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Investment Risk Updates

“As a money management firm, it is our job and responsibility to assess risk and to call the situation as we see it.”

David Kotok, Chairman and Chief Investment Officer

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A Retrospective of Market Commentaries for the Investment Implications of Avian Influenza

(March 2006-February 2007) ________________________________________________

Cumberland Advisors’ Stock Market Strategy for Pandemic Disease Potential:

Scenario 1 The disease spreads host-to-host (bird-to-bird, swine-to-swine, etc). Global stock market allocations and decisions based on normal economic and financial factors. We remain vigilant about the disease but our investment decisions are driven by the other factors. There may be some sector biases based on the type of disease and those sectors most readily at risk if an escalation occurs (agriculture or retail, for example). Scenario 2 The virus mutates within the animal kingdom. Pigs as a vector are a prime example because there can be mixing of human and bird virus forms. This raises the risk of further mutation and also broadens the exposure of humans. It does more damage in the agricultural sector. On evidence of scenario 2, we would quickly and specifically raise cash by selling stocks due to the rising risk. Scenario 3 A human-to-human form of the virus evolves and we see it in a cluster or several clusters somewhere in the world. We would raise more cash. At this stage we could be somewhere between 25% and 40% in cash in certain equity ETF accounts. Scenario 4 The virus mutates into a robust and efficient sneeze-transmissible form and causes many human casualties. This is the pandemic scenario. We would be at least 50% in cash or higher. Most global stock markets would be declining in this scenario. Most economies would be contracting. World economic growth would contract demonstrably.

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Ten Commentaries related to Bird Flu and Pandemic risk:

Bird Flu and You: 1 in Seriesst March 17, 2006

(This is the first in a series about bird flu. Over the next few months we plan to offer thoughts about the H5N1, its spread and its risk. We will also discuss the psychology of financial markets and how to prepare portfolios for H5N1 contingencies. And we will describe what we are doing as your investment advisor during this uncertain bird flu time.) Let’s establish something right up front. We believe that bird flu must be taken very seriously. We do not know how this will play out. We are operating under the principle that it is better to prepare for the worst while hoping for the best. In our firm we a implementing our contingency plans. We will inventory N95 masks. We already have electronic connections to the homes of all key personnel and can do most tasks virtually. We have a tested disaster plan in place and we have full duplication of records off site. In addition, we are also stocking the office with non-perishable foods as a precaution. We are giving financial assistance to those employees who have budget limitations and need financial help to assemble a food stock reserve of non-perishable items. We will provide storage for them in an office locker. Some might say this is extreme. That may have been a correct assessment a year ago. But it is no longer the case. If the virus mutates into a human-to-human transmissible form, research about the virus shows that there may be only a little available reaction time. That will not be the time to try to buy food in the super market or order masks from overwhelmed distributors. If that occurs, the remote possibility of panic behavior may be replaced with actual panic. We believe thinking people should take their precautions right now. Bird flu is likely to appear in the United States within 4 to 8 weeks. That is when the flyways from Asia to North America become active. The nearest case to US borders in is the Bering Sea and only 30 miles from the Alaskan border. The likely progression is in the Pacific flyways first and all the way to South America. The returning migration will probably bring bird flu to the Eastern US by fall. I shudder to think about what this virus can do in the poorer areas of Central and South America. I recall personal visits to many villages in Guatemala and Ecuador where chickens run freely in huts that also house the indigenous population. The potential economic impact is huge. Trips to Argentina, Brazil, Chile and Panama are on the schedule during the next month. The rest of this commentary is derived from a private letter we have obtained. It was written by an experienced federal official who is very concerned about family members

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and neighbors. One of those neighbors forwarded this letter to me. I have promised the official anonymity after a conversation with the writer. Suffice it to say I am completely satisfied with the credentials of the writer and the stature of the agency. I am taking the warnings seriously and have very good reasons to believe them to be a proper assessment. I have agreed not to identify the person and not to name the federal agency. Excerpts from a February 19, 2006 letter follow: “Since Thanksgiving I have spent almost all of my professional time working on pandemic preparedness for the XXX (agency). When….first asked….to help draft a…..action plan….I thought….that the threat was being exaggerated in the media. Unfortunately, my thoughts on this have changed as recent developments with the progression of the H5N1 strain of viral influenza may prove…..to be prophetic, rather than alarmist.” “Some basic facts about the H5N1 virus are that: 1) only a small number of human beings (165) have contracted the virus (from sick birds), but more than half have died (91); 2) to-date, there have been no reported cases of the virus in people or birds in the U.S. 3) the virus is rapidly progressing across the globe with recent cases found in birds in Europe, India and Africa, and in people in Turkey. If the H5N1 strain mutates and becomes efficiently transmissible between humans, people who have contracted the virus will be contagious, several days before they exhibit any symptoms.” This was quoted from another source of equally high reliability: “Each new human infection raises the prospect of a pandemic that could claim millions of lives and wreak economic havoc. For nearly a decade, the H5N1 virus was largely confined to poultry flocks in Southeast Asia. But six months ago the disease blazed across the Russia steppe, veering into Turkey before slicing into southern Europe and backtracking into Central and South Asia. Last week, traveling with a rapidity that has stunned medical watchers, the highly pathogenic virus appeared for the first time in Africa.” “Mutations that could change the H5N1 strain into a virus able to spread from human to human could occur in hours. The only signal of the shift would come from an unusual spate of deaths. ‘We’re not going to have much warning,’ said Dr. Michael Ryan [head of the World Health Organization’s command center].” “One day, two days, maybe three, is we are extremely lucky. Once contagious among humans, the virus will spread like a tsunami. There will the flash point –probably in Asia, perhaps somewhere else – followed by waves of infection that would hurtle around the world.” Now back to the private letter:

