Bond Market Regime Change: AAA Monthly Returns 1919-2004 Percent (%)
10
M oody's AAA M onthly Returns
6-13-2003 X
6
2
-2
-6
-10 1919 1924 1929 1934 1939 1944 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004
CU M BERL AN D AD VI SORS, I N C. (A Subsi di ar y of H ar leysvi lle N ati onal Bank )
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Total Credit Market Debt as a % of GDP 300 295 290 285 280 275 270 265 260 255 250 245 240 235 230 225 220 215 210 205 200 195 190 185 180 175 170 165 160 155 150 145 140 135 130 (E501A)
6/30/2004 Debt = 6/30/2004 GDP =
1925
1930
1935
1940
1945
CU M BERL AN D AD VI SORS, I N C. (A Subsi di ar y of H ar leysvi lle N ati onal Bank )
614 L andis Avenue Vineland, N J 08360
1950
Quarterly Data 12/31/1922 - 6/30/2004
300 295 $35. 182 Trillion 290 = 302.2% 285 $11. 643 Trillion 280 275 270 265 260 255 250 245 240 235 230 225 220 215 210 205 200 195 190 185 180 175 170 165 160 155 150 Annual interpolated GDP (including 145 estimates prior to 1929) used prior to 1946. 140 Domestic Nonfinancial Debt used prior to 1946. As of December, 1946 135 Domestic Nonfinancial Debt represented 99.4% of Total Credit Market Debt. 130
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
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Corporate Profits as a percent of Nominal GDP 9%
1947 - 2004
Percent  ( % )
Quarterly corporate after-tax profits with CCA and IVA adjustments in relation to Nominal GDP from 1947 to 2003. The capital consumption and inventory valuation adjustments convert depreciation and inventory withdrawals reported on an historical-cost basis to the replacement-cost measures used in the national income and product accounts. Data source: Bureau of Economic Analysis, (FRED) St. Louis Federal Reserve Bank and Cumberland Advisors, Inc.
8%
Record High
7%
6%
5%
4%
3% 1947
1951
1955
1959
1963
1967
1971
1975
1979
1983
1987
1991
1995
1999
2003
CU M BERL AN D AD VI SORS, I N C. (A Subsi di ar y of H ar leysvi lle N ati onal Bank )
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Corporate Profits and Stock Market Capitalization as a percent of Nominal GDP 1981 - 2004 Percent ( % ) 9%
170
Quarterly corporate aftertax profits with CCA and IVA adjustments in relation to Nominal GDP from 1981 to 2001. The capital consumption and inventory valuation adjustments convert depreciation and inventory withdrawals reported on an historicalcost basis to the replacementcost measures used in the national income and product accounts. Data source: St. Louis Federal Reserve Bank, Ned Davis Research, Bureau of Economic Analysis and Cumberland Advisors Inc.
8%
7%
145
NASDAQ Bubble
120
6%
95
5%
70 Corporate Profits as a percent of Nominal GDP Stock Market Total Capitalization as a Percent of GDP
4%
3%
45
20 1981
1984
1987
1990
1993
1996
1999
2002
CU M BERL AN D AD VI SORS, I N C. (A Subsi di ar y of H ar leysvi lle N ati onal Bank )
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The World’s 10 Largest Stock Markets
PPP
GDP
NOTE: World Total 51,766,267
NOTE: World Total 36,356,240
1. United States 10,871,095
1. United States
2. China
6,435,838
3. Japan
Measured in U.S. dollars @ 10/08/04 exchange rates
10,881,609
1.
United States 54.05%
2. Japan
4,326,444
2.
U.K.
10.90%
3,582,515
3. Germany
2,400,655
3.
Japan
9.78%
4. India
3,096,239
4. U.K.
1,794,858
4.
France
4.01%
5. Germany
2,279,134
5. France
1,747,973
5.
Canada
2.94%
6. France
1,632,119
6. Italy
1,465,895
6.
Switzerland
2.93%
7. U.K.
1,606,853
7. China
1,409,852
7.
Germany
2.92%
8. Italy
1,559,321
8. Spain
836,100
8.
Australia
2.27%
9. Brazil
1,371,655
9. Canada
834,390
9.
Netherlands
2.04%
10. Russian Fed. 1,318,827
10. Mexico
626,080
10. Italy
11. Canada
11. Korea, Rep.
605,331
Total: 93.53% Rest of the World 6.47% Total: 100%
963,550
1.69%
Source: World Bank Data 2004, MSCI, FRB., Cumberland Advisors and Laffer Associates. CU M BERL AN D AD VI SORS, I N C. (A Subsi di ar y of H ar leysvi lle N ati onal Bank )
614 L andis Avenue Vineland, N J 08360
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