Daily Trading Stance Tuesday, May 19, 2009

Theme Comment
Massive reversal day in all markets: Massive spike higher in Stocks, Commodities, High Yield Bonds and JPY-crosses.
It looks like we will continue to see buying on dips until we test the 200 DMA (currently 944) in S&P500. The 20 DMA
(currently 885) has been serving as a strong support since April.
Japan’s foreign currency rating was cut from AAA to Aa2 by Moody’s.
India’s stocks surged 10% higher on the election and futures indicate another 6% upside from here. Perhaps
supported by the killing of the Tamil Tiger leader.

Economic Data Releases

Country Time (GMT) Name Expectation Prior Comment
UK 08:30 CPI YoY (APR) 2.4% 2.9%
GE 09:00 ZEW Survey (Econ.sentiment, MAY) 20.0 13.0
US 12:30 Housing Starts (APR) 520K 510K

FX Daily stance Comment

EURUSD 0/+ Need to break 1.3575-85 res for further gains. Buy break or buy dip to 1.3530-40
EURJPY 0 Res at 131.0 may contain rally. Seen ranging 130-131. Buy break abv for 132.25
USDJPY 0 96.70 looks crucial for further gains to 97.50. Suppt 96.00-10
GBPUSD 0/- Abv 1.5350 targets 1.5450-60. Suppt 1.5290-1.5310
AUDUSD 0 Rally may stall at 0.7710-15 previous high. Suppt at 0.7615-30

FX-Options Comment
EURUSD Vols were offered yesterday with the rest of the curve at the same levels. After last week’s
test of 1.37 which failed to break, the pair should head lower to 1.32/1.33 area.
USDJPY Loads of selling along the curve the moment spot comes of slightly from the lows. Need a
larger sustained move beyond 9400 to incur any sort of gamma bid interests.
AUDUSD Along with USDJPY, vols have been hammered. 7400-7700 range is starting to establish
and seeing wing interests being bought to protect extreme moves.

Equities Daily stance Comment

DAX + Buy on dips targeting 4918 (200 day MA) initially, 4966 finally. S/L below 4823.
FTSE + Buy on dips targeting 4520. S/L below 4419.
S&P500 + Buy at the break of 910 targeting 918 initially, 930 finally. S/L below 898.
Nasdaq100 +
Nikkei225 +

Commodities Daily Stance Comment

Gold 0/+ Buy on dips towards 911 with a stop below 906. Target 924.
Silver 0/+ Buy on dips towards 13.70 and target 13.90. Stop below 13.62.
Oil 0/+ Buy at the break of 60.10 and target 61.30. Stop below 59.70.

Earnings Releases
Country Time (GMT) Name EPS exp. EPS prior Comment
FR (G(GMT)(GM
Aft-Mkt Air France-KLM -2.183 -0.340
UK T) - Vodafone 0.107 0.057
US Aft-Mkt Hewlett Packard 0.858 0.932 Important for eq.markets
 Daily Trading Stance

US Breakeven 10 Year 140

Top 100 Global Stocks CDS Index
3

2,5
120

100
1,5

1
80

0,5

60
0

-0,5 40
08-jan 08-mar 08-maj 08-jul 08-sep 08-nov 08-jan 08-mar 08-maj 20-05-2008 20-07-2008 20-09-2008 20-11-2008 20-01-2009 20-03-2009

US Breakeven 10 Year Saxo CDS Index

USD breakeven 10 Year – an expression for measuring inflation Credit Default Swaps are expressions for the perceived
expectations. default risk in a company. Now at 100.
AAA and BAA Corporate Bonds vs. 30yr US Treasuries
EURUSD Opt. Vol.
35 7

6
30

5
25

4
20

3
15

2
10
1
5
0
0 sep-07 dec-07 mar-08 jun-08 sep-08 dec-08 mar-09
maj-07 jul-07 sep-07 nov-07 jan-08 mar-08 maj-08 jul-08 sep-08 nov-08 jan-09 mar-09 maj-09

EUR-USD OPT VOL 1W EUR-USD OPT VOL 1M EUR-USD OPT VOL 1Y Moody BAA - US Generic Govt 30 Year Yield Moody AAA - US Generic Govt 30 Year Yield

Volatility at different time horizons. Too low, now? Spreads are easing, but still showing tight corporate debt
markets.

CEE-German Govt. Bond Spreads CBOE SPX VOLATILITY INDEX

12 90

80
10
70

8 60

50
6
40

4 30

20
2
10

0 0
jul-08 aug-08 sep-08 okt-08 nov-08 dec-08 jan-09 feb-09 mar-09 apr-09 nov-08 dec-08 jan-09 feb-09 mar-09 apr-09 maj-09
GDMA Hungarian - German Czech Republic - German Poland - German CBOE SPX VOLATILITY INDX

Some optimism after the G20 meeting. Especially for Hungary. The VIX Index is edging lower. Now below 40.