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Friday, February 26, 2010

Q4 GDP revised up from 5.7% to 5.9%. Inventories added 3.88 percentage points to GDP and
investment in software and equipment grew at the fastest pace in almost a decade.

GDP Annualized Rate QoQ (2005 chained dollars)

Consumer spending was still restrained by unemployment and deleveraging. But increasing sales have
driven companies to add to inventories and boost production. Furthermore, while cost cutting (i.e.
layoffs) has driven unemployment higher, it has also resulted in record high profit margins and earnings
that are already back to peak levels at some companies.

Bernanke urges action on the deficit - Fed chairman says investors' continued faith in U.S. economy
could fade quickly without signs that Congress is crafting plans to align federal expenditures and
revenue – WSJ

California’s assembly passed a bill that permits the state to delay payments to programs to avoid
running out of cash (the move is aimed at boosting confidence in CA muni debt – recall the state was
forced to delay a bond sale earlier this week b/c this measure hadn’t passed) – Bloomberg

JPMorgan muni strategy note - Problems in the sovereign debt market are spreading. We compare the
fiscal challenges and makeup of US state and local entities to that of sovereign governments such as
Greece. Alex Roever

Health care summit ends Thurs w/no signs of a compromise; neither Republicans nor Dems yielded
much ground. At the end of the session, the president suggested that if no deal was at hand, Democrats
would press forward alone and let voters be the ultimate judge. "That's what elections are for," WSJ

Health Care – HMOs get subpoenaed in CA as part of ongoing rate probe; California Attorney General
Jerry Brown on Thursday subpoenaed financial records and other documents from the state's seven
largest health insurance companies – Reuters