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“You are probably asking – what does this mean to me and my family? Why are you telling me this?” “The grim news is that if a pandemic happens, our only protection is “social distancing” or quarantines since vaccine production will be well behind the first wave of illnesses. XXX (agency’s) draft action plan is being developed by using several basic planning assumptions: that there will be severe disruptions in our operations due to extensive absenteeism (at least 40%), that a large number of employees will be working from home and that each pandemic wave would last for a period of 90 days.” “Therefore, it is not inconceivable that if a pandemic happens, we may be unable or unwilling to send our children to school, go to work, commute on public transportation, go to meetings, or conduct our daily business, until it passes (which could be 2-3 months). Given these assumptions, I would advise that you consider buying extra (non-perishable) food, drinks and supplies each time you go to the supermarket. I would advise people who need medications, to consider stocking up. I would think about how you would prepare to educate and entertain children at home during an extended period, and make preparations with your own work to increase your work-portability in the event that you must conduct business at home during a pandemic. Also, if you have friends or family that live alone or need care, you should make arrangements in advance of a pandemic.” “Again, this may not ever happen, but you certainly would not want to think about this for the first time after a pandemic begins. Also, I would not count on the federal, state or local governments to be prepared to help out. Although there have been great strides in the past two months in pandemic planning, the government will be overwhelmed and ill-prepared to assist individuals and families in need of basic necessities and supplies.” “There is a very useful web site that has been set up at: www://pandemicflu.gov, if you would like to keep current on the situation. The Department of Health and Human Services has put together check-lists for individuals and families, businesses, and state and local governments. You can gain access to these lists through the website.” “I am so sorry to be the messenger of such scary news and hopefully this will never happen. But it’s better to prepare for the worst and hope for the best.” Please note: Let me reiterate that this federal official has asked for anonymity and we respect that request. We also acknowledge that the official with whom we have spoken is taking the preventive posture for the writer’s family. We are grateful to this writer who allowed parts of this personal letter to be shared with readers. To all who read it; we wish you safety. Since this letter was written bird flu cases are in several more countries and deaths now exceed 100 people.

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Bird Flu: 2 in Seriesnd March 21, 2006

Bird flu in Israel presents a case study in preparation and action. They saw the first dead birds on a turkey farm on a Wednesday. Immediate lab testing identified hemagglutinin. That is one of the two proteins in the H5N1 strain. They did not wait for the second protein test to get a confirmation. They acted ASAP. BTW the second protein is neuraminidase. Israeli government services immediately quarantined the area around the four communities. They established a perimeter. They used poisoned water to kill the birds that were culled and buried immediately. The workers used hazardous material suits and masks. In addition, they put another perimeter in place at 10 kilometers from the sites. They deployed scientists and experts. All this happened at lighting speed and within 24 hours. Results are that the outbreak was contained to date. No human infections are known. Defensive measures are in place in every farm and agricultural settlement in Israel. Will that prevent another outbreak? We don’t know. Is there an economic impact? Of course. Half million poultry were destroyed. Behavioral changes occurred in the Israeli consumer. There are many impacts but they are relatively small. The key is that the response was planned and executed well. And the compensation arrangements for agriculture are in place. And there was full inter agency cooperation and timely delivery. Why? Well first we must say that Israel is a 1st world country which happens to have the most heightened readiness standards in the world. They have a half century of experience responding to hostile foreign country invasions, suicide bombers, terrorist attacks or missiles. The society is fully literate and attentive to news. The news services are free and open and run 24-7. Israelis have one of the most extensive healthcare systems on the globe. Finally Israel has a culture that values human life. So the case study occurs in a place that is as fully prepared as one can expect. We believe that this standard of response will be tested in many more countries. Soon bird flu may migrate to North America as the flyways across the Bering Sea open for business. One infected bird has been found only 30 miles from the Alaskan border. The migratory waterfowl will carry H5N1 along the Pacific flyways to South and Central America. Here is where the real tests will occur in the third world villages. We may also see signs in the US. I wonder what happens to our sentiment and psychological impulses when the first chicken farm in the northern or western portion of

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North America has an outbreak. It will certainly be the headline on every newspaper and the lead story on TV. There will be interviews of government officials and discussions of readiness at Congressional hearings and probing? All will come at a time when the disease may be spreading. We have no idea what these sentiment shifts will be in the US. We can only speculate today about behavioral changes that will have economic impacts here. Notice that I have maintained this discussion within the boundaries of the bird flu in its present form. That is bird to bird transmissible. Human to human mutation was not mentioned above. But it remains a possibility. In 1918 flu killed millions of people worldwide. We have a report about 1918 below. I do not want to speculate on what would happen with a flu pandemic today. Instead, I believe that the soundest policy is to prepare for the worst and hope for the best. That is what we are doing at Cumberland, with ourselves and with our client’s portfolios. For a detailed discussion of those preparations see our interview with The Capital Spectator: http://www.cumber.com/special/fly-by_virus.pdf . I leave for South America in a few hours on what will be the first of four foreign visits within a month. I will see remote villages and larges cities. This is my tenth trip to the region. Part of it will be devoted to fact finding and assessing the danger. More reports will follow when I return. Below are two excerpts about the 1918 flu pandemic. I thank my colleague, Matt Forester, for his assistance.

In 1918, a plague swept across the world virtually without warning, killing healthy young adults as well as vulnerable infants and the elderly. Hospitals and morgues were quickly overwhelmed; in Philadelphia, 4,597 people died in one week alone and bodies piled up on the streets to be carted off to mass graves. But this was not the dreaded Black Death-it was "only influenza." In this sweeping history, Barry (Rising Tide) explores how the deadly confluence of biology (a swiftly mutating flu virus that can pass between animals and humans) and politics (President Wilson's all-out war effort in WWI) created conditions in which the virus thrived, killing more than 50 million worldwide and perhaps as many as 100 million in just a year. Overcrowded military camps and wide-ranging troop deployments allowed the highly contagious flu to spread quickly; transport ships became "floating caskets." Yet the U.S. government refused to shift priorities away from the war and, in effect, ignored the crisis. Shortages of doctors and nurses hurt military and civilian populations alike, and the ineptitude of public health officials exacerbated the death toll.

In Philadelphia, the hardest-hit municipality in the U.S., "the entire city government had done nothing" to either contain the disease or assist afflicted families. Instead, official lies and misinformation, Barry argues, created a climate of "fear... [that] threatened to break the society apart." Barry captures the sense of panic and despair that overwhelmed stricken communities and hits hard at those who failed to use their power to protect the public good. He also describes the work of the dedicated researchers who rushed to find the cause of the disease and create vaccines. Flu shots are widely available today because of their heroic efforts, yet we remain vulnerable to a virus that can mutate to a deadly strain without warning. Society's ability to survive another devastating flu pandemic, Barry argues, is as much a political question as a medical one. Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to the Hardcover edition.

