THE MARKETS As you gather with your family and friends this week, we urge you not to let

anx iety over the fiscal cliff or sovereign debt problems in Europe distract you fro m what matters most. Turn off CNBC and close the Wall Street Journal for a few d ays. Use the opportunity to recharge your batteries. There ll be plenty of time to w atch the news later. To help you with this, we thought it would be nice to share a few positive things worth being thankful for. Progress towards a fiscal compromise: The latest word is that the White House an d Congress have committed to short negotiations, with the goal of achieving a fi scal cliff resolution before the New Year. This is welcome news and we hope we ll be gin to see business leaders opening their wallets and making big investments in hiring and growth soon.[1] Markets slid during the early part of last week, but rallied Friday on this news. [2] Resilient markets: Despite what we ve been through in the past few years, U.S. marke ts are still performing well the Dow is still up 3% for the year and 3.5% since la st year, when economists worried that we might be facing a double-dip recession. With consumer sentiment running high and investors feeling renewed confidence i n Congress, we may still see additional upside this year.[3] A recovering economy: Our economy has suffered some serious pain in the last few years, but is still chugging along. Currently, we have a housing market that is bouncing back vigorously, a decreasing unemployment rate, and recovering indust rial output. Our economy still has a long way to go before it can be considered fully recovered, but trends are pointing to continued improvement next year if w e can get past the fiscal cliff.[4] Looking ahead, despite the holiday-shortened trading week, markets could still s ee some action. Housing data will be released Monday, and Ben Bernanke is schedu led to speak Tuesday (analysts expect his remarks to address the economic recove ry and tight consumer credit markets). The day after Thanksgiving, Black Friday will mark the start of the holiday shopping season and traders may have time to react to any early revenue announcements.[5] European analysts expect the next r ound of Eurozone aid to Greece to be announced this week, so we may see some mov ement in currency and European markets too.[6] ECONOMIC CALENDAR Monday: Existing Home Sales, Housing Market Index Tuesday: Housing Starts, Ben Bernanke Speaks at 12:15 PM ET Wednesday: Jobless Claims, Consumer Sentiment, EIA Petroleum Status Report Thursday: U.S. Markets Closed for Thanksgiving Holiday Friday: U.S. Markets Close Early PERFORMANCE nov12 chart1119 Market Update 11/19/12: Thankful for Progress

Notes: All index returns exclude reinvested dividends, and the 5-year and 10-yea r returns are annualized.

Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not availa ble. HEADLINES Superstorm Sandy depresses industrial output. U.S. industrial manufacturing outp ut fell in October as Sandy disrupted production and transportation across the N ortheast. The storm is estimated to have reduced output by 1%; however, the unde rlying tone of production remains consistent with estimates.[7] Next round of Greek aid expected this week. According to remarks by Italian offi cials, Eurozone leaders will reach a compromise with Greece within days. Greece has already been granted an additional two years to reach austerity goals and Eu ropean leaders will meet to discuss funding requirements for the next tranche of aid money.[8] Business inventories rise in September due to high stocks of automobiles.Excludi ng the automobile stocks, inventories were flat for a second month, meaning that economists may have to lower third-quarter GDP estimates. Business inventories form a key part of GDP estimates.[9] China s biggest future threat is inflation. According to a Chinese central bank gove rnor, the biggest risk to China s transition from a planned economy to a market-base d one is inflation. Without careful management by central bankers and deep finan cial reforms, overspending by local and regional governments could overheat the economy.[10]