................................................................................................................................... 424
NEW-SENTIMENT: No More Greater Fools: Retail Traders Are "Pretty Fully Invested" In Stocks, TD CEO Says ...................................... 425
NEW-SENTIMENT: One Heckuva Bull Market but Momentum Weakening!.................................................................................................. 426
NEW-SENTIMENT: XXXX ............................................................................................................................................................................... 428
SENTIMENT: Small Business Confidence is a Major Problem in America .................................................................................................... 428
SENTIMENT: Americas Crisis of Trust ........................................................................................................................................................... 430
SENTIMENT: "Everything Is Awesome" American Consumers Are The Happiest In 11 Years ............................................................ 431
SENTIMENT: For CNBC, 2014 Was The Worst Year. Ever. ....................................................................................................................... 432
SENTIMENT: An Astounding Number Of Americans Aren't Investing A Cent ....................................................................................... 434
SENTIMENT: US Households to Withdraw $430 Billion From Stocks In 2014 ........................................................................................ 439
SENTIMENT: Elliott Wave's View from the Top .......................................................................................................................................... 442
SITUATIONAL SUMMARY & ANALYSIS .................................................................................................................................................... 446
INTERMEDIATE TERM RISK ANALYSIS ................................................................................................................................. 450

UPDATED-AGGREGATED GLOBAL FINANCIAL RISK INDEX .......................................................................................................................... 450
NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 451
NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 451
NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 452
NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 452
NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 452
NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 453
NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 454
NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 454
MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 455
NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 455
AGGREGATED RISK LEVEL ................................................................................................................................................................................ 456
CHARTS OF NOTE ............................................................................................................................................................................................... 458
NEW-RISK: When these Two Charts Appear Simultaneously, Bad Things Normally Follow! ....................................................................... 458
NEW-RISK: Well That's Never Happened Before - Exhibit 1 US Macro versus S&P 500 .......................................................................... 458
NEW-RISK: Well That's Never Happened Before - Exhibit 2 Long- and Short-end of the Treasury yield curve so anti-correlated. .......... 459
NEW-RISK: Well That's Never Happened Before - Exhibit 3 Fed-Fueled, Mal-Investment Boom ............................................................. 460
NEW-RISK: Well That's Never Happened Before - Exhibit 4 Market breadth diverge from performance for such an extended period .... 461
NEW-RISK: Well That's Never Happened Before - Exhibit 5 More trades per second in stocks ................................................................ 463
NEW-RISK: Well That's Never Happened Before - Exhibit 6 The "Smart Money" Has Never Been More Bearish .................................... 464
NEW-RISK: Well That's Never Happened Before - Exhibit 7 Big decoupling in recent weeks between US equity flows and prices ......... 464
NEW-RISK: Well That's Never Happened Before - Exhibit 8 Cumulative 3 Mo net flows out of equities, is now the largest on record ..... 465
RISK: World Stocks versus World 2015 GDP Estimate.................................................................................................................................. 467
RISK: World Stocks versus World 2014 & 2015 GDP Estimates ................................................................................................................... 467
RISK: World Stocks versus 10Y UST Yield, WTI Crude 2015 GDP Estimates .............................................................................................. 468
RISK: Fat Tails Have Disproportionately Large Impact on Returns................................................................................................................ 469
RISK: Statistically We Are Due for a Drawdown ............................................................................................................................................. 470
RISK: The Buffett Indicator .............................................................................................................................................................................. 471
RISK: Speculation Has Taken Control of the Markets .................................................................................................................................... 472
RISK: MSCI versus World GDP Divergence - Unsustainable ........................................................................................................................ 472
RISK: High Yield Credit Risk At Elevated Levels ............................................................................................................................................ 472
RISK: Active Hindenburg Omen ...................................................................................................................................................................... 473
RISK: An Over-Levered Hedge Fund Index Ending ABC Consolidation Pattern ........................................................................................... 473
RESEARCH OF NOTE .......................................................................................................................................................................................... 475
NEW-RISK: Two Point Three Sigmas Above the Norm.................................................................................................................................. 475
