The FCO Cockpit

Global Bubble Status ReportFebruary 2021

Contents

1. Introduction
2. General Results
3. Results per Asset Class
4. Sectors and Sector Portfolios
5. Single Stocks
6. Contact
7. Appendix

The FCO Cockpit - Global Bubble Status Report1Purpose and Benefits
4 The Financial Crisis Observatory (FCO) monthly report discusses the historical evolution of bubbles inand between different asset classes and geographies. The purpose of the FCO report is to ascertain
which asset classes and sectors are crowded and to what degree they develop contagion risks.
4 Today, the report is used by 600+ institutions world-wide, including universities, think tanks, sovereign
wealth funds, hedge funds, family offices, private banks and pension funds.
4 It delivers the big picture in terms of growing bubbles and instabilities in today’s financial markets for
Chief Investment Officers, Senior Researchers, Fund Managers, and Independent Financial Advisors,
and all parties with investment performance responsibility or managing financial risks.
4 The report is the result of an extensive analysis applied to the historical time series of about 450
systemic assets and about 850 single stocks. The systemic assets are bond, equity and commodity
indices, as well as a selection of currency pairs. The single stocks are mainly US and European equities.
The data is from Thomson Reuters.
4 To new readers, we recommend proceeding to the appendix for more detailed information about themethodology and procedures applied in this report.

The FCO Cockpit - Global Bubble Status Report

2

FCO Market Outlook

In line with our August 2020 FCO monthly report, a large number of active retail investors flood into theequity market, aggressively betting on leveraged and risky stocks while institutions have been net sellers ofthe very same stocks. Such a striking and pervasive divergence between amateurs and professionals
became much more pronounded recently.
One hot case is Melvin capital, a sub-fund of Steven Cohen (Showtime series Billions Bobby Axelrod's
prototype), who has been short-selling a struggling video game retailer, GameStop Corp.(US: GME). Many
well-known investors such as Jim Chanos, who gained his name from his famous short-sell of Enron in 2000,
Andrew Left who is the founder of Citron Research, and Citadel who ranks No.9 in AUM of all hedge fundfirms, are also involved, all betting on a terminal closure of GME. Interestingly, GME’s stock price did not go
the way these tycoons bet and Melvin capital was forced to close its short position a few days ago, recording
a 53% loss in January 2021, triggering a rushed $2.7 billion bailed out from Citadel and Point72 one week ago.
The stock prices of AMC, Nokia, Blackberry, etc. all skyrocketed similarly to GME, pushed by a large numberof high-spirited retail investors, led by some key opinion leaders (KOLs) such as Keith Gill, Chamath
Palihapitiya, Michael Burry. from some social media platforms (YouTube, Reddit’s r/wallstreetbets, etc.).
Tesla CEO Elon Musk’s public support on Twitter also fuelled the fire. After a few weeks of fierce battle,
Andrew Left of Citron research announced he will discontinue the short-selling report and Steven Cohen
decided to close his Twitter account. The domino effect from the short squeeze of GME and such shortselling targets as AMC, Nokia, etc. has pushed a large number of long/short hedge funds to close their shortpositions as well as their Long positions (on mainly large profitable firms) to reduce their portfolio exposures.
This creates more instabilities in the market: since many L/S hedge funds and quantitative funds are using
factor models, which are mainly built by longing the top quantile good /quality/profitable stocks andshorting bottom quantile bad/struggling/value-destructing stocks. If these funds are forced to leave one
side of their positions, they will have to close the opposite side. Besides, the rebalancing process caused by
the short squeeze might also lead to higher volatilitiy i.e. high VIX, which might also push some funds toreduce equity exposure.

