Presentation is loading. Please wait.

Presentation is loading. Please wait.

PB Americas The Investment Landscape – April 2010 Private Banking Americas Investment Strategy & Advisory Group The Investment Landscape April 2010.

Similar presentations


Presentation on theme: "PB Americas The Investment Landscape – April 2010 Private Banking Americas Investment Strategy & Advisory Group The Investment Landscape April 2010."— Presentation transcript:

1 PB Americas The Investment Landscape – April 2010 Private Banking Americas Investment Strategy & Advisory Group The Investment Landscape April 2010

2 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Important Legal Information This information is not intended to be a recommendation or opinion regarding the equity securities of the referenced companies. This material may not be used or relied upon for any purpose other than as specifically contemplated by a written agreement with Credit Suisse Securities (USA) LLC (CSSU). This material has been prepared by the Chief Investment Officer of the Private Banking USA business of CSSU and not by the CSSU research department. It is provided for informational purposes, is intended for your use only and does not constitute an invitation or offer to subscribe for or purchase any of the products or services mentioned. The material is not intended to provide a sufficient basis on which to make an investment decision. It is intended only to provide observations and views of the Chief Investment Officer, which may be different from, or inconsistent with, the observations and views of CSSU research department analysts, CSSU traders or sales personnel, or the proprietary positions of CSSU. Observations and views expressed herein may be changed by the Chief Investment Officer at any time without notice. Past performance is not an indication or guarantee of future performance, and no representation or warranty, expressed or implied is made regarding future performance. The material set forth above has been obtained from or based upon sources believed to be reliable but CSSU does not represent or warrant its accuracy or completeness and is not responsible for losses or damages arising out of errors, omissions or changes in market factors. 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. CSSU may, from time to time, participate or invest in transactions with issuers of securities that participate in the markets referred to herein, perform services for or solicit business from such issuers, and/or have a position or effect transactions in the securities or derivatives thereof. The material does not constitute objective research under FSA rules. The most recent CSSU research on any company mentioned is available to online subscribers at www.credit-suisse.com/pbclientview. CSSU does not provide legal or tax advice. Consult your personal accounting, legal, and tax advisor with respect to any legal or tax implications.www.credit-suisse.com/pbclientview The Private Banking USA business in CSSU is a regulated broker dealer and investment advisor. It is not a chartered bank, trust company or depository institution. It is not authorized to accept deposits or provide corporate trust services and it is not licensed or regulated by any state or federal banking authority. Internal Revenue Service Circular 230 Disclosure: As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein. ©2010 Credit Suisse Securities (USA) LLC. All rights reserved.

3 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Table of Contents Executive Summary CIO Webcast Market/Strategy Summary Key Focus: – China – Health Care Guideline Allocations Global Markets Recap Market and Economic Outlook

4 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information.

5 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information.

6 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. April CIO Webcast – Key Focus: China CLICK TO PLAY

7 PB Americas The Investment Landscape – April 2010 Market / Strategy Summary

8 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. – Global growth on uptrend, investment and jobs outlook improving US economic reports continue to surprise to upside Solid US jobs growth should boost consumer confidence, spending – Equities recover following early year selloff, outlook positive Upside from improving economy (earnings), fair valuations, high cash levels Favor quality growth, low debt and emerging markets exposure Overweight US, Asia ex-Japan (focus on China), and Brazil – Central banks likely delay hikes, Treasury yields to see gradual rise Now expect Fed to raise rates to only 1% in 2010; 10Yr Treasury 4% - 4.25% Credit: spreads below 10 year average; security selection gains importance – Currencies: Dollar neutral near term, longer term bearish due to deficits – Expect emerging market and commodity-related currencies to show strength – Commodities : prices should trend higher, volatility may persist Overweight oil and base metals; demographics support agriculture Precious metals: rising yields negative for gold, prefer platinum and silver Market/Strategy Summary – April 2010 Source: Credit Suisse Investment Strategy & Advisory

9 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Global activity and outlook continues uptrend Purchasing Managers Index (PMI) Source: Bloomberg via Credit Suisse IDC

10 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. US economic reports continue to surprise to upside US Economic Surprise Index (reports vs. consensus) Source: Bloomberg

11 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. US jobs growth should boost consumer confidence, spending US Nonfarm Payrolls (Monthly Change,000s) Source: Bloomberg

12 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. After early year selloff, US leads global equity markets higher YTD % Change: S&P 500, MSCI EAFE, MSCI Emerging Markets Source: Thomson-Datastream

13 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. 2010 projected EPS of $78 supports higher market levels S&P 500 Annual Earnings Per Share Forecasts Source: Bloomberg +20% +31%

