Global Economy: Zero Taper, More Uncertainty!

Presentation to:

HinesAnn Arbor, MI

September 26, 2013

Presented by:

Komal S. Sri-Kumar, Ph.D.PresidentSri-Kumar Global Strategies, Inc.

This publication is for information purposes only. Past performance is no guarantee of future results. While the information and statistical data contained herein are based on sources believed to be reliable, we do not represent that it is accurate and should not be relied on as such or be the basis for an investment decision. Any opinions expressed are current only as of the time made and are subject to change without notice. Sri-Kumar Global Strategies, Inc. assumes no duty to update any such statements. Any holdings of a particular company or security discussed herein are under periodic review by the author and are subject to change at any time, without notice. This report may include estimates, projections and other "forward-looking statements." Due to numerous factors, actual events may differ substantially from those presented. This publication is not to be used or considered as an offer to sell, or a solicitation to an offer to buy, any security. Nothing contained herein should be considered a recommendation or advice to purchase or sell any security. Sri-Kumar Global Strategies, Inc., or its employees or clients may have positions in securities or investments mentioned in this publication, which positions may change at any time without notice. ©Copyright 2013 2500 Broadway, Suite F-125, Santa Monica, CA 90404

•Growth to Slow Markedly

•No Hike in Rates Before 2016

•Unemployment Rate to Stay Elevated

•Structural Adjustments are Key

•Housing Remains a Positive Factor

2

Syria Conflict, Washington Gridlock Major Factors

• Jobs Created are Mostly Part-Time

• Broad-Based Unemployment Rate Rises

• Long-Term Unemployment Still Sizable

• Participation Rate Near Historic Lows

• Fiscal Incentive Should Focus on Job Creation

3

U.S. Unemployment: Still an Unhappy Story

Bernanke Boost: For Markets, Not Economy!

• Fed Introduced QE – Infinity Last Week!

• May 22 Speech Raised Bond Yields Sharply

• “Wealth Effect” Yet to Speed Economic Growth

• Market Distortions are Increasing

• Ballooning Portfolio Limits Fed’s Flexibility

4

Source: Bloomberg5

S&P 500: Fed, Global Macro Drive Index

Source: Bloomberg6

Expect Further Bond Rally After Recent CorrectionUST 10-Year

Source: Bloomberg7

U-6 Unemployment Stubbornly High

Source: Bloomberg8

U.S. Home Prices: Brightening Prospects

U.S. & Germany Unemployment Rates (%)

Source: Bloomberg

Europe in Remission, Not Cured

• Recession Over but Stagnant Economy

• Deposit Confiscation in Cyprus a Bad Precedent

• Spain, Greece Suffer High Unemployment

• France: Isolated in Globalized World!

• ECB: Further Easing Promised

10

Emerging Markets: Facing Bernanke Effect

11

• Significantly Slower Growth in 2013

• Brazil and India: Currencies Under Pressure

• Social Opposition Grows in Brazil, Turkey

• China: Good-bye, Double Digit Growth!

• Russia: Politics Vs. Growth Potential

Investment Strategies for an Uncertain World

12

• Deflation First But Inflation to Follow

• Short the Euro!

• Real Estate to be Effective Inflation Hedge

• REITs: Continued Benefit from Easy Money

• Europe’s Distress is Major Opportunity

13

Investing for the short-and-long-term

Biography

14

Komal S. Sri-Kumar, Ph.DPresidentSri-Kumar Global Strategies, Inc.

Dr. Komal S. Sri-Kumar is President of the Santa Monica, California based Sri-Kumar Global Strategies, Inc., a macroeconomic consulting firm he formed in January 2013 to advise multinational firms and sovereign wealth funds on global risk and opportunities.  Prior to founding the firm, Sri worked at the Los Angeles-based Trust Company of the West (TCW) from 1990 to 2012, serving for the last several years as the firm’s Chief Global Strategist.  He has been Chairman of TCW’s Comprehensive Asset Allocation Committee since 1997, and will continue to serve TCW clients in that capacity.

Before his work at TCW, Sri was Senior Vice President at the Beverly Hills-based Drexel Burnham Lambert, and Executive Vice President of DBL Americas, specializing in country risk analysis.

He is a Senior Fellow at the Milken Institute, and is a member of the Columbia University Graduate School of Arts and Sciences Alumni Board.  His articles and interviews have been published in the Financial Times, Wall Street Journal and the New York Times.  He is often interviewed on CNBC, Bloomberg Radio and TV, and Fox Business.

Sri holds an M.A. in Economics from the Delhi School of Economics, and M.Phil and Ph.D. degrees from Columbia University.  His doctoral dissertation at Columbia University was supervised by Robert Mundell, Nobel Laureate in Economics (1999).