《Why Stock Markets Crash》PP.123

The recent short squeeze, led by the crowded retail traders or day traders, is a typical self-reinforcing imitative and herding behavior. Such behavior is an example of the selforganization mechanism leading to complex emergent behaviors. The control parameter of cooperative behavior is the “coupling strength” between the agents in the interactive
system, which quantifies their imitation propensity, forming a herd (like a cluster, an army, or a gang). When many active amateur investors flood into the stock markets, as in the pastfew months, most of them have limited financial knowledge and information. Under the condition of information asymmetry, the optimal strategy for the agents is to imitate their“neighbors” (or some authoritative information sources). With the stock forums on social platforms already available, small retail investors can copy other investors’ (we consider someof them as key opinion leaders (KOLs)) “homework”: i.e. Retail investors buy the same stocks as those KOLs do, even if they have no idea about the business fundamental or market
valuation. Generally speaking, if the KOLs are not “strong”, or not many followers copy KOLs’ “homework”, the crowd cannot be sustained for long. But this time, a number of conditions
were met that accentuated the crowd phenomenon: (i) .COVID-19 makes lots of people stay at home and look for some occupation to fight their boredom, (ii) Some KOLs have lots offans (such as Elon Musk). (iii) The prevalence of the smartphone make information easily accessible. (iv) An astonishing amount of liquidity is injected by the Fed. (v) Some long side
KOLs are very professional (CFA Charter holders, ex-giant technology company (Facebook) senior manager, well-known professional investors). (vi) “Lottery-like pay-off” with theexiting slogan “You only live once” (YOLO) can easily ignite the animal spirits. Put them together and we get something similar to what happened in the 2000 (dot-com bubble).
At that time, Julian Robertson, the legendary value investor and founder of Tiger Management, had to close his fund due to big losses. He had short positions of some zombie
companies just like today’s Jim Chanos and Steven Cohen. But the madness of people (quote from Sir Isaac Newton) drove the junky stocks up to the sky and forced Julian to close his
short positions. Interestingly, at that time, many retail investors exchange information and opinions in the Yahoo chat rooms, like Silicon Investor and RagingBull.com, mutually
brainwashing each other and dreaming tomorrows. Yesterday once more!
Here are a few interesting questions: What exactly is a bubble? Are there any fund managers, who can leave the bubble when his/her fund is benefiting from it? Are there any fundmanagers who would dare to constantly say that he/she will not be impacted by his/her peers whose performance has been inflated by a bubble for many years? Who dares to fightbubbles and persistently win through his/her entire career? We will also be happy to ask Prof. Eugene Fama: if participants are irrational from time to time, how can we claim that themarket is efficient?
The FCO Cockpit - Global Bubble Status Report3General Results – The Big Picture

The FCO Cockpit - Global Bubble Status Report4General Results – This Month’s Overview

4 Over January 2021, a general increase in positive bubble activity of single stocks, equity indices and commodities wasobserved. From mid January, this was followed by a drop of the fraction of bubbles.
4 The positive bubble activity for the remaining asset classes, as well as all negative bubble activity, are below 5% thismonth. Thus, there is a general bias towards positive market trends and bubbles (which is a general and standard
observation).

The FCO Cockpit - Global Bubble Status Report5Multiscale Indicators
4 In the following, we will analyze different types of bubble signals that are obtained by our LPPLS
bubble detection procedure for each asset.
4 The four different signal types are the respective versions of the DS LPPLS Confidence Indicators, theso-called multiscale indicators.
4 In the tables, for each asset, only the strongest signal is listed.
4 The strongest signal is determined as the one for which the geometric average of the corresponding
bubble characteristics is maximized.
4 The multiscale indicators differ in the range of time-windows that they are computed for.
4 The different ranges are:—Super-Short (SS) Scale:[40,183] days—

Short (S) Scale:[40,365] days—

Medium (M) Scale:[365,730] days—

Long (L) Scale:[730,1460] days

4 Thus, if for instance the strongest signal is the super-short-scale Confidence Indicator, this can beinterpreted as a strong short-term in the price time series of the asset.
4 Similarly, for instance for the long-scale, a respective bubble is identified to exist for several years
already, with strong bubble growth over the entire time frame.
4 This slide shall serve as a reference for readers to map the range of windows that the abbreviationrefers to.

The FCO Cockpit - Global Bubble Status Report6Single Stocks - Europe

4 The analysis starts with the subclass of European single stocks. The fraction of positive (negative) bubble signals of the totalof 937 analyzed stocks is about 9% (1%). The corresponding three strongest positive and negative bubbles are listed in thetable above.
4 Most of the signals are on the short- to super-short term (see the reference Slide 7). Thus, recent strong market momentum
is detected by our analysis.
4 The top positive bubble signal is Royal Mail, with a bubble size estimated to be approximately 200% and a confidence
indicator of 57%. The bubble is predicted to be 86% matured. This amounts to predicting the crash to occur on ~ 7th March
2021, given the bubble duration of 221 days. The corresponding indicator plot is provided on the next slide.
4 The top negative bubble signal, which is of type super-short, is for Schibsted (Norway, Media). The detected bubble size is 20% at a low confidence indicator level of 16%. Thus, the signal is relatively weak. The corresponding plot is also provided in
the following. The start of the bubble, as indicated by the vertical green dashed line, is a bit before a prior peak.
The FCO Cockpit - Global Bubble Status Report

7The FCO Cockpit - Global Bubble Status Report8The FCO Cockpit - Global Bubble Status Report9Single Stocks – United States

4 For US Single Stocks, with 15%, the fraction of positive bubbles is higher than for the European stocks sector. The fractionof negative bubbles is close to zero, as there are very few signals. All signals correspond to the super-short scale (seeSlide 7).
4 Positive (negative) DS LPPLS Confidence Indicator values range in 51%-61% (39%-79%) and are therefore in the medium
range. Positive bubble sizes are fairly large, estimated between 85%-115% (-12% - -15%) at durations of 68-126 (56-60)
trading days. Combining the size of the bubbles with their duration corresponds to yearly compound growth rates (CAGR)
ranging in 242%/year-1604%/year (-43%/year - -50%/year). Of course it is quite unlikely for this growth to be sustained
throughout a full year, as indicated by the bubble progress and critical time predictions. All critical times are estimated tooccur before the end of March 2021. This is the hallmark of a heated market phase, with huge day-to-day gains that
however ultimately will have to come to a stop with a change of regime.
4 The indicator plots for the top positive (Discovery, US, Media) and negative bubble (Fidelity NIS, US, Information Services)
signals are provided in the following.

