Thursday, November 16, 2006

1
Thursday, November 16, 2006
Presented by Matt Berry
2
Federal Reserve Bank

• Market surges on Tuesday thanks to St. Louis Fed
  Chief Pooles comments that the interest rate
  policy is about right and could go either way
  in the future.
• Wall Street rallied again Wednesday, with the Dow
  Jones industrials scoring another record close as
  investors grew more confident that the Federal
  Reserve has inflation in hand.

3
Exchange Rates

• The dollar declined after data showed
  lower-than-expected U.S. inflation, which
  diminishes the chances of a dollar-supportive
  adjustment to interest rates by the Federal
  Reserve.
• The greenback reversed early losses to trade flat
  versus the Euro after French Prime Minister
  Dominique de Villepin said the Euro's management
  can't be left to the European Central Bank alone
  and called for "collaboration" at the European
  level on managing the Euro exchange rate.

4
Exchange Rates
Dollar VS Yen
Dollar VS Euro
5
International Markets

• France and Japan may have hit some rough patches,
  but the global economy still looks plenty solid
  heading into 2007
• France, the Eurozone's second-biggest economy
  after Germany, reported that its economic growth
  had ground to a halt in the third quarter, down
  from 1.2 in the second quarter.
• The Japanese government reported that core
  machinery orders fell 7.4 in September, instead
  of rising by 2.5 or so as the markets had been
  expecting.
• China remains a key engine for growth, with
  economic expansion expected at 10 in 2006
• The biggest cause of the expected mild slowdown
  next year is weakness in the U.S., estimated in
  growth of 2.4 for the U.S. in 2007, vs. 3.3 in
  2006.
• Dragging down the U.S. is the housing market's
  sharp slowdown, along with the continued effect
  of the Fed's campaign of raising rates

6
Stock Index - Asia
7
Stock Index - Europe
8
Sector Performance

• Leaders
• Technology (3.11)
• Energy (1.98)
• Utilities (1.81)
• Losers
• Health Care (-2.65)
• Telecommunications (-1.97)

9
Information Technology

• Cisco Systems was the highlight of the day
  11/13/2006 in the tech sector due to beating
  expectations and issuing upside Q2 revenue growth
  guidance.
• Napster reported mixed 2Q07 results. Furthermore,
  firm expects to experience headwinds this holiday
  season from the its multi-firm tech
  relationships, as well as Microsoft's Zune.
• UBS stated their belief that things have not
  changed materially from Motorolas earnings call
  3 wks ago and believe business and handset
  launches remain on track.
• Apple has teamed up with Air France, Continental,
  Delta, Emirates, KLM United to deliver iPod
  integration
• This week, Sun Microsystems said it will make its
  highly popular programming language, Java,
  available open-source.

10
Information Technology
11
Information Technology

• Market Cap 5283.6B (5196.3B)
• P/E 25.19 (26.13)
• ROE 14.89 (14.87)
• Dividend Yield 2.02 (2.02)
• Long Term Debt to Equity 0.73 (0.71)
• Price to Book Value 7.61 (7.07)
• Net Profit Margin 10.72 (10.67)
• Price to Free Cash Flow 49.34 (67.67)

12
Energy

• Oil prices rose this week after the government
  said supplies of crude oil rose but reported a
  big drop in gasoline and distillate stocks.
• U.S. light crude for December delivery gained 48
  cents to 58.76 a barrel on the New York
  Mercantile Exchange
• Several companies that buy oil products from
  Citgo Petroleum filed a lawsuit this week
  alleging the Venezuelan-owned refiner helped OPEC
  fix energy prices in the United States.
• Pacific Energy Partners LP and Plains All
  American Pipeline LP have announced the
  completion of their merger.

13
Energy
14
Energy

• Market Cap 1606.8B (1574.6B)
• P/E 8.50 (8.50)
• ROE 28.50 (28.50)
• Dividend Yield 2.71 (2.85)
• Long Term Debt to Equity 0.28 (0.36)
• Price to Book Value 2.91 (2.93)
• Net Profit Margin 11.30 (11.30)
• Price to Free Cash Flow 30.20 (40.20)

15
Utilities

• Increasing tension between Ameren Corp. and
  Missouri officials is delaying cleanup efforts at
  Johnson's Shut-Ins State Park, which was
  devastated last year when Ameren's Taum Sauk
  reservoir collapsed.
• ONEOK, Inc. announced today that its energy
  services segment ranked as the top "major"
  natural gas marketer for 2006 in the latest
  MASTIOGALE, or "Mastio," Natural Gas Marketer
  Customer Value Study.
• Constellation Energy Partners LLC, a buyer and
  developer of oil and natural gas properties, said
  its initial public offering will be priced at 21
  per common unit to raise 94.5 million

16
Utilities
17
Utilities

• Market Cap 1083.9B (1059.1B)
• P/E 33.26 (36.03)
• ROE 14.78 (15.08)
• Dividend Yield 3.51 (3.89)
• Long Term Debt to Equity 1.64 (2.11)
• Price to Book Value 2.65 (2.76)
• Net Profit Margin 8.14 (8.22)
• Price to Free Cash Flow -282.16 (-264.0)

18
Industrial - Goods

• Lafarge SA, the world's largest maker of cement,
  said Thursday profit rose 32 in the third
  quarter on stronger demand and as the company
  boosted prices.
• General Electric and Hitachi are joining forces
  in a 2 billion deal that will produce nuclear
  power ventures in the U.S. and Japan. The two
  companies which have shared a joint venture in
  nuclear fuels, are planning to bid on the
  construction of a nuclear power plant in Texas,
  which could be among the first constructed in the
  U.S. for 30 years.

