US Pocket Summary Tables
- 1. 8/28/2009 Wealth Management Research US pocket summary A weekly overview of market performance and Wealth Management Research's outlook, investment strategy and forecasts. Asset Class Performance & Strategy Highlighted WMR Themes - at a glance Extended Asset Market Returns Dividend Ruler Stock List monthly update, Equity Investment Theme, 28 August 2009 Allocation In this report, we provide an update of our "dividend ruler" stock screen—a list of companies with attractive fundamentals and above- Strategy* MTD YTD 2008 average dividend yields that also have historically delivered strong, consistent dividend per share growth, i.e., "as straight as a ruler." US Equity - 4.7% 17.6% -37.3% Non-US Developed Eq. + 3.8% 24.7% -43.2% US fixed income September update: Winding down a hot summer, Bond Investment Theme, 27 August 2009 Emerging Market Eq. + 0.2% 51.9% -53.2% While we still believe that investment grade corporate bonds, municipals, and TIPS are the most attractive sectors of the fixed income US Fixed Income -- 0.7% 4.2% 5.2% market, valuations are much less compelling than earlier this year. This month we recalibrated the weights within the credit sector by scaling back the overweight in IG credit to pay for a slight increase in HY. We believe spreads on agency debentures and mortgage-backed Non-US Fixed Income + 1.4% 5.4% 4.4% securities could widen later this year as the Fed purchase programs end. Cash (USD) - 0.0% 0.1% 1.8% Commodities + 0.2% 8.2% -35.6% Emerging Markets Top List, 25 August 2009 Total return indices in USD: Russell 3000, MSCI EAFE & Canada, MSCI Emerging This List is a selection of sovereign bonds in Emerging Markets countries that WMR currently favors. Markets, BarCap US Aggregate, BarCap Global Aggregate ex-USD, Citigroup 3- month T-bill, DJ UBS August update, U.S. Top 25 Stock List, 1 Aug 2009 The UBS WMR US Top 25 stock rose 6.8% (total return) in July and the S&P 500 rose 7.6%. Year to date, the Top 25 list is up 15.0%, and the S&P 500 is up 11.0%. Since its inception on 18 January 2006, the list has outperformed the S&P 500 by 1,383 basis points, down 3.3% Equity Regions' Strategy & Performance versus the S&P 500's decline of 17.1%. Market Returns *To access these reports please contact your Financial Advisor or access the reports via online services Strategy* MTD YTD 2008 US Equity --- 4.7% 17.6% -37.3% S&P 500 n.a 4.4% 14.1% -38.5% DJIA n.a 4.5% 9.2% -33.8% Nasdaq n.a 2.5% 28.6% -40.5% EMU ++ 6.0% 22.9% -47.1% UK n 3.9% 28.3% -48.3% Japan n 2.9% 10.2% -29.1% US Dollar Fixed Income Strategy & Performance Bond Regions Strategy & Performance Emerging Markets ++ 0.2% 51.9% -53.2% Market Returns Market Returns Total return indices in USD: Russell 3000, MSCI for non-US. Price return indices in USD: S&P 500, DJIA, Nasdaq. Forecasts are currently being aligned with new US investment process and will be published within the next several weeks. Strategy* MTD YTD 2008 Strategy* MTD YTD 2008 Treasuries -- 0.6% -3.5% 14.0% US -- 0.7% 4.2% 5.2% TIPS + 1.1% 6.0% -1.1% EMU ++ 1.1% 8.1% 1.0% US Equity Sector Strategy & Performance Agencies - 0.3% 0.3% 9.6% UK n 1.6% 16.7% -24.6% Market Returns Inv. Grade Corporates ++ 1.8% 15.5% -6.8% Japan -- 2.4% -2.7% 27.4% Sector Strategy* Weekly MTD YTD 2008 High Yield Corporates + 1.8% 40.3% -26.1% Total return indices in USD: Barclays Capital . Cons. Discr. + 3.1% 5.3% 25.1% -33.5% Preferred Securities n -1.5% 9.1% -25.2% Cons. Staples + 1.3% 1.1% 5.7% -15.4% Mortgages n 0.4% 4.1% 8.3% Regional Indicators Energy ++ 2.8% 3.0% 5.3% -34.9% Emerging Markets n 2.1% 19.4% -10.2% 2009 Consensus S&P 500 EPS USD 60 Financials n 3.2% 13.3% 19.1% -55.3% Municipals n.a 1.8% 11.2% -4.0% 2009 UBS WMR S&P 500 EPS USD 54 Health Care --- 2.0% 3.5% 9.8% -22.8% Total return indices in USD: BAS / Merrill Lynch 2010 Consensus S&P 500 EPS USD 75 Industrials + 3.3% 6.2% 9.2% -39.9% 2010 UBS WMR S&P 500 EPS USD 65 IT + 2.0% 3.2% 40.6% -43.1% Source: UBS WMR, All market performance data is from Bloomberg data as of date listed on top of this