NEW-RISK: No Really, Who is Buying? .......................................................................................................................................................... 482
NEW-RISK: Curious Sightings ........................................................................................................................................................................ 483
RISK: Even the BIS Is Shocked At How Broken Markets Have Become ....................................................................................................... 490
RISK: The Line between Rational Speculation and Market Collapse ............................................................................................................. 494
RISK: Global Economy Will Shrink By $2.3 Trillion In 2015 ........................................................................................................................... 499
RISK: Market Action Suggests Abrupt Slowing in Global Economic Activity.................................................................................................. 499
RISK: Warnings Signs Are Everywhere .......................................................................................................................................................... 503
RISK: Hindenburg Signals a Warning ............................................................................................................................................................. 504
MAY 2015 Edition


RISK: Americans say they're too broke to invest ............................................................................................................................................ 506

RISK: The Biology of Risk ............................................................................................................................................................................... 510
RISK: More Signs Of Bullish Excess ............................................................................................................................................................... 514
RISK: Markets Have Left the "Complacency" Phase, Have Entered Full Blown "Mania" .............................................................................. 516
RISK: VIX Sends Message of Complacency ................................................................................................................................................... 517
RISK: CS Warns Volume & DeMark Raise "Topping Threat" In Stocks ......................................................................................................... 518
RISK: No One Will Ring the Bell at the Top .................................................................................................................................................... 522
Cassandra's - New Additions to the List ................................................................................................................................................................ 529
NEW-CASSANDRA: "Another Crisis Is Coming": Jamie Dimon Warns Of the Next Market Crash ............................................................... 530
NEW-CASSANDRA: Steen Jakobsen: Get Ready For The Biggest Margin Call In History .......................................................................... 531
NEW-CASSANDRA: Wynn Calls "Big" Recovery "Complete Dream" As Gaming Revenues Collapse ........................................................ 533
NEW-CASSANDRA: Stan Druckenmiller's "Horrific Sense" Of Deja Vu: "This Will End Very Badly" ............................................................ 535
NEW-CASSANDRA: Hedge Fund Legend Julian Robertson Warns Of A "Complete Explosion" Unless Fed Contains "Boiling, Bubble"... 540
NEW-CASSANDRA: Kyle Bass Warns "The Fed Is Backed Into A Corner... Equities Are My Biggest Liquidity Worry" .............................. 541
NEW-CASSANDRA: Paul Tudor Jones Warns "Disastrous Market Mania" Will End In "Revolution, Taxes, or War" ................................... 542
NEW-CASSANDRA: John Hussman - A Who's Who Of Awful Times To Invest ............................................................................................ 544
CASSANDRA: Carl Icahn - One Day You'll See A Break Like A Few Weeks Ago But The Market Won't Come Back ................................ 547
CASSANDRA: Sam Zell Warns Of Stock Market Correction On CNBC ........................................................................................................ 548
CASSANDRA: Billionaire Carl Icahn warns on US stock prices ..................................................................................................................... 548
CASSANDRA: Soros Bets $2 Billion on Stock Market Collapse .................................................................................................................... 549
CASSANDRA: Dont Ignore Janet Yellens Stock Market Warnings 07-21-14 Fiscal Times ......................................................................... 550
CASSANDRA: Doug Kass: We're Heading for a Bear Market So Plan Accordingly ...................................................................................... 553
CASSANDRA: Comstock Funds Weighs In .................................................................................................................................................... 555
CASSANDRA: Michael Lombardi Weighs In ................................................................................................................................................... 557
CASSANDRA: Ron Paul Portfolio, 'Craziest' we've ever seen? ..................................................................................................................... 559
CASSANDRA: John Mauldin Goes Negative .................................................................................................................................................. 560
CASSANDRA: Hayman Capital Dramatically Reduces Risk .......................................................................................................................... 568
CASSANDRA: Byron Wien Warns "Oblivious Markets" Of 20% Correction ................................................................................................... 569
CASSANDRA: Harry Dent Warns Stocks to Sink More than 60% by End of 2014 ........................................................................................ 569
CASSANDRA: Stanley Druckenmiller: "When You Get This Kind Of Rigging, It Will End Badly".................................................................. 570
CASSANDRA: Mohamed El-Erian: "Prices Are Artificially High - Its Time to Take Profits" .......................................................................... 571
CASSANDRA: Felix Zulauf: World Headed Toward 1987 Style Market Collapse .......................................................................................... 572
CASSANDRA: Doug Kass: 'I'm Getting The Summer Of 1987 Feeling' In The Market Right Now ............................................................... 572
