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 weakened much of the day, but closed mixed (S&P 500 +4 bps, Dow +5 bps, Nasdaq -28 bps) after the FOMC minutes were released at 2pm. Several committee members said they were in support of additional stimulus should the economy weaken further. The bright spot of the day in terms of economic data came from the Conference Board, which said its consumer confidence index rebounded to 53.5 for August from 51.0 the prior month. However, a jobs component recorded its worst reading since February. According to the Case-Shiller composite 20-city index, home prices increased 0.3% in June following a 0.5% rise in May. On the negative front, the Chicago PMI posted its lowest level of the year, falling to 56.7 for August from 62.3 in July but still above breakeven 50.

Morning Markets Briefing
Market Commentary: September 1st, 2010 A snapshot of the markets through the lens of ConvergEx.

Looking for Diversification in All the Wrong Places
Summary: Our latest monthly review of asset price correlations finds little changed in terms of equities: average correlations are a minimal 5 basis points higher than last month and continue to be stubbornly high. Precious metal correlations to stocks were little changed, with de minimis movement between asset classes, while foreign and emerging market correlations remained near historical highs. In terms of fixed income, high yield corporate bonds saw a dramatically lower correlation to equities, while the commonality of investment grade debt to equities spiked. Of the currencies we track – Aussie Dollar, Yen and Euro – only the Euro displayed significant change, increasing 30 percentage points in its correlation to U.S. equities. The bright spots here are that gold and silver are doing yeoman’s work providing much-needed diversification to investors who own them, and the Euro’s behavior suggests that the market is less worried about sovereign debt risk hitting that region in the near term. As a larger point, we still find that market correlations are a real impediment to a sustained rally in risk assets. If you cannot use diversification to manage incremental risk, then why would you take on risk in the first place? _______________________________________________________________________________________________________________________________________________ Whether you want to admit it or not, you’ve likely done it at least a few times; you’ve put your own name into the Google search box and pushed “Enter.” Was it vanity? Or curiosity? Or did you realize that your employer/spouse/friend probably does it anyway and you should know what they see? Regardless of motivation, unless your name is truly unique, your search will result in a very off-putting realization: lots of strangers have your name. Like your exact name. Most people, we suspect, could have a pretty good sized dinner party with people that live within a few hundred miles of their home and share their entire name. Google “Beth Reed” and you’ll see what I mean.

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

11

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

There are dozens of “me.” Maybe hundreds. All with the same name, but obviously completely different. Beth Reed, social work professor. Beth Reed, college soccer player. Beth Reed, pianist (entertainment for that dinner party, perhaps). Beth Reed, desperate job hunter. Beth Reed, cellist (wonder if she practices with the pianist…). If you know me, you’ll know that I share very little in common with all the other “Beth Reeds.” Same with my Google images search – lots of Beth Reeds, but none who even come close to resembling me. (Scratch that whole “perfect crime” scenario where I have a long lost twin out there in the world). Actually, as a side note, I was kind of pleased to find the #2 Google search result was, in fact, really me. Granted, it’s a link to my Facebook profile (don’t click it, it’s blocked) and not some incredible accomplishment or noteworthy website. But of all the Beth Reeds on Facebook (and there are plenty), my profile popped up right at the top. If stocks, bonds, currencies and commodities could Google themselves, we bet they would all feel some of the same consternation that I do looking at all these total strangers with MY name. Sure, they all think they are different. Different fundamentals, different cyclical money flows, even different cultures and languages. But many of them really answer to the same name. I’ll explain in the remainder of this note. Every month we track asset price correlations for a variety of financial assets as well as precious metal commodities. This month shows little break from the recent highly correlated price movements amongst these asset types. There are a few exceptions – we’ll note those in a moment – but by and large a whole range of disparate risk assets continue to trade as one undifferentiated mass. It’s almost as if you typed in “investments to buy” into Google and got pictures of a gold coin, a chemical plant, a 500 Euro note, and the exchange traded fund for U.S. banks. They aren’t the same – not by a long shot – but to the global capital market they all LOOK the same. That’s not a healthy market. The mathematical benefits of diversification require assets that exhibit low-to-no correlation amongst themselves. When everything moves in synch, asset allocators have to pull in their horns. Wonder why investors are shunning risk and buying bonds? Part of the reason is clearly that the historically proven benefits of diversification just are not working as well as they once did. U.S. equity correlations among the 10 industrial sectors of the S&P 500 remain near historical highs, as 7 out of the 10 sector ETFs show correlations with the S&P 500 in excess of 90%. Only Healthcare, Utilities and Consumer Staples are lower, and they’re stuck in the 80% range, which is still very high. During August, there were 3 notable moves among the sector ETFS: • • • Healthcare stocks’ (XLV) correlation with the broad index fell almost 4 percentage points, while sector returns were down 1.1% over the same time period versus -4.7% for the S&P 500 . Consumer Staples (XLP) saw correlations increase more than 5 percentage points, a little surprising although 4 of its top 10 holdings that together make up about 20% of the index are down over the past month (CVS is down 11.43%, for example). Correlations of financial shares’ (XLF) increased 4 percentage points, which is understandable since concerns surrounding bank balance sheets and financial regulation are among primary drivers of current stock market weakness.

