Don Coxe 6/23/11 Conference Call

· Don took call while visiting Spain. Had a chance to see how they are handling their protests over there and they were handled in an orderly fashion without a lot of violence.

· In talking with the populace, he didn’t get a sense of the rage and hatred you may be seeing elsewhere. Instead the young people don’t feel changing the politics at the top will do anything for them. Instead, they feel that capitalism and the banks have failed them. Populace at large understands that the political class doesn’t have any resolution to the things that are happening.

· Banking system has been enticed to buy the Greek bonds due to the higher than normal yields. Don at one point said about the banks, “how stupid.” Don said that he had a sense that something on a big scale will have to happen to get us into a entirely different structure as the banks don’t seem to be changing their ways.

· Lesson that Don has learned as a result of traveling around is that the leadership, the elites have gotten totally disconnected from the people. Even though leaders are getting voted out of office that doesn’t necessarily mean that we will find leaders that will be able to get us out of this mess. People don’t like bailouts but they don’t want EURO to be hurt. But there is no containing EURO situation and it is spreading beyond Greece.

· Young peoples’ unemployment rates are between 20 – 40%.

· Interesting that dollar is strong given the bad politics in the US which could well be worse than what’s happening in Europe.

· Governments all over are still committed to fighting deficits but how difficult when we have huge unemployment. I get the sense that Don thinks some kind of proactive approach could help but did mention that the problem with Obama’s deficit monetary policy was that it was geared towards his supporters and not where it could have helped the overall economy. (Found this interesting as he was previously an Obama supporter.)

· There is a fast slowdown in the industrial sector going on.

· Thinks the market may finally be starting to discount the seriousness of the Euro sector.

· The profits for those who produce the commodities are much stronger than for the other standard S&P companies. This despite the fact that the commodity stocks have been hit. Sell off in the commodity stocks doesn’t really go to the fundamentals….the bull is still in tact.

· Fact is that Greece will not be able to stay in the Euro zone. The only question is how far this will spread. (Don states that all this is due to the “elites” making very bad decisions…e.g., the banksters – my term not Don’s)

· Remember that what caused (at least part of what caused) the deep issues in 2008 was $145 oil. That is not the case now. The fact that oil prices are down almost 5% today is good even though Don has recommended that investors have 24% of their investments in their commodity portfolio to oil. The down in the energy stocks is way over down.

· The fact that we have all these problems will mean that we won’t have higher interest rates even if Bernanke cannot come out openingly with a QE3.

· Susan’s comment - I got the feeling that Don thought the bad news was being factored into stocks and that the stock market will be stabilizing versus dropping off a cliff.