14 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Equities and USD have both rallied, reversing earlier trend S&P 500 and EUR/USD Exchange Rate Source: Thomson-Datastream Equity Strength / Dollar Weakness

15 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. 10Y - 2Y spread likely to narrow from historic levels US Treasury Yield 10 Yr and 2 Yr Source: Thomson-Datastream 10Y: 3.83% 2Y: 1.02%

16 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Credit spreads below average; security selection important Barclays US High Yield less 10-Yr Treasury (In bps) Source: Thomson-Datastream Avg: 612 bps 12/16/08: 2045 bps 3/31/10: 464 bps

17 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Expect commodity prices to trend higher, volatility may persist DJ UBS Commodity Index Source: Thomson-Datastream +30%

18 PB Americas The Investment Landscape – April 2010 Dashboard 2010 Key Focus: China

19 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. China Growth expected to remain strong, driving global activity Export growth returns to pre-crisis levels, augmenting domestic strength Equity valuations near 5 year avg. of 13; attractive given growth outlook Loan growth still robust, slowing to more sustainable levels Consumer Consumer confidence has improved, remains at low levels Credit Bank lending surveys point to improving lending conditions Commodities Rising liquidity (open interest) in commodities is supportive of prices Cash Corporate cash levels (relative to market cap) remain elevated Dashboard 2010 - Key Focus: China Source: Credit Suisse Investment Strategy & Advisory

20 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Chinese growth to remain strong, driving global activity Real GDP Growth (Y-o-Y % Change) Source: Credit Suisse 2010 Dashboard: China

21 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Export growth returns, augmenting domestic strength Chinese Exports, Y-o-Y % Change, 3 Month Moving Average Source: Bloomberg via Credit Suisse IDC 2010 Dashboard: China

22 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Equity valuations attractive given healthy growth outlook MSCI China Forward P/E Source: Thomson-Datastream via Credit Suisse IDC 2010 Dashboard: China Avg: 13.4 3/31/10: 13.0

23 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Loan growth still robust, slowing to more sustainable levels Chinese Loan Growth (Y-o-Y % Change) Source: Bloomberg via Credit Suisse IDC 2010 Dashboard: China

24 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. US consumer confidence has improved, remains at low levels US Consumer Confidence Source: Thomson-Datastream 2010 Dashboard: Consumer Feb-09: 25.3 Mar-10: 52.5

25 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Bank lending surveys point to improving lending conditions Net % of banks tightening lending standards (commercial & industrial loans) Source: Thomson-Datastream via Credit Suisse IDC 2010 Dashboard: Credit Lending tightening

26 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Rising liquidity (open interest) is supportive of prices Commodity Research Bureau (CRB) Open Interest Source: Bloomberg 2010 Dashboard: Commodities

27 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Corporate cash levels (vs. market cap) remain elevated US Non-Financial Corporate Cash / Market Cap Source: Thomson-Datastream via Credit Suisse IDC 2010 Dashboard: Cash

28 PB Americas The Investment Landscape – April 2010 Key Focus: US Health Care

29 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. The US spends 16% of GDP on health care, more than any other developed nation and 710 bps more than OECD average The bill is projected to save $143 billion over 10 years – Total Cost: -$938 bln (Medicaid outlays, exchange subsidies) – Total Savings: +$511 bln (cuts in Medicare/caid fees paid) – Total Fees & Taxes: +$569 bln (health insurance taxes, fees & penalties) – Net Savings ~ $143 billion Health Care underperformed by 15% over past 12 months and valuations remain depressed as uncertainty clouds sector outlook Winners and losers not yet clear, but market moves point to facilities and drug retail as potential winners; managed care and biotech as losers Key Focus: US Health Care Source: Credit Suisse Investment Strategy & Advisory

30 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. US spends more on health care than any other developed nation Total Health Expenditure as % of GDP for select countries Source: OECD Health Data 2009 KEY FOCUS: US HEALTH CARE

31 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. 2010 Senior rebate of $250 for Medicare prescription drug (donut hole) Insurers cant exclude children with preconditions, lifetime limits prohibited Business with less than 50 employees get credit for 35% of premiums Children must be allowed to stay on parents plan until 27 th birthday 2011 50% brand name drug discount for Prescription Plan or Medicare Advantage 2013 Contribution on flexible savings accounts capped at $2,500 Employers lose tax deduction for subsidizing prescription drug plan for Medicare Part D eligible retirees 3.8% tax on investment income for families earning >$250k (individuals, $200k) Medicare payroll tax increase from 1.45% to 2.35% for individuals earning over $200k, families $250k Medical device tax of 2.9% Health Care Bill Key Points Timeline Source: Credit Suisse Investment Strategy & Advisory KEY FOCUS: US HEALTH CARE

