The monthly market outlook report reiterates a view of a cyclical growth recovery starting in the third quarter of 2009, followed by a moderate structural recovery. While a strong business investment recovery is unlikely due to low capacity utilization and high costs, earnings results exceeded expectations in the second quarter due to tight cost controls. Reasonable valuations and cyclical improvement should support further equity gains.
The document provides an asset allocation and market outlook for the second quarter of 2009 from BlackRock. It summarizes views on global equity, fixed income, currency and commodity markets. Key points include:
- Equity markets have rallied from oversold levels but volatility will likely continue; higher risk assets should outperform over 2009. Within equities, favor healthcare, energy and technology.
- For fixed income, focus on higher quality investments like agencies and select corporate bonds; municipal bonds remain attractive.
- The US dollar will likely strengthen with risk aversion and weaken with improved risk appetite. Oil prices should rise through 2009 as recovery signs emerge.
Economies worldwide have rebounded since the 2008
Financial Crisis, along with rising global equity and
tightening credit markets. Even the rebound in earnings
growth and profit margins has been remarkable. Yet, the
U.S. economic growth hasn’t broken out as hoped, after
significant global fiscal and monetary stimulus, including
slashing interest rates. Unemployment remains high and
volatility has been unnerving for investors. Learn more at: www.nafcu.org/nifcus
The document provides an advisory newsletter with updates and outlook on the Indian economy, equity markets, debt markets, inflation, currency and commodity markets, real estate, and sector outlook. Key points from the document include:
- Indian equity markets declined sharply in January 2011 driven by FII selling and domestic investor uncertainty over inflation and policy reforms.
- Inflation remains high in India and other emerging economies, which may lead to further monetary tightening in India.
- The economic growth outlook for India and other regions like the US, Europe, Japan, and China remains positive.
- Debt markets moved as expected with interest rate hikes, but inflation may not be over yet and further hikes are expected in
- After positive returns in the first three quarters of 2011, global markets saw negative returns in the second quarter due to normal volatility, though prospects for economic recession remain remote.
- While economic growth has slowed globally, it is still positive and temporary factors like disruptions from Japan's disasters and commodity price rises have contributed; leading indicators remain positive.
- European sovereign debt issues continue regarding some countries' debt levels and management, but efforts to address problems have been taken and debt is still seen as manageable.
- Outlook remains positive for continued growth in the second half of 2011 and beyond, though expect continued short-term market volatility; long-term discipline and diversification are recommended.
The document provides an overview of First Bank of Nigeria's results for the nine months ended September 2010. It highlights a number of positive results including year-to-date deposit and lending growth, improving profitability with a return on equity of 14.1%, and a strong and liquid balance sheet. The bank is focusing on growth strategies like international expansion and diversification into investment banking and insurance. It is also working to improve service excellence through initiatives such as centralizing branch processes and optimizing channels to better serve customers. Overall the results show satisfactory performance in challenging economic conditions.
This global economic outlook gives Dun & Bradstreet's perspective on global business conditions. Based on its proprietary data and analytic insight, the outlook reviews business conditions for 2012 and gives insight on what to expect for 2013.
Long term capital market return assumptions 2011bfmresearch
The document provides J.P. Morgan Asset Management's long-term capital market return assumptions as of November 30, 2010. It includes their expected annualized compound returns over 10-15 years for various asset classes. It also includes the expected volatility and correlations between different asset classes.
The document provides an economic and market update and outlook for November 2012. It discusses recent performance and trends in global equity markets, the Indian economy and key sectors. The overall outlook is cautiously positive. The Indian economy is seen to have bottomed out, and further monetary easing and fiscal policy actions are expected to revive growth going forward. Private sector banks are favored over public sector banks based on better Q2 results.
The document provides an asset allocation and market outlook for the second quarter of 2009 from BlackRock. It summarizes views on global equity, fixed income, currency and commodity markets. Key points include:
- Equity markets have rallied from oversold levels but volatility will likely continue; higher risk assets should outperform over 2009. Within equities, favor healthcare, energy and technology.
- For fixed income, focus on higher quality investments like agencies and select corporate bonds; municipal bonds remain attractive.
- The US dollar will likely strengthen with risk aversion and weaken with improved risk appetite. Oil prices should rise through 2009 as recovery signs emerge.
Economies worldwide have rebounded since the 2008
Financial Crisis, along with rising global equity and
tightening credit markets. Even the rebound in earnings
growth and profit margins has been remarkable. Yet, the
U.S. economic growth hasn’t broken out as hoped, after
significant global fiscal and monetary stimulus, including
slashing interest rates. Unemployment remains high and
volatility has been unnerving for investors. Learn more at: www.nafcu.org/nifcus
The document provides an advisory newsletter with updates and outlook on the Indian economy, equity markets, debt markets, inflation, currency and commodity markets, real estate, and sector outlook. Key points from the document include:
- Indian equity markets declined sharply in January 2011 driven by FII selling and domestic investor uncertainty over inflation and policy reforms.
- Inflation remains high in India and other emerging economies, which may lead to further monetary tightening in India.
- The economic growth outlook for India and other regions like the US, Europe, Japan, and China remains positive.
- Debt markets moved as expected with interest rate hikes, but inflation may not be over yet and further hikes are expected in
- After positive returns in the first three quarters of 2011, global markets saw negative returns in the second quarter due to normal volatility, though prospects for economic recession remain remote.
- While economic growth has slowed globally, it is still positive and temporary factors like disruptions from Japan's disasters and commodity price rises have contributed; leading indicators remain positive.
- European sovereign debt issues continue regarding some countries' debt levels and management, but efforts to address problems have been taken and debt is still seen as manageable.
- Outlook remains positive for continued growth in the second half of 2011 and beyond, though expect continued short-term market volatility; long-term discipline and diversification are recommended.
The document provides an overview of First Bank of Nigeria's results for the nine months ended September 2010. It highlights a number of positive results including year-to-date deposit and lending growth, improving profitability with a return on equity of 14.1%, and a strong and liquid balance sheet. The bank is focusing on growth strategies like international expansion and diversification into investment banking and insurance. It is also working to improve service excellence through initiatives such as centralizing branch processes and optimizing channels to better serve customers. Overall the results show satisfactory performance in challenging economic conditions.
This global economic outlook gives Dun & Bradstreet's perspective on global business conditions. Based on its proprietary data and analytic insight, the outlook reviews business conditions for 2012 and gives insight on what to expect for 2013.
Long term capital market return assumptions 2011bfmresearch
The document provides J.P. Morgan Asset Management's long-term capital market return assumptions as of November 30, 2010. It includes their expected annualized compound returns over 10-15 years for various asset classes. It also includes the expected volatility and correlations between different asset classes.
The document provides an economic and market update and outlook for November 2012. It discusses recent performance and trends in global equity markets, the Indian economy and key sectors. The overall outlook is cautiously positive. The Indian economy is seen to have bottomed out, and further monetary easing and fiscal policy actions are expected to revive growth going forward. Private sector banks are favored over public sector banks based on better Q2 results.