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From the New England Journal of Medicine, August 5, 2004 The connection among public health, epidemic disease, and politics can be seen throughout

history, from the responses to the Black Death in Italian cities in 1348 to the response -- or lack thereof -- to the resurgence of tuberculosis on the part of the New York City Department of Health in the 1980s. John M. Barry spells out this connection in fascinating detail in The Great Influenza. In his meticulous description of the dire consequences that resulted when short-term political expediency trumped the health of the public during the 1918 influenza pandemic, Barry reminds his readers that the government response to an epidemic is all too often colored by the politics of the moment. Barry is neither a scientist nor a professional historian, and some of the details he gives on virology and immunology are clearly targeted at a nonmedical audience, but physicians and scientists will find this book engrossing nonetheless.

The influenza pandemic of 1918, the worst pandemic in history, killed more people than died in

World War I and more than the tens of millions who have died, to date, in the AIDS pandemic. Barry focuses only on what was occurring in the United States at the time, and he tries to place this unprecedented human disaster both against the background of American history and within the context of the history of medicine. He is right to try to acquaint the reader with the state of American medicine at the turn of the last century, focusing on the dismal status of medical education and laboratory research, particularly as compared with that in Europe at the same time. Much of his discussion centers on "great men" (and an occasional great woman), however, and the picture given of their lives and professional careers is superficial and occasionally repetitious, and it distracts from the main events. His point, presumably, is to convey the futility of all the efforts of these brilliant minds, and he begins and ends the book with anecdotes about Paul Lewis, a scientist who had helped to prove that poliomyelitis is caused by a virus and then developed a highly effective simian vaccine. Lewis is the symbol of the best and the brightest of the scientific establishment, and we follow him as he weaves in and out of the story. He, like all scientists of his time, failed to grasp the fact that influenza was caused by a virus, believing it to be caused by Pfeiffer's bacillus, and he was therefore unable to develop a successful vaccine or to halt the devastation.

The book becomes riveting once Barry begins to describe the origins and early weeks of the

epidemic. The fact that it was wartime and that hundreds of thousands of men were being called up, placed in overcrowded camps, and packed like sardines into ships to be delivered as efficiently as possible to Europe enabled influenza to spread rapidly among recruits. From the military camps, the virus spread into the civilian population in the United States and from the United States to France. Barry describes the first catastrophe at Camp Devens, in Massachusetts, in the late summer of 1918, where thousands of previously healthy men in their prime suddenly became critically ill, overwhelming the inadequate camp hospital, infecting the medical staff, and dying by the hundreds, apparently with acute respiratory distress syndrome. The smartest and most hardworking scientists, physicians, and nurses, both military and civilian, were stunned by the rapidity of the disease progression and the inexplicable death toll among the youngest and strongest. (Figure) Barry provides a fascinating picture of the response of the government -- both federal and local. The former was sluggish at best and secretive and dishonest at worst, desperate to keep the war effort going and the public calm and to minimize the severity of the disease.

In one of the more gripping chapters, Barry focuses on Philadelphia and tells us of the

backwardness of its social infrastructure, the lack of a functioning health department, and the power of the local political machine. Dr. Wilmer Krusen, a political appointee who was the director of the Philadelphia Department of Public Health and Charities, deliberately ignored warnings against allowing a Liberty Loan parade to proceed, even though influenza had devastated the local Navy Yard and begun to spread into the civilian population. Within 72 hours of the parade, every bed in Philadelphia's 31 hospitals was filled. Within 10 days the epidemic exploded from a few hundred civilian cases to hundreds of thousands and from a daily rate of one or two deaths to hundreds. The horror is most vivid in the dilemma surrounding the disposal of bodies. The city morgue had hundreds of bodies stacked up, which produced an unbearable stench, and undertakers rapidly ran out of coffins. Hundreds of bodies lay in homes exactly where they had been at the time of death; burial quickly became impossible, since there were not enough people to dig graves. Whether anything might have been done differently, and if it had, whether this would have made a difference, are questions that Barry leaves unanswered. His tone is often irritatingly and unnecessarily sensationalist. But his indictment of the public authorities for their dishonesty and deliberate minimization of the damage and dangers is particularly chilling in today's climate of bioterrorism, in the midst of a war

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whose damages and dangers have been similarly minimized. Barry makes it all too easy to imagine a similarly devastating epidemic with a similarly inadequate response. I highly recommend this book to all. Karen Brudney, M.D. Copyright © 2004 Massachusetts Medical Society. All rights reserved. The New England Journal of Medicine is a registered trademark of the MMS. --This text refers to the Hardcover edition.

Bird Flu: 3 in Seriesrd April 8, 2006

Long time readers know we take the bird flu risk very seriously. This is the third installment in a bird flu series. I fear that I will be writing many more. First, I must offer many thanks for the emails and especially those which forwarded research pieces and publication links. I particularly thank the new readers who responded after seeing our quotes in USA Today and the Wall St. Journal. We see most public information on this subject but can never be sure that we see all of it. Now to some observations formed on my recent trip to South America. I could write an epistle. Instead let me start with this which ran in the NYTimes (March 28, 2006) while I was away: “An 11-year-old girl was hospitalized with avian flu in Kamphaeng Phat (Thailand, September, 2004). Her mother became ill after 16 hours at the child’s bedside, kissing and wiping her mouth. The mother died 12 days after the girl. The girl (had) played and slept where chickens were kept. The mother lived in Bangkok and had no exposure to birds.” There is nothing like seeing things with your own eyes and hearing things with your own ears. In the last few weeks I have put on enough miles to travel half way around the world. I have been in places where there is no electricity and where children crawl on the floor along with the family chickens. This is not the first time I visited such places in Latin America; it is the tenth. I fear we are likely to repeat the above story many times and starting in 2006 and doing so in Latin America, not Asia. Anyone who does not take this seriously has blinders on or is living in denial. Bullets:

1. In Chile there is a new government forming. Bird flu has not made it to the radar screen. Some Chileans are actually arrogant about it. “We have natural barriers said one.” He argued that Chile is protected by the desert in the north, mountains in the east, ocean on the west and ice fields in the south. I didn’t say it but my thought was that this man “should go tell it to the birds”. High level Chilean

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business leaders and officials know about bird flu but they respond by saying it hasn’t reached here, yet. Uh, oh. That is not readiness; that’s denial. And Chile is one of the more modernizing and advanced economies in the entire region.

2. Argentina is a prospective disaster. The government does not have the resources

that are available in Chile. They are still thinking with the “it is over there, not here” approach. This is true even though Argentine exports of chicken feed have been dropping and there is some negative economic impact observable. They may be in for a jolt.