32 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. 2014 Health insurance required; no-coverage penalty = $95 in 2014, $325 in 2015, $695 in 2016 Companies with 50+ employees must offer coverage or pay penalty of $2,000 per employee Insurers cant refuse policies based on medical preconditions Health plans prohibited from imposing annual limits on coverage Health exchanges open Credit offered to Medicaid eligible and below 400% of poverty level* States required to expand Medicaid to childless adults (illegal immigrants not eligible) 2018 Insurance companies will pay a 40% excise tax on Cadillac plans worth over $27,500 for families ($10,200 individuals) (exempt-dental/vision plans) Health Care Bill Timeline (cont) Source: Credit Suisse Investment Strategy & Advisory KEY FOCUS: US HEALTH CARE *Current poverty level: $22,500 for family of four

33 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. The bulk of fees and taxes take effect in later years Projected revenue (fees & taxes) by calendar year (US$, billions) Source: Bureau of Labor Statistics KEY FOCUS: US HEALTH CARE

34 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Health care sector underperformed by 15% past 12 months S&P 500 and S&P 500 Healthcare Sector (Indexed to 0 at 3/31/09) Source: Bloomberg KEY FOCUS: US HEALTH CARE

35 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Health care sector valuations have trended lower vs market S&P 500 Health Care Sector P/E relative to S&P 500 P/E (Trailing) Source: Bloomberg KEY FOCUS: US HEALTH CARE

36 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Health Care Industries after bill passed: Top 3 and Bottom 3 Monday (3/22) and week (3/22-25) after bill passed Source: Bloomberg KEY FOCUS: US HEALTH CARE

37 PB Americas The Investment Landscape – April 2010 Guideline Allocations & Tactical Overweights

38 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Guideline Allocations Source: Credit Suisse Investment Strategy & Advisory

39 PB Americas The Investment Landscape – April 2010 Global Markets Recap

40 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Global Markets Recap Equities Resolution to health care reform added to Feb.s momentum in the US (S&P +6.0%), while EU resolve to address Greek debt worries helped euro area and non-US developed (DJ Euro Stoxx +7.9%). Emerging markets: strong March (+6.2%) pushed the group in the green for the year. Russia is top performer YTD on rising oil prices. Continuing Feb.s trend, sectors levered to industrial expansion (basic materials, industrials, financials) continued their outperformance. Telecomm, utilities and energy are bottom 3 sectors YTD. In US, small cap (+8.1%) outperformed large cap (+6.1%) by 2.2% YTD, while value has bested growth in both small and large cap spaces. Currency Positive economic news pushed dollar higher vs euro while expectations for earlier US tightening helped USD reverse weakness against the yen. Higher energy prices gave strength to the Canadian dollar vs US dollar. Source: Credit Suisse Investment Strategy & Advisory

41 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Global Markets Recap Interest Rates & Credit US Treasury yields moved higher across the curve in March, causing parallel shift up: 2 Yr +21 bps and 10 Yr +22 bps. Most government yields are slightly lower on the year due to tame inflation reports and accommodative central banks. Credit spreads narrowed again in March as risk aversion abated and investors reached for yield, pushing prices higher: US high yield spread fell 90 bps, emerging markets -50 bps. Tax-exempt yields narrowed and remain below Treasury (5Yr muni yield about 70% of Treasury). Commodities Despite some volatility, most commodities continued to push higher in March: copper +8.5%, oil +5.1%, gold +0.7%. Natural gas continues to be exception, down 20.1% (-34% YTD) due to abundance of supply. Volatility The Volatility Index (VIX) edged lower (-4.6%) to 17.6, as progress on US health and Greek debt issues helped keep the fear index at low levels. Source: Credit Suisse Investment Strategy & Advisory

42 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. GLOBAL MARKETS Total Return Through 03/31/10 Source: DataStream

43 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. GLOBAL EQUITY MARKETS YTD Price change in local currency (YTD through 3/31/10) Source: Thomson-Datastream

44 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. GLOBAL EQUITY MARKETS Mar-10 Price change in local currency (March 2010) Source: Thomson-Datastream

45 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. GLOBAL SECTORS (S&P 1200 Global) Price change in USD (YTD Through 03/31/10) Source: Thomson-Datastream

46 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. US EQUITY RETURNS (Size & Style) Total Return Through 03/31/10 Source: Thomson-Datastream, Bloomberg

47 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. US SECTORS (S&P 500) Price Change Through 03/31/10 Source: Thomson-Datastream