The document provides an analysis and strategy update on China from Deutsche Bank analysts for 2012. Some key points:
- GDP growth is expected to slow to 8.3% in 2012 before accelerating to 8.6% in 2013, supported by 10% EPS growth for Chinese companies.
- Property investment growth will slow significantly in early 2012, potentially dragging down GDP by 1-1.5 percentage points.
- Inflation is expected to fall sharply to around 2.5% by the second quarter of 2012, benefiting sectors such as power and oil refining.
- Several investment themes for 2012 are highlighted, including disinflation, recovery in property and public spending, and dissipating fears
Indian equity markets performed strongly over the last month and year, with the Sensex and Nifty rising 4.9% and 5% respectively over the last month and 19.9% and 21.7% over the last year. Global equity markets also saw gains. Indian debt markets remained volatile, with yields on the 10-year G-sec falling 56 basis points over the last year. Gold and oil prices rose over the last year, but gains were modest over the last month. The rupee depreciated slightly against the dollar. Overall, most markets saw gains in the last year but momentum slowed in the last month.
The turm oil in financial markets across the globe caused by the rating downgrade of US Government debt by S&P will continue to haunt the Indian markets also for quite sometime to come.
The document projects that the favorable economic and market conditions seen in late 2009 will continue into the first half of 2010, driven by ongoing global monetary and fiscal stimulus ("tailwinds"). This stimulus is expected to foster continued economic growth and a positive environment for investors. Specifically, the document forecasts:
- GDP growth in the 3-5% range for the first half of 2010, supported by business spending, inventory restocking, and solid corporate balance sheets, while the consumer contributes modest growth.
- The Federal Reserve continues quantitative easing and keeping interest rates near zero through the first quarter of 2010.
- China maintains stimulative policies, driving regional growth.
- A modest dollar decline boosts
The document projects that the favorable economic and market conditions seen in late 2009 will continue into the first half of 2010, driven by ongoing global monetary and fiscal stimulus ("tailwinds"). It forecasts GDP growth of 3-5% in the first half and 2-3% in the second half as stimulus fades. Investors are advised to favor cyclical and risky assets in the first half as tailwinds remain, but shift to more defensive positions in the second half as headwinds from expiring stimulus emerge. Risks to the outlook include a potential renewed economic slowdown as stimulus is removed.
Will Europe be able to circle the wagons? (third party)José Ricaurte Jaen
- The document provides an asset allocation perspective from J.P. Morgan on global markets in May 2012.
- Political risks in Europe have increased, forcing a reduction in long equity positions while maintaining credit exposure.
- Weaker Chinese economic data has led to a reduction in the Q2 growth forecast from 7.8% to 7%. Global growth forecasts remain unchanged.
- Near-term downside risks exist, but signals over 3-6 months remain positive, suggesting maintaining upside exposure to equities and credit while keeping overall tactical risk below average.
- Global bond markets were disrupted in the quarter as bond yields rose sharply due to expectations that the Federal Reserve would scale back its bond-buying program sooner than anticipated.
- Within fixed income, mortgage prepayment strategies detracted from performance but rebounded later in the quarter, while term-structure positioning and commercial mortgage-backed securities contributed to results.
- In stocks, selection strategies and some currency positions in non-directional strategies hurt returns in the 500 and 700 funds.
1) New central bank policies have calmed markets but risks remain in Europe. Politics could have a greater impact on markets in 2012 with high stakes.
2) Stocks are relatively cheap reflecting challenges but risks need acknowledgement. Within fixed income, investment-grade corporates offer opportunities.
3) Central bank liquidity has eased concerns but European issues like banks, sovereign debt, and austerity remain difficult hurdles in the coming months. Renewed volatility can't be ruled out.
The document provides an economic and market update for August 2012, analyzing factors such as global economic conditions, domestic economic growth and inflation trends, performance of key equity and debt markets, and providing an outlook on various sectors and the overall market. It notes recent monetary policy actions by central banks and analyzes their likely impact, while also offering recommendations to investors on portfolio rebalancing and positioning across different asset classes.
Franklin Templeton Quarterly Report -Debt Market - August 2012Natraj71
This document discusses the fixed income markets and FT funds. It provides an overview of the global and Indian macroeconomic environment, noting accommodative monetary policies, slowing growth, and high interest rate differentials. It then summarizes FT's fixed income funds, including the Templeton India Low Duration Fund, Short Term Income Plan, Income Opportunities Fund, and Corporate Bond Opportunities Fund. These funds are well positioned for the current environment given their focus on short-dated securities and corporate bonds.
FMP Market Themes and Outlook January 2013kmyoung1
This document provides a market outlook and investment themes for 2013 from FMPartners. It summarizes current economic conditions and sees modest GDP growth in the US. The main investment themes highlighted are global fiscal concerns, divergent growth between developed and emerging markets, credit dislocation, and inflationary pressures. The market outlook projects the S&P 500 will end 2013 around 1561 based on analyst forecasts. Key drivers of growth are seen as the ongoing US housing recovery, employment gains, manufacturing expansion, and domestic energy production. Equities are assessed as fairly valued currently based on dividend and debt yield comparisons. Risks in fixed income include the constrained credit environment and global deleveraging.
An analytical framework for how to price and value major bank stocks. Provided the basis for accurately calling trading strategies for the major banks during the Global Financial Crisis.
For the 2nd quarter, Bob Doll, Chief Equity Strategist and Jeff Rosenberg, Chief Investment Strategist for Fixed Income, with BlackRock, believe the backdrop for equities remains supportive, fixed income credit offers more value, and municipal bonds continue to remain attractive relative to taxable fixed income.
The mid-year economic outlook is on track with modest growth as expected. While the job market is improving with an average of 200,000 new jobs per month, GDP growth in the first quarter was below forecasts. However, full year GDP growth is still expected to be within the projected range of 2.5-3%. The Federal Reserve has provided substantial stimulus by concluding its QE2 bond purchase program. Investors have responded by modestly increasing risk taking, contributing to modest stock and bond gains so far in 2011. During the second half of the year, transitions are expected as policy stimulus fades, inflation rises, and the geopolitical landscape shifts.
The document provides an economic update for key global markets as of February 28, 2013. It notes that equity markets in India, the US, and Japan saw gains over the last year, while commodities declined. Indian debt markets saw yields stabilize while the rupee depreciated against the dollar. Overall, the global economic environment remains cautiously optimistic but risks like the Italian election warrant monitoring.
This research correctly called the bottom of the Australian banks share price cycle in the middle of the Global Financial Crisis. Fear and panic created a once-in-a-generation buying opportunity. For those prepared to think through and analyse the risks, there was significant money to be made.
Chief Investment Officer Ben Pace of Deutsche Bank presents on the state of the world economy and how it will effect luxury real estate prices in 2012 and beyond. From The Key 2012, luxury real estate conference by Concierge Auctions.
- YES Bank reported net interest income of INR 3.48 billion for Q4FY11, up 43% year-over-year and 8% quarter-over-quarter, ahead of estimates. Margins remained stable at 2.8% against expectations of a 10 basis point decline.
- Business growth rebounded with deposit growth at 16.4% quarter-over-quarter and loan book growth at 10.4% quarter-over-quarter. Earning assets grew by around 15% quarter-over-quarter.
