War Room 08/09

S+P Downgrade Decision

The War Room

•Monthly macro discussion

•Using tools in context

•Feature for subscribers only

•Feedback - what should it to be?

Agenda

•Current Status

•Scenarios in play

•Discovering safe harbors

•What’s next?

Where are we right now?

Gold at all time highs at $1743/oz

Market bounces after 12 day sell-off

Fed pledges to keep rates low through mid 2013 – 3 dissenting voters

Dollar at record low vs Swiss Francs, post FOMC

Treasury Yields hitting record lows, after S+P decision, post FOMC

Scenarios in Play

•Debt Ceiling Downgrade

•Cascading downgrades from S+P

•Double Dip Recession

•QE 3 – not yet in play

Discovering safe harbors•Currencies – Yen + Swiss Francs

•Precious Metals

•Low + Negative Beta to S+P

Try theMacro Trend Screener

7/20/11

Not all gold plays are following gold up…

… some are following the market down.

What’s next?

•Cascading Downgrades Scenario still on table

•Double Dip Recession Scenario

•Volatility Increasing

On the chopping block Should be immune

• US Banks• European Countries• European Banks• 11k municipal bonds

• Pre-funded with escrowed Treasuries• Backed by federal leases• For areas with high DoD concentration• For areas that depend on fed spending• For agricultural entities

• Mortgage REITS• Fannie + Freddie• Israeli sovereign debt• Insurance Companies(italics: already downgraded)

• States or local governments bonds: • Fiscally insulated from federal

interventions• With a predictable institutional

framework• Financially flexible

• Emerging market debt

Debt downgrade: who is next?

Volatility of Autumn 2008 crisis

Will be mirrored in Autumn 2011. If you sell, sell into strength.

27July – 08Aug 2011

03-31 October 2008