48 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. CURRENCY % Change As of 03/31/10 Source: Thomson-Datastream

49 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. GLOBAL INTEREST RATES 10Y Govt Bond Yield (12/31/09 & 03/31/10) Source: Thomson-Datastream

50 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. US FIXED INCOME & RATES As of 03/31/10 Source: Thomson-Datastream

51 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. CREDIT Spread to 10-Yr Treasury As of 03/31/10 (Basis Points) Source: Thomson-Datastream

52 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. COMMODITIES % Change As of 03/31/10 (Spot Price) Source: Thomson-Datastream

53 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. HEDGE FUND STRATEGIES Credit Suisse/Tremont Hedge Fund Index As of 2/26/10 (most recent data available) Source: Credit Suisse/Tremont Hedge Fund Index, Thomson- Datastream

54 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. CBOE Volatility Index (VIX) Source: Thomson-Datastream

55 PB Americas The Investment Landscape – April 2010 Looking Ahead – 2010 Market & Economic Outlook

56 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Market & Economic Outlook Summary Global growth strong, likely more self-sustaining as business investment and private consumption outlooks improve. Emerging markets remain driver (healthy domestic demand, recovering exports), but inflation pressures rising. Positive job creation in US should lead to improved consumer confidence and spending; forecast 2010 GDP growth of 3.5% (highest in developed world). Recent equity rally (following early year selloff) likely has further near term upside. Strategic outlook positive due to low debt/high cash levels, attractive valuations and improving and increasingly global economy. Remain overweight US, emerging Asia and Brazil. In the US, focus on companies with global exposure (particularly emerging markets), high cash levels and low debt. Overweight technology and consumer staples. Underweight utilities which faces headwinds from rising rates. Source: Credit Suisse Investment Strategy & Advisory

57 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Market & Economic Outlook Summary Special measures from central banks slowly being removed, likely to be followed by more formal tightening of rates later in 2010/early 2011. Now expect fed funds at 1% end 2010 (down from 1.50%), still conditional on employment picture improving. 2010 forecast ECB +50 bps; BOE +100 bps; BOJ on hold as deflation persists. Credit spreads below historic averages, broad based price gains likely limited – security selection gains importance. Recommend staying with short to medium maturities to limit interest rate risk. US muni bonds: focus on high quality general obligation bonds. US dollar neutral near term; bearish medium and long term (deficits and lack of rate support). Positive on commodity-related currencies. Commodity prices should continue upward trend. Demand from developed economies likely to drive further upside in base metals and oil. Rising rates negative for gold prices, prefer platinum. Source: Credit Suisse Investment Strategy & Advisory

58 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. GLOBAL ECONOMIC OUTLOOK Real GDP Growth Source: Credit Suisse estimates

59 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Healthy 2010 growth outlook led by emerging markets & US 2010 Real GDP Growth Forecasts (Y-o-Y) Source: Credit Suisse estimates

60 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. GLOBAL EQUITIES OUTLOOK Source: Credit Suisse estimates

61 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. Global Equities Snapshot (As of 03/31/10) Source: Standard and Poors, Bloomberg, MSCI Barra, CS estimates

62 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. EQUITY INDEX FORECASTS Source: Credit Suisse estimates

63 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. S&P 500 SECTOR OUTLOOK Source: Credit Suisse estimates

64 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. S&P 500 Sector Snapshot (As of 03/31/10) Source: Standard and Poors, Bloomberg, CS estimates

65 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. POLICY RATE OUTLOOK Government Policy Rates (%) Source: Credit Suisse estimates

66 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. INTEREST RATE OUTLOOK 10-Yr Government Bond Yield Source: Bloomberg, Credit Suisse estimates

67 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. CREDIT OUTLOOK Source: Credit Suisse estimates

68 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. CURRENCY OUTLOOK Source: Credit Suisse estimates

69 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. CURRENCY FORECASTS Source: Credit Suisse estimates

70 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. HEDGE FUND OUTLOOK Through February, 2010 (most recent data available) Source: Credit Suisse estimates

71 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. COMMODITIES OUTLOOK Source: Credit Suisse

72 The Investment Landscape – April 2010 This document is not complete without attached Important Legal Information. COMMODITIES FORECASTS Source: Bloomberg, Thomson-Datastream, Credit Suisse estimates

73 PB Americas The Investment Landscape – April 2010 Private Banking Americas Investment Strategy & Advisory Group The Investment Landscape April 2010


Download ppt "PB Americas The Investment Landscape – April 2010 Private Banking Americas Investment Strategy & Advisory Group The Investment Landscape April 2010."

Similar presentations


Ads by Google