- Net profit for Q4FY11 came in at INR 2.03 billion, up 45.2% year-over-year and 6.4% quarter-over-quarter,
Viewpoint Newsletter from Clear View Wealth Advisors with a focus on the role of dividend-paying stocks and the inflation-deflation debate. Also includes links to the free financial roadmap tool.
2009 Q2: Feature on Financing the Budget Deficiteconsultbw
The document provides an economic review of the 2nd quarter of 2009. It summarizes that while the global economy shows some signs of recovery from recession, growth is expected to remain slow. The mining sector in Botswana experienced a major contraction in the 1st quarter but is now seeing signs of recovery. Botswana's exports fell substantially in the 1st four months of 2009 due to declines in diamond and copper-nickel exports. However, the non-mining economy has proved resilient so far. The government faces fiscal challenges from declining revenues and commitments to large expenditure projects.
This document provides a quarterly outlook for Q4 2009. It discusses the potential "Japanization" of financial markets, where record stimulus could lead to higher stock valuations and lower bond yields, similar to post-1990 Japan. Government budget deficits may continue to drive treasury issuance but deflationary pressures could keep rates low. The document also notes signs of economic stabilization but at depressed levels, with consumer deleveraging expected to continue for years.
The document provides an analysis and strategy update on China from Deutsche Bank analysts for 2012. Some key points:
- GDP growth is expected to slow to 8.3% in 2012 before accelerating to 8.6% in 2013, supported by 10% EPS growth for Chinese companies.
- Property investment growth will slow significantly in early 2012, potentially dragging down GDP by 1-1.5 percentage points.
- Inflation is expected to fall sharply to around 2.5% by the second quarter of 2012, benefiting sectors such as power and oil refining.
- Several investment themes for 2012 are highlighted, including disinflation, recovery in property and public spending, and dissipating fears
Indian equity markets performed strongly over the last month and year, with the Sensex and Nifty rising 4.9% and 5% respectively over the last month and 19.9% and 21.7% over the last year. Global equity markets also saw gains. Indian debt markets remained volatile, with yields on the 10-year G-sec falling 56 basis points over the last year. Gold and oil prices rose over the last year, but gains were modest over the last month. The rupee depreciated slightly against the dollar. Overall, most markets saw gains in the last year but momentum slowed in the last month.
The turm oil in financial markets across the globe caused by the rating downgrade of US Government debt by S&P will continue to haunt the Indian markets also for quite sometime to come.
The document projects that the favorable economic and market conditions seen in late 2009 will continue into the first half of 2010, driven by ongoing global monetary and fiscal stimulus ("tailwinds"). This stimulus is expected to foster continued economic growth and a positive environment for investors. Specifically, the document forecasts:
- GDP growth in the 3-5% range for the first half of 2010, supported by business spending, inventory restocking, and solid corporate balance sheets, while the consumer contributes modest growth.
- The Federal Reserve continues quantitative easing and keeping interest rates near zero through the first quarter of 2010.
- China maintains stimulative policies, driving regional growth.
- A modest dollar decline boosts
The document projects that the favorable economic and market conditions seen in late 2009 will continue into the first half of 2010, driven by ongoing global monetary and fiscal stimulus ("tailwinds"). It forecasts GDP growth of 3-5% in the first half and 2-3% in the second half as stimulus fades. Investors are advised to favor cyclical and risky assets in the first half as tailwinds remain, but shift to more defensive positions in the second half as headwinds from expiring stimulus emerge. Risks to the outlook include a potential renewed economic slowdown as stimulus is removed.
Will Europe be able to circle the wagons? (third party)José Ricaurte Jaen
- The document provides an asset allocation perspective from J.P. Morgan on global markets in May 2012.
- Political risks in Europe have increased, forcing a reduction in long equity positions while maintaining credit exposure.
- Weaker Chinese economic data has led to a reduction in the Q2 growth forecast from 7.8% to 7%. Global growth forecasts remain unchanged.
- Near-term downside risks exist, but signals over 3-6 months remain positive, suggesting maintaining upside exposure to equities and credit while keeping overall tactical risk below average.
- Global bond markets were disrupted in the quarter as bond yields rose sharply due to expectations that the Federal Reserve would scale back its bond-buying program sooner than anticipated.
- Within fixed income, mortgage prepayment strategies detracted from performance but rebounded later in the quarter, while term-structure positioning and commercial mortgage-backed securities contributed to results.
- In stocks, selection strategies and some currency positions in non-directional strategies hurt returns in the 500 and 700 funds.
1) New central bank policies have calmed markets but risks remain in Europe. Politics could have a greater impact on markets in 2012 with high stakes.
2) Stocks are relatively cheap reflecting challenges but risks need acknowledgement. Within fixed income, investment-grade corporates offer opportunities.
3) Central bank liquidity has eased concerns but European issues like banks, sovereign debt, and austerity remain difficult hurdles in the coming months. Renewed volatility can't be ruled out.
The document provides an economic and market update for August 2012, analyzing factors such as global economic conditions, domestic economic growth and inflation trends, performance of key equity and debt markets, and providing an outlook on various sectors and the overall market. It notes recent monetary policy actions by central banks and analyzes their likely impact, while also offering recommendations to investors on portfolio rebalancing and positioning across different asset classes.
Franklin Templeton Quarterly Report -Debt Market - August 2012Natraj71
This document discusses the fixed income markets and FT funds. It provides an overview of the global and Indian macroeconomic environment, noting accommodative monetary policies, slowing growth, and high interest rate differentials. It then summarizes FT's fixed income funds, including the Templeton India Low Duration Fund, Short Term Income Plan, Income Opportunities Fund, and Corporate Bond Opportunities Fund. These funds are well positioned for the current environment given their focus on short-dated securities and corporate bonds.
FMP Market Themes and Outlook January 2013kmyoung1
This document provides a market outlook and investment themes for 2013 from FMPartners. It summarizes current economic conditions and sees modest GDP growth in the US. The main investment themes highlighted are global fiscal concerns, divergent growth between developed and emerging markets, credit dislocation, and inflationary pressures. The market outlook projects the S&P 500 will end 2013 around 1561 based on analyst forecasts. Key drivers of growth are seen as the ongoing US housing recovery, employment gains, manufacturing expansion, and domestic energy production. Equities are assessed as fairly valued currently based on dividend and debt yield comparisons. Risks in fixed income include the constrained credit environment and global deleveraging.
An analytical framework for how to price and value major bank stocks. Provided the basis for accurately calling trading strategies for the major banks during the Global Financial Crisis.
For the 2nd quarter, Bob Doll, Chief Equity Strategist and Jeff Rosenberg, Chief Investment Strategist for Fixed Income, with BlackRock, believe the backdrop for equities remains supportive, fixed income credit offers more value, and municipal bonds continue to remain attractive relative to taxable fixed income.
The mid-year economic outlook is on track with modest growth as expected. While the job market is improving with an average of 200,000 new jobs per month, GDP growth in the first quarter was below forecasts. However, full year GDP growth is still expected to be within the projected range of 2.5-3%. The Federal Reserve has provided substantial stimulus by concluding its QE2 bond purchase program. Investors have responded by modestly increasing risk taking, contributing to modest stock and bond gains so far in 2011. During the second half of the year, transitions are expected as policy stimulus fades, inflation rises, and the geopolitical landscape shifts.