The FCO Cockpit - Global Bubble Status Report10The FCO Cockpit - Global Bubble Status Report

11The FCO Cockpit - Global Bubble Status Report12Equity Indices - Global

4 We turn to a broader analysis of stocks grouped into sections in the S&P 1200 Global series. For this index series, nonegative bubble signals are detected. The positive bubble activity involves almost a quarter of the 386 analyzed indices.
4 The top positive bubble signals are found in the Broadcasting and Drug Retail Sector. The indicator plots for these twoare also depicted on the following slides.
4 Again, all signals occur on the super-short and short scale, with confidence indicators ranging from 33% to 68%.
4 Also here, the estimated bubble progress is above 95% for all of them, warning of imminent changes of regime or
crashes.

The FCO Cockpit - Global Bubble Status Report

13

The FCO Cockpit - Global Bubble Status Report

14

The FCO Cockpit - Global Bubble Status Report15Equity Indices – United States

4 Focusing on the US Equity indices, as covered by the S&P 500 and 1500 Index series, again, the broadcasting and drug
retail indices appear at the top, with similar bubble characteristics as previously determined in the global analysis.
4 As the S&P 500 Broadcasting and S&P 1500 Broadcasting indices are highly correlated, we only show the first one on thenext slide and, in addition, the Drug Retail index.

The FCO Cockpit - Global Bubble Status Report

16

The FCO Cockpit - Global Bubble Status Report

17

The FCO Cockpit - Global Bubble Status Report18Commodities

4 Our analysis of commodities comprises a selection of 34 indices, of which 29% are found to be in a positive bubble stateat the beginning of February 2021.
4 At the top, we find the MLCX Lean Hogs, Soybean Oil and Livestock Spot Indices. In the previous report, the Soybean
Index had already appeared as the single top signal.
4 For all three indices, the indicator plots are displayed on the following slides.

The FCO Cockpit - Global Bubble Status Report

19The FCO Cockpit - Global Bubble Status Report

20

The FCO Cockpit - Global Bubble Status Report

21

The FCO Cockpit - Global Bubble Status Report22Forex

4 The analysis of Real Effective Exchange Rate
(REER) Indices reveals a single negative bubble
signal, this month, on the Hong Kong ReeR.
4 The scale of the signal is medium-term, with an
identified bubble duration of 504 trading days.
4 On the left side, the indicator plot is shown. The
long-term indicator peaks at a larger value thanthat of the medium term indicator. Nevertheless,the geometric average, as listed in the table
above, is strongest for the medium-term signal.
Therefore, the bubble characteristics
corresponding to that signal are listed in thetable, but all four indicators are shown in thetime series plot.

The FCO Cockpit - Global Bubble Status Report

23CryptoX

4 The CryptoX sector is composed of 569 different cryptocurrencies, cryptocommodities, stablecoins and other types of cryptoassets.
The fraction of positive (negative) bubbles at the beginning of February is quite low at 4% (2%).
4 Nevertheless, as typical for the strongly volatile prices of cryptocurrencies, the bubble signals are quite strong, especially for the
positive bubbles, with the confidence indicator hitting up to 100% on the medium-term scale for NEM/USD. The bubble sizes range
between 310%-564% and from -64% to -98% for positive and negative bubbles, respectively.
4 The predicted crash / rebound times range between the start of February and mid April, with high associated scenario probabilities
exceeding 95%.
4 The following slides present the corresponding indicator plots for the top signals, as well as for BTC/USD. For Bitcoin, theConfidence Indicator peaked strongly during the growth phase of the recent bubble that began approximately in October 2020.
During the past month, then, a crash with a following volatile side-movement followed.

The FCO Cockpit - Global Bubble Status Report

24The FCO Cockpit - Global Bubble Status Report25

The FCO Cockpit - Global Bubble Status Report

26

The FCO Cockpit - Global Bubble Status Report27Sectors
Yearly Return

GICS Industry Group Name

Bubble Size

Bubble Score

Value Score

Growth Score

Feb 1st Jan 1st Feb 1st Jan 1st Feb 1st Jan 1st Feb 1st Jan 1st Feb 1st Jan 1st

Pharmaceuticals, Biotechnology & Life Sciences
Consumer Services
Retailing
Transportation
Consumer Durables & Apparel
Semiconductors & Semiconductor Equipment
Technology Hardware & Equipment
Automobiles & Components
Telecommunication Services
EnergySoftware & Services
Materials
Health Care Equipment & Services
Capital Goods
Media & Entertainment
Commercial & Professional Services
Food & Staples RetailingHousehold & Personal Products
Food, Beverage & Tobacco
Utilities
Insurance
Real Estate
Diversified Financials
Banks