CORRELATION & COMPLACENCY A PROBLEM .............................................................................................................................................. 574
EVENT RISK A PROBLEM .................................................................................................................................................................................... 577
Q2 EARNINGS & THE R WORD .............................................................................................................................................................. 577
POLITICAL-ECONOMIC TENSIONS .......................................................................................................................................................... 577
CENTRAL BANK POLICY MISCUES.......................................................................................................................................................... 577
ASIAN ECONOMIC SLOWDOWN SPILLAGE ............................................................................................................................................ 577
PETRO$ CRISIS BREWING IN BRIICS...................................................................................................................................................... 577
LONGER TERM - FUNDAMENTAL ANALYSIS .............................................................................................................................. 578

HIGHLIGHTS ......................................................................................................................................................................................................... 578
ASSET & LIABILITY OWNERSHIP ................................................................................................................................................................. 578
PANIC TOTAL RETURN DISTRIBUTION SINCE 1974 ................................................................................................................................. 578
PANIC CHASE FOR YIELD ............................................................................................................................................................................ 579
REAL S&P MARKET CAP / REAL GDP ......................................................................................................................................................... 579
UNSUSTAINABLE GAP BETWEEN PROFITS AND INCOME ...................................................................................................................... 580
ADJUSTED CORPORATE PROFITS FROM DOMESTIC OPERATIONS .................................................................................................... 580
TRAILING 10Y 12 MONTH NET MARGINS ................................................................................................................................................... 581
INVESTMENT CLASS PERFORMANCE ....................................................................................................................................................... 582
NEW-VALUATION SUMMARY ....................................................................................................................................................................... 583
VALUATION: Alternative Methodologies ............................................................................................................................................................... 588
NEW-FOUR SET CONSOLIDATED MARKET VALUATION INDICATORS .................................................................................................. 588
NEW-Crestmont from the Arithmetic ............................................................................................................................................................... 593
NEW-Cyclical PE 10 Ratio............................................................................................................................................................................... 595
NEW-Q Ratio ................................................................................................................................................................................................... 601
NEW-S&P Composite Regression-to-the-Trend ............................................................................................................................................. 606
NEW-Reference Methodologies Analysis ....................................................................................................................................................... 608
CHARTS OF NOTE ......................................................................................................................................................................................... 613
NEW-VALUATIONS Forward 12-Month P/E Ratio 10 Years ................................................................................................................ 613
NEW-VALUATIONS Forward 12-Month EPS versus Change in Price 10 Years ................................................................................. 613
NEW-VALUATIONS Net Margin Growth .................................................................................................................................................. 614
NEW-VALUATIONS 10 Year Trailing 12 Mo Net Margin Growth Historically High .............................................................................. 614
NEW-VALUATIONS XXXX ....................................................................................................................................................................... 615
VALUATIONS Record Profits Yet Historically Low Capital Asset Growth ............................................................................................... 616
VALUATIONS Historical Ranking of PE Values ....................................................................................................................................... 617
VALUATIONS Median Price/Cash Flow Multiple for US Stocks .............................................................................................................. 618
VALUATIONS Median Price/Earnings Multiple for US Stocks ................................................................................................................. 619
VALUATIONS Median Price to Book Multiple for US Stocks ................................................................................................................... 620
VALUATIONS Price/Book; Price/Cash flow; Price/Sales ......................................................................................................................... 621
VALUATIONS Global Equities Reported PE, PE before XO & Fwd PE ............................................................................................... 622
STUDY: EARNINGS 2015 Forecasts ................................................................................................................................................................. 623