The document provides an economic update for key global markets as of February 28, 2013. It notes that equity markets in India, the US, and Japan saw gains over the last year, while commodities declined. Indian debt markets saw yields stabilize while the rupee depreciated against the dollar. Overall, the global economic environment remains cautiously optimistic but risks like the Italian election warrant monitoring.
This research correctly called the bottom of the Australian banks share price cycle in the middle of the Global Financial Crisis. Fear and panic created a once-in-a-generation buying opportunity. For those prepared to think through and analyse the risks, there was significant money to be made.
Chief Investment Officer Ben Pace of Deutsche Bank presents on the state of the world economy and how it will effect luxury real estate prices in 2012 and beyond. From The Key 2012, luxury real estate conference by Concierge Auctions.
- YES Bank reported net interest income of INR 3.48 billion for Q4FY11, up 43% year-over-year and 8% quarter-over-quarter, ahead of estimates. Margins remained stable at 2.8% against expectations of a 10 basis point decline.
- Business growth rebounded with deposit growth at 16.4% quarter-over-quarter and loan book growth at 10.4% quarter-over-quarter. Earning assets grew by around 15% quarter-over-quarter.
- Net profit for Q4FY11 came in at INR 2.03 billion, up 45.2% year-over-year and 6.4% quarter-over-quarter,
Viewpoint Newsletter from Clear View Wealth Advisors with a focus on the role of dividend-paying stocks and the inflation-deflation debate. Also includes links to the free financial roadmap tool.
2009 Q2: Feature on Financing the Budget Deficiteconsultbw
The document provides an economic review of the 2nd quarter of 2009. It summarizes that while the global economy shows some signs of recovery from recession, growth is expected to remain slow. The mining sector in Botswana experienced a major contraction in the 1st quarter but is now seeing signs of recovery. Botswana's exports fell substantially in the 1st four months of 2009 due to declines in diamond and copper-nickel exports. However, the non-mining economy has proved resilient so far. The government faces fiscal challenges from declining revenues and commitments to large expenditure projects.
This document provides a quarterly outlook for Q4 2009. It discusses the potential "Japanization" of financial markets, where record stimulus could lead to higher stock valuations and lower bond yields, similar to post-1990 Japan. Government budget deficits may continue to drive treasury issuance but deflationary pressures could keep rates low. The document also notes signs of economic stabilization but at depressed levels, with consumer deleveraging expected to continue for years.
The document provides a weekly market outlook from UBS. It notes that additional turbulence is expected in the coming week due to heavy economic data releases and policy uncertainty. However, equity markets appear oversold and may be poised for a modest relief rally. Any sustained recovery will require confirmation that the economic recovery is on track, earnings impacts are modest and transitory, and policy remains supportive of growth. The document also discusses the challenges facing monetary policymakers and expectations that additional stimulus is unlikely, meaning markets will need to find comfort with the existing policy mix.
- Major equity markets dropped in August due to concerns about the pace of the global economic recovery. Bond markets and gold prices rose as investors sought safer assets.
- While the US and global economies are growing, the recovery is slower than expected. Unemployment remains high in the US and the housing market is still weak.
- Canada's economy is performing better than the US due to stronger commodity demand and fiscal position. However, growth may slow as the housing and consumer spending boom recedes.
Threadneedle investments. perspectivas y visión general de los mercados en 20...Observatorio-Inverco
Sección del Observatorio Inverco con informes de mercado de las gestoras de fondos de inversión. Threadneedle Investments. Perspectivas y visión general de los mercados en 2013. Diciembre 2012.pdf
This document is the annual report letter to shareholders from Marshall & Ilsley Corporation regarding their 2008 financial results. It summarizes that 2008 was a disappointing year due to losses from housing market collapse and overexposure to construction loans. It outlines steps taken to reduce risks, such as selling loans, job cuts, and dividend reductions. It expresses hope that government economic stimulus plans will help stabilize the economy and banking industry.
The document provides a monthly market outlook and investment directions for June 2012. It summarizes that the global economy recovery is threatened by issues in Europe. The outlook expects slow but positive global growth if policymakers address fiscal issues, but risks remain from a eurozone crisis or lack of US fiscal policy action. The recommendations are for a defensive portfolio positioning including high-quality dividend stocks, defensive sectors, and minimum volatility funds. Fixed income preferences include US investment grade and municipal bonds.
The monthly fact sheet provides an overview of the local Malaysian market in February 2010. Equity markets ended higher for the month, though small cap stocks underperformed. Ten of ten sectors were positive, led by telecommunications, consumer staples, and financials. Fixed income markets were flat due to lack of catalysts. The GDP grew strongly in Q4 2009 and inflation rose slightly. The outlook remains positive, expecting further equity market gains supported by strong economic growth, though deteriorating global growth or policy mistakes pose risks.
Bcg value creation in a low growth economy file59590managing1
The document discusses how developed economies are likely to experience an extended period of below-average economic growth due to factors such as the nature of the recent financial crisis, high consumer debt levels in countries like the US, and the winding down of government stimulus programs. This low-growth environment will have significant implications for how companies create shareholder value, with capital gains becoming less important and cash payouts to shareholders becoming more critical. Companies will need to find ways to thread the needle by combining increased cash returns with above-average but profitable growth in the challenging economic conditions.
The document provides an overview of CNO Financial Group's recapitalization plan to raise $900 million. This would be used to pay off senior secured debt and repurchase the majority of outstanding convertible debentures. The goals are to lower CNO's cost of capital, improve its credit ratings and financial flexibility, reduce convertible debt overhang, and advance shareholder value through higher earnings per share and return on equity. The plan aims to maintain a strong capital position and credit profile consistent with investment grade standards.
The document provides an overview of CNO Financial Group's recapitalization plan to raise $900 million. This would be used to pay off senior secured debt and repurchase the majority of outstanding convertible debentures. The goals are to lower CNO's cost of capital, improve its credit ratings and financial flexibility, reduce convertible debt overhang, and advance shareholder value through higher earnings per share and return on equity. The plan aims to maintain a strong capital position and credit profile consistent with investment grade standards.
• Some glimmers of hope… Rays of hope are permeating the semiconductor
industry, which probably saw most of the bad news in 1QCY09. Global chip sales
improved slightly in Mar 09 with a 30.0% yoy decline compared with a 30.1% yoy
fall in Feb 09. The book-to-bill ratio has ticked up with preliminary Mar 09 numbers
hitting 0.61x, up from Feb 09’s abysmal 0.47x. Finally, utilisation rates have scraped
bottom as some production facilities have been shuttered and inventory control is
being exercised. The end-user markets appear to have troughed, with PC and
handset sales probably hitting the bottom. Furthermore, trade credit is now
normalising. That said, stabilisation does not equate to a recovery and we believe
that restocking activity as inventory runs low is the primary factor in the improving
outlook. We still expect 2009 to be a difficult year where the typical seasonal pick up
in 3Q may not materialise given the current re-stocking activities.
