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Morning Review - 102110

Morning Review - 102110

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Nicholas Colas (Chief Market Strategist): 212 448 6095 or ncolas@convergex.

com Christine Clark: 212 448 6085 or cclark@convergex.com Beth Reed: 212 448 6096 or breed@convergex.com

Stocks advanced Wednesday, almost negating Tuesday’s losses, after the Fed reported “modest signs of growth” in its latest Beige Book (S&P 500 +1.1%, Dow +1.2%, Nasdaq +0.8%). The Fed also noted that inflation remained subdued and hiring was limited, though it did not describe the economy as “decelerating” as it did in September’s report. Strong earnings reports and a falling dollar also caught the market’s attention. Meanwhile, oil prices climbed above $81 a barrel, and crude inventories rose a less-than-expected 700K barrels last week. In economic news, mortgage applications fell last week after interest rates on 15- and 30-year fixed-rate mortgages rose for the first time in 6 weeks. Thursday is heavy on the earnings front with T, CAT, LLY, TRV, UPS, AXP, AMZN, PNC, XRX, CAL and LUV all slated to report.

Morning Markets Briefing
Market Commentary: October 21st, 2010 A snapshot of the markets through the lens of ConvergEx.

The Big D Is No Fan of QE: Beige Book Deep Dive
Summary: Our regular review of the Federal Reserve’s Beige Book, out yesterday afternoon, finds little in the report that signals the need for something as dramatic as a new round of Quantitative Easing. According to the summary, national economic activity continued to expand at a modest pace over the past six weeks. The most negative piece of commentary related to the labor market, where conditions remained soft with limited permanent hiring. Inflation continues to be subdued, as rising input costs were not passed along to final goods and services. Many local housing markets appeared to weaken further, with sales below year-ago levels in most regions, though there were some reports of price stabilization. The reference to economic improvement seems to stem mostly from an expansion in manufacturing activity, which was boosted by both production and new orders. Reading through the Beige Book, you would not know that the Fed has widely telegraphed its intention to inject another $500 billion or so of fresh liquidity into the financial system, which strikes us as odd (to say the least). The last two reports have portrayed a slowing economy, but this one seems to paint a more stable picture than previous installments. We’ll just have to wait for November 3rd to see where the Fed comes down on more stimulus; this Beige Book isn’t pointing the way decisively in either direction. _______________________________________________________________________________________________________________________________________________ Dallas, Texas – aka the Big D – is known for its flashy football team, authentic Tex-Mex cuisine and mouth-watering barbeque (side note however, it’s better in Bama). But I’ll bet you didn’t know that Dallas is also the proud title-holder of “City with the Most Restaurants per Capita” and “Most Shopping Centers per Capita.” Oh, and on another note, it is home to the Dallas Federal Reserve Bank, which brought us the latest edition of the Beige Book summary out yesterday afternoon. Unlike some aspects of the city, Dallas’ version of the Beige Book is neither flashy nor mouth-watering. If you were looking for a report that offered a portrayal of an economy in trouble and in desperate need of more stimulus, you walked away as empty-handed as a vegetarian in a Texas steakhouse.

Market Commentary – Pages 1-4, Equities/Conferences & Earnings – Page 5, Fixed Income – Page 6, Options – Page 7, Exchange-Traded Funds/Indexes – Page 8, Social Media & Internet Blogs Top Stories – Page 9
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©2010 BNY ConvergEx Execution Solutions LLC. May not be redistributed without express permission. All rights reserved

Nicholas Colas (Chief Market Strategist): 212 448 6095 or ncolas@convergex.com Christine Clark: 212 448 6085 or cclark@convergex.com Beth Reed: 212 448 6096 or breed@convergex.com