3. Brazil is on alert. Posters and warnings greet you in Sao Paulo airport. They list

the countries where bird flu cases have occurred. Why is Brazil on this while other countries are not? Two reasons: first they, along with the United States, are the largest world exporters of poultry. Brazilians understand the chicken business. Secondly, this is a rapidly modernizing and successful emerging market economy. Does that mean the rural areas are safe from the story above? Absolutely not. But at least Brazil is taking this seriously.

4. Now to the poorer countries like Guatemala and Honduras in Central America or

Ecuador and Peru in South America. This is a disaster waiting to happen. Millions of people live in the circumstances described in the above Asian case. There is insufficient information and inadequate health care. Remember, I am still describing a situation where the flu is a bid-to-bird variety. Millions will die if it becomes human-to-human of pandemic proportions.

5. Chickens and eggs are a major Latin American staple. Culling them when there is

an outbreak of flu will cut off the food source for millions of people. These are countries and governments with no plan, no funding, little developed health resources and no compensation plan. Guess what happens when you go into a village to kill all the chickens without a food and compensation plan. People hide the chickens. We have seen that in Africa and Asia. We are likely to see it in South America.

Let’s jump from the potential human tragedy to the financial arena. I discussed this issue with bankers who were attending the Inter-America Development Bank annual meeting in Belo Horizonte, Brazil. In the beginning they were polite but dismissive. I showed them some data. By the end of the conversation they were wondering why this was not on the top of the agenda. Here we had a meeting of the entire Latin American financial leadership and bird flu wasn’t mentioned. Not one speech or presentation. No discussion of financial risk if a bird-to-bird type flu starts to inflict economic dislocations. A banker said “We don’t lend to these businesses.” I thought about that and did not hold back. Politely I asked “But what about the customers of the businesses you do lend to?” At the end of our conversation he had changed his view. He did not know about the readiness and crisis management initiatives from the Financial Stability Forum and the directives internally in the US from the Federal Reserve and elsewhere. He does now. And we

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were only talking bird-to-bird variety. He shuddered when considering the risks in a human-to-human pandemic. A second point and then we will stop until the next installment. The migration of birds to North America is starting as this is written. Biologists and epidemiologists and other health care professionals have teams in Alaska and Canada. They will be testing as many as 100,000 birds in the next few weeks and months. We are going to start to see the results in our North American media. Those birds interact with others that travel the entire Pacific flyway. Notwithstanding the comments of the Chilean I quoted above, some of those birds travel to the most southern tip of his country. More will come later on this subject in the next installment. I fly to Panama on Thursday for two days of additional research and meetings. At this moment Cumberland remains fully invested in the stock market in both the US and international accounts and that includes the emerging market countries. That could change at any time. Those markets have been doing quite well. There is a time coming when we will take some profits. Valuation is the major reason right now. Bird flu risk can quickly become another one. BTW, I have already been asked so let me answer here. Yes, I ate chicken. Several times. It was cooked to temperatures that kill all viruses. Asado is delicious in South America and chicken is part of it. This is not about cooked foods and not about those of us who practice thoughtful personal hygiene and live in a very modern, first world, health sensitive society. Right now, this is primarily about the millions of people who do not live as we do. That said if this bird-to-bird flu becomes a human-to-human mutation, the risks rise exponentially. So far about 200 people are reported to have been infected by the H5N1 bird flu variety. Half are dead. This is a type A virus which is the type that can mutate and create a pandemic. It is mutating constantly and spreading worldwide. And this one is very lethal in its present form and quite different from the first version observed in 1997.

Bird Flu-4 in Seriesth May 5, 2006

I read through the just released 233 page national report on pandemic flu. Sorry folks. It doesn’t tell the whole story. It dumps much responsibility on state, local and tribal governments. Regrettably, it ignores the future and is focused in the past. If our country is to avoid a catastrophe, we must look forward and not backward. Otherwise the Bush administration is going to experience a flutrina. We hope it doesn’t become a category 5.

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Here are just a few observations. There are many more but I don’t want to write a 233 page critique. The national report looks in the wrong place. It focuses on where this flu has been. It ignores where flu is likely to spread. Central and South America are not mentioned. Only in general terms are there any international cooperation discussions. The birds don’t know that. They don’t read reports. Our expectation is that bird flu will arrive in North America within the next weeks or months. The Asia to North America flyway is active right now. A dead bird with H5N1 has been found 30 miles from the Alaskan coast. I have to believe that was not the only infected bird. There are testing teams in Alaska right now. They hope to test 100,000 birds in the next several months. Will they find flu? Nobody knows. Are they likely to find flu? We believe the answer is yes. The bird migratory patterns will then carry birds down the Pacific flyways to Central and South America later this year. We believe the battle ground for avian flu will be in Central America. Central America narrows to the point where it is only 37 miles wide in Panama. I visited there a few weeks ago. Millions of migratory birds will converge there later this year. Preventive and defensive measures must specifically focus on the indigenous villages and poorer sections of all the countries between the US-Mexico border and Columbia. Guatemala, Honduras and others are very vulnerable. They are poor. They have large populations which live in third world conditions. Children and chickens are on the same floor. I have personally visited a number of those villages and households. I’ve seen them with my own eyes. Chickens are a staple in these villages and homes. These Central American governments are ill prepared. There are no compensation plans if they have to kill all the chickens in the village. Cull the chickens and you also stop the eggs. If you don’t pay on the spot the locals will hide their chickens in the woods. And how are you going to feed those villagers after you cull the poultry? Remember: Central and South America are chicken based not pork based. This culture is not the same as Asia. We see the risk of wild birds mixing with poultry as high in this region. We expect that there will be cases of sick people who come in contact infected birds. It has occurred in Asia and Africa. Why shouldn’t it be expected to repeat in Central America? Here’s the rub that raises the pandemic risk. The more the bird-to-bird version of H5N1 mixes with people, the greater the odds it will mutate into a human-to-human form. That risk rises every time there is another human case. We believe that risk will rise in our neighborhood as the flu spreads into South and Central America.

