2011

Ted Hong, Ph.D.

July 2011

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OVERVIEW: SESSION IUPDATE (2011)Recent Event UpdateJasmine Movement () Japan Fukushima nuclear crisis () Global Economic Slowdown and the triangular relationship ()Chinas potential hard-landing ()US recovery slowdown ()Europe sovereign debt crisis ()SESSION IITHE BANKS ROLE IN THE NEXT BOOM () Bank's Role ()Traditional lending () Government sponsored lending ()Online payment ()The Next Boom ()Social media cyberspace ()LOHAS related industry ()Real Estate () SESSION IIITHE OPPORTUNITY LANDSCAPE () Think the unthinkable ()Role of IMF and World Bank ()The G2 in the G-20 First priority: Control risk ()Real Estate bubble ()Commodity bubble ()Internet bubble ()Public health outbreak ()*

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OVERVIEW: SESSION IUPDATE (2011)Recent Event UpdateGlobal Economic Slowdown and the triangular relationship ()SESSION IITHE BANKS ROLE IN THE NEXT BOOM () Banks Role ()The Next Boom ()SESSION IIITHE OPPORTUNITY LANDSCAPE () Think the unthinkable ()First priority: Control risk ()*

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SESSION I: 2011Recent Event UpdateJasmine Movement () Japan Fukushima nuclear crisis () Global Economic Slowdown and the triangular relationship ()US recovery slowdown ()Europe sovereign debt crisis ()China potential hard-landing ()*

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**24.5 yearsArab uprisings TunisiaEgyptLibyaBahrainSyriaYemen44.8 years36.9 years26.9 years

15-64 years: 62.7%Median age: 24.5 years

15-64 years: 66.8%Median age: 36.9 years

15-64 years: 73.4%Median age: 36.9 years

15-64 years: 64%Median age: 44.8 years

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* : China*24.0 years

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* : China*35.5 years

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* Economic Impact of Japans Fukushima nuclear crisisIndustry Supply Chain IT (Semiconductor, LED, & Consumer Electronics)Information and Communication Technology (ICT) AutomotiveFood & Beverage Contamination Radioactive Effect of Japanese Yen Short-term appreciation (repatriation effect)Long-term depreciation

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International Stock Indices*April 2008 June 2011

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*Commodity & Energy Markets2008Q2 - 2011Q2extension

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Global Rates Watch**

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*Source: FDICUS Financial Market vs. Bank Failure 1934-2011 RTC Era1989-1996157 failed Banks 201026 fails up to April 2011

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US Real Estate Market Watch

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Source: BeyondbondUS Bond Market: Treasury Curve Shift*

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*Outstanding Level of U.S. DebtSource: SIFMA

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*Issuance of US Mortgage Debt*

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Global Economic Slowdown -The triangular relationship ()Chinas potential hard-landing ()U.S. recovery slowdown () Europe sovereign debt crisis ()*

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SESSION II: The Banks Role in the Next BoomThe Banks Role ()Traditional lending () Government sponsored lending ()Online payment ()Industries in The Next Boom ()Cyberspace: Social media related industry ()Urbanization: LOHAS related industry ()Demographic: Real Estate industry*

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The Next Boom: Social Media *Let Social Media IPO Show BeginEstimate CV:$50B$20B$25BMarket Cap:$7.8B

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Virtual vs. Traditional Enterprises Traditional: Similar cap, need to feed moreVirtual: Less employees, produce more values*

Market CapEmployeesMarket Cap21689,000287,00020417926,3162,100,00018010033,700196,2001034317,700205,00045Total:528B166,7162,798,200532B

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The Next Boom: UrbanizationAn ongoing trend for growing urbanized middle-class. Taiwan and HK obviously are ahead of China. China 1st tier cities are adopting those concepts very rapidly while 2nd tier are just realizing the ideas. It's however will affect democracy thought which is dangerous in its domestic politics. The business thought that surround those ideas are growing bigger and are along with the theme of cyberspace service industry because LOHAS communities like leveraging social media to communicate ideas and form the trend. *

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LOHAS (Lifestyles of Health and Sustainability) Population: US 23% (50 million), Japan 29% (37 million)Market Size in US: $355 billion in consumer salesGreen Technologycertified green buildings, Energy Star appliances, etc.resource recovery and recyclingAlternative Energyrenewable poweralternative Transportation like hybrids, electric vehicles, car sharing, etc.Natural Lifestylesnatural home furnishings, apparel, etc.eco-tourism on excursions in naturePersonal Healthnatural/organic food, personal care, supplements, etc.*

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(LOHAS) *

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Source: BeyondbondReal Estate () 2010 US Household Annual Expenditure *

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2010 China and Taiwan Household Annual Expenditure*United StatesChina (Urban)Taiwan

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*Real Estate () 2010 US Household Annual Expenditure Housing34.43%Transportation15.61%Food12.99%Insurance Pensions11.15%Everything Else10.45%Health care6.37%

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The no. 1 job of a professional investor is not to make a lot of money, its to control risk.

