January 15, 2015

A Practical Approach to Cycles

Robert RethfeldWellenreiter-Invest

Germany

30 Year Cycle

US-Bonds

2

330-Year-Bond-Cycle is valid at least from 1800. Its a generational cycle.

Zinssatz 10-jähriger Staatsanleihen USA 1800-205030-Jahres-Zyklus

0

2

4

6

8

10

12

14

16

1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 2020 2040

Tief

Hoch

Tief

Hoch

Tief

Hoch

Hoch?

4

But: Japan suggests its only a short move up later in the year;

Cycle will go up, but not before the 2020ies

Implication: Upmove, but…

Zinssatz 10jähriger Staatsanleihen ausgewählter Staaten

0

1

2

3

4

5

6

7

8

9

10

Jan.90

Jan.92

Jan.94

Jan.96

Jan.98

Jan.00

Jan.02

Jan.04

Jan.06

Jan.08

Jan.10

Jan.12

Jan.14

Jan.16

Jan.18

Jan.20

Jan.22

Jan.24

Jan.26

USADeutschlandJapan

"Japan 10 Jahre zeitversetzt"

18-Year-Cycle

Real Estate

5

6

U.S Public Land Sales, Acres ‘000, 1800 - 1923

There is a speculation top every 18 years (Source: Phil Anderson)Other sources: John Murphy, Fred Foldvary, Fred Harrison, Akhil Patel

7The cycle goes 14 years up and 4 years down - with a hicup in between(Source: Ascendant Strategy)

US-Häusermarkt (Baugenehmigungen in 1.000) und US-Rezessionen

0

500

1.000

1.500

2.000

2.500

Jan.60

Jan.64

Jan.68

Jan.72

Jan.76

Jan.80

Jan.84

Jan.88

Jan.92

Jan.96

Jan.00

Jan.04

Jan.08

Jan.12

Jan.16

Jan.20

Jan.24

Chart shows US-Building Permits. The arrows mark the start of the last three cycles. Current cycle started in 2010. Difficulties in 2017/18; then up until 2024/25

US-Homebuilding-Index DJUSHB with potential cup and handle formation;Homebuilders are supported by very low interest rates

Implication: Buy homebuilders

US-REITs-Index (DJR) trending upwards

15-Year-Cycle

Forex

11

1. Cycle: 1970 - 1985 2. Cycle: 1985 – 2000/01 3. Cycle: 2000/01 – 2015?

Euro/Dollar seit 1970

0,40

0,60

0,80

1,00

1,20

1,40

1,60

Jan. 70 Jan. 75 Jan. 80 Jan. 85 Jan. 90 Jan. 95 Jan. 00 Jan. 05 Jan. 10 Jan. 15 Jan. 20

10 Jahre

5 Jahre 10 Jahre

6 Jahre8 Jahre

bisher 6,5 Jahre

13

Euro/Dollar tends to bottom early in Pre-Election Years (black line)

Implication: Early Euro/Dollar Low in 2015

Saisonaler Verlauf Euro/Dollar seit 1976 (in Prozent)

96

97

98

99

100

101

102

103

104

J F M A M J J A S O N D90

92

94

96

98

100

102

104

106

108

110Seit 1976Die letzten 10 JahreVorwahljahre2015

11-year-Sunspot Cycle (approx.)

Economy

14

Zyklus der Sonnenaktivität seit 1750 (4-Monats-GD)

0

50

100

150

200

250

1750 1775 1800 1825 1850 1875 1900 1925 1950 1975 2000 2025

16

17

- Each cycle-peak correlates with an US-recession.- Additonally a few recessions take place at troughs.

Sonnenaktivitäts-Zyklus (4-Monats-GD) und US-Rezessionen seit 1930

0

50

100

150

200

250

1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

US-Rezessionen

Anzahl der Sonnenflecken (4-Monats-GD)

18

- Solar Activity and Inflation- Spikes of Solar Activity tend to fall together with Inflationpeaks

Sonnenaktivität und Inflation seit 1950

0

50

100

150

200

250

Jan.50

Jan.55

Jan.60

Jan.65

Jan.70

Jan.75

Jan.80

Jan.85

Jan.90

Jan.95

Jan.00

Jan.05

Jan.10

Jan.15

Jan.20

-4

-2

0

2

4

6

8

10

12

14

16SonnenaktivitätUS-Inflationsrate (rechte Skala)

7-Year-“Shemitah“ Cycle

Stock Market

19

Dow Jones Index im Sieben-Jahres-Zyklus (Sabbat-Cycle)

10

100

1.000

10.000

100.000

Sep.02

Sep.09

Sep.16

Sep.23

Sep.30

Sep.37

Sep.44

Sep.51

Sep.58

Sep.65

Sep.72

Sep.79

Sep.86

Sep.93

Sep.00

Sep.07

Sep.14

Sep.21

At the end of every seven years you shall granta release of debts.