7.7%
5.7%
-5.6% -1.7%
33.5% 43.3%
9.5% 13.7%
17.5% 18.8%
39.4% 43.5%
44.1% 46.8%
68.9% 63.6%-4.2% -1.0%-26.3% -34.2%
18.9% 31.1%
18.8% 19.1%
14.6% 16.4%
4.4%
6.5%
23.7% 26.5%
0.9%
9.6%
9.1% 12.0%
3.3% 10.3%-4.8% -0.4%
-5.6%
0.5%
-10.2% -4.0%-12.1% -8.5%
4.8%
8.3%
-13.6% -12.4%

0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
79.4%
64.8%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%

0.0%
57.7%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%

The FCO Cockpit - Global Bubble Status Report

0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
32.0%
17.6%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%

0.0%
33.5%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%

66.6%
24.0%
21.6%
46.6%
34.3%
63.4%
68.2%
68.0%
63.2%
54.4%
31.5%
50.6%
55.2%
48.0%
29.1%
27.3%
42.6%
36.4%
46.7%
47.2%
-

65.4%
26.5%
22.2%
56.0%
32.7%
61.0%
65.0%
73.1%
60.9%
52.5%
33.3%
50.9%
53.5%
48.4%
26.1%
29.1%
42.8%
33.3%
49.2%
47.6%
-

49.3%
53.6%
51.2%
49.7%
53.5%
32.1%
45.8%
61.3%
41.1%
61.7%
50.2%
55.3%
49.7%
49.6%
31.1%
54.0%
58.0%
49.2%
53.9%
45.1%
-

48.7%
45.0%
49.2%
48.4%
61.9%
37.9%
44.8%
57.6%
43.7%
63.9%
50.2%
53.0%
53.5%
47.1%
35.7%
54.2%
57.8%
49.4%
54.0%
45.2%
-

28

Sectors
4 We use the MSCI World Industry Group Indices to calculate bubble size and bubble score of thecorresponding sectors. To determine the value scores and growth scores of the sectors, we averageover the corresponding values for each stock of a given sector, weighted by market cap.
4 There are two positive bubbles identified in the 24 MSCI World Industry Group Indices: Technology
Hardware & Equipment, and Automobiles & Components. The high bubble scores indicate that thisindustry index may face a high probability of correction in the near future. We identified last month that
the Consumer Services industry group has a significant bubble, and it has been developing into a
correction in the past month, as showed below.

The FCO Cockpit - Global Bubble Status Report29Portfolio Construction & Performance

4 Here we illustrate the methodology of the portfolio construction process based on the
results of our previous analyses.
4 For individual stocks that we identified in the 4 quadrants, we constructed 4 portfolios
based on the 4 quadrants defined in the last report. Each portfolio consists of all the stocks
listed in the corresponding quadrant.
1.

Trend-Following Long Stock Portfolio (TFLSP) is made of the stocks that have apositive bubble signal as well as a strong value score. For instance, TFLSP November
consists of all the stocks listed in quadrant 1, identified in slide 37 of November 2017
FCO Report.

2.

Trend-Following Short Stock Portfolio (TFSSP) is made of the stocks that have anegative bubble signal as well as a weak value score.

3.

Contrarian Long Stock Portfolio (CLSP) is made of the stocks that have a negative
bubble signal as well as a strong value score.

4.

Contrarian Short Stock Portfolio (CSSP) is made of the stocks that have a positive
bubble signal as well as a weak value score.

The FCO Cockpit - Global Bubble Status Report30Portfolio Construction & Performance

4 At the same time, we also classified 20 industries into 4 quadrants, and constructed 4 typeof industry portfolios based on the 4 industry quadrants. Each portfolio consists of all thestocks in the industries listed in the corresponding quadrant. Following the samedefinitions as above, we have Trend-Following Long Industry Portfolio (TFLIP), TrendFollowing Short Industry Portfolio (TFSIP), Contrarian Long Industry Portfolio (CLIP), andContrarian Short Industry Portfolio (CSIP).
4 In each month, we initiated 8 new portfolios based on the updated results. The
performance of every 8 portfolios we initiated since November 2017 are presented in thenext slide. All of the stocks in our portfolios are weighted by their market capitalizations
and we don’t consider transaction cost in the portfolio performance.

The FCO Cockpit - Global Bubble Status Report

31Portfolio Construction & Performance
4 The Long portfolios have continued to outperform other portfolios while we have seen signs of lost of momentums of themarket. Contrarian Portfolios are more delicate to use due to their sensitivity to timing the expected reversal and exhibit
very volatile performances. We expect trend-following positions to perform in the months following the position set-up
and then contrarian positions to over-perform over longer time scales over which the predicted corrections play out.

The FCO Cockpit - Global Bubble Status Report32Single Stocks
We can divide the stocks into four quadrants1)

nb u t ray e r iar nw
llo
-f o rnd uye
b

Co

1

t re

4

in
g

4 Quadrant 1: Stocks with a strong value score arecheap relative to their earnings potential. The strong
positive bubble signal should be interpreted as a
momentum indicator possibly the consequence of a
repricing based on the fundamentals. As an investor,
one could be a trend-following buyer. E.g.
Volkswagen AG.

