The FCO Cockpit Global Bubble Status Report. Peter Cauwels & Didier Sornette Chair of Entrepreneurial Risk. February 1st, 2016

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1 Global Bubble Status Report Peter Cauwels & Didier Sornette Chair of Entrepreneurial Risk February 1st, 2016

2 What is this? This monthly report discusses the historical evolution of bubbles in and between different asset classes and geographies. It is the result of an extensive analysis done on the historical time series of 433 systemic assets and 815 single stocks. The systemic assets are bond, equity and commodity indices and a selection of currency pairs. The single stocks are mainly US and European, equities. In the first part of this report, we present the state of the world, based on the analysis of the systemic assets. In the second part, we zoom in on the bubble behavior of single stocks and discuss some specific cases. + For an intuitive explanation of the methodology and the specifics of the indicators that are used in this report, we refer to: D. Sornette and P. Cauwels, Financial bubbles: mechanisms and diagnostics. Review of Behavioral Economics 2 (3), (2015) ( and

3 general result

4 Main results Markets are driven by a sell-off in commodities. Around 40% of our indices show negative bubble signals. The effect is seen across all commodities: energy, soft and metals. This is the result of herding. People sell the asset class because the price goes down. The result is a positive feedback mechanisms and mispricing. The commodities sell-off has spill-over effects in other asset classes. This can be seen as strong negative bubble signals in: Corporate bonds mainly in mining, oil & gas, basic resources, industrial metals... Country stock indices mainly in the United Arab Emirates, and other exporters like Canada, Brazil,... Currencies of commodity exporting countries like South Africa, Norway, Canada, Russia... A positive bubble signal is an indication of herding when people start buying because prices go up. A negative bubble signal is an indication of herding when people start selling because prices go down.

5 results per asset class

6 commodities 39% of the commodity indices that were analyzed show negative bubble signals. The effect is seen across all commodities: energy, soft and metals. It is the result of herding. People sell the asset class because the price goes down. This results in a positive feedback mechanisms and mispricing. This sell off has a strong impact on corporate bonds and currencies of exporting countries. Commodities Yearly Return DS LPPL Trust DS LPPL Confidence Positive Bubbles None Negative Bubbles Heating Oil ER Index -40% 35% 62% Gasoil ER Index -39% 32% 61% Energy ER Index -39% 30% 54% Natural Gas ER Index -40% 29% 15% Brent Crude ER Index -41% 25% 49% Petroleum ER Index -38% 24% 44% Live Stock ER Index -12% 22% 6% Nickel ER Index -43% 17% 21% Crude Oil ER Index -41% 16% 37% Robsta Coffee ER Index -33% 12% 36% Metals ER Index -18% 11% 7% HG Copper ER Index -17% 9% 16% Platinum ER Index -29% 9% 13% Copper ER Index -16% 8% 16% Gasoline ER Index -18% 5% 19%

7 bond indices The sell off in commodities has a clear spill-over effect in corporate bonds, mainly in mining, oil & gas, basic resources, industrial metals... We see that 9% of all bond indices that were analyzed show negative bubble warning signals. Country Indices Yearly Return DS LPPL Trust DS LPPL Confidence Positive Bubbles iboxx Asia China Government 5.9% 61.7% 84.1% iboxx Asia Taiwan Government 7.9% 35.0% 70.6% Negative Bubbles None Sector Indices Yearly Return DS LPPL Trust DS LPPL Confidence Positive Bubbles None Negative Bubbles iboxx USD Oil Equipment, Services & Distribution Index -13.5% 40.3% 52.3% iboxx USD Basic Resources Index -16.1% 37.7% 58.5% iboxx EUR Basic Resources Index -17.2% 33.5% 61.7% iboxx USD Mining Index -19.8% 33.0% 48.0% iboxx USD Basic Materials Index -11.6% 31.8% 59.2% iboxx USD Industrial Metals Index -12.2% 19.0% 33.9% iboxx USD Oil & Gas Index -9.8% 14.0% 45.7% iboxx USD Gas, Water & Multiutilities Index -6.9% 8.1% 22.7% iboxx USD Oil & Gas Producers -8.5% 6.8% 31.2%

8 bond indices iboxx USD Oil Equipment, Services & Distribution Index is falling off a cliff, this can be classified as a negative bubble, clearly showing an over-reaction in the market.