Before reviewing the details of Wednesday’s report, we present for your review a quick summary of the prior Beige Book (released September 8th) including the overall tone for the two most closely watched components – inflation and the labor market. • • • • Economic conditions picked up in 2/3rds of the Federal Reserve Districts, though the pace of improvement was described as “modest” at best. Consistent with prior 2010 reports, the September Beige Book depicted inflation as subdued with inconsequential upticks in some input costs that were not reflected in end prices of goods and services. While the June report emphasized an improvement in permanent employment levels in most Districts, September’s edition highlighted temporary hiring over permanent positions, while revealing that labor market conditions showed “moderate” improvement. After a decent pickup last Spring, residential real estate activity was particularly sluggish following the tax credit expiration, and the industrial and commercial real estate markets remained weak as well.

As for the current edition, which is based on information collected from mid-July through early October, economic conditions across the 12 Federal Reserve Districts improved modestly on balance. The highlights of this very brief and noncommittal Beige Book are below, followed by details from the seven business sectors listed in the report. • • • • The overall tenor of economic improvement resulted from a boost in manufacturing activity, where production and new orders were up across most Districts. Labor market conditions remained extremely soft, with limited hiring for permanent positions as many businesses are hesitant to add to payrolls in uncertain economic times. Inflation continued to be subdued, despite reports that input costs rose slightly, as price increases were not passed on to final goods and services. Wage pressures also remained minimal. The housing market appeared to weaken even further, as sales in most regions managed to fall below already depressed levels from the year-ago period.

And for the details… Manufacturing As perhaps the brightest spot in this edition of the Beige Book, manufacturing activity continued to expand, with several Districts noting gains in production and new orders across a wide range of industries. The only two exceptions were Philadelphia and Richmond, where activity weakened compared to the early September report. Though there were pick-ups in production and new orders, inventories were described as light or in line with orders, hiring remained sluggish, and future capital spending plans were minimal except in the St. Louis District. Manufacturing contacts in New York, Philadelphia, Chicago and Kansas City were particularly optimistic about future factory activity, suggesting they expect business conditions to stay positive or improve in the coming months.

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Nicholas Colas (Chief Market Strategist): 212 448 6095 or ncolas@convergex.com Christine Clark: 212 448 6085 or cclark@convergex.com Beth Reed: 212 448 6096 or breed@convergex.com

Nonfinancial Services Activity for most professional and nonfinancial services was described as stable to modestly increasing, with demand for information technology services depicted as particularly solid. A recent flurry of M&A activity resulted in a slight improvement in accounting work, while healthcare reform and the associated regulatory changes caused a pickup in healthcare consulting. In a possible positive signal for the real estate market, there were some reports from architectural firms of increasing activity. Demand for transportation services was largely mixed. Kansas City noted unexpected weakness in transportation firms, rail companies in Atlanta experienced slowing growth, San Francisco mentioned a pickup in demand for trucking services, and railroad cargo volumes inched up in Dallas. Consumer Spending and Tourism Retail spending was flat or moderately positive in 10 Districts, while Richmond and Atlanta experienced declining traffic and sales. Retailers noted that consumers were slowly gaining confidence, but remained price-conscious and tended to limit purchases to necessities and nondiscretionary items. Looking ahead, many retailers expected modest sales growth through year-end, with contacts in the New York region planning to hire more temporary holiday staff than last year. In terms of cars, new vehicle sales either held steady or increased, as rising prices reflected decent demand and lean inventories. Activity in the travel and tourism space improved across the board. Contacts in San Francisco noticed growth in business travel and convention activity, while hotel occupancy in popular tourist destinations across the country was above year-ago levels. Real Estate and Construction Housing markets continued to be weak across the nation. Most regions reported that overall home sales were still declining and were below year-ago levels, while inventories were elevated and/or rising. Prices were generally stable. Respondents’ outlooks were for subdued sales and construction levels through the end of 2010. Some reports of tighter credit standards, as well as general economic uncertainty, appeared to hurt activity. The commercial real estate sector did not fare any better. With the exception of the apartment sector (particularly in Manhattan), rental rates declined further, and property sales were low with the exception of investment demand for distressed properties. Industry contacts believed the CRE market would remain weak for the foreseeable future. Banking and Finance Lending activity was consistently low across most regions, while demand for commercial and industrial loans remained soft with the exception of small increases in M&A lending in some Districts. Aside from scattered reports of improvements in residential mortgage lending and refinancing, consumer lending activity was subdued. Credit quality was little changed except for a decrease in delinquency rates on consumer loans in the New York area.
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Nicholas Colas (Chief Market Strategist): 212 448 6095 or ncolas@convergex.com Christine Clark: 212 448 6085 or cclark@convergex.com Beth Reed: 212 448 6096 or breed@convergex.com