• …but no full-blown recovery until 2010. We argue that a true recovery will only
take root when the global economy begins to move upwards. A meaningful and
sustained recovery will only take place when consumer sentiment and spending
spring back to life and cause ASPs to start rising. We believe that a more
convincing uptrend will take hold only from 2H10 onwards.
• Global economies to start stabilising towards year-end. Our economists believe
that the world economy will feel the full impact of the global financial crisis this year.
Although the process of sorting out the financial system will take time and
resources, the cumulative effects of sizeable fiscal stimuli and aggressive monetary
easing globally will work to provide some stability. Recent global indicators are less
negative. Considering the extremely low base this year, global growth should pick
up in 2010 but will probably fall short of its long-run average growth rate of 3.7%.
• Upgrade sector to TRADING BUY. While the fundamentals for the sector remain
uncertain, we think that downside to share prices is limited as valuations are still
below trough levels. We upgrade the sector from Underperform to TRADING BUY.
Furthermore, in line with our market strategy, we think that investors’ risk appetite is
increasing and higher beta plays such as semicon should be in vogue. Investors
should start picking up semicon stocks ahead of the recovery of the sector as
historically, the share prices for both MPI and Unisem cratered 13-18 months before
the upturn of the sector. Sector catalysts include a) a sooner-than-expected revival
of end-user demand and b) a faster-than-expected economic recovery.
• Upgrade Unisem and MPI to Trading Buy. In tandem with the sector upgrade, we
upgrade MPI and Unisem from Underperform to Trading Buy. We raise our target
prices for both after cutting our discounts to their 5-year historical average by 30-
60% pts to 20-40% for Unisem and MPI respectively. We assign a lower discount to
Unisem, our top pick, as its higher liquidity and beta make it a better play on a
market rebound. Re-rating catalysts include a) qoq improvement in earnings, b)
revival of end demand and c) the higher betas on offer.
1) The document discusses using a "building blocks" method to estimate future returns for both stocks and bonds. For stocks, the key blocks are earnings growth, dividend yields, and changes in valuation multiples. For bonds, the blocks are expected inflation, term premiums, and real yields.
2) The analysis estimates that stock returns over the next decade will be around 8.5% annually, lower than historical averages due to currently low dividend yields and limited room for further multiple expansion. Bond yields are expected to gradually rise into the 6% range over the next 10 years.
3) Investors are advised to remain vigilant with fixed income given the prospects for higher rates, and to be active in adjusting their
Garanti Bankası Earnings Presentation-BRSA Consolidated Financials Septembe...Garanti Bank
This document provides an earnings presentation summary for 9M12. Key highlights include:
- Balance sheet strength with increasing loans/assets ratio and prudent provisioning maintaining strong coverage levels.
- Healthy profit generation fueled by strong core banking income and efficient cost management, with comparable net profits up 27% YoY and strong returns.
- Continued focus on sustainable revenues through diversified fee sources and strict cost discipline while expanding distribution network.
The document discusses the state of the US economy and debt financing markets for middle market companies. It notes that while the economic recovery remains fragile, modest growth in areas like manufacturing, personal income and expenditures, coupled with continued federal stimulus, should allow the economy to continue growing without a second recession. However, unemployment will remain high as productivity gains allow more output with fewer workers. Debt markets have also seen renewed activity, with increased volumes in both the leveraged loan and high yield bond markets.
The commercial real estate market is lagging behind the broader economic recovery. Job losses have been significantly sharper in this recession compared to previous ones, and it will likely take several years to regain the jobs lost. As a result, real estate fundamentals will remain weak for an extended period. Transaction data shows rising capitalization rates and spreads, reflecting the return of risk to commercial real estate pricing. Cap rates could remain high for 12-24 months or rise further if space market fundamentals remain weak. This would result in value declines of 40% or more from the combination of higher cap rates and deteriorating fundamentals. The recovery path for cap rates and values is uncertain but will ultimately depend on the pace of job growth and economic
The document projects that the favorable economic and market conditions seen in late 2009 will continue into the first half of 2010, driven by ongoing global monetary and fiscal stimulus ("tailwinds"). It forecasts GDP growth of 3-5% in the first half and 2-3% in the second half as stimulus fades. Investors are advised to favor cyclical and risky assets in the first half as tailwinds remain, but shift to more defensive positions in the second half as headwinds from expiring stimulus emerge. Risks to the outlook include a potential renewed economic slowdown as stimulus is removed.
Garanti Bankası Earnings Presentation-BRSA Consolidated Financials December 3...Garanti Bank
This document provides a summary of BRSA's consolidated earnings presentation for the fourth quarter of 2012. Some key points:
- BRSA reported a net income of TL 3.729 billion in 2012 but adjusted net income excluding one-time effects was TL 3.030 billion, an increase of 23% over 2011.
- Core banking revenues grew, with net interest income excluding CPI linkers up 26% year-over-year and continuously growing fee income.
- Gross cost of risk remained below 100 basis points as expected, and prudent provisioning was maintained despite pressured profitability.
- Adjusted return on average equity was 18.9%, underscoring BRSA's sound core banking performance
1) The BOJ's negative interest rate policy is believed to have been effective and will likely not be reversed at the upcoming September 21 meeting.
2) The BOJ's quantitative and qualitative easing program will also likely not be tapered in aggregate but may involve a "twist" to steepen the yield curve.
3) The BOJ will probably add domestic corporate bonds to its quantitative easing purchases but is unlikely to include foreign bonds at this time due to political sensitivities.
Similar to September WMR Monthly Market Outlook (20)
1. Wealth Management Research
Monthly Market Outlook
28 August 2009
This report has been prepared by UBS Financial Services Inc. (“UBS FS”).
2. Summary: Monthly Market Outlook
Investment
Economics Equities Fixed Income
Strategy
We reiterate our On the backdrop of Reasonable While we continue
view of a cyclical our anticipation of a valuations and to like corporate
growth recovery global economic cyclical and municipal
starting in 3Q09, recovery, we improvement should bonds, valuation is
followed by a continue to support further not as compelling.
moderate structural recommend that gains. Add TIPS
recovery. investors tilt their
Q2 S&P 500 earnings opportunistically.
We don’t expect a portfolios toward While inflation is
have handily
strong business fixed riskier asset classes, not a near-term
exceeded consensus
investment recovery regions and sectors. concern, the risk of
expectations, driving
as capacity utilization We still favor recent market rally. a policy mistake is
is very low, equities and high.
consumption growth commodities over Tight cost controls
Industrials rated
will likely be only fixed income and drove 2Q09 earnings
BBB and
moderate and the cash. beats, revenues to
systemically
cost of capital is pick up as economy
Our expectations of important
high. turns during 2H09
continued dollar Financials offer
The core CPI through 2010. additional income.
weakness supports
disinflation cycle will our thesis for Small-cap Use non-Financials
continue further preferring non- as a core holding.
fundamentals
until around mid- dollar-denominated remain challenged, In agencies, we
2010. Headline CPI assets. We have earnings estimates prefer callables to
inflation is poised to strengthened our continue to fall. bullets, where
rise out of negative tilt toward non-US spreads are tight.
territory but not developed equities Sector strategy is
accelerate over US equities. We geared towards
threateningly. still like emerging cyclical, globally-
market equities. focused sectors.
ab3 1
3. Economics
US Cyclical Recovery on Track
Cyclical recovery in 2H09 followed by moderate structural recovery
in 2010.