document, using representative indices and is Materials + 1.5% 3.0% 32.9% -45.7% provided for information only. Telecom - 2.2% -1.3% -0.4% -30.5% Please ask your Financial Advisor for the most recent Investment Strategy Guide and WMR Forecast Tables. Utlities -- 1.4% 1.8% 4.0% -29.0% Scale for tactical deviation charts Total return indices in USD: S&P 500 sector indices Symbol Description/Definition + moderate overweight vs. benchmark - moderate underweight vs. benchmark n Neutral, i.e. on benchmark US Equity Size, Style Strategy, and Performance ++ overweight vs. benchmark -- underweight vs. benchmark n/a not applicable Indicates +/- change in most Market Returns +++ strong overweight vs. benchmark --- strong underweight vs. benchmark + - recent update Style Strategy* MTD YTD 2008 The overweight and underweight recommendations represent tactical deviations that can be applied to any appropriate benchmark portfolio allocation. Large- Cap Value + 6.3% 11.8% -36.8% They reflect WMR’s short- to medium-term assessment of market opportunities and risks in the respective asset classes and market segments. The Large - Cap Growth + 3.0% 23.1% -38.4% benchmark allocation is not specified here. Please see the most recent Investment Strategy Guide for definitions/explanations of benchmark allocation. They should be chosen in line with the risk profile of the investor. Note that the Regional Equity Strategy is provided on an unhedged basis (i.e., it is Mid-Cap n 5.9% 26.8% -41.5% assumed that investors carry the underlying currency risk of such investments). Thus, the deviations from the benchmark reflect our views of the Small-Cap - 5.0% 18.1% -33.8% underlying equity in combination with our assessment of the associated currencies. Total return indices in USD: Russell This report has been prepared by UBS Financial Services Inc. (UBS FS) & UBS AG * Please see the most recent Investment Strategy Guide for an interpretation of the tactical tilts and an explanation of the corresponding benchmark allocation. 1
- 2. 8/28/2009 Wealth Management Research US pocket summary Currency Markets Performance & WMR Forecasts Central Bank Target Rates Overview and WMR Forecasts Market Returns Forecast 2010 current MTD YTD 2008 in 3 m in 6 m in 12 m in % Current Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul USDCAD 1.0877 0.9% -10.8% 22.1% 1.08 1.05 1.00 Fed 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 EURUSD 1.4341 0.6% 2.6% -4.2% 1.45 1.50 1.57 ECB 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 GBPUSD 1.6284 -2.6% 11.6% -26.5% 1.67 1.72 1.77 BoE 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 USDCHF 1.0594 -0.9% -0.9% -5.7% 1.05 1.01 0.99 BoJ 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 USDSEK 7.1254 -0.9% -9.1% 21.1% 6.90 6.53 6.11 SNB 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 USDJPY 93.5200 -1.2% 3.2% -18.9% 97.00 100.00 105.00 BoC 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 AUDUSD 0.8392 0.4% 19.4% -19.7% 0.83 0.85 0.88 RBA 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 Please refer to most recent WMR Forecast Tables for further details. Please refer to most recent WMR Forecast Tables for further details. Commodities Performance & WMR Forecasts Interest Rate WMR Forecasts Market Returns Forecast Short Rates Bond Yields current MTD YTD 2008 1-3 m 9-12m (3m LIBOR) (10y gov) WTI Crude (US$/bbl) 72.49 4.4% 62.5% -53.5% Sideways 85 in % current in 12m current in 12m Nat. Gas (US$/mmbtu) 2.84 -22.2% -49.4% -24.9% Bullish 6.20 USA 0.36 0.30 3.45 4.25 Gold (US$/oz) 944.60 0.6% 9.1% 5.8% Bullish 1150 Canada 0.56 0.30 3.39 3.80 Aluminum (US$/mt) 1851.00 -0.9% 22.8% -36.1% Bearish 1800 EMU 0.80 1.00 3.25 4.00 Copper (US$/mt) 6257.50 9.4% 105.7% -54.2% Bullish 7000 UK 0.69 0.60 3.56 4.30 Silver (US$/oz) 14.22 4.3% 30.7% -23.0% Bullish 15.00 Switzerland 0.32 0.30 1.98 2.80 Corn (Usc/bushel) 323.00 -4.9% -20.6% -10.6% Bullish 480 Japan 0.39 0.30 1.31 1.80 Bullish = we target the upper range, Sideways = we expect a sideways move, Bearish = we Please refer to most recent WMR