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The deficiency in the national plan is that we look inward. We think about our borders with Mexico and Canada. We focus internally. Our national plan is silent on what to do in Central and South America and how to work with these countries and regions. The birds do not know political boundaries. They will move down the Pacific flyways into Central and South America. The ducks and other migratory fowl are the carriers. On the return trip they will come up our central flyways and the eastern flyway. That is when the Mississippi flyway and the Atlantic flyway intersect with poultry in the central and eastern regions of the US. Those birds mix with the geese that have decided to live on your golf course and in your industrial park. The national plan is silent on how to deal with that and what to do in a preventive way. And what about the other issues? Here’s one example. Wild turkeys have made a remarkable comeback from near extinction. What do we do about hunting seasons? What are the protective measures for duck and goose hunters who may shoot an infected bird? What happens if they take a goose or a turkey home to clean it and eat it? The national plan is silent on many of these issues. Sorry to upset your weekend. In our money management firm it is our job and responsibility to assess risk and call the situation as we see it. In this case the risk is rising. In round one of a national pandemic plan, the federal government has raised more questions than it answered.

Bird Flu Update-5 in Seriesth May 15, 2006

We are increasingly concerned about the spread of avian flu in Africa. The most recent additions are Egypt with 13 cases-5 dead and the Sudan. And now Djibouti has a case with a 2 year old and there are several more suspected infections. The country list grows as do the deaths and human infections. In many of these countries it is very hard to know the real count of bird cases or people cases. The World Health Organization (WHO) requires a lab certified case before it gets on the infected person or dead people list. In many of these countries there are little provisions for the rapid response needed to determine if a person got bird flu or something else. Deaths are only counted when the person is confirmed by a WHO certified lab. We believe that there are many unreported cases both in the bird community and among people. We have not made a portfolio change based solely on the spread of bird flu. We have outlined our strategy if we see evidence of mutation to a human-to-human form. We still have not seen a single case of an infected bird in our hemisphere. We believe there is a 50-50 chance that will change this year. We also believe the high risk Western

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Hemispheric areas are in Central and South America and among the poorer countries with large third world living conditions and insufficient preparation. Notice that it took a US Naval unit from Cairo to confirm H5N1 with a lab test in Djibouti. We will close this celebration of Buddha’s birthday with the WHO press release about the Djibouti. Substitute the name of a village in Guatemala for the one in Djibouti and this news item would probably read the same way. The difference is that you would learn about it on the front page of your American newspaper and not from a Cumberland commentary. That is not a forecast. We hope it doesn’t happen. But we must remind the skeptics and detractors that readiness in preparation for a shock is always problematic. Try it after a shock and sometimes you get a New Orleans flooding or a 9/11. There is a cost to readiness. When you get hit, if becomes a very cheap price. Now to the text of the May 12th release from the WHO.

Avian influenza – situation in Djibouti

12 May 2006

The Ministry of Health in Djibouti has confirmed the country’s first case of human infection with the H5N1 avian influenza virus. The patient is a 2-year-old girl from a small rural village in Arta district. She developed symptoms on 23 April. She is presently in a stable condition with persistent symptoms.

Three tests conducted on 10 May by the Cairo-based US Naval Medical Research Unit 3 (NAMRU-3) confirmed the child’s infection with the H5N1 virus. She is the first case of human infection reported in the Horn of Africa.

Three of the child’s siblings are under investigation for possible infection and are also receiving care. Samples have been taken and are being sent to NAMRU-3 for testing.

Health authorities in Djibouti initiated surveillance for human cases following reports of a small number of chicken deaths in early April. NAMRU-3 has also confirmed the presence of H5N1 virus in samples from three chickens.

Surveillance for additional human and animal cases is presently under way, but is hindered by the country’s lack of resources and of epidemiological and laboratory capacities. The search for human cases has been further complicated by a concurrent outbreak of dengue fever, which can mask the occurrence of other febrile illnesses with abrupt onset of symptoms, including H5N1 infection.

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Stock market strategy for bird flu: 6 in Series.th May 25, 2006

Many thanks to readers for your positive and critical comments regarding last night’s and Monday night’s bird flu discussion on Larry Kudlow’s CNBC show and for the response’s from my interview with Kathleen Hays on Bloomberg TV. Let me recap and also use this email to answer a lot of questions at once. Cumberland’s stock market strategy for bird flu has four scenarios and responses:

Scenario 1 is the bird-to-bird spreading of the disease as we see in the world right now. That means we make the global stock market allocations and decisions based on economic and financial factors as we usually do. We remain vigilant about avian flu but our investment decisions are driven by the other factors. We do have a bias toward the health care sector because avian flu is stimulating health care preparedness and research. And we do avoid the agricultural and retail sectors where avian flu is a negative factor. Scenario 2 occurs if the virus mutates within the animal kingdom. Pigs as a vector are a prime example because there can be mixing of human and bird virus forms. This raises the risk of further mutation and also broadens the exposure of humans. It does more damage in the agricultural sector. On evidence of scenario 2, we would quickly and specifically raise cash by selling stocks due to the rising risk attached to bird flu. Scenario 3 starts the nightmare. A human-to-human form of the virus evolves and we see it in a cluster or several clusters somewhere in the world. In this scenario this form is mild. For sake of brevity let’s use SARS as a metaphor although we believe avian flu will be more severe than the recent SARS experience for a whole list of reasons. We would raise even more cash. At this stage we could be somewhere between 25% and 40% in cash in certain equity ETF accounts. Scenario 4 is the most feared. Here the virus mutates into a robust and efficient sneeze-transmissible form and causes many human casualties. This is the pandemic scenario. We would be at least 50% in cash or higher. Most global stock markets would be declining in this scenario. Most economies would be contracting. As I said in the interviews, “Instead of economic growth we would have economic shrink.”

We are currently in Scenario 1. The Indonesian cluster and its evolution over the last two weeks flirted with both scenario 2 for pigs and scenario 3 for the sick and dead members of the infected family. That is why stock markets sold off around the world and most viciously in emerging market countries and Asia. The World Health Organization (WHO) has confirmed enough for Cumberland’s choice to remain in scenario 1 for investment strategy. WE still have a cash reserve building but it is due to other economic factors like the US housing slowdown or rising interest rates or inflation fears. It is not due to a shift in bird flu investment scenario. Here is the WHO statement:

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“Full genetic sequencing of two viruses isolated from cases in this cluster has been completed by WHO H5 reference laboratories in Hong Kong and the USA. Sequencing of all eight gene segments found no evidence of genetic reassortment with human or pig influenza viruses and no evidence of significant mutations. The viruses showed no mutations associated with resistance to the neuraminidase inhibitors, including oseltamivir (Tamiflu).”

At Cumberland, we believe that we have just dodged a bullet. On the initial news from Indonesia, we were readying a move to scenario 2 or maybe even 3. It could still happen at any time.

