David Kotok Feb 2105
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Transcript of David Kotok Feb 2105
CUMBERLAND ADVISORS, INC.A Subsidiary of Harleysville National Bank614 Landis Avenue, Vineland, NJ 08360 (800) 257-7013
February 2005www.cumber.com
Page: 1
Global Interdependence Center Conference
Milan, Italy
David KotokChairman & Chief Investment Officer
Cumberland Advisors Inc.
February 21, 2005
CUMBERLAND ADVISORS, INC.A Subsidiary of Harleysville National Bank614 Landis Avenue, Vineland, NJ 08360 (800) 257-7013
February 2005www.cumber.com
Page: 2
-10
-6
-2
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10
Percent
Moody’s AAA Monthly Returns 1919-20056-13-2003 X
Bonds are No Longer Stable
CUMBERLAND ADVISORS, INC.A Subsidiary of Harleysville National Bank614 Landis Avenue, Vineland, NJ 08360 (800) 257-7013
February 2005www.cumber.com
Page: 3
© Copyright 2004 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved. NDR Disclaimer. For data vendor disclaimers refer to www.ndr.com/vendorinfo.
6/30/2004 Debt = $35.182 Trillion6/30/2004 GDP = $11.643 Trillion = 302.2%
Annual interpolated GDP (including estimates prior to 1929) used prior to 1946.
Domestic Nonfinancial Debt used prior to 1946. As of December, 1946
Domestic Nonfinancial Debt represented 99.4% of Total Credit Market Debt.
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1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
Total Credit Market Debt as a % of GDP(quarterly data 12/31/1922 – 6/30/2004)
Record High Debt
CUMBERLAND ADVISORS, INC.A Subsidiary of Harleysville National Bank614 Landis Avenue, Vineland, NJ 08360 (800) 257-7013
February 2005www.cumber.com
Page: 4
0
500
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4500
1985
Q1
1985
Q4
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Q3
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Q2
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Q1
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Q4
1989
Q3
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Q2
1991
Q1
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Q3
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Q3
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2001
Q3
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Q2
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Q4
2004
Q3
OUTSTANDING STOCK OF TREASURYS(Bn. USD$)
LESS FOREIGN OFFICIAL & FEDHOLDINGS (Bn. USD$)
Source: BCA Research
Actual Balances are Growing
CUMBERLAND ADVISORS, INC.A Subsidiary of Harleysville National Bank614 Landis Avenue, Vineland, NJ 08360 (800) 257-7013
February 2005www.cumber.com
Page: 5
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OUTSTANDING STOCK OFTREASURYS (% OF GDP)
LESS FOREIGN OFFICIAL & FEDHOLDINGS (% OF GDP)
Source: BCA Research
Relative to GDP, Marketable Treasuries are Flat
CUMBERLAND ADVISORS, INC.A Subsidiary of Harleysville National Bank614 Landis Avenue, Vineland, NJ 08360 (800) 257-7013
February 2005www.cumber.com
Page: 6
3%
4%
5%
6%
7%
8%
9%
1947 1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003
Record High
Quarterly corporate after-tax profits with CCA and IVA adjustments in relation to Nominal GDP from 1947 to 2003. The capital consumption and inventory valuation adjustments convert depreciation and inventory withdrawals reported on an historical-cost basis to the replacement-cost measures used in the national income and product accounts. Data source: Bureau of Economic Analysis, (FRED) St. Louis Federal Reserve Bank and Cumberland Advisors, Inc.
Corporate Profits as a percent of Nominal GDP 1947 - 2005Corporate Profits Very High
CUMBERLAND ADVISORS, INC.A Subsidiary of Harleysville National Bank614 Landis Avenue, Vineland, NJ 08360 (800) 257-7013
February 2005www.cumber.com
Page: 7
After-Tax Corporate Profit Growth
1959 - 2005 (YOY, %)
-30
-20
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1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003
Percent (%)
Quarterly corporate after-tax profits with CCA and IVA adjustments, year over year (%). Data source: Bureau of Economic Analysis, (FRED) St. Louis Federal Reserve Bank and Cumberland Advisors, Inc.
Seven Quarters Negative 2000.1-2001.3
CUMBERLAND ADVISORS, INC.A Subsidiary of Harleysville National Bank614 Landis Avenue, Vineland, NJ 08360 (800) 257-7013
February 2005www.cumber.com
Page: 8
Corporate Profits and Stock Market
Capitalization as a percent of Nominal GDP
1981 - 2005
3%
4%
5%
6%
7%
8%
9%
1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Percent (%)
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45
70
95
120
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Corporate Profits as a percent of Nominal GDPStock Market Total Capitalization as a Percent of GDP
Quarterly corporate after-tax profits w ith CCA and IVA adjustments in relation to Nominal GDP from 1981 to 2001. The capital consumption and inventory valuation adjustments convert depreciation and inventory w ithdraw als reported on an historical-cost basis to the replacement-cost measures used in the national income and product accounts. Data source: St. Louis Federal Reserve Bank, Ned Davis Research, Bureau of Economic Analysis and Cumberland Advisors Inc.
NASDAQBubble
CUMBERLAND ADVISORS, INC.A Subsidiary of Harleysville National Bank614 Landis Avenue, Vineland, NJ 08360 (800) 257-7013
February 2005www.cumber.com
Page: 9
Source: World Bank Data 2003, MSCI, FRB., Cumberland Advisors, and Laffer Associates.
PPP
NOTE: World Total 51,766,267
GDP
NOTE: World Total 36,356,240
The World’s 10 Largest Stock Markets
Measured in U.S. dollars @ 01/31/05 exchange rates
1. United States 10,871,095
2. China 6,435,838
3. Japan 3,582,515
4. India 3,096,239
5. Germany 2,279,134
6. France 1,632,119
7. U.K. 1,606,853
8. Italy 1,559,321
9. Brazil 1,371,655
10. Russian Fed. 1,318,827
11. Canada 963,550
1. United States 10,881,609
2. Japan 4,326,444
3. Germany 2,400,655
4. U.K. 1,794,858
5. France 1,747,973
6. Italy 1,465,895
7. China 1,409,852
8. Spain 836,100
9. Canada 834,390
10. Mexico 626,080
11. Korea, Rep. 605,331
1. United States 52.72% 2. U.K. 11.24%
3. Japan 9.67%
4. France 4.20%
5. Germany 3.04%
6. Switzerland 3.00%
7. Canada 2.89%
8. Australia 2.31%
9. Netherlands 2.15%
10. Italy 1.91% Total: 93.12% Rest of the World 6.88% Total: 100%
Three Ways to View the World