Agriculture and Natural Resources For the most part agricultural conditions were favorable as fall harvest was ahead of its normal pace, and most regions were anticipating above-average yields. Additionally, unfavorable weather conditions overseas boosted demand for US agricultural products. The energy sector continued to expand, as Cleveland and Kansas City reporting an increase in hiring and capital spending at some energy firms. Outlooks were generally positive for the coming months, though low natural gas prices dimmed the outlook for producers in the Cleveland and Dallas regions. Prices and Wages Input costs rose slightly across the country, but inflation was subdued as such price increases were largely not reflected in the price of end goods and services. However, some respondents in Atlanta, Cleveland and Dallas mentioned plans to raise the prices of final goods to potentially cover rising costs, while many restaurants in the Kansas City District already implemented slight increases in menu prices. Wages pressures continued to be mostly nonexistent, and there were widespread reports of anticipated higher employee benefit costs due to healthcare reform. Lastly, in terms of the labor market, no news isn’t good news in this case. Employment is glaringly missing from the business sector headlines, a clear departure from the norm, as the report basically states that hiring remained limited. Many firms mentioned a reluctance to expand payrolls, while some regions experienced a slowdown in demand for staffing services, and Cleveland reported a decline in new job openings. The Fed will likely use this report in its next FOMC meeting on November 2-3 as it determines the size of a second round of quantitative easing. $500 billion seems to be the most widely-quoted estimate, and with few Beige Book clues to stray from this general consensus, it looks like the Fed is determined to keep us guessing.

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Nicholas Colas (Chief Market Strategist): 212 448 6095 or ncolas@convergex.com Christine Clark: 212 448 6085 or cclark@convergex.com Beth Reed: 212 448 6096 or breed@convergex.com

U.S. EQUITIES In earnings news, MS (flat on the day) posted net income that was worse than expected due to tighter debt-related credit spreads, though quarterly revenue results topped estimates. WFC (+4.3%) beat profit forecasts thanks to its merger with Wachovia and core business growth, while USB (+0.1%) also reported better-than-expected earnings as corporate loan demand rose for the first time in 2 years. Meanwhile, shares of BA added 3.4% on positive earnings helped in part by a rise in commercial airplane volume, and DAL (+10.9%) swung a profit in the 3rd quarter (boosted by international demand for air travel) after a loss in the year-ago period.
Important Earnings Today (with Estimates) From… PENN: $0.33 BUCY: $1.12 CBE: $0.84 GNTX: $0.24 ALB: $0.84 PM: $1.01 CA: $0.44 BCR: $1.40 GR: $1.13 ALXN: $0.37 PNC: $1.58 CY: $0.15 HSY: $0.79 ALGN: $0.18 CAT: $1.09 SNDK: $1.00 HBAN: $0.06 CAKE: 0.34 DO: $1.36 AMZN: 0.48 LUV: $0.25 ESI: $2.73 CMG: $1.30 LLY: $1.15 AXP: $0.85 TRV: $1.44 JBLU: $0.19 CB: $1.39 EXC: $1.10 T: $0.55 UPS: $0.87 FITB: $0.17 LTM: $0.57 ATHN: $0.08 CTXS: $0.38 VFC: $2.11 CYN: $0.58 FLIR: $0.38 MCD: $1.24 BIDU: $0.41 XRX: $0.21 NFX: $1.05 COLM: $1.47 FCX: $2.10 BAX: $0.97 Source: Bloomberg NUE: $0.11 CPWR: $0.10 GDI: $0.73 BBT: $0.26 Important Conferences/Corporate Meetings Today:
New York Society of Security Analysts Brazil Conference – New York, NY Prior Day SPX (High – 1182.94; Low – 1166.74; Close – 1178.11): Three Day (High – 1182.00; Low – 1155.50):

