Don Coxe Institutional Call 2/18/11

· Don’s overall tenor is one of greater caution on the economy and hence the stock market. He does not think the projections of 3.5 – 5% growth in GDP by many bulls is realistic.

· He is basing this in part on the CREE, the regional bank index. If the economy was really humming along the CREE should be doing better, but it is not. If community banks are still struggling despite the massive amounts of “financial heroin” this should send a note of caution to investors.

· While significant inflation not yet showing up in US economy, the scarcity of materials plus large monetary growth equals high probability of significant inflation coming. If it shows up could be far worse than ‘70’s where we only had food and fuel inflation because this time we also have other price increases (e.g., base metals, steel, etc.) The only thing seeming to hold us back on the inflationary front is the price roll back associated with technology.

· Geopolitical situation in Middle East is going badly. Those countries with the most benevolent governments are the ones that are going to be toppled not those like Iran that is murdering protestors. (So the government in Iran and other similar countries will avoid being toppled.)

· Recommends that investors NOT get out of PM which will serve as a protection against things going badly. Should be around 25% of one’s commodity investments. Furthermore, people with money in the Middle East are going to be buying PMs which will serve to support their price. (Much like happened in Euro land where fear drove wealthy to buy PM)

· In June with no quantitative easing continuing from Fed and efforts to seriously try to cut the deficits we could end up with a recession (this is what sparked it in the 70’s)

· BOTTOM LINE COXE IS STRIKING A NOTE OF CAUTION AND DOES NOT SEEM TO BE BULLISH ON THE STOCK MARKET AT LEAST NOT AROUND THE TIME THE FED STOPS PUMPING $$$ INTO THE SYSTEM. HE ALMOST SEEMED TO ME LIKE HE WAS EXPECTING A RECESSION VERSUS THE MUCH TOUTED RECOVERY. PM WILL SERVE AS PROTECTION FOR THINGS GOING BADLY.