Precious metals’ correlations to stocks – we track gold and silver – were mixed last month. Silver was basically flat, while the gold correlation to stocks rose 7 percentage points. Both are hovering close to where they theoretically should be – silver (represented by SLV) around 45% (roughly half of silver demand is industrial) and gold (GLD) relatively close to zero at 13%. In short, it appears as though precious metals are among the few asset classes that are doing what they are “supposed” to do – diversify risk versus financial assets.
2

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

Foreign and emerging market correlations continue to stick near historic high correlations, with their respective ETFs (EFA and EEM) showing price correlations in excess of 90%. In fixed income land, high yield bond (HYG) correlations with U.S. equities fell 25 percentage points, largely as a result of stock market weakness over the past couple of weeks versus still decent bond market strength. In contrast, investment grade corporate bonds (LQD) saw their correlation rise almost 30 percentage points. Of the 3 currencies we track – Aussie Dollar (FXA), Yen (FXY) and Euro (FXE) – the Euro’s 30 percentage point increase in its correlation to U.S. stocks was the only significant move. It would appear that, for better or worse, the fears over a European sovereign debt crisis have receded and been replaced with a more general global macro set of concerns. Hard to read that as really positive or negative at this point. Lastly, if the S&P sector ETF correlations over the past year are any indication of what’s in store, chances of a significant, lasting market rally appear rather slim. As the last 2 charts show, sector ETF correlations tend to break down and widen when the market is in the midst of a sustained rally, as it did in April and January. Currently, the 10 sector ETFs are bunched together, and though the difference between the high and low correlation has widened slightly, the average correlation has barely budged.
Historical 30-Days Correlation Against S&P 500 2 Months Ago 3 Months Ago Change in absolute correlation* Change in absolute correlation* Change in absolute correlation*

Name

Symbol

Current

1 Month Ago

(07/30/10)
Energy Health Industrials Utilities Consumer Staples Telecomm Technology Consumer Discretionary Financials Materials Gold Silver EAFE Index Emerging Markets Australian Dollar Euro Japanese Yen High Yield Corporate Bond Investment Grade Bond XLE XLV XLI XLU XLP IYZ XLK XLY XLF XLB GLD SLV EFA EEM FXA FXE FXY HYG LQD 92.95% 82.26% 94.90% 81.42% 88.43% 92.46% 95.11% 93.88% 97.72% 90.50% 13.34% 43.75% 92.92% 91.37% 79.13% 60.59% -40.61% 61.11% -42.55% 94.56% 86.13% 95.73% 83.28% 83.14% 90.93% 95.99% 95.25% 94.16% 89.96% 20.11% 43.19% 92.15% 88.40% 86.78% 30.84% -50.33% 86.12% -13.35%

(07/01/10)
95.17% 93.66% 97.74% 88.31% 85.56% 93.80% 95.84% 97.08% 95.02% 94.79% -16.47% 37.63% 95.41% 95.55% 88.60% 45.60% -73.54% 80.59% -21.74%

(06/10/10)
93.57% 94.43% 97.98% 90.07% 92.70% 94.12% 96.58% 97.35% 97.16% 95.15% -26.48% 25.58% 94.43% 93.98% 82.97% 40.79% -72.75% 77.55% 14.30%

from 1 mo ago
1.61 3.87 0.83 1.86 5.29 1.53 0.88 1.37 3.56 0.54 6.77 0.56 0.77 2.97 7.65 29.75 9.72 25.01 29.20

from 1 mo ago to 2 mos ago
0.61 7.53 2.01 5.03 2.42 2.87 0.15 1.83 0.86 4.83 36.58 5.56 3.26 7.15 1.82 14.76 23.21 5.53 8.39

from 2 mos ago to 3 mos ago
11.97 27.93 5.05 24.09 11.64 9.39 5.42 11.80 5.41 9.26 35.05 22.75 6.53 5.41 15.54 0.53 37.14 24.21 34.88
Source: IVolatility.com