S&P Futures
One Day (High –1180.00; Low – 1160.50):

Source: Thomson ONE
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Nicholas Colas (Chief Market Strategist): 212 448 6095 or ncolas@convergex.com Christine Clark: 212 448 6085 or cclark@convergex.com Beth Reed: 212 448 6096 or breed@convergex.com

FIXED INCOME Treasuries were little changed Wednesday after the Fed’s Beige Book painted a somewhat upbeat picture of the economic landscape, though unemployment remains high and inflation subdued. Eight of the 12 Federal Reserve Banks reported some form of economic growth, while Philadelphia and Richmond described “mixed” conditions, Cleveland “held steady,” and Atlanta “remained slow.” Ten-year yields were basically flat on the day, while the yield on the long bond fell 2 bps as the Fed’s regional economic survey failed to quell widespread speculation that the central bank will engage in a second round of quantitative easing.

Source: Bloomberg

Source: Bloomberg

Today’s Important Economic Indicators/Events (with Consensus): Jobless Claims (8:30am EST): 455K Thomas Hoenig Speaks (9:45am EST) Leading Indicators (10:00am EST): 0.3% Philly Fed Survey (10:00am EST): 1.0 EIA Natural Gas Report (10:30am EST)

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Nicholas Colas (Chief Market Strategist): 212 448 6095 or ncolas@convergex.com Christine Clark: 212 448 6085 or cclark@convergex.com Beth Reed: 212 448 6096 or breed@convergex.com

U.S. EQUITY OPTIONS
SPX – The underlying index recovered from yesterday’s selloff posting a solid gain of +1.1 %, within a equally positive range of +0.1% to + 1.5%. The implied premium in SPX options, as measured by the VIX, also reversed much of yesterday’s activity, posting a loss of 4%, and ending the day comfortably below 20 at 19.79. Several net sellers of option premium contributed to the decline in implied volatility. There was an early seller of November 1200 calls about 10,000 times outright. The November 1175 puts were sold 4,000 times vs. buying the November 1100 puts 6,000 times for a net credit of $22.90. However, several other traders took advantage of falling premiums (and a rising underlying index) by rolling their put positions up and out. The November 1130/1150 put spread was bought over 10,000 times on the day. The December / January 800 put spread was also bought about 5,000 times for $1.35. ETF- The Market drifted higher following the release of encouraging earnings data, and options volume was higher than expected with a mixed sentiment. In broad-based products we note investors getting short volatility in UUP (US Dollar Index Bullish Fund) through selling ~27,500 Jan2012 22 puts delta neutral. Similarly, in EWZ (Brazil) paper sold 11,000 Dec 77 straddles, and in XHB (Homebuilders) investors sold 20,000 Jan 17.5 calls delta neutral. In EEM (Emerging Markets) we saw an investor position for downside as paper sold 10,000 Nov 47 calls to buy 10,000 Nov 45 puts. Lastly, investors took advantage of contracted volatility levels through the purchase of VXX (VIX Short Term Futures) Mar 11 puts 5,000 times.