9 currencies The sell off in commodities has a spill-over effect in currencies of commodities exporting countries. We see that 14% of all the currency pairs that were analyzed show bubble warning signals. Additionally, what is striking is the bubble signal on the GBP/USD exchange rate. FX Yearly Return DS LPPL Trust DS LPPL Confidence US Dollar/South African Rand 39% 37% 53% US Dollar/Norwegian Krone 11% 15% 20% US Dollar/UK Pound Sterling 5% 14% 34% US Dollar/Chinese Renminbi 5% 11% 38% Swiss Franc/South African Rand 21% 11% 38% Euro/South African Rand 26% 11% 42% US Dollar/Argentine Peso 60% 10% 34% US Dollar/Canadian Dollar 12% 10% 36% US Dollar/Russian Rouble 11% 9% 25% Euro/Argentine Peso 35% 7% 35% Swiss Franc/Argentine Peso 31% 6% 25%

10 currencies The USD/South African Rand exchange rate shows a classical long term bubble signal. The price trajectory increases faster-than-exponentially due to positive feedback mechanisms.

11 currencies There is an interesting short term bubble signal in the GBP to USD exchange rate. This 5yr time series is normalized to 100.

12 stock indices The sell off in commodities has a spill-over effect in the stock indices of commodities exporting countries like United Arab Emirates, Canada, Brazil... The strong negative effect on stocks in commodities related sectors can also clearly be observed. The clear negative bubble signal in European banks is striking. Equities Country Indices Yearly Return DS LPPL Trust DS LPPL Confidence Positive Bubbles None Negative Bubbles Colombia SE General Index -20.0% 24.1% 20.2% Warsaw SE WIG Poland Index -15.8% 19.8% 46.7% Dubai Financial Market General -22.2% 18.2% 37.3% Qatar Exchange General Index -22.1% 13.7% 35.7% Muscat SE General Index -23.5% 10.8% 31.3% TSX-Toronto Stock Exchange 300 Composite Index -14.0% 9.2% 34.9% Sao Paulo SE Bovespa Index -19.1% 8.5% 28.8% SET Index -18.0% 8.0% 28.0% Kuwait Main Index -23.8% 7.0% 30.8% Abu Dhabi index -12.3% 5.3% 19.9% IBEX 35 Index -17.2% 5.2% 19.0% Equities Sector Indices Yearly Return DS LPPL Trust DS LPPL Confidence Positive Bubbles None Negative Bubbles S&P 500 Indp Pwr Prdcr&EngTrdrs -42.1% 32.6% 5.7% S&P 500 Containers & Packaging -19.9% 13.0% 35.6% STOXX Europe 600 Basic Resources -43.9% 12.8% 38.0% S&P 500 Paper& Forest Products -31.2% 9.2% 9.6% STOXX Europe 600 Banks -19.0% 8.1% 27.7% S&P 500 Road & Rail -37.9% 7.0% 31.2% S&P 500 Consumer Finance -25.9% 6.7% 37.6%

13 stock indices European banks (orange) compared to European stocks (purple). There is a negative bubble signals in banks. The correction since the peak in April last year has been massive.

14 single stocks

15 What is this? For 815 stocks we calculate the bubble warning indicators as well as two newly-developed financial strength indicators. The stocks are the constituents of the Stoxx Europe 600, the S&P 500 and the Nasdaq 100 indices. From these, all doubles and stocks with incomplete data are removed. Because our financial strength indicators are specifically designed for corporates, all financial institutions are taken out of the set as well. The two financial strength indicators are: A value score that is based on the ROIC (Return on Invested Capital) taking into account the EV (Enterprise Value) to normalize for high/low market valuations and/or high/low debt; A growth score that has characteristics similar to the PEG ratio, which is the Price to Earnings ratio normalized for expected EPS-growth (Earnings per Share). Both scores give a value between zero and one, one being the best of the set and zero the worst, so the higher the score, the higher the financial strength.