- Howard Marks, Oak Tree Investment

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SESSION IIIBeyond the Horizon First priority: Control risk ()Real Estate bubble () Commodity bubble () Internet bubble () Public health outbreak ()New Globalization GameThe G2 in the G-20 Role of IMF and World Bank ()

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Demographics and Real Estate Aging PopulationReal Estate bubble : Commodity bubble () Internet bubble () MCIEnron

Control Risk *

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Control Risk Public Health Outbreaks Mad cow disease2003 SARS2006 E. Coli outbreak2008 (Melamine)2009 H1N12011 ( DEHP

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*G2 in G20: Global GDP Distribution 2000 vs. 2010*

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*Global Population vs. GDP 2010 in Cumulative %*

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The IMF and World Bank International Monetary Fund (IMF) & the World Bank were both founded at the UN Monetary and Financial Conference in 1944.182 member countries

Major Responses:U.S. Savings and loan crisis (1986-95)Japan banking crisis (1990-99)Asian Banking crisis (1998-99)U.S. subprime crisis (2007-present)European sovereign debt crisis (2008-present)*

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Ted@BeyondBond.comFor Additional Information contact*

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Beyondbond Beyondbond 1999 CMBS Beyondbond

Nomura, HSBC, BlackStone, LoneStar, Brevan Howard, GinnieMae, DTCC

.(Robert Engle) 2003 Dr. Hong has more than twenty years research and structuring experience in the U.S. mortgages and securitization areas.

Dr. Hong has published intensive residential and commercial mortgage research papers. He and his core team has provided intensive mortgage research, investment advisory, risk management tools, customized fixed income valuation analytics and trading technology for major financial institutions. In addition, Dr. Hong has advised financial regulators in Taiwan and China for the last years in securitization area.

Dr. Ted Hong is currently the president of Beyondbond, Inc. In the past 10 years, Dr. Hong has provided fixed income research, investment and risk management analytics as well as trading platform for major global banks, investment banks, mortgage lenders, large private equity and hedge funds, fixed income exchanges, and clearing houses. Prior to that, Dr. Hong was a director at Nomura Securities International and oversaw analytics and securitization business in the mortgage areas. He and his core team members were instrumental in developing the commercial mortgage-backed securities industry and jump-started the national real estate market in the 1990s according to Fortune Magazine.

Dr. Hong has been repeatedly invited by regulators and financial institutions from Taiwan and China such as Peoples Bank of China, Peking University, Financial Supervisory Commission (FSC), Central Bank of China, GreTai Securities Market, National Taiwan University, Asia Money, and Taiwan Academy of Banking and Finance (TABF) to give numerous speeches with respect to the securitization markets. Dr. Hong is currently the senior advisor and consultant for regulators in Taiwan such as FSC, TABF, and GreTai..

Dr. Hong received his Ph.D. in Economics from University of California at San Diego. His specialized research topic was the non-stationary volatility modeling in the time series area. Dr. Hong had several research articles jointly published with Dr. Robert Engle, the 2003 Nobel Laureate in Economics. His research piece such as An Options Approach to Commercial Mortgages and CMBS Evaluation and Risk Analysis has been repeatedly quoted and published.*

**2011, , QE2QE32011, , , [THIS SLIDE IS HIDDEN]I will start with a quick 3-year historic lookup by major events. Ill then compare the failed banks statistics with last 3 memorable recession period Y2K, 90s and Great Depression era.Then we look how global markets have reacted or pro-acted by each market sector and geographic region. Through macro economic view, we will review all the majo market

I will start with a quick 3-year historic lookup by major events. Ill then compare the failed banks statistics with last 3 memorable recession period Y2K, 90s and Great Depression era.Then we look how global markets have reacted or pro-acted by each market sector and geographic region. Through macro economic view, we will review all the majo market

****DJ index closed at 9743 as of 7/6/2010, another 700 down from my quote 2 weeks ago.Gold is the one that has strong performance to against inflation threaten. But even that went down at 1195 at 7/6/2010, 4% down from my quote 2 weeks ago.Oil is down as well. The Deflation fear is back.Emerging market is the hope or isnt it?

*No sign of downtrend for the bank failure yet comparing with last 2 major recessions in the 30s and 90s.March_05 fade*The current low interest environment is actually even lower than June, 2003 and last even longer. But the economy has not yet fully recovered yet. R.E. is still down.Although the outstanding remains, the 99% of mortgage issuance in 2010 coming from agency mortgage.*I will start with a quick 3-year historic lookup by major events. Ill then compare the failed banks statistics with last 3 memorable recession period Y2K, 90s and Great Depression era.Then we look how global markets have reacted or pro-acted by each market sector and geographic region. Through macro economic view, we will review all the majo market

*Zynga is expected to raise up to $2 billion in an IPO that could value the company at $20 billionGroupon, which plans to raise $750 million, giving it a valuation of as much as $25 billion****National Statistics of TaiwanNational Bureau of Statistics of China (China Statistical Yearbook)*I will start with a quick 3-year historic lookup by major events. Ill then compare the failed banks statistics with last 3 memorable recession period Y2K, 90s and Great Depression era.Then we look how global markets have reacted or pro-acted by each market sector and geographic region. Through macro economic view, we will review all the majo market

I will start with a quick 3-year historic lookup by major events. Ill then compare the failed banks statistics with last 3 memorable recession period Y2K, 90s and Great Depression era.Then we look how global markets have reacted or pro-acted by each market sector and geographic region. Through macro economic view, we will review all the majo market

[Need Year for each event]

1996 BSE (Mad cow disease) British outbreakDecember 2003 first BSE case reported in US***http://www.imf.org/external/pubs/ft/fandd/2008/12/collyns.htm*