19
Industrial - Goods
20
Industrials - Goods

• Market Cap 1114.9B (1092.8B)
• P/E 16.39 (16.29)
• ROE 14.94 (15.02)
• Dividend Yield 1.54 (1.57)
• Long Term Debt to Equity 0.83 (0.79)
• Price to Book Value -333.10 (70.32)
• Net Profit Margin 5.40 (5.44)
• Price to Free Cash Flow 113.73 (93.76)

21
Industrial - Services

• Target shares rose 2.4 to 59.16 after the
  discounter, second in size to Wal-Mart, said it
  made 16 more in the third quarter compared with
  last year. Much of the growth came at the hands
  of better credit-card sales -- up nearly 21 --
  and new-store openings.
• With its new seasonal ad campaign, Sears Roebuck
  and Co. is celebrating the holidays through the
  eyes of someone who sees them like no one else
  Mom.
• US Airways made a hostile offer for Delta Air
  Lines on Wednesday.

22
Industrial - Services
23
Industrials - Services

• Market Cap 3221.0B (3174.3B)
• P/E 23.25 (23.37)
• ROE 14.77 (14.52)
• Dividend Yield 1.29 (1.29)
• Long Term Debt to Equity 1.02 (0.92)
• Price to Book Value -0.48 (1.21)
• Net Profit Margin 5.99 (5.93)
• Price to Free Cash Flow 10.46 (-7.20)

24
Financials

• KeyBank senior VP arrested in Cleveland on
  charges of embezzling 29 million from bank
• Wachovia announces it will pay workers on
  military leave their full salary throughout their
  active service effective 1-1-07

25
Financials
26
Financials

• Market Cap 6010.9B (7258.1B)
• P/E 14.53 (13.04)
• ROE 17.19 (17.03)
• Dividend Yield 2.63 (2.40)
• Long Term Debt to Equity 2.54 (2.46)
• Price to Book Value 2.78 (2.69)
• Net Profit Margin 14.85 (14.01)
• Price to Free Cash Flow 18.79 (17.75)

27
Consumer Staples

• Spectrum Brands announces big loss
• Altria up on upgrade to Buy by Goldman Sachs
• Procter Gamble Co. said that it will resume
  selling its SK-II skin care products in China,
  after safety concerns prompted a two-month
  suspension.

28
Consumer Staples
29
Consumer Discretionary

• Heads of the Big 3 meet with President Bush
• McDonalds looking to China for growth, but not
  yet ready to introduce new oil with less trans
  fats
• The Federal Deposit Insurance Corp. announced
  Wednesday that it approved a group of investors'
  application to take over a bank owned by the
  profitable finance arm of General Motors Corp.
• Pepsi feeling pressure due to crackdown on trans
  fats and looking increasingly at tea and water
• The makers of Johnnie Walker Blue Label, Diageo
  PLC, announced plans to bring contemporary art to
  the public through a new multi-million dollar
  integrated marketing campaign that uses
  contemporary art to reinforce Blue Label as a
  luxury brand.

30
Consumer Discretionary
31
Consumer Goods Staples Discretionary

• Market Cap 2693.9B (2670.9B)
• P/E 52.14 (25.52)
• ROE 17.76 (17.44)
• Dividend Yield 2.07 (2.07)
• Long Term Debt to Equity 1.28 (1.26)
• Price to Book Value -11.55 (-10.68)
• Net Profit Margin 6.96 (6.83)
• Price to Free Cash Flow 78.51 (83.32)

32
Basic Materials
33
Basic Materials

• Silver
• Silver miners rallying, but expect more upside
• Agricultural Chemicals

34
Basic Materials
35
Basic Materials

• Market Cap 4557.3B (4483.5B)
• P/E 11.68 (11.64)
• ROE 26.39 (26.98)
• Dividend Yield 2.21 (2.26)
• Long Term Debt to Equity 0.44 (0.44)
• Price to Book Value 3.27 (3.31)
• Net Profit Margin 12.06 (12.10)
• Price to Free Cash Flow -35.34 (27.68)

36
Telecommunications Services

• ATT, BellSouth Slide on Merger Worries
• ATT Extends Global Network to Vietnam
• Cingular plans mobile banking service for 2007
• Supreme Court rejects Qwest appeal

37
Telecommunications Services
Foreign
Domestic
38
Telecommunications Services - Domestic

• Market Cap 413.3B (420.2B)
• P/E 19.80 (19.40)
• ROE 13.30 (13.40)
• Dividend Yield 3.73 (3.56)
• Long Term Debt to Equity 0.90 (0.78)
• Price to Book Value 7.65 (7.87)
• Net Profit Margin 9.70 (9.80)
• Price to Free Cash Flow 50.60 (52.4)

39
Health Care

• Drug stocks slumped for several days after the
  election due to fears of government intervention
  in drug pricing.
• Shares of Novartis were down sharply after a
  decision on the approval of a key diabetes drug
  was delayed three months.
• Effectiveness of using stents in heart attack
  patients questioned by a new study. Stents
  currently generate 5 billion a year in sales.

40
Health Care
41
Health Care

• Market Cap 2559.5B (2630.2B)
• P/E 43.47 (28.13)
• ROE 14.91 (14.73)
• Dividend Yield 1.67 (1.63)
• Long Term Debt to Equity 0.55 (0.55)
• Price to Book Value 4.67 (5.32)
• Net Profit Margin 11.70 (10.86)
• Price to Free Cash Flow -293.76 (53.75)

42
Week of 11/13/2006