*Red indicates increasing correlation; green indicates decreasing correlation

3

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

Sector ETFs: High, Low & Avgerage Monthly Historical 30-Day Correlations Against the S&P 500
100% 95% 90% 85% 80% 75% 70% 65% 60% 1200 1150 1100 1050 1000 950 900
S&P 500 Index

Sector ETFs: Historical 30-Days Correlation Against the S&P 500
100% 95% 90% 85% 80% 75% 70% 65% 60%

Correlation

Energy High Average Low S&P 500 Telecom

Health Technology

Industrials Cons Disc

Utilities Financials

Cons Stpls Materials

GLD and SLV: Historical 30-Days Correlation Against the S&P 500
90%

Currencies: Historical 30-Days Correlation Against the S&P 500
80%

70% 50% 30% 10% -10% -30% GLD SLV

60% 40% 20% 0% -20% -40% -60% -80% Australian Dollar Euro Yen

4

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 Shares of RIMM dropped 6.0% after Sanford Bernstein said in a note that the Blackberry makes faces “a scary outlook” in the business market, citing the segment’s high e-email penetration and strengthening competition. Retail chain SKS jumped 19.7% on a Daily Mail report that it may get a bid of $11 per share, or $1.7 billion, from a group of U.S. and U.K. private equity firms, while grocery store chain WINN sank 18.2% after reporting quarterly same-store sales fell more than 5%. MON fell 5.8% as it lowered its fiscal year (which ended today) earnings to $2.45 a share from its previous forecast of up to $2.60 a share.
Important Earnings Today (with Estimates) From… JOYG: $1.02 BGP: $-0.13 SAI: $0.33 BF/B: $0.84 EXPR: $0.07 Source: Bloomberg HNZ: $0.72 HOV: $-0.53

S&P Futures
One Day (High –1054.25; Low – 1037.50):

Important Conferences/Corporate Meetings Today:
Bank of America Merrill Lynch Korea Conference – Seoul, KP Morgan Stanley Global Industrials Conference Roth Capital Partners Fall Conference – Maui, HI

Prior Day SPX (High – 1055.14; Low – 1040.88; Close – 1049.33):

Three Day (High – 1072.75; Low – 1037.50):

Source: Thomson ONE
5

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 advanced Tuesday, with 10-year notes closing out their biggest monthly rally since late 2008 after minutes from the latest FOMC meeting showed that some members saw “increased downside risks” to current growth and inflation outlooks. The yield on the 10-year fell more than 40 bps in August, the biggest drop since December 2008 when it decreased 71 bps after the Fed cut rates to 0-0.25%. German bonds also had their steepest monthly gain since late 2008, as they returned 3.8% in August.

Source: Bloomberg

Source: Bloomberg

Today’s Important Economic Indicators/Events (with Consensus):
Motor Vehicle Sales: 8.7 million MBA Purchase Applications (7:00am EST) Challenger Job-Cut Report (7:30am EST) ADP Employment Report (8:15am EST) ISM Manufacturing Index (10:00am EST): 53.0 Construction Spending (10:00am EST): -0.6% Federal Reserve Gov. Elizabeth Duke speaks at 10:45am EST Dallas Fed President Richard Fisher speaks at 12:30pm EST
6