16 Aggregated financial strength score The FCO Cockpit 4 The four quadrants: financial strength versus bubble score Ryder System Inc Bed Bath & Beyond Inc CEZ as Cummins Inc Mosaic Co CF Industries Holdings Inc Robert Half International Inc Bollore SA Carmax Inc Harley-Davidson Inc Urban Outfitters Inc Ryanair Holdings PLC Vestas Wind Systems A/S Thales SA Pearson PLC 50% -80% -60% Kinder Morgan -40% Inc DaVita HealthCare -20% 0% 20% 40% Baker G4S Hughes Inc Partners PLC Staples Inc Inc Whitbread PVH CorpPLC 40% Nordstrom Inc Alphabet Inc Northrop Grumman Burberry Group Corp PLC Archer Daniels Qualcomm Constellation Macys Inc Midland Inc Co 30% Brands Inc BBA ONEOK W Tyco Aviation W Grainger International Inc PLC AP Moeller Williams Companies Inc Dr Pepper Snapple Clorox Co Western Electricite - Digital Maersk de France Inc PLC A/S Corp SA 20% Group Inc Hormel Foods Corp Tesco PLC IMI PLC Weir Group PLC dorma kaba Holding Antofagasta PLC Rio Tinto PLC AG Range Resources 10% BHP Billiton PLC Anglo American Corp Anadarko 3 PLC ArcelorMittal SA Amazon.com Inc Petroleum Corp 0% 2 Southwestern Aggregated bubble score Energy Co 100% 90% 80% 70% 60% 1 By aggregating the bubble scores and the financial strength scores, we can divide the stocks into four quadrants: 1. Quadrant 1: Stocks with a strong positive bubble score and a strong financial strength (e.g. Ryanair); 2. Quadrant 2: Stocks with a strong positive bubble score and a weak financial strength (e.g. Amazon); 3. Quadrant 3: Stocks with a strong negative bubble score and a weak financial strength (e.g. Anglo American); 4. Quadrant 4: Stocks with strong negative bubble score and a strong financial strength (e.g. Ryder Systems).

17 Each quadrant has its own specs: 1. Quadrant 1: These stocks have a strong financial strength. As the financial strength scores are normalized for Enterprise Value, they can still be considered as relatively cheap. The strong positive bubble signal should be interpreted as a momentum indicator possibly the consequence of a repricing based on the fundamentals. As an investor, one could be a trend-following buyer. 2. Quadrant 2: These stocks have a weak financial strength. They can be considered as very expensive relative to their financial performance. The strong positive bubble signal is an indication of sentiment and herding increasing the price until it is not linked to fundamentals anymore. As an investor, one could be a contrarian seller. 3. Quadrant 3: These stocks have a weak financial strength. They can be considered as very expensive relative to their financial performance. On top of that, there are clear negative bubble signals. Such stocks should be considered as falling knives. As an investor, one could be a trendfollowing seller. 4. Quadrant 4: These stocks have a strong financial strength. They can be considered as very cheap relative to their financial performance. The strong negative bubble signal is an indication of sentiment and herding. These stocks can be considered as over-sold. As an investor, one could be a contrarian buyer.

18 Aggregated financial strength score The FCO Cockpit 4 The four quadrants: financial strength versus bubble score Ryder System Inc Bed Bath & Beyond Inc CEZ as Cummins Inc Mosaic Co CF Industries Holdings Inc Robert Half International Inc Bollore SA Carmax Inc Harley-Davidson Inc Urban Outfitters Inc Ryanair Holdings PLC Vestas Wind Systems A/S Thales SA Pearson PLC 50% -80% -60% Kinder Morgan -40% Inc DaVita HealthCare -20% 0% 20% 40% Baker G4S Hughes Inc Partners PLC Staples Inc Inc Whitbread PVH CorpPLC 40% Nordstrom Inc Alphabet Inc Northrop Grumman Burberry Group Corp PLC Archer Daniels Qualcomm Constellation Macys Inc Midland Inc Co 30% Brands Inc BBA ONEOK W Tyco Aviation W Grainger International Inc PLC AP Moeller Williams Companies Inc Dr Pepper Snapple Clorox Co Western Electricite - Digital Maersk de France Inc PLC A/S Corp SA 20% Group Inc Hormel Foods Corp Tesco PLC IMI PLC Weir Group PLC dorma kaba Holding Antofagasta PLC Rio Tinto PLC AG Range Resources 10% BHP Billiton PLC Anglo American Corp Anadarko 3 PLC ArcelorMittal SA Amazon.com Inc Petroleum Corp 0% 2 Southwestern Aggregated bubble score Energy Co 100% 90% 80% 70% 60% 1 By aggregating the bubble scores and the financial strength scores, we can divide the stocks into four quadrants: 1. Quadrant 1: Stocks with a strong positive bubble score and a strong financial strength (e.g. Ryanair); 2. Quadrant 2: Stocks with a strong positive bubble score and a weak financial strength (e.g. Amazon); 3. Quadrant 3: Stocks with a strong negative bubble score and a weak financial strength (e.g. Anglo American); 4. Quadrant 4: Stocks with strong negative bubble score and a strong financial strength (e.g. Ryder Systems).