Now let me close this commentary by hitting something squarely between the eyes of one of my detractors.

In the interviews this week I have been accused of “hysteria” and “provoking fear.” One very well known commentator said something to the effect that we see bird flu all the time and there is nothing new here and not a lot of reason to worry about it. He was dismissive about this risk. He is totally wrong in my view.

What is worse is that this type of thinking may be dead wrong. It reflects the opinion of folks who are not digging down into the research.

Here is a quick lesson. H5N1 is an abbreviation for the virus identification. It is technical shorthand. Details will appear below. There are 144 known types of this virus mix. The H5N1 combination has never been in the human being in recorded history. That is why it is so deadly to people. That is why is has killed over half of those who contracted it. We humans have no natural immunities to H5N1.

I will skip the technical discussion of how this kills a person. It is gruesome and very unpleasant. The key is that the threat is very real and that defensive actions and readiness preparation are critical to preventing or diminishing any disaster. In Indonesian we saw a snapshot of readiness failure. We saw what this virus can do. I believe that we must be prepared to see it again elsewhere.

I will stop with the definition of exactly what the H5N1 stands for. I fly tomorrow to Estonia and then on to Prague for back-to-back meetings. In both, we will focus on the euro and the euro zone economies and global financial markets. In addition, I plan to discuss bird flu preparation with officials from several European countries.

Now to a detail from WHO http://www.who.int .

“THE DISEASE IN BIRDS Avian influenza is an infectious disease of birds caused by type A strains of the influenza virus. The disease occurs worldwide. While all birds are thought to be susceptible to infection with avian influenza viruses, many wild bird species carry these viruses with no apparent signs of harm. Other bird species, including domestic poultry, develop disease

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when infected with avian influenza viruses. In poultry, the viruses cause two distinctly different forms of disease – one common and mild, the other rare and highly lethal. In the mild form, signs of illness may be expressed only as ruffled feathers, reduced egg production, or mild effects on the respiratory system. Outbreaks can be so mild they escape detection unless regular testing for viruses is in place. In contrast, the second and far less common highly pathogenic form is difficult to miss. First identified in Italy in 1878, highly pathogenic avian influenza is characterized by sudden onset of severe disease, rapid contagion, and a mortality rate that can approach 100% within 48 hours. In this form of the disease, the virus not only affects the respiratory tract, as in the mild form, but also invades multiple organs and tissues. The resulting massive internal haemorrhaging has earned it the lay name of “chicken Ebola”. All 16 HA (haemagluttinin) and 9 NA (neuraminidase) subtypes of influenza viruses are known to infect wild waterfowl, thus providing an extensive reservoir of influenza viruses perpetually circulating in bird populations. In wild birds, routine testing will nearly always find some influenza viruses. The vast majority of these viruses cause no harm. To date, all outbreaks of the highly pathogenic form of avian influenza have been caused by viruses of the H5 and H7 subtypes. Highly pathogenic viruses possess a tell-tale genetic “trade mark” or signature – a distinctive set of basic amino acids in the cleavage site of the HA – that distinguishes them from all other avian influenza viruses and is associated with their exceptional virulence. Not all virus strains of the H5 and H7 subtypes are highly pathogenic, but most are thought to have the potential to become so. Recent research has shown that H5 and H7 viruses of low pathogenicity can, after circulation for sometimes short periods in a poultry population, mutate into highly pathogenic viruses. Considerable circumstantial evidence has long suggested that wild waterfowl introduce avian influenza viruses, in their low pathogenic form, to poultry flocks, but do not carry or directly spread highly pathogenic viruses. This role may, however, have changed very recently: at least some species of migratory waterfowl are now thought to be carrying the H5N1 virus in its highly pathogenic form and introducing it to new geographical areas located along their flight routes. Apart from being highly contagious among poultry, avian influenza viruses are readily transmitted from farm to farm by the movement of live birds, people (especially when shoes and other clothing are contaminated), and contaminated vehicles, equipment, feed, and cages. Highly pathogenic viruses can survive for long periods in the environment, especially when temperatures are low. For example, the highly pathogenic H5N1 virus can survive in bird faeces for at least 35 days at low temperature (4oC). At a much higher temperature (37oC), H5N1 viruses have been shown to survive, in fecal samples, for six days. For highly pathogenic disease, the most important control measures are rapid culling of all infected or exposed birds, proper disposal of carcasses, the quarantining and rigorous disinfection of farms, and the implementation of strict sanitary, or “biosecurity”,

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measures. Restrictions on the movement of live poultry, both within and between countries, are another important control measure. The logistics of recommended control measures are most straightforward when applied to large commercial farms, where birds are housed indoors, usually under strictly controlled sanitary conditions, in large numbers. Control is far more difficult under poultry production systems in which most birds are raised in small backyard flocks scattered throughout rural or periurban areas. To our Cumberland clients, and readers and friends and to the detractors we offer that billions of people in this world live their daily lives in circumstances described above. That is why Cumberland remains vigilant. As this is released today we are still in scenario 1.

Bird Flu Update: 7 in Series th

June 16, 2006

We saw the below-quoted report after the market closed today and right before we were packing up to leave. Note: it can take up to four days, for the sub-type, e.g., N1 or N2, to be identified. “Avian flu found in Canada (Prince Edward Island)” Last updated Jun 16 2006 04:48 PM ADT, CBC News “A case of H5 avian flu has been confirmed in a gosling from O'Leary by the Atlantic Veterinary College. Dr. Lamont Sweet, P.E.I.'s chief health officer, said in a news release there is no evidence the virus can be transmitted by eating poultry products, but anyone in contact with poultry needs to take special care. "From the information we have received, there is a low risk of human illness at the present time," said Sweet in the news release. "We are monitoring evidence of flu-like symptoms or eye infections in those who have come in contact with domestic or wild birds in the O'Leary area." The sick gosling was from a flock of 20 geese and ducks kept in the back yard of a private home in O'Leary. Officials have established an area of quarantine around the home, and are testing other birds in the area. Sweet urged anyone who has been in contact with poultry in the last week who is experiencing flu-like symptoms to see their physician.” The ornithologists, veterinarians and medical experts we have consulted during the last year projected a 50-50 chance that we would see the H5 virus in North America in 2006. Prince Edward Island is an important bird migratory convergence point. If this is H5N1, we can expect more cases among wild birds. If it is H5N2 - a variant that may not make birds ill and poses no threat to humans - we are much less concerned. We have yet to see any H5 in poultry in the US. We have not yet seen any report of the dangerous H5N1 in Alaska. Experts in Alaska and Canada are presently catching and

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testing migratory birds from Eastern Siberia. Birds in the migratory patterns to Prince Edward Island come from Europe In our view, if H5N1 gets into the Western Hemisphere, the most vulnerable places are in Central and South America. There, millions of people live in proximity to poultry. Living conditions are of a third world type, i.e., like those in Indonesia and elsewhere in Asia. Our recent visit to Panama - and a previous visit to Guatemala – confirmed for us that these countries are not prepared to handle avian flu. They have waited too long to gear up the defense. We would like to be wrong on this assessment about Latin America. We hope this case in Canada is not H5N1.