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 – After Monday’s sharp drop the index opened lower but quickly moved into positive territory for most of the day until a selloff in the afternoon, finally ending almost unchanged. The range on the day was -0.8 % to +0.6%. The VIX moved largely in lockstep with the index with a range of -4.7% to +2.3 % ending down 4.2 % on the day. There were several interesting trades in SPX options. Multiple sellers of over 10,000 (on the day) September 1025 puts helped push implied volatility down as the index rallied in the morning. Also the September 1030/1050 put spread was sold late in the day over 10,000 times. There were also several portfolio hedge trades. One noteworthy example was a December (2010) 3-way in which: 1025 puts were bought 5,000 times at $55.80; 800 puts were sold 7,500 times at $ $10.00; and 1175 calls were sold 5,000 times @ $8.20. There were also several typical hedge adjustments such as the sale of the October 1000 puts vs. the purchase of the November 1025 puts for a net debit of $21.80. Perhaps the most interesting trade today was the purchase of 17,000 December (2012) 2000 calls for $0.65. ETF- In what seemed like a roller coaster ride, the market fluctuated from negative to positive territory to close unchanged on the day. Early on we saw investors taking advantage of inflated premium levels. For example in EEM one investor sold 9,000 Sep 40 / 37 put spreads and 3,500 Sep 41 /37 put spreads. Also, SMH saw a seller of the Sep 22.5 puts 25,000 times. As the day progressed however, we noted a buyer in XLF of 50,000 Dec 15 Calls and in XHB of 18,800 Jan 17.5 calls. Volatility buyers emerged in XLP as an investor bought the Sep 25 / 28 strangle 2,600 times, while in other trading paper bought 1,600 XME Dec 47 / 53 strangles. Lastly, we saw one investor positioning for downside in SPYs as paper bought the Sep 100 Puts vs. selling the 109 Calls 15,000 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

8/25/2010
Q ARG NOVL FDO CTL FRX AAPL STZ PX MO WIN DIS LM KR LUV STR AMAT GS CPB VLO PM NSM NKE CAM TIF MRK WHR PLL SBUX

CURRENT IMPLIED VOLATILITY / CURRENT HISTORICAL VOLATILITY 8/26/2010 8/27/2010 8/30/2010 8/31/2010 30-Day Implied Vol
Q ARG NOVL FDO FRX CTL PX LM C LMT CB TIF MO DIS BBT BMY NKE STZ HRB PLL WIN PNW PM BAC MRK CAM NSM VLO CPB GS AMAT STR LUV KR AAPL Q ARG NOVL FRX HRB FDO CTL BMY AAPL BAC MO NKE MSFT LM GS NVLS LMT STZ KR C AMAT MCK PX PM SAI MRK PNW WIN PLL BBT CB TIF DIS Q ARG FDO HRB NOVL PEP FRX CTL NKE AAPL CB GS BAC STZ MO LM BMY COG KR MSFT CAM PM MKC WHR DVN NVLS LMT C AMAT MCK PX SAI ARG Q NOVL HRB FDO YHOO MS STZ CB PEP CTL NKE FRX BAC MSFT CAM AAPL GS PM ABT SBUX COG SRE SAI NTRS DVN WHR MKC KR BMY LM MO 22.05 20.22 54.73 46.42 35.17 34.28 35.84 31.58 23.28 17.98 14.33 28.16 34.16 38.54 28.19 45.83 31.34 32.84 21.24 20.18 32.44 43.99 22.68 29.77 35.08

BIGGEST MOVERS
Top 10 30-Day Implied Vol MFE 2825.13% 39.04 PBI 177.63% 26.02 QCOM 166.50% 20.22 PTV 161.38% 29.11 GENZ 155.72% 32.94 INTU 134.58% 33.63 FDX 99.58% 35.17 PFE 80.15% 17.98 MDT 78.70% 37.65 NRG 71.71% 54.73 Bottom MHP Q GILD PWR PCAR HRB LTD IP WHR R 10 -96.44% -65.87% -59.25% -56.78% -56.41% -46.54% -45.94% -45.54% -42.53% -42.05% 30-Day Implied Vol 5.16 41.29 25.58 12.40 27.70 31.55 40.90 28.52 48.77 38.57

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.

7

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

0.00% 0.97% 0.60% 0.30% 0.08%
Shares Traded

Energy Health Industrials Utilities Consumer Staples
Currency

XLE XLV XLI XLU XLP

-0.27% -0.39% -0.39% 0.46% 0.08%

-10.65% -9.56% 1.08% -1.19% -0.08%
YTD Perf

Telecomm Technology Consumer Discretionary Financials Materials
Currency

IYZ XLK XLY XLF XLB

0.96% -0.34% 0.13% 0.85% 0.42%

0.05% -9.77% 1.41% -5.87% -6.43%

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

230,933,965 84,228,130 65,932,652 59,769,862 48,254,740
Daily Return

Australian Dollar British Pound Sterling Canadian Dollar Euro Japanese Yen
Name

FXA FXB FXC FXE FXY

-0.22% -0.82% -0.59% 0.03% 0.61%

-0.85% -5.29% -1.70% -11.66% 10.52%
YTD Perf

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

FXM FXS FXF UDN UUP

-0.44% 0.00% 1.07% 0.04% -0.08%

-1.17% -3.30% 1.75% -6.75% 4.51%

Prior Day Top Performers
Ticker Category

VIX ETNs
Ticker 1-Day Perf

Fixed Income ETFs
Ticker 1-Day Perf YTD Perf

iShares MSCI Emerg Mrkts Financials Idx PowerShares DB Crude Oil Dble Short ETN GlobalShares FTSE All-World Direxion Daily Semicondct Bear 3X Shares ProShares UltraShort DJ-UBS Crude Oil