Rank
1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 20 21 22 23 24 25

10/14/2010
PTV MFE DTV RSH BMC HSP MJN CLX CHRW KMB M FSLR FIS AMGN MYL SJM MDP HRS ABT VAR VRSN CA ORLY PPL PNW K MDP PCS APOL PBI

CURRENT IMPLIED VOLATILITY / CURRENT HISTORICAL VOLATILITY 10/15/2010 10/18/2010 10/19/2010 10/20/2010 30-Day Implied Vol
PTV MFE DTV RSH BMC HSP MJN CLX CHRW KMB M FSLR FIS AMGN MYL SJM MDP HRS ABT VAR VRSN CA ORLY PPL PNW K MDP PCS APOL PBI PNW MFE RSH DTV PTV HSP MJN BMC M IBM AAPL MDP CA CHRW SJM STJ TJX MYL CEPH VRSN TSS FRX CLX IFF VAR PPL ORLY ABT HRS AMGN FSLR KMB MFE DTV RSH PNW PTV BMC MYL VRSN HSP SYMC CHRW EBAY MJN SJM GENZ TSS MDP CA XEL ORLY HD CEPH FIS K STJ VAR IFF CLX TJX AAPL IBM M FRX PTV MFE MKC DTV EFX RSH BMC MYL MJN EBAY TSS HSP K CHRW SYMC CA MDP VAR SJM VRSN NI AN GENZ PPL HRS FIS CEPH HD ORLY XEL PNW MDP

24.16 4.79 35.49 20.71 39.89 40.76 54.09 33.37 33.49 37.56 34.43 28.89 19.83 24.61 37.60 32.29 38.91 27.84 22.94 30.14 21.56 34.19 13.28 19.18 34.23

BIGGEST MOVERS
Top 10 PTV MKC EFX NU CPWR MCD AON ADBE KG TEG 397.91% 110.94% 44.27% 34.81% 28.22% 21.78% 11.82% 11.77% 11.72% 10.90% 30-Day Implied Vol 24.16 35.49 39.89 19.43 50.50 16.27 21.95 38.99 8.50 25.38 Bottom ISRG PNW GILD STJ MI LLY JNPR MFE CMA ETN 10 -44.37% -37.92% -29.47% -29.06% -29.02% -27.95% -27.87% -26.27% -24.70% -23.68% 30-Day Implied Vol 34.85 19.81 24.80 26.91 47.65 18.22 30.93 4.79 33.52 26.55

We ranked the S&P 500 companies from the highest to lowest 30 day implied to historical volatility ratio. Above we identify the 10 most positive and negative movers. The table to the left represents the 25 highest 30 day implied to historical volatility ratios within the S&P 500 companies. The green represents names new to the list while the red represents names that have fallen out.

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Nicholas Colas (Chief Market Strategist): 212 448 6095 or ncolas@convergex.com Christine Clark: 212 448 6085 or cclark@convergex.com Beth Reed: 212 448 6096 or breed@convergex.com

Exchange-Traded Funds/Indexes
Prior Day Peformance of Largest ETFs by Assets
Name (Net Assets*) Ticker Category Daily Return Sector Ticker 1-Day Perf

S&P 500 Sector ETFs
YTD Perf Sector Ticker 1-Day Perf YTD Perf

SPDRs SPDR Gold Shares iShares MSCI Emerging Markets Index iShares MSCI EAFE Index iShares S&P 500 Index
Name

SPY GLD EEM EFA IVV

Large Blend N/A Diversified Emerging Mkts Foreign Large Blend Large Blend

0.98% 0.95% 1.64% 1.83% 0.96%
Shares Traded

Energy Health Industrials Utilities Consumer Staples
Currency

XLE XLV XLI XLU XLP

1.32% 0.81% 1.35% 0.81% 0.88%

3.42% 0.13% 15.98% 3.87% 8.08%
YTD Perf

Telecomm Technology Consumer Discretionary Financials Materials
Currency

IYZ XLK XLY XLF XLB

1.48% 0.78% 1.14% 1.07% 1.89%

9.64% 4.67% 16.09% 1.46% 4.73%

Prior Day Top Volume ETFs
Ticker Category Ticker 1-Day Perf

Currency ETFs
Ticker 1-Day Perf YTD Perf

SPDRs Financial Select SPDR PowerShares QQQ iShares MSCI Emerging Markets Index iShares Russell 2000 Index
Name