8 % q/q annualized
UBS WMR As expected, 2Q09 real
6 forecasts GDP showed clear
recession abatement,
4 contracting by 1% q/q
2 annualized after a
downward revised drop
0 of 6.4% in 1Q09.
-2 We reiterate our view of
a cyclical growth recovery
-4 starting in 3Q09, followed
-6 by a moderate structural
recovery in 2010.
-8
We revised higher our
-10 real GDP growth forecast
-12 from +2.5% to +3.5% q/q
annualized in 3Q09 and
Q2 2004 Q2 2005 Q2 2006 Q2 2007 Q2 2008 Q2 2009 from +2.2% to +3% in
Consumption Investment in nonresidential structures 4Q09. However, we keep
our 2010 forecast of +2%
Investment in equipment & software Residential investment
and expect moderating
Inventories Net exports
growth throughout 2010.
Government Real GDP (% q/q annualized)
Source: Thomson Datastream, UBS WMR
ab3 2
4. Economics
Vigorous US Investment Cycle?
A strong investment recovery is unlikely without a strong
consumer recovery.
95 Capacity utilization in the
% industrial and the
90 manufacturing sector just
rebounded in July, but
remains extremely
85
depressed.
80 Businesses can
reincorporate ample idle
75 capacity into their
production processes
70 before having a need to
invest vigorously in new
65 production capacity.
Additionally, the prospect
60 of a moderate consumer
recovery and the higher
Jan-67 Jan-77 Jan-87 Jan-97 Jan-07 cost of capital will likely
make companies wary of
Industrial capacity utilization committing too many
Industrial capacity utilization (historical average) resources to new
Manufacturing capacity utilization production capacity.
Manufacturing capacity utilization (historical average)
Source: Thomson Datastream, UBS WMR
ab3 3
5. Economics
Vigorous US Investment Cycle?
Investment shares are not particularly far away from long-term
averages.
11 in % of GDP The share of investment in
10 equipment and software in
GDP is below its long-term
9 average, but the share of
8 investment in non-residential
structures in GDP is in line
7 with its long-term average.
6 The share of investment in
5 equipment and software in
GDP is sufficiently low to
4 speak for a pick up in
3 investment spending in this
category. However, other
2 factors (low capacity
utilization, tepid consumer
Q1 1950 Q1 1960 Q1 1970 Q1 1980 Q1 1990 Q1 2000
recovery, high cost of
Nominal investment in equipment and software capital) are massive
Nominal investment in equipment and software (historical average) headwinds that will likely
Nominal investment in non-residential structures keep the investment
Nominal investment in non-residential structures (historical average) recovery muted.
Real investment in equipment and software
Real investment in non-residential structures
Source: Thomson Datastream, UBS WMR
ab3 4
6. Economics
US Inflation Outlook
Core CPI disinflation cycle to continue.
6 % y/y UBS Core CPI inflation has
WMR
continued to trend lower
5 forecasts
recently. We reiterate our
view that core CPI inflation
4 will moderate further and
will likely dip below +1%
3 y/y in mid-2010. A
moderate increase to
2 +1.2% by year-end 2010
will likely follow.
1
Headline CPI inflation has
likely reached its nadir and
0 is poised to rise going
forward. We expect it to
-1 reach +1.5% y/y by year-
end 2009 and +2.4% y/y by
-2 year-end 2010.
-3
Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08
CPI Core CPI
Source: Thomson Datastream, UBS WMR
ab3 5
7. Investment Strategy
Recent Financial Market Performance
As of 25 August 2009, in US dollars
The S&P 500 continues to rally,
now up approximately 56% from
17.2%
US Equities 4.4%
trough to peak since Mar ‘09.
During that time the market has
26.1% yet to correct more than 10% on
Non-US Developed Equities 5.0% 54.5% any given pullback. Although
some form of correction appears
Emerging Markets Equities 1.9% possible in the near term, we still
4.2% believe that a sustainable
US Fixed Income 0.7% recovery is underway.
5.6%
Non-US Fixed Income 1.6% The dollar has continued to slide,
helping non-US stocks and bonds
0.1%
Cash 0.0%
outperform dollar assets.
8.4% Emerging markets equities
Commodities 0.4% continue to outperform their
developed country counterparts
YTD, however they have
-10% 10% 30% 50% generally underperformed over
year-to-date month-to-date the last month..
Commodities Commodity prices
are still 48% below their peak,
Source: Bloomberg: Russell for US equities, MSCI for foreign equities, Barclays indexes for fixed
and broadly at 2003 levels,
income, DJ UBS for commodities.
however Valuations are starting
to appear slightly expensive vs.
marginal costs of production .
ab3 6
8. Investment Strategy
Tilt toward Equities and Commodities
Tactical deviations from benchmark, in %
We maintain our
moderate overweight in
Equity
global equities, as we
expect them to
outperform fixed income
and cash over a 9-12
Fixed Income
months.
Equity valuations remain
attractive, though clearly
less so than in the spring.
Cash
We believe that equities
should continue to benefit
given clear signs of cyclical
recovery.
Commodities
In addition, there remains
significant cash on the
sidelines, which could
-10 -8 -6 -4 -2 +0 +2 +4 +6 +8 +10 continue to enter equity
markets.
Source: UBS WMR
ab3 7
9. Investment Strategy
Global equities
Equity valuation is still attractive
Our Dividend Discount
Model indicates a 7%
upside to global
equities, even under
fairly conservative
estimates of the
earnings level and
medium-term real
earnings growth.
Other valuation metrics
also suggest
moderately attractive
value. The Equity Risk
Premium remains
abnormally high,
suggesting that
equities offer better
value than high grade
bonds.
Source: Reuters Ecowin, WMR
ab3 8
10. Investment Strategy
Recovery supportive of Equities
Average pattern around market bottoms: Since mid-1960s
160 65
The phase of the cycle that we
150 believe we are now in is
We believe we are here 60 typically supportive for equity
market returns.
140
Although the market has
55 already rallied substantially
130
from its March bottom, equity
markets typically outperform
120 fixed income and cash for more
50
protracted periods than a
110 quarter following a trough in
the economy.
45
100
90 40
-24 -20 -16 -12 -8 -4 0 4 8 12 16 20 24 28 32 36
S&P 500 Trailling real earnings ISM (right scale)
In the above chart, the S&P 500 is indexed to 100 at t=0, which is market lows around the
average bear market since 1964. The chart indicates equity prices bottom first, then the ISM,
and finally real earnings
Source: Thomson Financial, Bloomberg, WMR
ab3 9
11. Investment Strategy
Dollar to remain under pressure
Inverse relation to equity market performance
We expect the dollar to
110 230 depreciate against
105 210 most currencies during
the rest of the year.
100 190 The magnitude of US
170 monetary and fiscal
95 policy initiatives will, in
150 our view, put the US
90 dollar under pressure.