EMFN DTO GSW SOXS SCO

N/A Bear Market N/A N/A Bear Market

6.18% 5.74% 5.72% 5.66% 5.52%

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

-0.99%

-35.54%

0.61%

20.10%

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

AGG LQD HYG SHY IEF TLT

0.07% 0.34% -0.03% 0.04% 0.45% 1.11%

5.57% 8.50% -0.79% 1.66% 12.03% 20.77%

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

Gold Silver Natural Gas

GLD SLV UNG

0.97% 1.61% -0.34%

13.76% 14.16% -36.73%

Crude Oil EAFE Index Emerging Markets SPDRs

USO EFA EEM SPY

-3.33% 0.30% 0.60% 0.00%

-18.74% -9.66% -3.88% -5.50%

Major Index Changes:
None

ETFs in the Headlines and Blogs:
Analysis: Warnings mount as retail ETF surge gathers pace - http://www.reuters.com/article/idUSTRE67U2RL20100831 Merger-Arbitrage ETF Banks on Deal Pickup - http://online.wsj.com/article/SB20001424052748704323704575461682410264798.html

8

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
Calculated Risk Case-Shiller: Hope Price Indices Increase in June - http://www.calculatedriskblog.com/2010/08/case-shiller-home-price-indices.html FDIC Q2 Banking Profile: 829 Problem Banks - http://www.calculatedriskblog.com/2010/08/fdic-q2-banking-profile-829-problem.html Europe Bond Yields - http://www.calculatedriskblog.com/2010/08/europe-bond-yields.html Gibbs: Housing tax credit not high on list of options - http://www.calculatedriskblog.com/2010/08/gibbs-housing-tax-credit-not-high-on.html Lawler: HUD Secretary May Have Just Made Near-Term Home Sales Worse - http://www.calculatedriskblog.com/2010/08/lawler-hud-secretary-may-havejust-made.html The Big Picture Psychological Stages of a RE Bubble Market - http://www.ritholtz.com/blog/2010/08/psychological-stages-of-a-bubble-market/ Scientistic Fiction - http://www.ritholtz.com/blog/2010/08/scientistic-fiction/ Why Are WSJ Reporters Defecting for NYT? - http://www.ritholtz.com/blog/2010/08/why-are-wsj-reporters-defecting-for-nyt/ Proposed New Car Fuel economy Stickers - http://www.ritholtz.com/blog/2010/08/proposed-new-car-fuel-economy-stickers/ Quote of the Day: Double Dip or Not - http://www.ritholtz.com/blog/2010/08/quote-of-the-day-double-dip-or-not/ The Baseline Scenario Hedge Fund Blindness - http://baselinescenario.com/2010/08/31/hedge-fund-blindness/ Central Clearing and Systemic Risk - http://baselinescenario.com/2010/08/30/central-clearing-and-systemic-risk/ The Conscience of a Liberal The Unbearable Pettiness of Being Rich - http://krugman.blogs.nytimes.com/2010/08/31/the-unbearable-pettiness-of-being-rich/ Brother, Can You Paradigm? - http://krugman.blogs.nytimes.com/2010/08/31/brother-can-you-paradigm/ Bespoke Investment Group State Default Risk - http://www.bespokeinvest.com/thinkbig/2010/8/30/state-default-risk.html Robert Reich’s Blog Why a Civil Society Extends Unemployment Benefits - http://robertreich.org/post/1039598190/why-a-civil-society-extends-unemployment-benefits Warning: Why Cheaper Money Won’t Mean More Jobs - http://robertreich.org/post/1033774961/warning-why-cheaper-money-wont-mean-more-jobs Zero Hedge Does a Republican Sweep Mean Further Expansion of the Fed’s Dovish Policy? Why Expiration of Bush Tax Cuts Would Cripple GDP http://www.zerohedge.com/article/bofa-demonstrates-republican-sweep-means-further-expansion-feds-dovish-policy-expiration-bus
9

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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