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Market pictorial

26 March 2014

Market cap to GDP ratio above 2007 peak

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FED equity value to GDP ratio above 2007 peak

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US margin debt and S&P 500 at all time highs

140

Growth in US margin debt and S&P 500 (correlation = 0.94)

120

100

80

60

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Margin debt as at 31/01/14: US$451 billion Peak prior to 2007 crash: US$381 billion (Jul-07) Min since Apr-07: Max since Apr-07: data) Growth from low: US$173 billion (Feb-09) US$451 billion (Jan-14, latest 160%

Apr-07 Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Margin debt S&P 500

40

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S&P as at 1/03/14: 1,865 Monthly peak prior to 2007 crash: 1,549 (Sep-07) Monthly Min since Apr-07: 735 (Jan-09) Monthly Max since Apr-07: 1,865 (Feb-14) Growth from low: 154%

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Margin debt to GDP and subsequent S&P returns

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S&P PE Ratio

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Current S&P 500 PE Ratio: 19.63 -0.14 (-0.70%) Mean: 15.51 Median: Min: Max: 5.31 123.79 14.53 (Dec 1917) (May 2009)

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Shiller PE ratio

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Current Shiller PE Ratio: 25.53 -0.18 (-0.70%) Mean: 16.52 Median: Min: Max: 4.78 44.20 15.91 (Dec 1920) (Dec 1999)

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S&P dividend yield

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Current Yield: 1.89% +1.32 bps Mean: 4.43% Median: Min: Max: 1.11% 13.84% 4.36% (Aug 2000) (Jun 1932)
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US 10 year Treasury rate

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Current 10 Year Treasury Rate: 2.75% Mean: 4.64% Median: Min: Max: 1.53% 15.32% 3.92% (Jul 2012) (Sep 1981)

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Contact information
John Jonovski Managing Director Phalanx Capital Inc. Tel: +44 (0) 7771 993 851 Fax: +44 (0) 20 7990 9333 john.jonovski@phalanxcapital.com Michael Jonovski Managing Director Phalanx Capital Inc. Tel: +44 (0) 7802 499 043 Fax: +44 (0) 20 7990 9333 michael.jonovski@phalanxcapital.com

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