Economic/Market Update – December 2012

Daryl MontgomeryDecember11, 2012

Copyright 2012, All Rights Reserved

The contents of this presentation are not intended as a recommendation to buy or sell any security.

This is the 5 Year Anniversary of the Beginning of the Recession

in 2007

News in June 2010 from the UK

News in Dec 2012 from the UK

“UK on triple-dip recession alert after industrial slowdown”

The View from the U.S.

How’s the Recovery Going?

• ECRI says U.S. recession began in July.

• EU officially entered recession in Nov.

• BOE says UK could be facing triple-dip recession.

• Japan sinks into yet another recession (announced yesterday). GDP down 3.5% in Q3.

• All these countries have 0% or close to 0% interest rates and have been printing money.

• China GDP at 7.4% (slows for 7th Quarter). India GDP growth lowest in 10 years.

U.S. Employment in the 2000s

The U.S. needed to create almost 9 million extra jobs since recession began, not even back to number at starting point. We are 12.5 million short.

Falling Labor Force Participation Rate

Right of green line is after recession began.

Food Stamp Use Hits Another Record

Central Bank Policies

• U.S. and Japan at 0% interest rates. Fed has said it would keep rates at 0% until 2015.

• UK at 0.50% and EU at 0.75%.

• All 4 engaging in some for of QE (Quantitative Easing), a form of money printing.

• U.S. QE3 has no time limit, no $ limit, no security type limit.

• Operation Twist may be ending.

• No more bullets in case of crisis.

Federal Reserve Balance Sheet

Where’s the QE3?

U.S. Monetary Base – Measure of Future Inflation

M2 Money Supply

Inflation Expectations

European Debt Crisis• Greece gets another bailout. “We have settled

the Greece question”- Holland

• France is downgraded by Moody’s

• Monti resigns in Italy, Juncker resigns again.

• Spanish banks loaded up on gov’t debt. Spain has still not asked for bailout.

• Credit Suisse announces negative interest rates on interbank deposits.

• EU awarded Nobel Peace Prize!

How to Know if There’s a Depression

Background Material for Charts

• Moving Averages – 50-day, 200-day, 325-day or 10-week, 40-week, 65 week

• RSI – relative strength index, 80-overbought, 20 oversold, 50 divides bearish and bullish

• MACD – moving average convergence divergence, zero divide bullish bearish, peak and bottom numbers variable

• DMI – Directional Movement Index, +DI (blue), -DI (red) and trend line (black).

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Major US Indices:

Dow Jones Industrials 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

Dow Jones 5-Years Weekly Volume

Dow Jones Transports 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

Nasdaq 3-Years Weekly

10, 40,65-Week Moving Averages, RSI, DMI, MACD

S&P 500 3-Years Weekly

10, 40, 65-Week Moving Average and RSI, DMI, MACD

Russell 2000 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

Precious Metals

GOLD ETF: GLD 3-Years Weekly

10, 40, 65-Week Moving Averages, RSI, DMI, MACD

Silver ETF SLV 3-Years Weekly

10, 40, 65-Week Moving Averages, RSI, DMI, MACD

Mining ETF GDX 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

Mining ETF GDXJ 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

Other Commodities

WTI Crude Oil One-Year Daily

Uranium CA:U 3-Years Weekly

10, 40, 65-Week Moving Averages, RSI, DMI, MACD

Solar ETF TAN 3-Years Weekly

10, 40, 65-Week Moving Averages, RSI, DMI, MACD

Agriculture ETF RJA 3-Years Weekly

10, 40, 65-Week Moving Averages, RSI, DMI, MACD

Copper ETF JJC 3-Years Weekly

10, 40, 65-Week Moving Averages, RSI, DMI, MACD

Emerging Markets

Brazil Bovespa 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

India Sensex 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

Shanghai Composite 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

Russia RTS 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

Bonds and Currencies

30-Year Treasury Yield 3-Years Weekly

10, 40, 65-Week Moving Averages, RSI, DMI, MACD

10-Year Treasury Yield 3-Years Weekly

10, 40, 65-Week Moving Averages, RSI, DMI, MACD

U.S. $ DXY 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

Euro FXE 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

Euro FXF 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

Euro FXA 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD

Euro FXC 3-Years Weekly

10, 40, 65-Week Moving Averages and RSI, DMI, MACD