3co

fo t re n
llo d
se wi lle n grns e t ralle r iar n

4 Quadrant 2: Stocks with a weak value score are
expensive relative to their earnings potential. The
strong positive bubble signal is an indication ofsentiment and herding increasing the price until it is
not linked to fundamentals anymore. As an investor,
one could be a contrarian seller. E.g. Sysco Corp.

2*1) A strong positive bubble signal is identified if bubble score is positive, and a strong negative bubble
signal is identified if bubble score is negative.
A strong value score is identified if value score is larger than 60%, and a weak value score is identified
if value score is smaller than 40%.

4 Quadrant 3: These stocks are expensive relative totheir earnings potential. On top of that, there areclear negative bubble signals. Such stocks should
be considered as falling knives. As an investor, one
could be a trend-following seller. E.g. Koninklijke
Vopak NV
4 Quadrant 4: These stocks are cheap relative to theirfinancial performance. The strong negative bubble
signal is an indication of sentiment and herding.
These stocks can be considered as over-sold. As aninvestor, one could be a contrarian buyer. E.g.
Lockheed Martin Corp

The FCO Cockpit - Global Bubble Status Report33Single Stocks

4 For 823 stocks, we calculate the bubble warning indicators as well as two financial
strength indicators, which indicate the fundamental value of the stock and the growthcapability respectively.
4 To analyze the financial strength of individual stocks, we have two indicators. Bothscores give a value between zero and one, one being the best of the set and zero theworst, so the higher the score, the higher the financial strength.
— A value score that is based on the ROIC (Return on Invested Capital) taking into account the EV(Enterprise Value) to normalize for high/low market valuations and/or high/low debt; Value scores
are calculated by comparing ROIC level versus EV/IC in each industry.

— A growth score that has characteristics similar to the PEG ratio, which is the Price to Earnings ratio

normalized by the expected growth of the EPS (Earnings per Share).

4 The stocks are the constituents of the STOXX Europe 600, the S&P 500 and the Nasdaq
100 indices. From these, all doubles and stocks with incomplete data are removed.
Because our financial strength indicators are specifically designed for corporates, allfinancial institutions are taken out of the set as well.

The FCO Cockpit - Global Bubble Status Report34Single Stocks
Quadrant 1 stocks: strong positive bubble signals with strong fundamentals
Company Name
Marvell Technology Group Ltd

Yearly Bubble Bubble Bubble Value Growth
Return Size
Start
Score Score Score
Country of Headquarters GICS Industry Group Name
BermudaSemiconductors & Semiconductor Equipment 113.1% 42.3% Jul-20 69.4% 79.4% 64.8%