SPY XLF QQQQ EEM IWM

Large Blend Specialty - Financial Large Growth Diversified Emerging Mkts Small Blend

185,270,192 90,569,894 65,007,228 53,458,972 49,422,837
Daily Return

Australian Dollar British Pound Sterling Canadian Dollar Euro Japanese Yen
Name

FXA FXB FXC FXE FXY

1.84% 0.88% 0.89% 1.59% 0.44%

9.76% -2.18% 2.58% -2.77% 14.30%
YTD Perf

Mexican Peso Swedish Krona Swiss Franc USD Index Bearish USD Index Bullish
Bonds

FXM FXS FXF UDN UUP

0.94% 2.57% 0.88% 1.16% -1.32%

5.13% 7.41% 7.26% -0.11% -2.99%

Prior Day Top Performers
Ticker Category

VIX ETNs
Ticker 1-Day Perf

Fixed Income ETFs
Ticker 1-Day Perf YTD Perf

iPath Global Carbon ETN Direxion Daily Real Estate Bull 3X Shares UBS E-TRACS CMCI Silver TR ETN Direxion Daily Dev Mkts Bull 3X Shares Direxion Daily China Bull 3X Shares

GRN DRN USV DZK CZM

N/A Specialty - Real Estate N/A Foreign Large Blend Pacific/Asia ex-Japan Stk

7.47% 6.94% 6.04% 5.78% 5.61%

iPath S&P 500 VIX VXX Short-Term Futures ETN iPath S&P 500 VIX VXZ Mid-Term Futures ETN

-4.97%

-59.61%

-1.85%

2.36%

Aggregate Investment Grade High Yield 1-3 Year Treasuries 7-10 Year Treasuries 20+ Year Treasuries
ETF

AGG LQD HYG SHY IEF TLT

0.12% 0.18% 0.31% 0.01% -0.05% 0.21%

5.26% 7.86% 2.45% 1.82% 12.36% 13.36%

Others
ETF Ticker 1-Day Perf YTD Perf Ticker 1-Day Perf YTD Perf

Gold Silver Natural Gas

GLD SLV UNG

0.95% 2.17% 0.09%

22.39% 41.06% -44.35%

Crude Oil EAFE Index Emerging Markets SPDRs

USO EFA EEM SPY

2.74% 1.83% 1.64% 0.98%

-9.39% 3.93% 10.87% 5.77%

Major Index Changes:
None

ETFs in the Headlines and Blogs:
Interest in Commodity ETFs Remains High Due to Fed - http://news.morningstar.com/articlenet/article.aspx?id=355676 Seven ETFs to Play Silver - http://seekingalpha.com/article/230934-seven-etfs-to-play-silver

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Nicholas Colas (Chief Market Strategist): 212 448 6095 or ncolas@convergex.com Christine Clark: 212 448 6085 or cclark@convergex.com Beth Reed: 212 448 6096 or breed@convergex.com