CHARTS OF NOTE ......................................................................................................................................................................................... 623
NEW-2015 EARNINGS Consumer Staples and Discretionary are sending a Pretty Clear Message ..................................................... 623
MAY 2015 Edition


2015 EARNINGS Consensus Long-Term Growth versus Forward PE ................................................................................................... 624

2015 EARNINGS Consensus Analysts Estimates 1979-1995 ............................................................................................................. 625
2015 EARNINGS Consensus Analysts Estimates 1995-2014 ............................................................................................................. 625
2015 EARNINGS CY 2015 Earnings Growth ........................................................................................................................................... 626
2015 EARNINGS CY 2015 Revenue Growth ........................................................................................................................................... 627
2015 EARNINGS Q1 Forward 12 Mo EPS versus Change in Price ..................................................................................................... 628
2015 EARNINGS Q1 Forward 12 PE Ratio ........................................................................................................................................... 629
RESEARCH OF NOTE .................................................................................................................................................................................... 630
2015 EARNINGS Q1 Earnings Guidance: Negative Guidance (84%) Above Average ........................................................................... 630
Q1 EARNINGS Reported Results....................................................................................................................................................................... 631
CHARTS OF NOTE ......................................................................................................................................................................................... 631
NEW-Q1 EARNINGS Q1 Earnings Growth by Sector ............................................................................................................................. 631
NEW-Q1 EARNINGS Q1 Revenue Growth by Sector ............................................................................................................................. 631
NEW-Q1 EARNINGS Q1 Earnings Growth by Sector - Estimates .......................................................................................................... 632
NEW-Q1 EARNINGS Q1 Reveue Growth by Sector - Estimates ............................................................................................................ 632
RESEARCH OF NOTE .................................................................................................................................................................................... 633
NEW-Q1 EARNINGS Q1 Summary ......................................................................................................................................................... 633
NEW-Q1 EARNINGS Fewer Companies Beating Estimates and Sales Estimates Than Average ......................................................... 633
NEW-Q1 EARNINGS Forward Earnings, Revenue and Margins ............................................................................................................ 635
NEW-Q1 EARNINGS First Decline in Earnings (-0.4%) Since Q3 2012 (-1.06%) .................................................................................. 636
NEW-Q1 EARNINGS First Decline in Revenues (-2.6%) Since Q3 2012 (-11.5%) ................................................................................ 637
CHARTS OF NOTE ............................................................................................................................................................................................... 638
CHARTS Finance the Biggest Source of Corporate Funds rising from 19% to 30% .................................................................................. 638
CHARTS Average Age of Private Fixed Assets ........................................................................................................................................... 639
CHARTS Percent of Families With Business Equity .................................................................................................................................... 639
CHARTS Percent of Families With Business Equity .................................................................................................................................... 640
CHARTS New England Patriots NFL Franchise Valuation ......................................................................................................................... 641
CHARTS US Equity Market is Not Outgrowing the Economy AS Measured by the Coincident Indicator .................................................. 642
CHARTS Deviation of Earnings Above / Below Long Term Growth Trend ................................................................................................. 643
CHARTS S&P 500, Moodys Baa Corporate & 30Y UST Yields ................................................................................................................. 643
CHARTS Corporations Carrying Higher Levels of Leverage than a Few Years Ago .................................................................................. 644
CHARTS US Corporate CFROI (Cash Flow ROI) ....................................................................................................................................... 645
CHARTS Weakening Sector Retunrs ........................................................................................................................................................... 645
CHARTS SPX, Corporate Profits versus Employed Population % .............................................................................................................. 646
CHARTS Executive Incentives Distort Earnings .......................................................................................................................................... 646
CAPITALIZATION Market Capitalization as a % of Nominal GDP .............................................................................................................. 647
CAPITALIZATION Market Capitalization Adjusted by Gold and CPI ........................................................................................................... 648
CAPITALIZATION Market Capitalization versus Total Federal Reserve Assets ......................................................................................... 649
CAPITALIZATION Total Market Capitalization versus M2 ........................................................................................................................... 650