Swatch Group AG

Switzerland

Consumer Durables & Apparel

1.7%

TE Connectivity Ltd

Switzerland

Technology Hardware & Equipment

Compagnie Financiere Richemont SA

Switzerland

Consumer Durables & Apparel

Covestro AG

Germany

Infineon Technologies AG
Volkswagen AG
Stora Enso Oyj

35.7% Jun-20

35.3%

77.6%

93.9%

29.2%

49.3% May-20

78.0%

63.2%

25.0%

12.0%

46.7% Jul-20

5.6%

74.0%

96.2%

Materials

48.0%

60.8% May-20

79.1%

98.2%

49.2%

Germany

Semiconductors & Semiconductor Equipment

52.5% 109.7% Apr-20

81.0%

70.6%

59.4%

Germany

Automobiles & Components-4.8%

38.5% Apr-20

7.6%

95.3%

95.6%

FinlandMaterials

23.2%

62.2% Mar-20

12.4%

69.9%

88.3%

Compagnie Generale des Etablissements Michelin SCA France

Automobiles & Components

6.7%

28.6% Jun-20

17.9%

92.2%

92.6%

Schneider Electric SE

FranceCapital Goods

26.8%

33.1% Jun-20

58.1%

64.2%

14.2%

Compagnie de Saint Gobain SA

FranceCapital Goods

16.9%

47.6% May-20

66.1%

94.8%

11.0%

Spie SAFranceCommercial & Professional Services

1.5%

35.6% Apr-20

8.4%

88.1%

22.7%

Ashtead Group PLC

United Kingdom

Capital Goods

39.3%

76.2% Apr-20

31.9%

60.7%

84.4%

Tesco PLC

United Kingdom

Food & Staples Retailing-6.8%

9.5% Aug-20

66.0%

78.2%

21.8%

Royal Mail PLC

United Kingdom

Transportation

129.4% 203.1% Mar-20

61.6%

99.4%

15.9%

Smurfit Kappa Group PLC

Ireland; Republic ofMaterials

13.3%

66.3% Mar-20

55.6%

66.0%

88.5%

Eaton Corporation PLC

Ireland; Republic ofCapital Goods

14.4%

28.0% Jun-20

2.1%

68.2%

68.2%

Medtronic PLC

Ireland; Republic ofHealth Care Equipment & Services-6.7%

22.5% Jun-20

3.2%

74.5%

79.6%

Johnson Controls International PLC

Ireland; Republic ofCapital Goods

22.9%

48.4% Jun-20

41.9%

76.5%

46.0%

Entain PLC

Isle of Man

Consumer Services

37.0% 102.9% Apr-20

12.4%

89.0%

87.3%

Koninklijke Philips NV

Netherlands

Health Care Equipment & Services

3.4%

9.4% Aug-20

57.4%

72.5%

8.8%

STMicroelectronics NV

Switzerland

Semiconductors & Semiconductor Equipment

20.7%

48.8% Apr-20

58.2%

67.6%

21.9%

Aalberts NV

Netherlands

Capital Goods-9.7%

69.0% Mar-20

47.1%

62.5%

3.0%

The FCO Cockpit - Global Bubble Status Report35Single Stocks
Quadrant 1 stocks: strong positive bubble signals with strong fundamentals (cont’d)Company NameCountry of
Headquarters

GICS Industry Group NameAB SkfSwedenCapital Goods

Alexion Pharmaceuticals Inc

Yearly Bubble Bubble Bubble Value
Return Size
Start
Score Score

Growth
Score

19.0%

31.6%

Jul-20

39.7%

82.7%

16.3%

United States of America Pharmaceuticals, Biotechnology & Life Sciences

51.8%

42.0%

Jul-20

4.6%

91.3%

25.7%

Bio Rad Laboratories Inc

United States of America Pharmaceuticals, Biotechnology & Life Sciences

55.2%

24.6% May-20

8.4%

65.4%

71.6%

Broadcom Inc

United States of America Semiconductors & Semiconductor Equipment

43.4%

51.1% Jun-20

33.2%

85.1%

54.4%

Catalent Inc

United States of America Pharmaceuticals, Biotechnology & Life Sciences

94.0%

30.6%

Jul-20

39.6%

63.6%

35.7%

DXC Technology Co

United States of America Software & Services-10.8%

90.9% Jun-20

58.8%

98.1%

3.5%

Discovery Inc

United States of America Media & Entertainment

38.9%

103.5%

Jul-20100.0%

86.3%

68.1%

F5 Networks Inc

United States of America Technology Hardware & Equipment

54.4%

42.0%

Jul-20

28.4%

92.4%

52.5%

Ford Motor Co

United States of America Automobiles & Components

30.6%

110.2% Mar-20

11.9%

86.0%

91.6%

General Motors Co

United States of America Automobiles & Components

48.0%

140.1% Mar-20

21.4%

90.3%

12.2%

KLA Corp

United States of America Semiconductors & Semiconductor Equipment

65.8%

88.6% Apr-20

34.1%

77.3%

36.3%

Keysight Technologies Inc

United States of America Technology Hardware & Equipment

49.8%

49.1% Sep-20

69.1%

64.1%

29.9%

LKQ Corp

United States of America Retailing

5.7%

29.8% May-20

16.4%

76.3%

55.4%

Laboratory Corporation of America Holdings United States of America Health Care Equipment & Services

24.7%

43.4% Apr-20

14.8%

86.5%

57.1%

Lam Research Corp

United States of America Semiconductors & Semiconductor Equipment

51.3%

105.9% May-20

23.2%

84.1%

29.1%

Leidos Holdings Inc

United States of America Software & Services

-4.1%

19.9%

Jul-20

7.9%

68.7%

32.0%

Molson Coors Beverage Co

United States of America Food, Beverage & Tobacco-13.3%

45.7% Jun-20

69.6%

88.5%

7.7%

Mosaic Co

United States of America Materials

30.9%

107.5% Jun-20

56.6%

67.1%

90.0%

Newell Brands Inc

United States of America Consumer Durables & Apparel

19.0%

50.8% Jun-20

34.7%

90.8%

13.4%

News Corp

United States of America Media & Entertainment

41.0%

69.4% May-20

15.4%

81.1%

12.9%

Qorvo Inc

United States of America Semiconductors & Semiconductor Equipment

62.2%

40.7% Sep-20

83.3%

86.9%

30.9%

Teradyne Inc

United States of America Semiconductors & Semiconductor Equipment

60.9%

96.2% May-20

14.8%

89.3%

30.3%

ViacomCBS Inc

United States of America Media & Entertainment

41.8%

102.1% Jun-20

94.2%

83.6%

93.8%

Walgreens Boots Alliance Inc

United States of America Food & Staples Retailing-5.9%

36.7% Sep-20

53.8%

82.2%

34.2%

The FCO Cockpit - Global Bubble Status Report36Single Stocks
Quadrant 1 Stocks Current Month Example – Discovery Inc.

4 The above graph shows the one-year cumulative return of the stock in blue (left hand scale), S&P 500
in green (left hand scale) and the calculated DS LPPLS Bubble Score in red (right hand scale). The green
shaded period delineates the time interval within which the positive bubble is identified. The Bubble
Score of this seven-month bubble has reached 100% with a bubble size 103.5%.