130
85 The Fed’s low rate
110 policy has made the
80 90 dollar a funding
currency for so called
75 70 “carry trades.” This
will contribute to
downward pressure on
70 50 the greenback
00 01 02 03 04 05 06 07 08 09 Our bearish view on the
dollar is the main
US dollar nominal effective exchange rate (LHS) reason why we hold a
Carry trade index (RHS) preference for non-US
equities over US
Source: Bloomberg and UBS WMR equities and a
preference for foreign
bonds over US bonds.
ab3 10
12. Investment Strategy
International Equities
Equity Valuations – 12 month forward P/E Ratios
We prefer Emerging
20.0 Market equities as well as
non-US developed
18.0 26.8 equities to US stocks.
16.0 14.6 14.5 14.6 Mounting evidence of a
14.0 12.0 12.1 12.8 global recovery should
continue to benefit EM
12.0 equities in relative terms
10.0 even though their
valuations has become
8.0 less attractive.
6.0
Within non-US developed
4.0 markets our preference is
2.0 for the Eurozone.
Valuations there are
0.0 attractive and economic
indicators, which are
surprising to the upside,
UK
US
ld
n
e
ed
ts
n
pa
ke
or
signal that a recovery is
zo
op
Ja
W
ar
underway.
ro
el
M
v
Eu
de
gn
S
gi
-U
er
n
Em
No
Source: IBES, UBS WMR
ab3 11
13. Investment Strategy
Commodities
Further upside potential for commodities
Commodities have pulled
back somewhat in Aug,
80 15 but are still up year-to-
date on a total return
60 basis. They are also
10 trading roughly 48% off
of their 2008 peak.
40
We believe that the
5
20 cyclical recovery should
prove supportive for
commodities during the
0 0 next 12 months.
Global demand for
-20
-5 commodities is likely to
improve as the global
-40 Commodities (S&P GSCI, 12-month total return economy returns to
in % and USD) -10 positive growth. In
-60 OECD leading indicators (6-month change particular, a growth
annualized in %) recovery in Emerging
-80 -15 Market countries should
be supportive.
82 84 86 88 90 92 94 96 98 00 02 04 06 08
We believe that, on
average, commodities are
Source: Bloomberg, UBS WMR trading slightly above
their marginal costs of
production. They are no
longer very cheap on this
measure.
ab3 12
14. Equities
US Equity Strategy
Cost cutting drove Q2 earnings to exceed expectations
Tight cost controls helped drive
80% over 2/3 of the S&P 500 to beat
68% 2Q09.
70%
Top-line growth should improve
60% in the second half of 2009 and
50% 2010 as nominal GDP rebounds.
50%
40%
30%
20%
10%
0%
2Q09 earnings 2Q09 revenues
% of S&P 500 companies beating consensus estimates
Source: FactSet and UBS WMR
ab3 13
15. Equities
US Equity Strategy
Market gains have been fundamentally driven
2Q09 earnings season has been
1050 $16.50 unambiguously positive relative to
low expectations, coming in 15%
$16.00 higher than expected. Recent
1000
$15.50 market rally driven by improving
fundamentals.
950 $15.00
$14.50
900 $14.00
$13.50
850
$13.00
800 $12.50
Jul 2009 Aug 2009 Sep 2009
S&P 500 (LHS) 2Q09 S&P 500 EPS (RHS)
Source: FactSet and UBS WMR
ab3 14
16. Equities
US Equity Strategy
Valuations are fair, cyclical environment continues to improve
45 Valuations have increased, but
remain below-average.
40 Combination of reasonable
Average P/E 16.0x valuations and cyclical
35 improvement should support
Current P/E 14.4x
30 further equity market gains.
25
20
15
10
5
0
1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
S&P 500 P/E on 10-year average of real operating EPS
Source: S&P, Thomson Financial and UBS WMR
ab3 15
17. Equities
US Equity Strategy
Small-cap fundamentals remain challenged
Large-cap S&P 500 earnings
$50 $120 estimates have stabilized, small-
caps (Russell 2000) estimates
continue to fall.
$40 $100
Fundamentals for small-caps
$80 remain challenged relative to
$30 large-caps: expensive relative
valuations, lack of international
$60 exposure, difficulty in attaining
$20 favorable financing, greater
$40 exposure to credit losses.
$10 $20
$0 $0
Mar 2008 Jul 2008 Nov 2008 Mar 2009 Jul 2009 Nov 2009
Russell 2000 consensus 2009 EPS estimates (LHS)
S&P 500 consensus 2009 EPS estimates (RHS)
Source: FactSet and UBS WMR
ab3 16
18. Equities
US Equity Strategy
WMR US Sector Strategy - Pro-cyclical, Pro-Global
Energy We continue to favor US sectors
that should benefit from
Technology Deviation from continued improvement in the
Benchmark domestic economy, stronger
Industrials growth trends in emerging
markets, rising commodity
Materials prices and a weakening US
dollar.
Consumer Disc
Consumer Staples
Financials
Telecom
Utilities
Health Care
underweight neutral overweight
Source: Bloomberg and UBS WMR
ab3 17
19. Fixed Income
US Duration Strategy
Real, nominal, and break even yields
6.0 We recommend investors
retain a duration
US 10 Year Breakeven Inflation US 10 Year Real Yield US 10 Year Nominal Yield
underweight (-0.5 years).
5.0
Real yields and inflation
expectations should
continue to normalize, as
4.0
the global economy
stabilizes and on fears
that an imperfect exit
3.0
strategy for quantitative
easing will lead to higher
inflation.
2.0
If inflation overshoots
the Fed’s target over the
1.0 next 3 to 5 years,
Treasury yields look
expensive.
0.0
Heavy supply, a reversal
May-07
Nov-07
Feb-07
Aug-07
May-08
Nov-08
Feb-08
Aug-08
May-09
Feb-09
Aug-09
of the flight-to-quality-
bid, and uncertain
demand from overseas
Source: Bloomberg, UBS WMR as of 27 August 2009 investors should also
pressure yields higher.
ab3 18
20. Fixed Income
US Fixed Income Strategy
Rate development and WMR forecast
8.0%
WMR
7.0% forecast US interest rate forecasts (%)
US interest rate forecasts (%)
6.0% In 3 In 6 In 12
27 June
17 Aug
month month month
5.0%
3-m
4.0% 0.36
0.61 0.40 0.30 0.30
LIBOR
3.0% 2-year 1.05 1.90 1.70 2.60
2.0% 5-year 2.48 3.10 2.60 3.50
1.0%
10-year 3.46 4.00 3.50 4.25
0.0%
30-year 4.23 4.80 4.30 5.00
Aug-99
Aug-00
Aug-01
Aug-02
Aug-03
Aug-04
Aug-05
Aug-06
Aug-07
Aug-08
Aug-09
Aug-10
2 year yield 10 year yield
Source: Bloomberg, UBS WMR, as of 27 August 2009
ab3 19
21. Fixed Income
US Fixed Income Strategy
Strong rally has sapped much of the valued from corporates
We continue to favor
900 Industrials Investment Grade
corporate bonds over
800 Financials other Fixed Income
700 segments, though much
Industrials - Prior Max of the value has been
600 eroded given the strong
500 Financials - Prior Max rally this year.
Corporate bonds have
400 YTD total returns of over
14% with Industrials and
300 Utilities outperforming
200 Financials by 300bps and
650bps respectively.