CAPITALIZATION Total Market Capitalization versus Monetary Base ....................................................................................................... 651
CAPITALIZATION Total Market Capitalization versus Gross Federal Debt ................................................................................................ 652
CAPITALIZATION Market Capitalization Ratios .......................................................................................................................................... 653
CAPITALIZATION Regional Corporate Loss Comparisons Problems in Japan....................................................................................... 653
CHARTS 7 Year Total Return Cycle ............................................................................................................................................................ 654
CHARTS Profit Margins Shrink as Proportion of GDP ................................................................................................................................. 654
CHARTS Q1 Earnings Pre-Announcements ................................................................................................................................................ 655
CHARTS Q1 Earnings Taken Down Dramatically ....................................................................................................................................... 655
CHARTS Q1 Earnings Already Taken Down By 5% since January ............................................................................................................ 656
CHARTS Positive & Negative Q1 Pre-Announcements .............................................................................................................................. 656
CHARTS Q1 Revenue Slippage in Last 60 Days ........................................................................................................................................ 657
CHARTS Forward 12 Month EPS vs Price: 10-Year ................................................................................................................................... 658
CHARTS Forward 12 Month EPS vs Price: 10-Year ................................................................................................................................... 658
RESEARCH OF NOTE .......................................................................................................................................................................................... 660
NEW-FUNDAMENTALS Corporate Profits Vaporizing ................................................................................................................................ 660
NEW-FUNDAMENTALS Fundamentals No Longer Currently Matter - Proof ............................................................................................. 664
NEW-FUNDAMENTALS Profit Margins - Is the Ladder Starting to Snap?.................................................................................................. 665
FUNDAMENTALS The Great PE Multiple Expansion of 2011-2014 ........................................................................................................... 672
FUNDAMENTALS Stocks Have Never Been More Expensive Based On Long-Term Growth Forecasts .................................................. 676
FUNDAMENTALS Long Term Return Trends ............................................................................................................................................. 678
FUNDAMENTALS Profit Margins Contract as a Percentage of GDP .......................................................................................................... 680
FUNDAMENTALS Stagnant Wages a Major Contributor to Profits ............................................................................................................. 682
FUNDAMENTALS Worsening risk/reward fundamentals in US corporate credit ........................................................................................ 684
BUYBACKS Situational Assessment .................................................................................................................................................................. 688
CHARTS OF NOTE ......................................................................................................................................................................................... 688
BUYBACKS Cash to Stockholders Exceeds 90% of Profits .................................................................................................................... 691
BUYBACKS Stock Repurchases Surge 30% in Q3 ................................................................................................................................. 691
BUYBACKS Stock Repurchases 2nd Highest on Record at $145B.......................................................................................................... 691
BUYBACKS 2914 YTD Stock Repurchases By Corporation 20 Corporations Over $4B ..................................................................... 692
BUYBACKS Operating EPS With / Without Buybacks ............................................................................................................................. 692
MAY 2015 Edition


BUYBACKS Sales & Revenue Doesnt Support Reported EPS Due to Buyback Distortion ................................................................... 693
BUYBACKS S&P 500 Buyback Index versus S&P 500 ........................................................................................................................... 694
BUYBACKS The New S&P 500 Buyback Index TR ................................................................................................................................. 694
BUYBACKS The New S&P 500 Buyback Index Since Start of QE ......................................................................................................... 695
BUYBACKS IBM Total Debt to Equity (to Fund Buybacks) ..................................................................................................................... 695
BUYBACKS IBM Debt Issuance v Buybacks ........................................................................................................................................... 696
BUYBACKS Global FDI into Finance versus Productive Assets ............................................................................................................. 697
BUYBACKS Total Corporate Debt 35% Higher than 2008 Peak Used for Buybacks .......................................................................... 697
BUYBACKS Buyback Bonanza ................................................................................................................................................................ 698
BUYBACKS Buybacks Have Made a 1% Earnings Growth Distortion to Median S&P 500 Company ................................................... 698