The FCO Cockpit - Global Bubble Status Report37Single Stocks
Quadrant 1 Stocks Last Month Example – Vestas Wind Systems A/S.

4 The figure above plots the one-year cumulative return of the stock (blue), STOXX 600 (green) and LPPLS
Bubble Score (red lines on the right y-axis). The green shaded period delineates the time interval within
which a strong positive bubble has been identified and reported last month. The stock price’s regime has
shifted with a correction of 30% and a recent disappearance of the DS LPPLS Bubble signal, which is inagreement with our diagnostic last month of a strong LPPLS bubble signal.
The FCO Cockpit - Global Bubble Status Report38Single Stocks
Quadrant 2 stocks: strong positive bubble signals with weak fundamentals
Yearly Bubble Bubble Bubble Value
GrowthReturn Size
Start
Score
Score
Score
Company NameCountry of Headquarters GICS Industry Group Name
Hellofresh SE
Germany
Retailing
206.8%
55.1%
Jul-20
16.5%
0.0%
43.1%
TUI AG
Germany
Consumer Services-38.2%
66.9%
Jul-20
32.0%
5.7%
99.9%
Neste Oyj
Finland
Energy52.5%
67.9% May-20
12.5%
33.0%
19.8%
Bollore SE
FranceMedia & Entertainment-10.4%
19.6% Jun-20
17.7%
16.5%
98.1%
Sodexo SA
FranceConsumer Services-25.3%
20.4%
Jul-20
26.0%
37.3%
9.6%
Dassault Systemes SE
FranceSoftware & Services
5.9%
13.0%
Jul-20
26.7%
11.9%
42.5%
Soitec SA
FranceSemiconductors & Semiconductor Equipment
86.2%
121.3% Apr-20
82.9%
29.1%
17.5%
Corbion NV
Netherlands
Materials
53.7%
47.3% Apr-20
11.9%
11.6%
80.5%
BE Semiconductor Industries NV Netherlands
Semiconductors & Semiconductor Equipment
43.9%
48.1% Sep-20
66.0%
36.6%
23.3%
Scatec ASA
NorwayUtilities
99.4%
101.9% May-20
38.4%
18.5%
83.2%
H & M Hennes & Mauritz AB
SwedenRetailing-12.4%
45.3% Mar-20
24.9%
14.9%
45.8%
Evolution Gaming Group AB (publ) Sweden
Consumer Services
159.3%
35.3%
Jul-20
47.3%
27.9%
63.6%
AES Corp
United States of America Utilities
18.9%
92.7% Mar-20
10.8%
37.6%
26.2%
Agilent Technologies Inc
United States of America Pharmaceuticals, Biotechnology & Life Sciences
42.3%
22.7% Sep-20
63.6%
33.4%
49.4%
Chipotle Mexican Grill Inc
United States of America Consumer Services
66.2%
52.3% May-20
54.8%
2.5%
62.5%
Darden Restaurants Inc
United States of America Consumer Services-4.0%
98.3% Apr-20
12.8%
17.4%
17.3%
Electronic Arts Inc
United States of America Media & Entertainment
31.7%
15.2% Sep-20
7.0%
34.6%
24.0%
Emerson Electric Co
United States of America Capital Goods
8.1%
28.2% May-20
5.6%
36.3%
23.1%
Enphase Energy Inc
United States of America Semiconductors & Semiconductor Equipment
372.3% 205.7%
Jul-20
61.7%
5.3%
62.0%
ETSY Inc
United States of America Retailing
295.3%
90.4%
Jul-20
66.2%
3.0%
44.1%
Hilton Worldwide Holdings Inc
United States of America Consumer Services-9.0%
34.7% May-20
13.8%
9.3%
41.6%
Martin Marietta Materials Inc
United States of America Materials
3.8%
57.9% Mar-20
16.1%
18.2%
77.4%
Maxim Integrated Products Inc
United States of America Semiconductors & Semiconductor Equipment
39.2%
28.2% Aug-20
56.3%
37.7%
66.8%
Mercadolibre Inc
Argentina
Retailing
170.3%
63.7% Sep-20
10.9%
0.3%
74.0%
Okta Inc
United States of America Software & Services
90.8%
46.0% May-20
35.3%
0.1%
61.5%
Sysco Corp
United States of America Food & Staples Retailing-7.1%
54.3% Mar-20
43.3%
19.0%
42.2%
Tesla Inc
United States of America Automobiles & Components
414.4%
116.6% Sep-20
50.7%
4.2%
70.7%
Ulta Beauty Inc
United States of America Retailing-4.6%
23.9% Jun-20
31.7%
29.4%
52.2%
Waters Corp
United States of America Pharmaceuticals, Biotechnology & Life Sciences
Jul-20
85.2%
20.7%
39.0%
20.8%
24.4%

The FCO Cockpit - Global Bubble Status Report39Single Stocks
Quadrant 2 Stocks Current Month Example – Soitec SA.

