My notes from Coxe's Friday call. Don't think he is a fan of big government. We need to keep in mind that he has not been an ultra conservative in the past. Actually he admitted early on to his initial support for Obama. That said, here are my notes:

Don Coxe 8/5/11

· Received better than feared employment report which resulted in a short term rally

· We are still dealing with the same issues. This upcoming Fed meeting at Jackson Hole will be the toughest meeting since 2008 due in part to the belief that most of their “fire power” in getting the rest of the world out of this mess has been used up.

· The US government’s was unable to deal professionally and effectively with the debt ceiling. Larry Summers was the first to use the term of “terrorists” for tea party. This then became OK for the rest of the others to use the same term like for example VP Biden. This is the result of a deep fissure within US society. This could lead to enormous unrest and difficulty in getting consensus on any real issues.

· There is a sense by a large number of US society that government is not being responsive to their voice and instead Washington is tied to Wallstreet. Feeling that elites feel allegiance only to elites and those are the ones they are helping.

· What happened in the mid term elections it was a sign of unrest. Feeling that bailouts were intended to protect the elites. The tea partiers are saying that they no longer believe that their leaders are working for them.

· Banks in Europe are stuffed to the gills with government bonds. Puts into question the shape of the European banking system. Don’t know how they would handle another recession.

· “Financial heroin” is another topic for our discussion. Bank of New York Mellon bank is now charging those with large cash deposits for keeping them with the bank! Corporations are sitting on large amounts of cash but not doing much with it as they see little opportunity. Massive amounts of money being created by central banks but they are being stuck within the system. Banking system is not really making loans as corporations are not wanting to borrow.

· Challenge to investors is “what can you believe in?” Non-financial corporate centers are no longer centers of risk. They have cleaned up their balance sheets.

· Large sectors of the global economy are going to be able to do well in this environment. In fact they have less risk than a lot of government bonds. Difficulty is that the rule book has been thrown away.

· Not recommending you run to the hills and go into instruments where the returns are zero (government bonds).

· The real problem now is the regulatory aspect of government which does pose a risk. Governments will not try to bail us out. They can’t do that as they have little ammunition. But what they can do to try to show us that they have relevance because they can regulate business. Companies may not need help from the government but that government will make it difficult for them to operate. E.g., government telling Boeing that it cannot open a plant in South unless they are unionized does cause problems.

· Emerging markets will likely outperform the others because governments are not involved there in holding back the corporate world.

· Strength that we see in commodity prices will continue as supply is so close to demand. This is particularly the case in agriculture.

· If the elites do try to regulate business it will cause the US to go into a serious recession.

· Sticking with the call that we will have much more toxic politics. The only thing positive to this is that the political elites by virtue of their bad behavior will be seen to be irrelevant.

· The mainstream media will be unrestrained in their criticism of the tea party.

· Investors can shrug all this off by asking the following questions - Am I investing in companies that are making money? Am I better off by having my money in a bank that needs to be protected by government or am I better off having my money in a company that pays dividends and is making things that people really need?