BUYBACKS Top 10 Buyback Companies ................................................................................................................................................ 699
BUYBACKS Intel Buybacks ...................................................................................................................................................................... 699
BUYBACKS Shares Outstanding Back at 2000 Level ............................................................................................................................. 700
BUYBACKS Largest Volumes of Buybacks by US Listed Corporation in Last Year ............................................................................... 700
BUYBACKS Corporations Are No Longer Investing But Rather Financial Engineering Stock Prices ..................................................... 701
BUYBACKS Q2 Drop-Off Closer to Normal .......................................................................................................................................... 702
BUYBACKS Borrowing to Buy back Shares ............................................................................................................................................. 702
BUYBACKS Cyclical Nature of Buybacks Evident ................................................................................................................................... 702
BUYBACKS Major Q2 Repurchases ........................................................................................................................................................ 703
BUYBACKS Major Q1 Repurchases ........................................................................................................................................................ 703
BUYBACKS Quarterly Repurchase & Buyback Yield ............................................................................................................................... 704
BUYBACKS US Corporate Cash versus Buybacks .................................................................................................................................. 705
BUYBACKS Net Debt/EBITDA of American Non-Financial Corporations ............................................................................................... 705
RESEARCH OF NOTE .................................................................................................................................................................................... 706
NEW-BUYBACKS - The US Equity Bubble Depends On Corporate Buybacks; Here's The Proof ............................................................ 706
NEW-BUYBACKS - Why Markets Are Manic - The Fed Is Addicted To the "Easy Button"........................................................................ 710
NEW-BUYBACKS - When $140 Billion In Buybacks Isn't Enough... .......................................................................................................... 712
NEW-BUYBACKS - "Obsessive" Buybacks Could Be Big Mistake, "Serious" People Tell Unserious People .......................................... 712
BUYBACKS - Q3 Buybacks Surging, These Are The Top 20 Repurchasers Of Their Own Stock ............................................................ 716
BUYBACKS - Accounting Magic .................................................................................................................................................................. 718
BUYBACKS - The largest source of overall US equity demand in recent years......................................................................................... 720
BUYBACKS - Has Boosted Median Earnings Growth by 100 bps for S&P 500 ......................................................................................... 723
BUYBACKS - Companies Spend Almost All Profits On Buybacks ............................................................................................................. 728
BUYBACKS - Buyback At Biggest Pace Since 2007 .................................................................................................................................. 732
BUYBACKS - Buyback Party Slowing ......................................................................................................................................................... 734
BUYBACKS - Buyback Party Slowing ......................................................................................................................................................... 739
THE $2T TAX RUSE Its a Free Ride for US Corporations ......................................................................................................................... 744
UNPRECEDENTED BUYBACKS LEVELS ................................................................................................................................................. 744
A FREE TAX RIDE....................................................................................................................................................................................... 746
GENERIC TAX EXAMPLE ........................................................................................................................................................................... 746
TARGETS ................................................................................................................................................................................ 751

CONCLUSIONS....................................................................................................................................................................... 753
MARKET MESSAGE ............................................................................................................................................................................................. 753
I- DEFINING CHARTS ........................................................................................................................................................................................... 761
Defining Chart #2 - Finding the Longer Term Super Cycle Pivot b .............................................................................................................. 761
Defining Chart #3 - The Big M and Super Cycle b ..................................................................................................................................... 763
Defining Chart #3 - The Big M and Super Cycle b ..................................................................................................................................... 763
Defining Chart #4 Intermediate Term Topping Process ............................................................................................................................... 764
The Bottom Line............................................................................................................................................................................................... 766
II- TARGETS .......................................................................................................................................................................................................... 768