Forecast Tables for target the lower range. Please refer to most recent WMR Forecast Tables for our short term further details. and long term views for 3 months and 12 months, respectively. Growth & Inflation WMR Forecasts Reports of Note Published in the Last Week - at a glance GDP Growth Inflation US economics: Cyclical recovery at the doorstep, Economic Theme, 28 Aug 2009 (Real GDP % chg. yoy) (CPI; % change yoy) In this edition of our monthly US economic outlook, we reiterate the rough roadmap for recovery that we laid out last month and introduce our in % 2008 2009F 2010F 2008 2009F 2010F detailed 2010 forecasts. We also test the hypothesis of a strong business fixed investment recovery despite a lackluster consumer recovery. In our view, historically low capacity utilization and a lack of vigorous consumer demand speak strongly against a robust recovery in business investment. World 3.2 -0.8 2.8 5.7 1.6 2.8 USA 0.4 -2.5 2.2 3.8 -0.7 1.8 As good as it gets, Investment Strategy Guide, 27 August 2009 Canada 0.7 -1.5 2.2 2.4 0.5 2.1 Equity markets have continued to move higher this month, buoyed by additional evidence that the global economy is on the path to recovery. We EMU 0.7 -4.0 0.2 3.3 0.5 1.3 recommend holding a pro-cyclical portfolio tilt. This includes a preference for equities and commodities over fixed income and cash, a preference Germany 1.3 -6.0 0.3 2.6 0.5 1.5 for cyclical over defensive equity sectors, and a preference for corporate bonds over other parts of the fixed in-come market. France 0.7 -2.5 0.5 2.8 0.6 1.5 Italy -0.9 -4.0 -0.1 3.3 1.0 1.8 Equity markets: The case for having equities in portfolios, Market Update, 26 Aug 2009 Even after a huge rally, with shares rising more than 45% from their lows in March, there is still a case for including equities in a portfolio. Spain 1.0 -3.7 -0.8 4.1 0.8 2.0 The case is built on a longer-term outlook rather than on any quick-win trading opportunities. The gains stemming from the relief that a UK 0.7 -3.4 -0.2 3.6 0.7 1.4 full-fledged depression had been avoided are now mostly behind us. As more normal, cyclical patterns re-emerge, our valuation analysis Switzerland 1.6 -2.8 -0.4 2.4 -0.4 0.6 still suggests that equities should offer good longer-term returns. Japan -0.7 -6.0 1.5 1.4 -0.8 0.5 Asia ex Japan 6.0 3.0 6.1 6.2 0.3 2.6 Investing in volatile times, Part 3: Achieving financial goals in a changed world, UBS life themes, 26 Aug 2009 China 9.0 7.8 8.5 6.1 -1.2 1.6 Defining your goals is a vital first step to long-term investment success and peace of mind. The aftermath of the financial crisis will impact Please refer to most recent WMR Forecast Tables for further details. the investment landscape in several ways, including probable changes to tax policies and pension programs. Your goals need to be defined and structured in a comprehensive personal financial plan. Financial crisis thermometers: Bi-weekly update, Economic Theme, 24 Aug 2009 In this report, we give our stance on where we stand in the current financial crisis by measuring financial, economic and credit health with the help of "thermometers". The financial health thermometer for the US and Eurozone deteriorated mildly, while it improved for the UK and stalled for Japan over the course of the last two weeks. The US credit health thermometer improved in July and now stands below its level immediately preceding the collapse of Lehman Brothers last fall. *To access these reports please contact your Financial Advisor or access the reports via online services 2
