built by advisors for advisors in a world dominated by smarter and smarter gadgets, one of the...

Built By Advisors For Advisors

In a world dominated by smarter and smarter gadgets, one of the dumbest machines on earth is making a quiet comeback.

THE USELESS MACHINE TURN IT ON AND A SWITCH POPS OUT TO TURN IT OFF??

YIKES! ONLY$29.95

Source: Wall Street Journal 3/12/2013

TRUE STORY??!!


BIGFOOT INVESTMENTS OPEN FORUM

Mar 14th, 2013

WELCOME!


AGENDA WELCOME! ADMIN NOTESQUOTE OF THE DAYOPTIMISM GAUGECHARTS OF INTERESTSO WHAT’S UP WITH: INTEREST RATESA CLOSER LOOK AT: ALK DAVID’S CORNERSWAPS AND SPREADSLEE’S COMMENTS QUESTIONS/COMMENTS


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“NOTES”


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QUOTE OF THE DAY:The two most powerful things in existence:…

Ken Langone – Founder Home Depot

…….A kind word and thoughtful gesture!


Optimism Gauge

As of: 3/14/2013

Indicator Current Value Prior/Metric Value Current Value

St Louis Fed Financial Stress Index -.549 -0.597(Revised) +1.0

Chicago Fed National Act Index (3 Mon Mov Av) 0.30 0.23(Revised) +.50

Unemployment 7.7 7.9 (Revised) +.50

Weekly Jobless Claims (4Wk Mov Av) 346,750 349,500(Revised) +.50

ECRI Weekly Index 6.2 6.8 +.50

Conf Board Leading Indicators (NEW) 94.1 93.9 +1.0

University of Michigan Sentiment - Final 77.6(Final – Feb 2013) 73.8(Final-Jan 2012) -.25

Monthly Retail Sales (Adjusted) 416,990 416,070 +.50

NFIB Small Business Sentiment 90.8 88.9 -.50

ISM Manufacturing 54.2(Expansion Line = 50) 53.1 +.50

Economic Capacity Utilization 79.1 79.3(Revised) +.50

Stock Market Moving Averages Weekly Data Points >50-day MA/>100-Day MA N/A

+.50

S&P Case-Shiller 20 City Comp Index 145.95 145.82 (Revised) +.50

Total +5.75Last Update: 3/14/2013

Measuring Our Economy

NOTES/COMMENTS

CURRENT READING: 76.3%

PRIOR READING: 72.0%

BIAS: BULLISH

11 OF 13 INDICATORS POSITIVE

TREND - POSITIVE

EconomicOptimism

Index

15

25

35

45 65

75

85

95

76.3%

READING AS OF: 3/14/2013

POSITIVE AS OF: 8/17/2012

Current Reading Prior Reading

Measuring Our Economy


Charts of Interest!


BEFORE AND AFTER – HOW ARE WE DOING?2007 to NOW

Source: Wall Street Journal


5 REASONS THE ECONOMY IS NOT EXPANDING


REASON #1 – THE MONEY IS JUST SITTING!

EXCESS RESERVES GROWING

MONEY VELOCITY

DECREASING

MONEY SUPPLY

GROWING

Source: Federal Reserve Bank of St Louis


REASON #2 – SMALL BUSINESSES OUTLOOK: POOR

Source: Calculated Risk

Below 95% of Pre-Recession

Level


REASON #3 – LABOR FORCE METRICS MASK A PROBLEM

Source: Federal Reserve Bank of St Louis

FEB 201363.5%

Feb 200766.3%


Business Investment – Down 25%

Source: Bureau of Economic Analysis

17.4% of GDP 13.1% of GDP

REASON #4 – GDP NOT GROWING FAST ENOUGH


REASON #5 – THE JOBS GAP

Source: The Hamilton Project

Getting back to“normal” will be tough

Most Likely Path

Built By Advisors For AdvisorsSource: ICI

MONEY FLOWS

NO “ROTATION” YET!Flows into bond funds

actually increased

Built By Advisors For AdvisorsSource: Political Calculations

CHANGES CAN HAVE CONSEQUENCES


BigFoot News The “Portfolio” Tab


4 Sections


Trade Log Excel file

To Override BigFoot System

Trade Date Breakout/Edit

To Remove Position


Monthly Returns

- Current Data- Historical Stats- Strategy Stats- Comparison to the Market


SO WHAT’S UP WITH:

INTEREST RATES – BERNANKE “SPEAK”


Recently (3/1/2013) Chairman Bernanke made a speech to the Annual Monetary/Macroeconomics Conference in San Francisco:

“LONG-TERM INTEREST RATES”

DISECTING THE SPEECH (AGREE OR NOT) WILL TELL YOU HOWTHE FED VIEWS RATES AND WHY. WE SHOULD LISTEN!