4 The above graph shows the one-year cumulative return of the stock in blue (left hand scale), STOXX 600 ingreen (left hand scale) and the calculated DS LPPLS Bubble Score in red (right hand scale). The green shaded
period delineates the time interval within which the positive bubble is identified. The Bubble Score of this tenmonth bubble has reached 82.9% with a bubble size 121.3%. The strong positive bubble signal and weakfundamentals indicate a high probability of correction in the future.
The FCO Cockpit - Global Bubble Status Report40Single Stocks
Quadrant 2 Stocks Last Month Example – Siemens Gamesa Renewable Energy SA.

The figure above plots the one-year cumulative return of the stock (blue), STOXX 600 (green) and LPPLS Bubble
Score (red lines on the right y-axis). The green shaded period delineates the time interval within which a strong
positive bubble has been identified and reported last month. The stock price’s regime has shifted with acorrection of 20%, which is in agreement with our diagnostic last month.

The FCO Cockpit - Global Bubble Status Report41Single Stocks
Quadrant 3 stocks: strong negative bubble signals with weak fundamentals

Company Name

YearlyCountry of Headquarters GICS Industry Group Name Return

Koninklijke Vopak NV Netherlands

Energy-14.9%

BubbleSize-13.8%

BubbleStart
Jul-20The FCO Cockpit - Global Bubble Status Report

BubbleScore-33.3%

Value
Score
32.3%

Growth
Score
86.0%

42

Single Stocks
Quadrant 3 Stocks Current Month Example – Koninklijke Vopak NV.

4 The above graph shows the one-year cumulative return of the stock in blue (left hand scale), STOXX 600
in green (left hand scale) and the calculated DS LPPLS Bubble Score in red (right hand scale). The red
shaded period delineates the time interval within which the negative bubble is identified. The Bubble
Score of this seven-month bubble has reached 33.3% with a bubble size -13.8%. This negative bubble is not
yet matured and may continue to develop.

The FCO Cockpit - Global Bubble Status Report43Single Stocks
Quadrant 3 Stocks Last Month Example – HomeServe PLC.

4 The figure above plots the one-year cumulative return of the stock (blue), STOXX 600 (green) and LPPLS
Bubble Score (red line on the right y-axis). The red shaded period delineates the time interval within which thestrong negative bubble was identified and reported last month. The stock price has been flat in the pastmonth, with the disappearance of the DS LPPLS Bubble signal. One should remain cautious about this stock
given the weak fundamentals.

The FCO Cockpit - Global Bubble Status Report44Single Stocks
Quadrant 4 stocks: strong negative bubble signals with strong fundamentals

Company NameCountry of Headquarters GICS Industry Group Name

Swedish Match AB

SwedenLockheed Martin Corp

United States of America Capital Goods

Food, Beverage & Tobacco

Verizon Communications Inc United States of America Telecommunication Services

YearlyReturnBubbleSize

BubbleStart

Bubble
Score

Value
Score

Growth
Score

16.2%

-8.5%

Sep-20-27.9%

99.5%

36.9%

-26.8%-14.2%

Jul-20-87.8%

92.8%

48.5%

-9.1%

-9.5%

Sep-20

-5.7%

61.3%

45.1%

The FCO Cockpit - Global Bubble Status Report45Single Stocks
Quadrant 4 Stocks Current Month Example – Lockheed Martin Corp.

4 The above graph shows the one-year cumulative return of the stock in blue (left hand scale), S&P 500
in green (left hand scale) and the calculated DS LPPLS Bubble Score in red (right hand scale). The red
shaded period delineates the time interval within which the strong negative bubble is identified. The
Bubble Score of this six-month bubble has reached 87.8% with a negative bubble size -14.2%. We
expect a rebound in the future when the bubble is mature, which is due to our diagnostic of a negative
bubble signal with strong fundamentals, calling for a contrarian buyer position.
The FCO Cockpit - Global Bubble Status Report46Single Stocks
Quadrant 4 Stocks Last Month Example – Ucb SA.

4 The figure above plots the one-year cumulative return of the stock (blue), STOXX 600 (green) and LPPLS
Bubble Score (red line on the right y-axis). The red shaded period delineates the time interval within which thestrong negative bubble was identified and reported last month. The stock has entered a low volatility slightly
increasing trend in the past month, reversing the previous downward momentum. This is in agreement withour bubble signal and the diagnostic of the strong fundamentals.
The FCO Cockpit - Global Bubble Status Report47More Information

4 Visit the Financial Crisis Observatory for more information
http://www.er.ethz.ch/financial-crisis-observatory.html
4 Contacts ETH Zurich
Jan-Christian Gerlach, Didier Sornette, Ke Wu & Dongshuai Zhao
Chair of Entrepreneurial Risks
Department of Management, Technology and Economics
ETH Zurich
Scheuchzerstrasse 78092 Zurich, Switzerland

The FCO Cockpit - Global Bubble Status Report48