- 3. Disclaimer In certain countries UBS AG is referred to as UBS SA. This publication is for our clients’ information only and is not intended as an offer, or a solicitation of an offer, to buy or sell any investment or other specific product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation and needs of any specific recipient. We recommend that recipients take financial and/or tax advice as to the implications of investing in any of the products mentioned herein. We do not provide tax advice. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. Other than disclosures relating to UBS AG, its subsidiaries and affiliates, all information expressed in this document were obtained from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to its accuracy or completeness. All information and opinions are current only as of the date of this report, and are subject to change without notice. This publication is not intended to be a complete statement or summary of the securities, markets or developments referred to in the report. Opinions may differ or be contrary to those expressed by other business areas or groups of UBS AG, its subsidiaries and affiliates. UBS Wealth Management Research (UBS WMR) is written by Wealth Management & Swiss Bank and Wealth Management Americas. UBS Investment Research is written by UBS Investment Bank. The research process of UBS WMR is independent of UBS Investment Research. As a consequence research methodologies applied and assumptions made by UBS WMR and UBS Investment Research may differ, for example, in terms of investment horizon, model assumptions, and valuation methods. Therefore investment recommendations independently provided by the two UBS research organizations can be different. The analyst(s) responsible for the preparation of this report may interact with trading desk personnel, sales personnel and other constituencies for the purpose of gathering, synthesizing and interpreting market information. The compensation of the analyst(s) who prepared this report is determined exclusively by research management and senior management (not including investment banking). Analyst compensation is not based on investment banking revenues, however, compensation may relate to the revenues of UBS as a whole, of which investment banking, sales and trading are a part. At any time UBS AG, its subsidiaries and affiliates (or employees thereof) may make investment decisions that are inconsistent with the opinions expressed in this publication, may have a long or short positions in or act as principal or agent in, the securities (or derivatives thereof) of an issuer identified in this publication, or provide advisory or other services to the issuer or to a company connected with an issuer. Some investments may not be readily realizable since the market in the securities is illiquid and therefore valuing the investment and identifying the risk to which you are exposed may be difficult to quantify. UBS relies on information barriers to control the flow of information contained in one or more areas within UBS, into other areas, units, groups or affiliates of UBS. Some investments may be subject to sudden and large falls in value and on realization you may receive back less than you invested or may be required to pay more. Changes in foreign currency exchange rates may have an adverse effect on the price, value or income of an investment. Past performance of an investment is not a guide to its future performance. Additional information will be made available upon request. All Rights Reserved. This document may not be reproduced or copies circulated without prior written authority of UBS or a subsidiary of UBS. UBS expressly prohibits the distribution and transfer of this document to third parties for any reason. UBS will not be liable for any claims or lawsuits from any third parties arising from the use or distribution of this document. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to all categories of investors. Australia: Distributed by UBS Wealth Management Australia Ltd (Holder of Australian Financial Services Licence No. 231127), Chifley Tower, 2 Chifley Square, Sydney, New South Wales, NSW 2000. Bahamas: This publication is distributed to private clients of UBS (Bahamas) Ltd and is not intended for distribution to persons designated as a Bahamian citizen or resident under the Bahamas Exchange Control Regulations. Canada: In Canada, this publication is distributed to clients of UBS Wealth Management Canada by UBS Investment Management Canada Inc. Dubai: Research is issued by UBS