Geece - Dates coming up to watch 04/09/10 $EWG $NBG

Geece - Dates coming up to watch

• This weekend – activation of IMF-EU rescue? Reuters reported that a deal has been reached on the specific terms of a rescue but its not clear if Athens has requested the plan to be activated. In terms of the parameters of IMF debt, for loans up to three years, Greece will be charged the SDR rate plus 300 bps plus 50 bps service charge (per Reuters).

• Apr 13 - Greece will auction a total of 1.2 billion euros ($1.6 billion) of six- and 12-month T-bills on April 13

• April 20 - Bond redemption for E8.22 billion

• Apr 22 - Greek strikes - Greek civil servants will walk off the job for 24 hours on April 22 to protest against austerity measures which they say burden only the poor, a union (ADEDY) official said on Friday. Reuters

Greece’s 7yr sale on Mon continues to trade poorly in the secondary market…

         Greece's 7yr sale on Mon continues to trade poorly in the secondary market…according to the FT today: Greece still has big problems," said a senior banker. "The Greek bond syndication was very disappointing. Investors still do not have faith in Greece and are only prepared to buy the bonds for higher yields." (FT) 

CEEMEA Rates Trade Idea Pay 5y Turkish CCS

Rationale: The TRY 5y CCS seems to be trading at the bottom of the range (10-10.80). Given our economists’
view that CPI inflation will climb higher this year before starting to fall in 4Q10 (Exhibit 1), the risk/reward of
tactically paying rates in Turkey looks attractive to us.

While we acknowledge that the curve is already quite steep, we do not think that sufficient rate hikes are priced in at the moment. Based on our estimates, the curve is pricing in around 250bp of hikes by end-2011,
compared with Morgan Stanley’s forecast of 325bp.

Real yields are also reaching a turning point. Given the historically strong relationship between real GDP and real yields, we think that real yields are close to the
bottom and should turn around soon, following the trend in real GDP. Even as inflation starts to fall after 4Q10, we think that nominal yields should continue to rise, given our economists’ GDP forecast of 4%Y at end-2010 and 4.2%Y at end-2011.

Oil and food also pose upside risks to our inflation
forecast, in our view. Furthermore, the longer the CBT
keeps rates on hold, the higher the likelihood that
inflation expectation might deteriorate further, thus
mitigating some of the (positive) base effects from 4Q10.
Carry/rolldown: Over a 1-month period, the
carry/rolldown on a pay 5y CCS position is around -9bp.
This compares more favourably with -20bp in 2y and
-22bp in 1y.

Alternatives: We still like paying breakeven inflation by
holding 2y linkers versus paying 2y CCS.
Key risks: Persistent lira strength, a significant
improvement in inflation profile (e.g., lower oil or food
prices), a potential IMF package and a lower domestic
debt rollover ratio in March and April could put
downward pressure on rates, in our view.

Link here

Yesterday’s Trading 02.17.10

Yesterday’s Trading 02.17.10

· Equity Levels: SP500 ends 1099 (despite a few attempts failed to get up through 1100), up
4.6 points/0.4% on the day; Nazz ends up 0.5% (just shy of the 50day MA – 3 points under);
the R2K ends up 0.6% (remains above its 50day MA).

· Equities had a decent bid to them all session; Helping the tape today: 1) some pos.
headlines out of Europe (the strong Spain debt issue and the Greek Jan budget coming in
better than expected; late in the session, the FT said Greece would attempt to come to market
next week w/a syndicated loan issue to build credibility w/investors); 2) earnings – WFMI
and DE are the highlights in the US while financials stood out overnight (on Tues it was
Barclays and Wed morning ING rallied); 3) eco numbers better-than-expected (housing
starts and IP; also – the Jan budget statement @ 2pmET came in lower/better than expected);
4) Washington headlines – the Treasury reported late in trading that permanent mortgage
modifications jumped 75% M/M in Jan while Obama held a press conf today talking up the
benefits of the stimulus program this morning (and the WSJ noted that the bulk of the
infrastructure stimulus is still to come).

· Desk color - Despite the modest rally, volumes/attendance/conviction levels all remain on the
light side and the SP500 failed to sustain a move north of the technically important 1100
level. That said, stocks were able to shrug off a strong dollar rally (the DXY closes up 0.9%
and more than makes up for Tues’ weakness) and some hawkish Fed headlines (the minutes
were as expected although the line about “several” Fed officials wanting asset sales in the
near-term spooked some people). A lot of the flow continues to come from short-term
focused HFs while larger vanillas haven’t done a whole lot in the last 72 trading hours.
Continue to see a sellers strike although a lot of the aggressive short covering is starting to
abate (the covering really kicked off after we failed to follow through on the downside back
on 2/5 but has been petering out in the last couple sessions). Longs didn’t have enough to
break through 1100 as real vanilla buyers on the sidelines.