19 Aggregated financial strenght score 65% Automobiles & 4 1 Components Consumer Durables & Apparel Technology Consumer Services Hardware & Media 50% -7.0% -6.0% -5.0% Equipment -4.0% -3.0% -2.0% -1.0% Health 0.0% Care 1.0% 2.0% 3.0% Utilities Capital Goods Equipment & Materials 45% Services Pharmaceuticals, Biotechnology & Life Commercial & Sciences Retailing 40% Software & Services Professional Services Food & Staples Retailing 35% 3 The four quadrants: financial strength versus bubble score Energy Transportation Aggregated bubble score 60% Semiconductors & Semiconductor Equipment Telecommunication Services 55% 30% 25% Food, Beverage & Tobacco Household & Personal Products 2 By aggregating the data, the four quadrants can also be constructed for sectors: 1. Quadrant 1: Sectors with an average positive bubble score and a strong financial strength; 2. Quadrant 2: Sectors with an average positive bubble score and a weak financial strength; 3. Quadrant 3: Sectors with an average negative bubble score and a weak financial strength; 4. Quadrant 4: Sectors with an average negative bubble score and a strong financial strength.

20 Quadrant 1 and 2 stocks: positive bubble signals with strong respectively weak fundamentals Growth score Amazon.com Inc Constellation Brands Inc Ryanair Holdings PLC 50% 0% 10% 20% 30% 40% 50% 60% 70% 80% Clorox Co 40% Hormel Foods Northrop Corp Grumman Corp 2 dorma kaba Holding AG Alphabet Inc Dr Pepper Snapple Group Inc 100% 90% Thales SA 80% 70% 60% 30% 20% 10% 0% Value score Vestas Wind Systems A/S 1 Aggregated Growth/Value score 90% 80% 70% 60% Vestas Wind Systems A/S Ryanair Holdings PLC Thales SA 50% 10% 15% 20% 25% 30% 40% Northrop Dr Pepper Grumman Corp Snapple Group Alphabet Inc Constellation 30% Inc Brands Inc 20% 10% 0% Clorox Co dorma kaba Holding AG Amazon.com Inc 1 2 Aggregated bubble score Hormel Foods Corp

21 Growth score The FCO Cockpit Quadrant 3 and 4 stocks: negative bubble signals with strong respectively weak fundamentals Talktalk Telecom Group PLC 100% 90% 80% 70% Ryder System Inc Bollore SA CEZ as Robert Half International Mosaic Inc Co Exelon Corp Harley-Davidson CF Industries Inc Carmax Inc Holdings Inc 60% ONEOK Inc AB SKF DaVita HealthCare Cummins Inc Whitbread Partners Inc 50% PLC 0% Chipotle 20% Mexican 40% G4S PLC 60% 80% Urban Outfitters 100% Grill Inc Akamai 40% Inc Technologies IncBaker Hughes Inc Kinder Morgan Inc Union Pacific Corp Pearson Bed Bath PLC & W W Williams Grainger 30% Inc Murphy Oil Corp Voestalpine Beyond Inc AG 3 Companies Tyco IncInternational Nordstrom Inc PVH Corp Spectra Energy BBA PLC Aviation PLC Staples Inc 20% Burberry Group Corp AES Corp Meggitt Archer PLC Daniels PLC Cabot Oil & Gas Smiths Macys Group Qualcomm Midland OC Oerlikon Gap PLCInc Co Inc IMI PLC Quanta Services Rolls-Royce Corp Range 10% Resources Western Electricite AP Moeller Digital de - Tesco PLC Corporation AG EQT Corp Lafargeholcim Ltd Inc National Holdings Oilwell PLC Southwestern Corp Maersk France Anadarko Weir Antofagasta Seagate Pfaeffikon Group Corp SA A/S BHP Billiton Anglo Rio Energy Co ArcelorMittal Varco Tinto PLC American PLC Inc PLC 0% Petroleum Corp SA Technology PLC Value score 4 Aggregated Growth/Value score Ryder System Inc CEZ as Mosaic Co CF Industries Holdings Inc 100% 90% Robert Half International Inc 80% Bollore SAExelon Corp 70% Cummins Inc Carmax Inc Bed Bath & Harley-Davidson AB SKF 60% Beyond Inc Urban Inc Outfitters Inc Pearson PLC 50% -80% -70% -60% -50% Kinder -40% Morgan -30% Talktalk Voestalpine Murphy Telecom AGOil Corp DaVita Baker HealthCare -20% -10% 0% Inc G4S Hughes PLC Inc Staples Inc Group PLC Whitbread PVH Partners Union Corp Inc Pacific Akamai PLC 40% Corp Nordstrom Archer Technologies Inc Meggitt AES Corp Inc PLC Qualcomm Daniels Macys Inc Inc 30% Midland Smiths Gap Co Group Inc Burberry Group BBA Aviation ONEOK PLC W Tyco W Grainger International Rolls-Royce Inc PLC Electricite Western Digital de PLC AP Moeller - Williams Inc France Companies Holdings OC PLCOerlikon Inc Quanta Spectra Services Corp SA 20% Maersk A/S Energy Corporation Seagate Chipotle Inc Mexican IMI PLC Tesco EQT PLCorpAG Weir Group National Oilwell Corp Antofagasta Range Lafargeholcim Resources Pfaeffikon Technology LtdGrill PLC Inc Rio Tinto PLC PLC PLC 10% 3 Anglo American BHP Anadarko Billiton PLC Corp Varco Inc ArcelorMittal Southwestern SA PLC Petroleum Corp Cabot Oil & Energy Gas Co 0% Corp Aggregated bubble score 4