AG Dubai Branch within the DIFC, is intended for professional clients only and is not for onward distribution within the United Arab Emirates". France: This publication is distributed to clients of UBS (France) SA, 69, boulevard Haussmann F-75008 Paris, R.C.S. Paris B 421 255 670, a duly authorized bank under the terms of the «Code Monétaire et Financier», regulated by French banking and financial authorities as the «Banque de France» and the «Autorité des Marchés Financiers». Germany: The issuer under German Law is UBS Deutschland AG, Stephanstrasse 14-16, 60313 Frankfurt am Main. UBS Deutschland AG is authorized and regulated by the «Bundesanstalt für Finanzdienstleistungsaufsicht». Hong Kong: This publication is distributed to clients of UBS AG Hong Kong Branch by UBS AG Hong Kong Branch, a licensed bank under the Hong Kong Banking Ordinance and a registered institution under the Securities and Futures Ordinance. Indonesia: This research or publication is not intended and not prepared for purposes of public offering of securities under the Indonesian Capital Market Law and its implementing regulations. Securities mentioned in this material have not been, and will not be, registered under the Indonesian Capital Market Law and regulations. Italy: This publication is distributed to the clients of UBS (Italia) S.p.A., via del vecchio politecnico 3 - Milano, an Italian bank duly authorized by Bank of Italy to the provision of financial services and supervised by «Consob» and Bank of Italy. Jersey: UBS AG, Jersey Branch is regulated by the Jersey Financial Services Commission to carry on investment business and trust company business under the Financial Services (Jersey) Law 1998 (as amended) and to carry on banking business under the Banking Business (Jersey) Law 1991 (as amended). Luxembourg/Austria: This publication is not intended to constitute a public offer under Luxembourg/Austrian law, but might be made available for information purposes to clients of UBS (Luxembourg) S.A./UBS (Luxembourg) S.A. Niederlassung Österreich, a regulated bank under the supervision of the «Commission de Surveillance du Secteur Financier» (CSSF), to which this publication has not been submitted for approval. Singapore: This material is distributed to clients of UBS AG Singapore Branch by UBS AG Singapore Branch, an exempt financial adviser under the Singapore Financial Advisers Act (Cap. 110) and a wholesale bank licensed under the Singapore Banking Act (Cap. 19), regulated by the Monetary Authority of Singapore. Spain: This publication is distributed to clients of UBS Bank, S.A. by UBS Bank, S.A., a bank registered with the Bank of Spain. UAE: This research report is not intended to constitute an offer, sale or delivery of shares or other securities under the laws of the United Arab Emirates (UAE). The contents of this report have not been and will not be approved by any authority in the United Arab Emirates including the UAE Central Bank or Dubai Financial Authorities, the Emirates Securities and Commodities Authority, the Dubai Financial Market, the Abu Dhabi Securities market or any other UAE exchange. UK: Approved by UBS AG, authorised and regulated in the UK by the Financial Services Authority. A member of the London Stock Exchange. This publication is distributed to private clients of UBS London in the UK. Where products or services are provided from outside the UK they will not be covered by the UK regulatory regime or the Financial Services Compensation Scheme. USA: Distributed to US persons by UBS Financial Services Inc., a subsidiary of UBS AG and an affiliate of UBS Securities LLC. UBS Financial Services Inc. accepts responsibility for the content of a report prepared by a non-US affiliate when it distributes reports to US persons. All transactions by a US person in the securities mentioned in this report should be effected through a US-registered broker dealer affiliated with UBS, and not through a non-US affiliate. Version as per June 2009. © UBS 2009. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. 3