Bird Flu (Indonesian outbreak): 8 in Seriesth July 3, 2006

This World health Organization (WHO) report is worth reviewing: http://www.cumber.com/special/weeklyepirecord.pdf. It tracks the form of H5N1 from 2003 through April 30, 2006 and BEFORE the recent surge in cases in Indonesia. Clearly the global spread is worrisome and the lethality of the virus is growing as it changes. The more copies of the virus there are, the greater the risk that one will mutate into an efficient pandemic causing form. Some virologists suggest the version spreading since 2003 is more robust than the version first observed in 1997. To date, the form of the virus remains the avian version. There is no clear evidence that there has been mutation into a sneeze-transmissible, efficient human-to-human form. There is some evidence of spread with a human vector and that is in addition to infection from direct contact with sick poultry. This evidence arises from one cluster which showed a human-to-human transmission. That cluster was limited to 7 deaths in one extended family. A WHO report about Indonesia has not yet been made public by the government of Indonesia. It was recently presented in Jakarta and is still “confidential.” The WHO will not release it to the public because it was prepared at the Indonesian Government’s request. It concerned the cluster of H5N1 cases on Northern Sumatra which may have exhibited human-to-human transmissibility. We can only guess about why Indonesia is keeping the report private. There are no good reasons for them to do so. The only ones we can think of either cause that government embarrassment (bureaucratic bungling) or may instill alarm or even panic. The sad fact is Indonesia is playing politics with a deadly global disease when the best global approach is immediate, full and complete disclosure of every single pertinent detail.

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Indonesia has been pretty forthright about the country’s failings and lack of full preparedness. That makes the failure to release this report even more puzzling. By the way, according to the latest WHO headcount, the number of laboratory-confirmed human bird-flu cases in Indonesia has risen to 54, with 41 of them resulting in death. WHO and CDC folks consider the H5N1 global risk rising. The report shows why and tracks the spread of the virus as it continues to establish greater and greater geographic presence. Remember: this report PRECEDES the May event in Indonesia. If added, they would only make its conclusions more severe. Our best guess is that the battleground in this American hemisphere will be in Central America where the Atlantic and Pacific flyways of wild birds converge in that isthmus. Our experience (including personal visits to Panama and Guatemala) indicates that Latin American countries in Central America are not properly prepared. We believe the risk of a repeat of the Indonesian experience in Central America is high. We continue to see estimates that the H5N1 virus will arrive in North America this year. The conventional wisdom puts those odds at 50-50. Canada and the USA have active migratory waterfowl surveillance projects underway in order to detect any infected birds that arrive from Eastern Siberia or Europe. Cumberland continues to monitor Avian Flu developments closely. We have numerous sources and particularly find Stratecon to be very helpful. We would recommend them to others seeking such a comprehensive service.

Bird Flu (War & September 28 ): 9 in Series th th August 12, 2006

Abstract: 1. War increases bird flu risk. 2. CDC says H5N1 becoming more pathogenic. 3. On September 28th representatives from our federal, state & local governments, businesses and medical experts will convene for a full day in Philadelphia. Agenda: medical, financial and economic aspects of bird flu & pandemic planning. Lawyers will outline liabilities of companies if their plans are not complete. Comcast, Intel and Schneider Trucking will discuss their programs and industry situation. A Federal Reserve officer speaks on Fed readiness and how banking system operations may be impacted. Conference organizers are the Global Interdependence Center (GIC) and the Philadelphia College of Physicians. See: http://www.cumber.com/special/ev060928_AvianFlu.pdf. The telephone number of GIC is 215-898-9453. Bird flu cannot compete with a shooting war or a terrorist plot in the battle for TV space. But this virus doesn’t know about a war; neither do the migratory birds.

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We are reminded that the 1918 flu pandemic happened, in part, because of the massive dislocations of peoples in the aftermath of World War 1. Throughout history, war has raised vulnerability to disease. Millions of people are now dislocated. They live in close quarters and with chickens. They are in places (The Middle East) where bird flu has already been present. Turkey, Iraq and Egypt have had World Health Organization (WHO) confirmed human deaths. Additional countries in the region have had H5N1 outbreaks in poultry. War zones are not easily accessible by labs. Disease defense personnel don’t go where machine guns are active. Lebanon is situated on a migratory bird route and between Turkey and Israel. Both countries have had H5N1 bird infections within the past year. Turkey is now preparing for H5N1 outbreaks when autumn’s migrating birds arrive. The last Turkish H5N1 outbreak killed four children in January of this year. Israel has an H5N1 readiness health plan in operation. It was very effective during the last outbreak there; no human cases were reported. We do not know how much of it is disrupted by the Hezbollah attack. Any H5N1 mutation to more efficient transmissibility could cause a pandemic. Work on vaccine is progressing but we must remember that it is a vaccine developed from an earlier genetic form of H5N1. Some preliminary indications are that it may be 80% effective on that specific genetic version. It is unknown if it will be effective on a mutation strain which is easily transmissible among humans. That cannot be known before the mutation occurs, is found, decoded in laboratory work and then used by drug companies to mass produce the vaccine. That cannot be known in advance of a pandemic. Thailand has a large outbreak in progress. Bangkok and 7 other Thai provinces are on Bird Flu watch. So far we’ve seen several human deaths and a large chicken culling. Nearly a 1000 people are being monitored for viral infection. Laboratory work is busy in Thailand. Indonesia has been called the “Bird Flu Capital of The World” by the Economist. H5N1 is endemic. There are two more suspected people clusters in Indonesia. The government has yet to release all the details of the WHO report. Indonesia has been offered their requested $900 million in soft loans and grants. They say they have no money and want it all in grants. As of August 1st, the Indonesian national bird flu commission has not been given any money by the government. Reports of human cases are almost continuous. Another was in the news yesterday. Germany just (August 4) confirmed a “lethal H5N1 strain” in a swan in the Dresden zoo. It confirmed cases in domestic fowl in April. To its embarrassment, Germany declared itself “free of highly pathogenic avian influenza” on July 28th. So much for the European Union policy of a free zone declaration when no flu is found for 90 days. So-called bird flu free countries are not so free. New outbreaks have appeared this week in Cambodia and Vietnam. Whatever gave local politicians the notion that they could

