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

In a world dominated by smarter and smarter gadgets, one of the dumbest machines on earth is making a quiet comeback. TURN IT ON AND A SWITCH POPS OUT TO TURN IT OFF??. THE USELESS MACHINE. YIKES!. ONLY $29.95. TRUE STORY??!!. Source: Wall Street Journal 3/12/2013.

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

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  1. In a world dominated by smarter and smarter gadgets, one of the dumbest machines on earth is making a quiet comeback. TURN IT ON AND A SWITCH POPS OUT TO TURN IT OFF?? THE USELESS MACHINE YIKES! ONLY $29.95 TRUE STORY??!! Source: Wall Street Journal 3/12/2013

  2. BIGFOOT INVESTMENTS OPEN FORUM Mar 14th, 2013 WELCOME!

  3. AGENDA • WELCOME! • ADMIN NOTES • QUOTE OF THE DAY • OPTIMISM GAUGE • CHARTS OF INTEREST • SO WHAT’S UP WITH: INTEREST RATES • A CLOSER LOOK AT: ALK • DAVID’S CORNER • SWAPS AND SPREADS • LEE’S COMMENTS • QUESTIONS/COMMENTS

  4. “NOTES” • IF YOU USE ANY OF OUR SLIDES, PLEASE REMEMBER TO • HAVE THEM APPROVED BY YOUR COMPLIANCE DEPARTMENT. • WE’LL UN-MUTE YOU ON OUR END SO YOU CAN ASK QUESTIONS. • PLEASE MUTE AUDIO FROM THE MENU ON YOUR SCREEN SO • WE DO NOT GET FEEDBACK. • THANK YOU!

  5. BigFoot Investments is now on Twitter, LinkedIn!

  6. BigFoot On LinkedIn! Don’t Forget To Join Our “Group”

  7. Notifying You! SMS Alert System

  8. NOTES! • WE WILL NOW POST THE WEBINAR SLIDES AND RECORDINGS TO THE BLOG • ALSO - WE WILL CONTINUE TO SEND OUT THE SLIDES

  9. QUOTE OF THE DAY: The two most powerful things in existence:… …….A kind word and thoughtful gesture! Ken Langone – Founder Home Depot

  10. Optimism Gauge As of: 3/14/2013

  11. Measuring Our Economy Last Update: 3/14/2013

  12. Measuring Our Economy READING AS OF: 3/14/2013 Economic Optimism Index NOTES/COMMENTS CURRENT READING: 76.3% PRIOR READING: 72.0% BIAS: BULLISH 11 OF 13 INDICATORS POSITIVE TREND - POSITIVE 45 65 35 75 25 85 76.3% 15 95 Current Reading Prior Reading POSITIVE AS OF: 8/17/2012

  13. Charts of Interest!

  14. BEFORE AND AFTER – HOW ARE WE DOING? 2007 to NOW Source: Wall Street Journal

  15. 5 REASONS THE ECONOMY IS NOT EXPANDING

  16. REASON #1 – THE MONEY IS JUST SITTING! MONEY SUPPLY GROWING MONEY VELOCITY DECREASING EXCESS RESERVES GROWING Source: Federal Reserve Bank of St Louis

  17. REASON #2 – SMALL BUSINESSES OUTLOOK: POOR Below 95% of Pre-Recession Level Source: Calculated Risk

  18. REASON #3 – LABOR FORCE METRICS MASK A PROBLEM Feb 2007 66.3% FEB 2013 63.5% Source: Federal Reserve Bank of St Louis

  19. REASON #4 – GDP NOT GROWING FAST ENOUGH 17.4% of GDP 13.1% of GDP Business Investment – Down 25% Source: Bureau of Economic Analysis

  20. REASON #5 – THE JOBS GAP Most Likely Path Getting back to “normal” will be tough Source: The Hamilton Project

  21. MONEY FLOWS NO “ROTATION” YET! Flows into bond funds actually increased Source: ICI

  22. CHANGES CAN HAVE CONSEQUENCES Source: Political Calculations

  23. BigFoot News The “Portfolio” Tab

  24. 4 Sections

  25. Trade Log Excel file To Remove Position To Override BigFoot System Trade Date Breakout/Edit

  26. Monthly Returns - Current Data - Historical Stats - Strategy Stats - Comparison to the Market

  27. SO WHAT’S UP WITH: INTEREST RATES – BERNANKE “SPEAK”

  28. 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 HOW THE FED VIEWS RATES AND WHY. WE SHOULD LISTEN!

  29. 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”

  30. BROADER ECONOMIC PICTURE Global Yields “Conform”

  31. BASIS FOR 10 YEAR U.S. RATES (CONSTRAINTS) THREE FACTORS*: Expected Inflation Expected path of “real” rates Residual rate or Term Premium *COMPONENTS OF YIELD

  32. Note decline in Term Premium If inflation is close to NOMINAL rate – the other two components make slightly “negative” contributions

  33. 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

  34. 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

  35. RATE ESTIMATES MOVING FORWARD

  36. RANGE COMPUTATIONS Note: Up/Down ranges are quite equalized

  37. RISKS FROM THE FED PERSPECTIVE • RATES WILL REMAIN LOW • THEY WILL NOT FED POSITION “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.”

  38. A CLOSER LOOK AT: ALK

  39. 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

  40. Alaska Air Group, Inc (ALK) 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. Sources: Value Line, March 2013

  41. Enters Portfolio

  42. ENTERS PORTFOLIO 3/1/2013 – BUY SIGNAL Purchase at $54.11

  43. March 2013 Stock Picks 3 As of February 28, 2013 - Subject to change.

  44. FINVIZ SUMMARY Barclays Upgrade 3/4/2013 Target $63.00

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