100
From a valuation
0 perspective, Financials
appear to be the most
Aug-99
Aug-00
Aug-01
Aug-02
Aug-03
Aug-04
Aug-05
Aug-06
Aug-07
Aug-08
Aug-09
attractive segment as
non-Financials now trade
inside of historic
recessionary levels.
Sources: Moody's, Barclays Capital, UBS WMR, 27 August 2009
ab3 20
22. Fixed Income
US Fixed Income Strategy
Investment grade credit spreads
Within the non-Financial space,
900 BBB Index we continue to recommend
800 AA / A Composite Index
adding investment grade bonds
rated ‘BBB’. Despite compressing
700 Difference over the past few months, a
600 Average Difference spread differential of 130bps
remains. This differential
500 continues to be well above
400 historical levels.
300 ‘BBB’s offer an effective way to
increase yield while only
200 moderately increasing credit risk.
100 Should credit spreads continue
0 to tighten as we forecast, bonds
rated ‘BBB’ are likely to benefit
(100)
disproportionately and
Aug-99
Aug-00
Aug-01
Aug-02
Aug-03
Aug-04
Aug-05
Aug-06
Aug-07
Aug-08
Aug-09
demonstrate the highest total
returns.
Source: Barclays Capital, UBS WMR, 27 August 2009
ab3 21
23. Fixed Income
US Fixed Income Strategy
Muni ‘A’ revenue and ‘AAA’ GO yield curves (%)
A significant imbalance
between supply and
6.0 AAA GO A Electric
demand continues to help
drive positive performance
5.0 in the tax-exempt market,
with a year-to-date total
4.0
return near 10%.
Despite the market’s run
3.0 up, we see value in munis,
particularly for high-net
2.0
worth investors.
Yield on ‘A’ rated essential
1.0 purpose revenue bonds in
the 7 to 12 year area range
0.0
from 3.53% to 4.48%
translating into taxable
equivalent yields of 5.43%
1 2 3 4 4 6 67 78 89101112131415161718192021222324252627282930
2 3
5 9 111213 26272829
to 6.89% assuming the
current 35% top federal
tax bracket.
Source: MMD Interactive, UBS WMR, as of 27 August 2009
ab3 22
24. Fixed Income
US Fixed Income Strategy
The agency spread curve is very steep
2-year bullet agencies
are very tight from an
75 historical perspective.
65
The credit spread
55 between 2 and 10-year
45 agencies is 43bps, the
widest in five years.
35
25 We favor bullets in the 3
to 5 year area, where
15
the spread curve and
5 Treasury curve is steep.
-5
Bonds issued under the
-15 TLGP have converged
-25 with agency bullets.
-35 2/10-yr Agency Spread Curve Investors with a greater
-45 tolerance for risk may
wish to swap into the
-55
senior debt of
-65 uninsured but
Sep-00
Sep-01
Sep-02
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
systemically important
banks.
We prefer callables to
Sources: Bloomberg, UBS WMR, 27 August 2009 bullets for investors
who can tolerate
maturity uncertainty.
ab3 23
25. Fixed Income
US Fixed Income Strategy
Value in TIPS over nominal Treasuries
5.00 % 5-year breakeven TIPS breakeven rates
remain below 2%
10-year breakeven
throughout the short to
4.00 30-year breakeven intermediate portion of
the TIPS curve.
3.00 We believe that TIPS in
this segment will
generate a higher
2.00 return than nominals as
actual inflation rates
1.00 are likely to come in
above the breakeven.
We favor adding TIPS
0.00
opportunistically to
guard against future
-1.00 inflation in 2011 and
beyond.
Oct-05
Apr-06
Oct-06
Apr-07
Oct-07
Apr-08
Oct-08
Apr-09
Oct-09
Laddering TIPS in the 3
to 10 year maturity
range will also protect
the real purchasing
Sources: Bloomberg, UBS WMR, 27 August 2009
power of each bond as
it comes due.
ab3 24
26. Strategic Calls
Strategic Calls seek to exploit investment opportunities among a wide
range of asset classes based on long-term trends and themes
Pricing power: Key to profitability – opened 16 Sept 2008, last updated
12 August 2009.
Agribusiness: Enhancing productivity to yield attractive investment returns
– opened 29 April 2008; last updated 27 April 2009.
Wallflowers: Finding value in shunned stocks – opened 22 May 2008; last
updated 21 May 2009.
Favor large-caps: Smaller companies, bigger problems – opened 14 March
2008, last updated 12 August 2009.
Corporate Bonds: Credit where credit is due – opened 30 May 2008; last
updated 4 December 2008.
Energy Efficiency: Investing in Sustainable Energies Part II – opened 23
June 2008; last updated 27 April 2009.
To access Strategic Calls from Online Services, click:
RESEARCH FOR INDIVIDUALS STRATEGIC CALLS (left column)
ab3 25
27. Monthly Client Conference Calls
Now you have direct access to our top Wealth Management Research
analysts and strategists.
As a UBS client, you are invited to pose your questions directly to our senior analysts and strategists on the
UBS Market Watch client call. The interactive conference calls also feature timely commentary on the markets
and the economy.
Note: The WMR Market Watch call is now on a monthly schedule. See dates and times of 2009 calls below:
Wednesday, September 16 – 1PM EST Wednesday, November 11 – 1PM EST
Wednesday, October 14 – 1PM EST Wednesday, December 16 – 1PM EST
To access the call dial:
US Phone: 866-288-0542 To access the replay dial:
International Phone: 913-312-6669 U.S. Phone: 1 888 203 1112
Verbal Passcode: Market International Phone: +1 719 457 0820
Passcode: 2439294
ab3 26
28. WMR Investment Strategy and Key Forecasts
Emerging M arkets
Euro zone
UK
Other Develo ped
Japan
US
––– –– – n + ++ +++
Treasuries
TIP S
A gencies
P referred Securities
M ortgages
Inv. Grade Corpo rates
High Yield Corpo rates
Emerg. M arket
––– –– – n + ++ +++
ab3 27
30. Disclaimer
In certain countries UBS AG is referred to as UBS SA. This publication is for our clients’ information only and is not intended as an offer, or a solicitation of an offer,
to buy or sell any investment or other specific product. It does not constitute a personal recommendation or take into account the particular investment objectives,
financial situation and needs of any specific recipient. We recommend that recipients take financial and/or tax advice as to the implications of investing in any of the
products mentioned herein. We do not provide tax advice. The analysis contained herein is based on numerous assumptions. Different assumptions could result in
materially different results. Other than disclosures relating to UBS AG, its subsidiaries and affiliates, all information expressed in this document were obtained from
sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to its accuracy or completeness. All information
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Opinions may differ or be contrary to those expressed by other business areas or groups of UBS AG, its subsidiaries and affiliates. UBS Wealth Management
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assumptions made by UBS WMR and UBS Investment Research may differ, for example, in terms of investment horizon, model assumptions, and valuation
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