And this is the form of the release: Everycreditor who has lent anything to his neighborshall release it; he shall not require it of his neighbor or his brother, because it is called theLord’s release. (Deuteronomy 15:1-2)

End of Sabbath Year 2007/08: Sept. 29, 2008Weird: Dow falls 777,7 points

Dow Jones Index

End of Sabbath Year 2000/01: Sept. 17, 2001First day of reopening after 9/11: Dow falls 685 points

Dow Jones Index

End of Sabbath Year 1993/94: Sept. 5, 1994The year was bumpy, but had no special „release“ date at the end.There was a „bond crash“ (interest rates went up).

Dow Jones Index

End of Sabbath Year 1986/87: Sept. 23, 1987Crash followed in Oktober

Dow Jones Index

In total:

- Three of the last four Sabbath Years saw Drama

- 1993/94 was a bumpy year

- 11 of the 16 Sabbath Years since 1900 areassociated with large Corrections, Crashes or Bear Markets

- Only 2 years (1944 and 1958) were very positive

Implications:

- The current sabbath year began in September 2014

- Markets saw already

- the Mid-October Bond Earthquake,

- the oil price collapse

- dramatic volatility increases

- and todays Swiss Franc 20-Percent-rise

- this sabbath year ends on September 13, 2015

Skyscrapers are generally planned in times of bull marketsand finished in times of bear markets.

- The Empire State Building or the Burj Khalifa are examples.

- The new Building One World Trade Center is about finished.Hopefully its not a bad sign for the US-Economy

- Coincidence? Former Word Trade Center:

- construction begun in 1966 (Sabbath Year)

- was finished in 1973 (Sabbath Year)

- was destroyed in 2001 (Sabbath Year)

New World Trade Center opened in Nov. 2014 (Sabbath Year)

For what its worth.

4-Year-Presidents-Cycle

Stock Market

30

31

Dow Jones Index - Präsidentschaftszyklus

80

90

100

110

120

130

140

Nach,1

Nach,4

Nach,7

Nach,10

Zw i,1

Zw i,4

Zw i,7

Zw i,10

Vor, 1 Vor, 4 Vor, 7 Vor,10

Wahl,1

Wahl,4

Wahl,7

Wahl,10

Jahr 1(Nachwahljahr)

Jahr 2(Zwischenwahljahr)

Jahr 3(Vorwahljahr)

Jahr 4(Wahljahr)

Post-Election Year Midterm Year Pre-Election Year Election Year

32

Dow Jones Index - Vorwahljahre prozentuale Veränderung seit 1899

-60

-40

-20

0

20

40

60

80

100

1899

1903

1907

1911

1915

1919

1923

1927

1931

1935

1939

1943

1947

1951

1955

1959

1963

1967

1971

1975

1979

1983

1987

1991

1995

1999

2003

2007

2011

2015 is a Pre-Election year. All Pre-Election years since 1943 were positive.

33

Dow Jones Index - Verlauf mit US-Präsidenten in zweiter Amtszeit in %

100

102

104

106

108

110

112

114

116

118

120

J F M A M J J A S O N D

VorwahljahreVorwahljahre - US-Präsidenten in zweiter Amtszeit

2015 is a Pre-Election year with a Second-Termer US-President („lame Duck“)This sets up good first and a challenging second half

34

Wellenreiter Financial Markets Outlook 2015

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The information and opinions in this report were prepared by Wellenreiter-Invest Robert Rethfeld. The informationherein is believed to be reliable and has been obtained from public sources believed to be reliable. Wellenreiter-Invest makes no representation as to the accuracy or completeness of such information.

Wellenreiter-Invest may engage in securities transactions, on a proprietary basis or otherwise, in a mannerinconsistent with the view taken in this research report. Opinions, estimates and projections in this report constitutethe current judgement of the author as of the date of this report. They are subject to change without notice. Wellenreiter-Invest has no obligation to update, modify or amend this report or to otherwise notify a recipientthereof in the event that any opinion, forecast or estimate set forth herein, changes or subsequently becomesinaccurate. Prices and availability of financial instruments are subject to change without notice.

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36EUR/CHF after abandoning price support of 1,20

EUR/CHF seit 1976

1,00

1,20

1,40

1,60

1,80

2,00

2,20

Jan.76

Jan.78

Jan.80

Jan.82

Jan.84

Jan.86

Jan.88

Jan.90

Jan.92

Jan.94

Jan.96

Jan.98

Jan.00

Jan.02

Jan.04

Jan.06

Jan.08

Jan.10

Jan.12

Jan.14

Jan.16

37USD/CHF after abandoning price support of 1,20

US-Dollar / Schweizer Franken seit 1986

0,60

0,80

1,00

1,20

1,40

1,60

1,80

2,00

2,20

Jan.86

Jan.88

Jan.90

Jan.92

Jan.94

Jan.96

Jan.98

Jan.00

Jan.02

Jan.04

Jan.06

Jan.08

Jan.10

Jan.12

Jan.14

Jan.16