· Equity Sectors – similar to mid-day, weakness in the commodity-linked stocks on back of
the stronger buck (this group saw some profit taking following big ramps during Tues’
session; despite the dollar more than recouping Tues’ sell-off, materials/energy stocks only
pulled back small today). Financials trade inline w/the sp500 helped by large banks (C,
BAC), life insurance (off the Morgan Stanley sector upgrade), and REITs (continued M&A
optimism) while the regional banks were weak. Health care led the market for the whole
session (the HMOs in particular had a bid to them today). SP500 staples index was one of the
best performing groups, although a lot of this was on back of WFMI (which advanced double
digit % after earnings). Capital Goods outperformed on back of DE’s earnings.

· Best Performing SP500 stocks (from Bloomberg): WFMI, SNDK, IRM, DE, BSX, THC,
DPS, GILD, GT, CFN

· Weakest performing sp500 stocks (from Bloomberg): FMC, NBR, RF, TSO, CBG, MOT,
IGT, AIG, JDSU, SRE

2.18.10 Today’s Top Stories & Catalysts

Today’s Top Stories & Catalysts

· Focus for the most part remains on Europe with little out of Asia (BoJ decision pretty
much as expected and HK’s unemployment rate was unchanged) as China remaining closed.
On the Greek front, no major developments to speak of overnight (to watch coming up
though: the FT is reporting that Greece may test the waters next week w/a bond offering and
the country is expected to deliver more information by Fri 2/19 on its debt swap deals).
There were a handful of earnings out in Europe - Daimler is prob. the standout, w/the
stock off ~7% after reporting disappointing numbers and proposing a dividend cut. SocGen is
down 5% post its earnings (first disappointing European financial report this week after very
strong Barclays and ING #s) although other European financials aren't really getting hit in
sympathy. In London, BT is the weakest stock in the FTSE following a ratings downgrade
from S&P (there are continued worries about the co's pension exposure). On the eco front,
the UK posted a budget deficit for January vs. expectations for a surplus, putting UK
sovereign debt under some pressure (FT).

· tech update from Wed night - big night of earnings - on the whole numbers/trends/mgmt
commentary all remain positive, although inline w/what we heard from companies back in Jul
and also inline w/CSCO's Chambers a couple weeks back. Trends were robust in the CQ4,
trends remained strong in Jan, the CQ1 is shaping up to be better-than-seasonal for many endmarkets,
and mgmt tone remains sanguine on the outlook. The next big catalyst for tech will
be the sell-side conference season and the mid-Q updates - Goldman has a conf next week
and Morgan Stanley the week after - these forums will give companies a chance to update on
the status of Q1 (i.e. are things still pacing better-than-seasonal; how is the outlook for June
shaping up; etc). Also - we will start getting formal mid-Q updates in early Mar. Some
tidbits from Wed night: 1) HPQ tone remains positive on demand; PCs prob. showed biggest
upside (revs much better than St), which isn't surprising given what others have said/reported
(MSFT, INTC, etc); HPQ mgmt said it was component constrained (similar to what others,
inc. CSCO, have said); 2) AMAT beat and raised; tone was positive; one analyst on the call
noted that backing into CH2:10 guidance based on mgmt's color implies a down back-half (if
I take the 25% revenue growth you gave in the April quarter, 100% year on year growth, I
think you are actually talking about a 50% revenue decline from the April quarter level into
July and October"); that said AMAT was sanguine on the outlook looking into ’11; 3) NVDA
said it remained capacity constrained throughout the Q and will remain so into the Apr-end Q
(NVDA said this cost them a couple hundred million in revs in the Q and that they would
have guided for higher Apr revs). Big to watch tonight in techland - DELL and IM earnings.

· Gold sales - IMF to Begin On-Market Sales of Gold – hit after the US close on Wed – IMF
said Wed night it will soon kick off the second phase of its gold sales process. The first
phase was set aside exclusively for off-market sales to official holders. The total amount
remaining to be sold is 191.3 metric tons. In accordance with the priority of avoiding
disruption of the gold market, the on-market sales will be conducted in a phased manner over
time.