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reduce their vigilance is beyond me; instead they may have condemned some of their citizens to death. That is the result of complacency. So much for the “it ain’t our problem anymore” crowd. “Why is this news important?” readers may ask. Note this “current situation” report excerpt from the Center for Disease Control (CDC): “Research suggests that currently circulating strains of H5N1 viruses are becoming more capable of causing disease (pathogenic) in animals than were earlier H5N1 viruses. One study found that ducks infected with H5N1 virus are now shedding more virus for longer periods without showing symptoms of illness.” CDC adds that “the avian influenza (H5N1) virus that emerged in Asia in 2003 continues to evolve and may adapt so that other mammals may be susceptible to infection as well.” To paraphrase Bob Dylan: the H5N1”is a changing.” Read the detailed viral study from the CDC (it is on its website and archived on ours) and you will understand that the genetic changes in H5N1 are continuous. You also will see why each human infection raises the odds of a mutation to a human-to-human form. The US government has expanded its national wild bird testing program. The goal is to sample feces or tissue from up to 100,000 birds who will be heading south from North America’s nesting grounds. Congress has appropriated these funds and tasked the Agriculture and Interior Departments to do this testing. The world is spending nearly $10 billion in H5N1 defense with the US leading the way. We are responsible for about half the funding of the globe. Note how we are launching a national bird testing plan. Success may mean no pandemic or it may mean more limited damage than would otherwise have occurred.

Bird Flu Update- 10th in Series February 3, 2007

Today’s British news confirms more spread of H5N1 throughout the globe. In Suffolk, England 2600 turkeys died of the highly pathogenic avian flu. Veterinarians were at the farm by Thursday night, lab tests were performed on Friday and the initial results confirmed H5N1. Following the rules of the European Union (EU), an immediate 3 kilometer killing zone and 10 kilometer surveillance zone has surrounded this single farm. The BBC estimates that an additional 160,000 turkeys will be slaughtered as a precaution. In the EU, compensation is already allocated to the farmers. We haven’t written about bird flu in a while. The reason: there was not much new to say.

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For newer readers, we previously published a several part series on bird flu. It is just as valid today as it was when we started to worry about this risk. Email us your snail mail address and we will send you a package. Many readers have asked if we are still concerned about H5N1. The answer is emphatically “yes!” Actually, we are more concerned than before. And we have reasons:

1. The virus has been mutating as scientists expected. The result is a developing version which is more resistant to known medical treatments like Tami flu.

2. Lab work by some scientists shows that the mutating form of H5N1 has changed genetic directional alteration in favor of more virulence toward humans.

3. The virus seems as deadly as ever in the recent third world cases of human infection (Indonesia, Nigeria).

4. Third world countries have minimal protective arrangements. An outbreak like the one in England would not be contained were it to occur in one of those countries. Instead there would be spread and then a few human infections and some death. That continues to be the pattern in the third world.

5. The global professional epidemiologic community fears this virus and now also fears the mass of complacency that has developed worldwide.

At Cumberland, we continue to build an inventory of supplies in a locker. We have cases of N-95 masks. We bought the 3M, non-latex, product number 1860, 20 per carton, Health Care Particulate Respirator and Surgical Mask, www.masksnmore.com . We have a plan in place if there is a bird flu pandemic. We have all key people set up to access their work virtually. We test our disaster plan regularly and without advance notice to employees. We have a fully redundant off site data installation. There are some who laugh at our precautions. We have experienced a little of that in the form of teasing by Wall Street colleagues. Our view remains as it has always been. We prepare for the worst and hope for the best. Our financial market strategy is also unchanged. We will not act on portfolios based on outbreaks among turkeys or chickens. Right now, H5N1 is a poultry disease, not a human disease. The humans who have contracted it seem to have gotten it from contact with birds. This is trouble for chicken farmers and for the some in the food supply business and for some related agriculture sectors. But it is not enough to broadly sell your stocks. In order to raise cash in diversified portfolios, we will need to see signs of human-to-human efficient transmission. So far that has not occurred in enough events to trigger protracted selling. There was a fear of a human-to-human death cluster in Indonesia last May. It occurred contemporaneously with an unrelated market shock: the Japanese central bank removal of reserves. The Bank of Japan triggered that sell off; the bird flu cluster exacerbated it in the May-June period of last year.

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Since then, there has not been any indication of H5N1 mutation into a highly efficient human-to-human transmissible form. Warning: that change to efficient transmission could happen any day, any month, any year or never. There is absolutely no way to know. Some key indicators can help in tracking this change. If we see signs of mass pig deaths that confirm H5N1, we would raise some precautionary cash. Pigs and humans have many similar genetic characteristics which is why pigs are so important in the H5N1 surveillance. Pigs are also a food staple in the third world and frequently are mixed with chickens and people in third world living conditions. If we see human clusters of infection that are not chicken related, we will sell stocks immediately. We will take our energy position to an under weight from over weight. We are already over weight healthcare and would probably raise that weight. We would avoid any financials related to the insurers. The insurers are not reserved for the losses that would occur in a worldwide H5N1 pandemic. We would raise our allocation to the highest quality long term government bonds. We would batten down the hatches of portfolios against what would likely be a global recession in an H5N1 pandemic. Yes, we take bird flu seriously as we have for several years. The form of this virus is much different than when it first appeared 10 years ago. The spread throughout the globe and the mutations to date suggest it is also much more dangerous.

We have not yet had a reported case of H5N1 in the Americas. In our view its arrival is inevitable. We believe that the first outbreak among poultry in the US or Canada will cause negative financial market reaction and fear. If there is a human death in North America, it will trigger some panic. If it comes to South or Central America, it will be close enough to shatter the American mood of complacency. In our view the occurrence of one of these events is only a matter of time.

At Cumberland, we remain prepared for the worst and hoping for the best.

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