III QUARTERLY SENTIMENT RISK AND FUNDAMENTALS ........................................................................................................................... 770
NEW-SENTIMENT .......................................................................................................................................................................................... 770
NEW-FUNDAMENTAL ANALYSIS ................................................................................................................................................................. 773
NEW-RISK ANALYSIS .................................................................................................................................................................................... 774
IV STUDIES ........................................................................................................................................................................................................ 775
NEW-STUDY: A DEBT SUPERCYCLE ................................................................................................................................................................. 775
CHARTS OF NOTE ......................................................................................................................................................................................... 775
NEW-SUPERCYCLE Chinese Industrial Production ............................................................................................................................... 775
NEW-SUPERCYCLE Net Selling by Foreign Holders of US Assets....................................................................................................... 775
NEW-SUPERCYCLE Net Selling by Private Foreign Holders of US Assets .......................................................................................... 776
NEW-SUPERCYCLE Six Month Cumulative Change of Holdings of US $Assets .................................................................................. 776
NEW-SUPERCYCLE Trade Weighted US$ Index .................................................................................................................................... 777
NEW-SUPERCYCLE Six Month Cumulative Change of Banks Own $ Liabilities .................................................................................. 777
NEW-SUPERCYCLE Six Month Cumulative Change of Banks Own $ Liabilities -2 .............................................................................. 777
NEW-STUDY: LOOMING US MARKET LIQUIDITY PROBLEM .......................................................................................................................... 779
CHARTS OF NOTE ......................................................................................................................................................................................... 779
NEW-LIQUIDITY Q2 Net Government Borrowing Temporarily Keeping Liquidity Flowing ..................................................................... 779
NEW-LIQUIDITY Quarterly Distortions? ................................................................................................................................................... 780
NEW-LIQUIDITY Quantitative Easing By Quarter .................................................................................................................................... 780
NEW-LIQUIDITY Liquidity Determines The Direction of Asset Prices ..................................................................................................... 781
NEW-LIQUIDITY Richard Duncans Liquidity Gauge Projections Through 2020 ................................................................................. 782
MAY 2015 Edition


CHARTS OF NOTE ......................................................................................................................................................................................... 783

CHARTS OF NOTE ......................................................................................................................................................................................... 785
NEW-STUDY: INCREASING VOLATILITY IN THE BOND BUBBLE ................................................................................................................. 787
CHARTS OF NOTE ......................................................................................................................................................................................... 788
NEW-BOND BUBBLE US versus German 10 Year Government Yields ................................................................................................. 789
NEW-BOND BUBBLE Price Decline in 30 Year Bunds in the Last Two Weeks ..................................................................................... 790
NEW-STUDY: BUYBACKS .................................................................................................................................................................................... 791
CHARTS OF NOTE ......................................................................................................................................................................................... 791
V - TRIGGER$ ZONES .......................................................................................................................................................................................... 794
VI - DRIVER$ & BIA$ ............................................................................................................................................................................................. 795
VIII- GORD'S VIEWS & OPINIONS ....................................................................................................................................................................... 796
SENTIMENT & CONFIDENCE - NERVOUSNESS ........................................................................................................................................ 804
MARKET AT HISTORIC HIGHS ..................................................................................................................................................................... 809
The Intrinsic Enterprise Value ...................................................................................................................................................................... 814
Stock Valuations are based on a Discounted Free Cash flow. EBITDA is Cash flow. ............................................................................... 815
How Long Will Labor Tolerate this or Survive on Shrinking Disposable Income? ...................................................................................... 816
Have a Look at the Market Deflated by QE ................................................................................................................................................. 816
10
MAY 2015 Edition



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