· China & US tensions growing on economic front - US officials increasingly view the
Chinese currency’s artificially low peg as a threat to worldwide economic stability; the US
plans to press Chinese officials in the coming months to take action and strengthen the yuan.
In addition, US multinational corporations are becoming increasingly vocal about what they
view as anti-competitive practices on the part of the Chinese – WSJ

· Muni market – cities weigh Chapt 9 filings – the WSJ says municipalities around the
country are considering whether to file for Chpt 9 bankruptcy protection; also on the muni
front: States see ~$1T benefits “sinkhole” (there is a massive gap between what states have
promised in pensions, health care, and other benefits, and the available resources)
· Retail earnings season kicks off – WMT earnings due to hit @ 7amET this morning; JCP
comes Fri morning.

· US bank lending falls at fastest rate in history – bank lending in the US has contracted so far in ’10 at the fastest rate in history, raising worries that the Fed is withdrawing its
emergency stimulus measures too early. The M3 broad money supply has been contracting at
a rate of 5.6pc over the last three months. This signals future deflation. London Telegraph.

· Earnings season recap – from JPMorgan’s E Beinstein - Roughly 75% of the non-financial companies in our High Grade bond index have filed their 4Q09 reports. This preliminary data suggests credit metrics continue to improve, but the complexion of the improvement has changed. Recall, trends in 3Q09 credit metrics were positive across almost all sectors. These trends continue in 4Q09, but with a different tone. While companies continue to accumulate cash, the pace is slower. With cost cutting largely finished, profit margins have ticked down as companies must spend more to grow. While leverage has likely peaked earlier in 2009, its reduction will likely be gradual.

Americas Equity Morning Summary 02.15.10

Companies Featured
AMAT.O, APD.N, BWLD.O, CRM.N, EVVV.O, GILD.O, GPS.N, JCP.N,
JWN.N, PNRA.O, PX.N, RHT.N, STR.N, ZION.O

Commodities/Commodity Market Report-

Energy prices increased last week, as did most commodities, as risk aversion eased slightly. Oil
led the pack, despite a bearish US DOE report which showed crude, gasoline and distillate
inventories registering weaker-than-expected. Base metals reversed the past couple of weeks’
weakness following a more upbeat mood in equity markets and benign Chinese inflation data.
Precious metals last week recovered from recent weakness after the dollar lost some ground
against the euro ahead of a meeting of Eurozone finance ministers, although concerns over
sovereign risk in the region may continue to support the US currency. Agriculturalprices finished
higher, following the general commodity rally on reduced risk aversion.

US Economics/A European Slowdown Would Only Nick the US

The European sovereign debt crisis may net to slower European growth. Rising risk premiums on
the region’s sovereign debt, constraints on its banks, and fiscal tightening will weigh on growth in
peripheral economies and may spill into the core countries. A weaker euro will be an offset. We
estimate that a one-percentage-point slowdown in European growth might shave 0.2% from that
in the US. Three channels matter: exports, earnings and financial linkages. Europe accounts for
about 29% of our exports, 8% of S&P revenues, and 4.6% of US banks’ totals assets. Contagion
spreading from the European banking system is the biggest tail risk. If the crisis spills over into
broader risk aversion and a drying up of liquidity — the functional equivalent of the US subprime
crisis — the consequences could be more dire.

STEP Commentary/Changes to the Growth STEP

We are adding a 4% position in Express Scripts ($86.43), Ricky Goldwasser’s top pick in her
recently launched coverage of the Healthcare Services group and also one of five top global
picks highlighted by Morgan Stanley's healthcare analysts around the world. Express Scripts
looks well positioned to benefit from the shift to generics from branded drugs over the next five
years, increased exposure to specialty drugs, and meaningful earnings accretion from the NetRx
acquisition, and Ricky sees earnings more than doubling over the next three years. We are
removing the portfolio’s 4% position in Amgen ($56.48). There is no change to Steve Harr’s OW
rating on Amgen, but for the purposes of the Growth STEP, we prefer to move to the sidelines
and shift the portfolio’s position into what we view as a more robust growth story.

Economics Calendar

02/17: Housing Starts (January), forecast: 540,000
02/17: Industrial Production / Capacity Utilization (January), forecast: + 1.1 % / 72.9%
02/18: Producer Price Index/ Core (January), forecast: +0.8 % / +0.1%
02/18: Leading Indicators (January), forecast: +0.3 %

FULL REPORT HERE
02/19: Consumer Price Index/ Core (January), forecast: +0.3 % / +0.1%


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N O R T H A M E R I C A