22 Quadrant 1 stocks: strong positive bubble signals with strong fundamentals Country of Yearly DS LPPL DS LPPL Bubble Value Growth Financial Quadrant 1 Headquarters GICS Sector Name GICS Industry Group Name Return Trust Confidence all score score strength Score Ryanair Holdings PLC Ireland Industrials Transportation 34.2% 14.0% 23.2% 18% 73% 94% 83% Thales SA France Industrials Capital Goods 45.0% 21.5% 12.1% 16% 43% 87% 61% Vestas Wind Systems A/S Denmark Industrials Capital Goods 74.7% 14.3% 10.8% 12% 46% 94% 66%

23 Quadrant 1 stocks: strong positive bubble signals with strong fundamentals, example Ryanair. Left graph is a standard output from the Financial Crisis Observatory. It shows the historical price evolution of the stock in blue (left hand scale) and the calculated bubble warning index DS LPPL Trust in red (right hand scale). We can see a clearly spiking warning. The right graph shows the outperformance of the stock over the last five years (orange) with respect to the Eurostoxx benchmark (purple).

24 Quadrant 2 stocks: strong positive bubble signals with weak fundamentals Country of Yearly DS LPPL DS LPPL Bubble Value Growth Financial Quadrant 2 Headquarters GICS Sector Name GICS Industry Group Name Return Trust Confidence all score score strength Score Hormel Foods Corp USA Consumer Staples Food, Beverage & Tobacco 49.1% 34.8% 22.1% 28% 8% 44% 19% Constellation Brands Inc USA Consumer Staples Food, Beverage & Tobacco 35.8% 25.5% 29.7% 28% 10% 66% 26% dorma kaba Holding AG Switzerland Industrials Commercial & Professional Services 45.8% 15.5% 17.3% 16% 9% 25% 15% Alphabet Inc USA Information Technology Software & Services 43.5% 12.6% 11.9% 12% 18% 68% 35% Clorox Co USA Consumer Staples Household & Personal Products 16.0% 11.7% 12.8% 12% 14% 45% 25% Amazon.com Inc USA Consumer Discretionary Retailing 103.8% 14.3% 10.2% 12% 1% 69% 7% Northrop Grumman Corp USA Industrials Capital Goods 14.1% 12.3% 10.9% 12% 34% 35% 34% Dr Pepper Snapple Group Inc USA Consumer Staples Food, Beverage & Tobacco 16.4% 11.3% 11.3% 11% 11% 66% 27%

25 Quadrant 2 stocks: strong positive bubble signals with weak fundamentals, example Hormel foods. Left graph is a standard output from the Financial Crisis Observatory. It shows the historical price evolution of the stock in blue (left hand scale) and the calculated bubble warning index DS LPPL Trust in red (right hand scale). We can see a clearly spiking warning. The right graph shows the outperformance of the stock over the last five years (orange) with respect to the S&P 500 benchmark (purple).