WHY ARE RATES SO LOW? Central Banks pursuing accommodative policy

Boost Growth Reduce slack in economy

Broader economic environment (world-view) Constraints that environment places on policy

→ The first one is obvious→ The last two are also “policy drivers”


BROADER ECONOMIC PICTURE

Global Yields “Conform”


BASIS FOR 10 YEAR U.S. RATES (CONSTRAINTS)

THREE FACTORS*:1. Expected Inflation2. Expected path of “real” rates3. Residual rate or Term Premium

*COMPONENTS OF YIELD


Note decline in Term Premium

If inflation is close to NOMINAL rate – the other two components make slightly “negative” contributions


FACTORS AT WORK: Ten year yield is an expectation Fed effects changes in “nominal” rates If inflation moves slowly, real rates are “controlled” In the longer term (real world) rates are determined

primarily by NON-MONETARY FACTORS The 10-year rate is “predictive” of expectations of a

slow cyclical recovery and slow long-term growth rates


MOVING FORWARD (THE DYNAMIC)

…”Move toward more normal rates over the next several years”

“Normalization of Term Premium might also contribute “(to the rise)

“Next chart illustrates (4) possible paths….” “…the basic message is clear—long-term interest rates are

expected to rise gradually over the next few years”

Source: Bernanke quotes in speech


RATE ESTIMATES MOVING FORWARD


RANGE COMPUTATIONS

Note: Up/Down ranges are quite equalized


RISKS FROM THE FED PERSPECTIVE

RATES WILL REMAIN LOWTHEY WILL NOT

“I hope my discussion this evening has convinced you that, at least in economic circumstances of the sort that prevail today, such an approach [increasing rates] could be quite costly and

might well be counterproductive from the standpoint of promoting financial stability.”

FED POSITION


A CLOSER LOOK AT: ALK

Alaska Air Group, Inc (ALK)Alaska Air Group, Inc., through its subsidiaries, provides scheduled air

transportation for passengers and cargo. It offers extensive north/south service within the western United States, Canada, and Mexico; passenger and cargo services to and within the state of Alaska; and long-haul east/west service to

Hawaii and 13 cities in the mid-continental and eastern United States. The company offers passenger air services to approximately 24 million passengers and fly to approximately 100 destinations. As of December 31, 2011, its fleet consisted

of 117 Boeing 737 jet aircraft and 48 Bombardier Q400 turboprop aircraft. The company was founded in 1932 and is based in Seattle, Washington.

Source: FinViz.com, March 2013

Sources: Value Line, March 2013

POSITIVES: Alaska Air offered new flights which helped add to their 8% increase over 2011 numbers. Passenger revenue per available seat mile also increased nearly 3%. Lower fuel expenses offset higher maintenance and ancillary costs. All told, earnings grew 21% year over year.

Possible concerns: If fuel prices spike or the global economy fails to gain sufficient traction, it would surely weigh on results of the forthcoming fleet modernization program.

Alaska Air Group, Inc (ALK)


Enters Portfolio


ENTERS PORTFOLIO 3/1/2013 – BUY SIGNALPurchase at $54.11

March 2013 Stock Picks

As of February 28, 2013 - Subject to change.

3


Barclays Upgrade 3/4/2013Target $63.00

FINVIZ SUMMARY


FEB 2013 DATAImproving Steadily In All Metrics

February Year-to-Date

2013 2012 Change 2013 2012 Change

Revenue passengers (in thousands) 1,376 1,341 2.6% 2,854 2,695 5.9%

Revenue passenger miles RPM (in millions) 1,870 1,761 6.2% 3,902 3,577 9.1%

Available seat miles ASM (in millions) 2,198 2,085 5.4% 4,632 4,256 8.8%

Passenger load factor 85.1% 84.5% 0.6 bps 84.2% 84.0% 0.2 bps

On-time arrivals as reported to U.S. DOT 90.6% 89.5% 1.1 bps 88.6% 84.1% 4.5 bps


Dow Transportation Index


Dow U.S. Airline Index


VALUE LINE


8-K Filed 3/13/2013 – Stock Up Over 4%


ALASKA AIR, OTHER AIRLINES SOAR AS PROSPECTS IMPROVE

The Transportation-Airlines industry group posted the largest gain in the past eight weeks among the 197 industries tracked by IBD.

The top advances in the industry include Spirit Airlines (SAVE), up 31% year to date, Alaska Air Group (ALK), up 29% and SkyWest (SKY), up 19%.

Another boost came Feb. 22 from the Department of Transportation, which reported passenger traffic increased 0.8%, year over year, in November. Domestic travelers inched up 0.4%

while international passengers jumped 4.3%.


THE CHARTS PLEASE!


DAVID’S CORNER


SWAPS & “SPREADS”

IGNORE AT YOUR PERIL


SWAPS AND SPREADSRATE PRIOR CURRENT STATUS

Libor/OIS 13.86 14.51

Euribor/Eonia .130 .135

DTCC RepoIndex

Agency .200 .120

MBS .222 .126Treas .189 .111

High Yield 4.88 4.76

Federal ReserveCurrency Swaps

(ECB)USD million

7 Day 0 380

Open 4,192 7,963

Note: Status = No impact Status = Negative Impact

As Of: 3/13/2013

CREDIT ANTICIPATES – EQUITY CONFIMS


Lee’s Comments!


QUESTIONS & COMMENTS

THANKS FOR JOINING US!


IMPORTANT DISCLOSURE INFORMATION

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performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot Investments.com), or any non-investment related content, made reference to directly or indirectly in this presentation will be profitable, equal any corresponding indicated historical performance level(s), be suitable for any investment professional’s clients portfolio or individual situation, or prove successful. The investment professional retains

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