Top Online Social Networking Stories
Latest Popular Digg.com Business News Steve Jobs takes shots at Android and BlackBerry - http://www.digitaltrends.com/mobile/steve-jobs-takes-shots-at-android-and-blackberry/ Red State vs. Blue State - http://blog.infographicworld.com/2010/10/18/red-vs-blue-state/ Calculated Risk AIA: Architecture Billings Index shows expansion, first time since Jan 2008 - http://www.calculatedriskblog.com/2010/10/aia-architecture-billings-indexshows.html MBA: Mortgage Purchase Activity Declines - http://www.calculatedriskblog.com/2010/10/mba-mortgage-purchase-activity-declines.html Housing Starts and the Unemployment Rate - http://www.calculatedriskblog.com/2010/10/housing-starts-and-unemployment-rate.html Foreclosure-Gate: The Investigations and some comments on other issues - http://www.calculatedriskblog.com/2010/10/foreclosure-gate-investigationsand.html The Big Picture Darwin’s Law of Maladaptive Corporate Behavior (or, why bailouts are nearly always a terrible idea) - http://www.ritholtz.com/blog/2010/10/darwinscorporate-survival/ Do Underwater Homeowners Have Zero Cost Option on Home Prices? - http://www.ritholtz.com/blog/2010/10/do-underwater-homeowners-have-zero-costoption-on-home-prices/ Hey, Big Spender - http://www.ritholtz.com/blog/2010/10/hey-big-spender/ Big Spender, Part II - http://www.ritholtz.com/blog/2010/10/big-spender-part-ii/ Robert Reich’s Blog The Perfect Storm - http://robertreich.org/post/1344561814 The Fed’s New Bubble (Masquerading as a Jobs Program) - http://robertreich.org/post/1328014052 Bespoke Investment Group Goldman Sachs Breaks Up - http://www.bespokeinvest.com/thinkbig/2010/10/19/goldman-sachs-gs-breaks-up.html Zero Hedge Don’t Bother with Comparisons to the 1970s… They’re Useless - http://www.zerohedge.com/article/guest-post-dont-bother-comparisons-1970s-theyreuseless China Halts Rare Mineral Exports to US and Europe, Prices Set to Surge - http://www.zerohedge.com/article/china-halts-rare-mineral-exports-us-andeurope-prices-set-surge The Conscience of a Liberal Just Call Him Bernanke-sama - http://krugman.blogs.nytimes.com/2010/10/18/just-call-him-bernanke-sama/
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Nicholas Colas (Chief Market Strategist): 212 448 6095 or ncolas@convergex.com Christine Clark: 212 448 6085 or cclark@convergex.com Beth Reed: 212 448 6096 or breed@convergex.com

GENERAL DISCLOSURES
This presentation discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions. It is provided for general informational purposes only and should not be relied on for any other purpose. It is not, and is not intended to be, research, a recommendation or investment advice, as it does not constitute substantive research or analysis, nor an offer to sell or the solicitation of offers to buy any BNY ConvergEx Execution Solutions LLC (“ConvergEx”) product or service in any jurisdiction. It does not take into account the particular investment objectives, restrictions, tax and financial situations or other needs of any specific client or potential client. In addition, the information is not intended to provide sufficient basis on which to make an investment decision. Please consult with your financial and other advisors before buying or selling any securities or other assets. This presentation is for qualified investors and NOT for retail investors. Please be advised that options carry a high level of risk and are not suitable for all investors. To receive a copy of the Options Disclosure Document please contact the ConvergEx Compliance Department at (800) 367-8998. The opinions and information herein are current only as of the date appearing on the cover. ConvergEx has no obligation to provide any updates or changes to such opinions or information. The economic and market assumptions and forecasts are subject to high levels of uncertainty that may affect actual performance. Such assumptions and forecasts may prove untrue or inaccurate and should be viewed as merely representative of a broad range of possibilities. They are subject to significant revision and may change materially as market, economic, political and other conditions change. Past performance is not indicative of future results, which may vary significantly. The value of investments and the income derived from investments can go down as well as up. Future returns are not guaranteed, and a loss of principal may occur. The information and statements provided herein do not provide any assurance or guarantee as to returns that may be realized from investments in any securities or other assets. This material does not purport to contain all of the information that an interested party may desire and, in fact, provides only a limited view of a particular market. The opinions expressed in this presentation are those of various authors, and do not necessarily represent the opinions of ConvergEx or its affiliates. This material has been prepared by ConvergEx and is not a product, nor does it express the views, of other departments or divisions of BNY ConvergEx Group, LLC and its affiliates.

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