26 Quadrant 3 stocks: strong negative bubble signals with weak fundamentals Country of Yearly DS LPPL DS LPPL Bubble Value Growth Financial Quadrant 3 Headquarters GICS Sector Name GICS Industry Group Name Return Trust Confidence all score score strength Score Anglo American PLC UK Materials Materials -75.6% 55.8% 42.9% -49% 96% 1% 8% IMI PLC UK Industrials Capital Goods -37.6% 36.9% 62.7% -48% 37% 9% 18% BHP Billiton PLC UK Materials Materials -49.4% 30.9% 36.9% -34% 76% 2% 13% Anadarko Petroleum Corp USA Energy Energy -53.5% 19.1% 58.9% -34% 43% 2% 9% Antofagasta PLC UK Materials Materials -43.4% 20.4% 43.1% -30% 78% 3% 16% Weir Group PLC UK Industrials Capital Goods -47.3% 19.0% 41.6% -28% 77% 4% 17% Rio Tinto PLC UK Materials Materials -41.9% 15.3% 35.5% -23% 86% 3% 15% ArcelorMittal SA Luxembourg Materials Materials -58.2% 34.5% 15.6% -23% 96% 0% 7% Range Resources Corp USA Energy Energy -38.8% 23.4% 21.2% -22% 39% 7% 16% Southwestern Energy Co USA Energy Energy -64.8% 35.5% 12.5% -21% 20% 1% 4% Tesco PLC UK Consumer Staples Food & Staples Retailing -26.6% 15.1% 28.8% -21% 49% 8% 19% National Oilwell Varco Inc USA Energy Energy -41.7% 12.4% 30.5% -19% 98% 3% 17% Lafargeholcim Ltd Switzerland Materials Materials -29.3% 12.2% 29.1% -19% 42% 6% 15% Cabot Oil & Gas Corp USA Energy Energy -27.1% 22.1% 15.4% -18% 3% 7% 4% EQT Corp USA Energy Energy -18.7% 23.3% 11.6% -16% 12% 6% 9% Chipotle Mexican Grill Inc USA Consumer Discretionary Consumer Services -36.6% 16.5% 13.5% -15% 7% 48% 18% Spectra Energy Corp USA Energy Energy -18.8% 14.2% 15.4% -15% 28% 14% 20% Seagate Technology PLC Ireland Information Technology Technology Hardware & Equipment -54.4% 17.3% 11.0% -14% 80% 5% 19%

27 Quadrant 3 stocks: strong negative bubble signals with weak fundamentals, example Anglo American. Left graph is a standard output from the Financial Crisis Observatory. It shows the historical price evolution of the stock in blue (left hand scale) and the calculated bubble warning index DS LPPL Trust in red (right hand scale). We can see a clearly spiking warning. The right graph shows the performance of the stock over the last five years (orange).

28 Quadrant 4 stocks: strong negative bubble signals with strong fundamentals Country of Yearly DS LPPL DS LPPL Bubble Value Growth Financial Quadrant 4 Headquarters GICS Sector Name GICS Industry Group Name Return Trust Confidence all score score strength Score Ryder System Inc USA Industrials Transportation -41.0% 48.2% 60.8% -54% 79% 93% 86% CEZ as Czech Republic Utilities Utilities -28.8% 34.7% 58.8% -45% 93% 94% 93% Cummins Inc USA Industrials Capital Goods -39.1% 45.4% 23.9% -33% 90% 56% 71% Mosaic Co USA Materials Materials -52.3% 25.5% 41.8% -33% 96% 88% 92% CF Industries Holdings Inc USA Materials Materials -50.6% 18.7% 42.4% -28% 91% 83% 87% Harley-Davidson Inc USA Consumer Discretionary Automobiles & Components -39.8% 17.6% 40.3% -27% 52% 80% 64% Robert Half International Inc USA Industrials Commercial & Professional Services -27.0% 13.7% 41.0% -24% 84% 85% 85% Urban Outfitters Inc USA Consumer Discretionary Retailing -38.1% 25.2% 20.5% -23% 84% 43% 60% Bollore SA France Industrials Transportation -3.7% 13.8% 35.6% -22% 66% 96% 80% Carmax Inc USA Consumer Discretionary Retailing -32.2% 11.1% 34.9% -20% 66% 76% 71% Exelon Corp USA Utilities Utilities -22.5% 22.0% 11.2% -16% 78% 78% 78% AB SKF Sweden Industrials Capital Goods -33.2% 10.9% 19.2% -14% 73% 58% 65%

29 Quadrant 4 stocks: strong negative bubble signals with strong fundamentals, example Ryder System. Left graph is a standard output from the Financial Crisis Observatory. It shows the historical price evolution of the stock in blue (left hand scale) and the calculated bubble warning index DS LPPL Trust in red (right hand scale). We can see a clearly spiking warning. The right graph shows the outperformance of the stock over the last five years (orange) with respect to the Eurostoxx benchmark (purple).

30 thank you