JP Conklin 704-887-9880 office jp.conklin@pensfordfinancial.com www.pensfordfinancial.

com Leveling the Playing Field April 23, 2012 _______________________________________________________________________ Treasury rates continued to slide as Europe continues to spook markets. Fridays news that the IMF had raised $430B may help reverse the recent risk off trade, or maybe everyone will realize that contagion is potentially right around the corner. There is no stigma whatsoever on these facilities, Draghi said at a press conference in Frankfurt on February 9, 2012. Heres a graph from Bloomberg showing how the credit spreads of banks that took LTRO loans has widened compared to those banks that did not take LTRO loans. This has created a LTRO stigma spread, which is has doubled in the last few months.

. Spains 10yr sovereign bond broke through the critical 6.00% level last Monday before retracing and hovering just below for this past week. The result over the long term could result in a more centralized model OR countries leaving the euro. Im not sure the current middle ground is sustainable for much longer. And lets not discount the French election, which included the French version of a primary on Sunday and resulted in incumbent Sarkozy coming in a close second to

socialist Francois Hollande. He is expected to win the runoff on May 6, which will really be unfortunate for French millionaires as he plans on raising their tax bracket to 75%. I can see Obama holding a press conference, See? Im not nearly that bad! I know even less about stocks than I do about bonds, which is tough to do. Equities just had the strongest Q1 in 14 years, but the last two weeks have been a bit rougher. The NASDAAPL as some have begun calling it, had its biggest two week loss since the rally began. We have a saying around the office, Buy AAPL, its like free money! We even have a wager on when it will hit $1,000. The earliest is January 2013 while yours truly has the latest date, July 2013. I basically took the over because I dont see it hitting $1k over the next year, its already up 50% in 2012! Heres a spooky graph comparing ytd world stock performance to 2011 does this portend a nasty second half of 2012?

FOMC Meeting (Tuesday and Wednesday) From one of our favorite economic teams at BNP Paribas: While a policy change is extremely unlikely at the April meeting, the June meeting is another story. By then we expect further confirmation that the pace of employment growth has slowed, while seasonal payback could also generate weak headline

prints for housing indicators and retail sales. The month of May brings elections in Greece and France that could significantly affect market sentiment, while there is a risk that Spanish sovereign yields could come under further pressure, especially if the ECB stays on the sidelines. In our view, the Fed remains very optimistic about the prospects for growth in 2013 and beyond. If domestic data do disappoint over the next couple of months as we fear and financial tensions build again, the Fed is likely to become more pessimistic about its own forecasts and decide that more policy accommodation is necessary.

By Michael Ramirez - April 20, 2012

LIBOR Outlook This section would be more interesting if it was written by Secret Service agents while protecting the president in Columbia.

Fixed Rate Outlook

10 Year Note # of Replies Median Average High Forecast Low Forecast 2Q 2012 70 2.25% 2.26% 3.05% 1.90% 3Q 2012 69 2.40% 2.42% 3.45% 2.00% 4Q 2012 70 2.50% 2.57% 3.88% 2.00% 1Q 2013 65 2.60% 2.70% 4.12% 2.00% 2Q 2013 60 2.73% 2.85% 4.43% 2.00% 3Q 2013 56 2.84% 3.00% 4.80% 2.00% 4Q 2013 56 3.00% 3.13% 5.20% 2.00%

The IMF intervention may boost confidence in the near term, but throwing money at the problem simply avoids a total collapse. Have they really fixed anything yet? We may see a jump in long term yields, but it just doesnt feel like theres any real reason for a sustained movement higher right now.

This Week Two day FOMC meeting beginning on Tuesday and ending with the FOMC statement Wednesday afternoon. Fridays Q1 GDP release will also be significant. Q4 2011 showed a 3.0% pace of growth, but the consensus is 2.5% with some economists calling for as low as 2.2%. Assuming the final result is in this ballpark, this is remarkably similar to Q1 2011s GDP, which suggests were struggling to grow at above level trend. Global warming has helped out this winter, so dont be surprised if we see some pullback in the coming months.

One of our readers sent us the following email he received during the week: Date: April 18, 2012 8:36:15 PM EDT To: undisclosed-recipients Subject: Student Loan Forgiveness Act of 2012 Hi, I signed a petition to Rep. John Kline (MN-2), The United States House of Representatives, and 2 others which says: "Total outstanding student loan debt in America is expected to exceed $1 TRILLION this year. Millions of hardworking, taxpaying, educated Americans are being crushed under the weight of their educational debts, while the economy continues to sputter. Support a REAL economic stimulus and jobs plan. Support the Student Loan Forgiveness Act of 2012 (H.R. 4170)." Will you sign this petition? Click here: http://signon.org/sign/support-the-student-loan?source=s.em.mt&r_by=4265427 Thanks!

I guess we found those 99% protesters, huh? And yes, that is the real link. And no, it doesnt actually sign the petition if you click it (but I did worry for about 10 seconds before ultimately decided it was worth the risk. The things I do for journalistic integrity).

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ECONOMIC CALENDAR
Economic Data Day Monday Tuesday 9:00AM 10:00AM 10:00AM 10:00AM 10:00AM Wednesday 7:00AM 8:30AM 8:30AM 12:30PM Thursday 8:30AM 8:30AM 10:00AM 10:00AM 10:00AM 11:00AM 8:30AM Friday 8:30AM 8:30AM 8:30AM 8:30AM 9:55AM Case-Shiller 20-city Index Consumer Confidence Richmond Fed Manufacturing Index House Price Index (MoM) New Home Sales (MoM) MBA Mortgage Applications Durable Goods Orders Durables Ex Transportation FOMC Rate Decision Initial Jobless Claims Continuing Claims Chicago Fed Nat Activity Index Pending Home Sales (MoM) Pending Home Sales (YoY) Kansas City Fed Manufacturing Activity Employment Cost Index GDP (QoQ) GDP Price Index Core PCE (QoQ) Personal Consumption Consumer Sentiment 0.5% 2.5% 2.3% 2.2% 2.1% 75.8 1.5% -1.5% 0.5% 0.25% 365k 3300k -3.4% 70.0 7 0.1% 2.2% -3.8% 70.2 7 0.0% -1.6% 6.9% 2.2% 1.6% 0.25% 386k 3297k -0.09 -0.5% 13.9% 9 0.4% 3.0% 2.1% 0.9% 1.3% 75.7 Time Report Forecast Previous

Speeches and Events Day Monday Wednesday Time 11:45AM 12:30PM 2:00PM 2:15PM ECB's Weidmann speaks FOMC Rate Decision FOMC to release Projections of Economy and Fed Funds Rate Fed's Bernanke holds Press Conference Report Place New York, NY

Treasury Auctions Day Tuesday Wednesday Thursday Time 1:00PM 1:00PM 1:00PM 2-year Treasury 5-year Treasury 7-year Treasury Report Size $35B $35B $29B