JUL 15 Wells Fargo Global Chartbook - July 2010

July 15, 2010
Economics Group
Special Commentary
Global Chartbook: July 2010

Executive Summary: Is Global Recovery Still in the Cards? Contents Page
The seizing of financial markets that followed Lehman Brothers’ failure in September 2008 World – 3
caused the global economy to fall into its deepest recession in decades. By the spring of 2009, United States – 4
industrial production (IP) in the 30 countries that comprise the Organisation for Economic Eurozone – 5
Cooperation and Development (OECD) had entered its steepest downturn in decades (Figure 1). Japan – 6
But the policy response—unprecedented monetary easing, expansionary fiscal policy and the United Kingdom – 7
shoring up of private-sector balance sheets—led to stabilization in economic activity in mid-2009 Australia – 8
that subsequently morphed into global recovery. Although IP in the OECD countries currently Canada – 9
stands nearly 10 percent below its pre-recession peak, the rebound has been quite sharp, at least Norway – 10
when measured by the year-over-year growth rate. Singapore – 11
South Korea – 12
Figure 1 Figure 2
Sweden – 13
OECD Industrial Production
Year-over-Year Percent Change
U.S. Trade Weighted Dollar Major Index
March 1973=100
Switzerland – 14
10% 10% 115 115 Taiwan – 15
110 110 Argentina – 16
5% 5%
105 105 Brazil – 17
0% 0%
100 100 Chile – 18
95 95
China – 19
-5% -5% 90 90
India – 20
85 85
Mexico – 21
-10% -10% Poland – 22
80 80
Russia – 23
-15% -15%
75 75
South Africa – 24
OECD Industrial Production: Apr @ 9.8%
70
Major Currency Index: Jul @ 77.2
70
Turkey – 25
-20%
81 85 89 93 97 01 05 09
-20% 65
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
65 Dollar – 26
Energy – 27
Source: IHS Global Insight, Organisation for Economic Cooperation and Development, Bloomberg LP Metals – 28
and Wells Fargo Securities, LLC
Among the major regions of the world, economic growth in Asia has been strongest to date. The
financial systems of most Asian economies were not nearly as leveraged as those of their western
counterparts, so banks in the region were able to ramp up lending again. In addition, most Asian
governments responded to the crisis with expansionary fiscal policy. North American economies
are growing again as well. The U.S. economy has been in recovery mode for roughly a year, and a
self-sustaining expansion recovery appears to be under way in Canada. Europe lags other major
regions of the world in terms of economic recovery, but growth rates in European economies have
been positive, albeit weak, over the past few quarters.
However, some investors fear that the global economy is about to slip back into recession. Before
we discuss the likelihood of another global recession, let’s first consider the genesis of economic
downturns. Recessions typically happen when something in the economy becomes unbalanced,
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Global Chartbook: July 2010 WELLS FARGO SECURITIES, LLC
July 15, 2010 ECONOMICS GROUP
and the subsequent correction tends to weaken the overall economy. For example, the painful
U.S. recession of the early 1980s occurred because growth in aggregate demand outstripped
growth in aggregate supply in the late 1970s, which subsequently led to high inflation. The Fed
then tightened monetary policy significantly, throwing the economy into recession. Likewise, the
Japanese and German recessions of the early 1990s were caused by high inflation (growth in
demand again outstripping growth in supply) that led to excessive monetary tightening. More
recently, excessive credit growth led to overinvestment in residential real estate, not only in the
United States but also in some other major foreign economies. The inevitable bursting of the real
estate bubbles caused the global economy to tumble into a deep recession.
So, are there any signs of imbalance in the global economy at present that could lead to renewed
recession? The United States still has a current account deficit and China still has a current
account surplus, but these imbalances are smaller today than they were a few years ago.
Therefore, massive dumping of U.S. assets by foreigners, which would probably lead to another
financial crisis, does not seem very likely. American consumers still have fairly hefty debt loads,
but the household debt-to-disposable income ratio has come down to less than 115 percent at
present from 125 percent in late 2007. We believe that balance-sheet adjustments will constrain
growth in American consumer spending over the next year or two, but we do not anticipate
panicked deleveraging. Real estate bubbles in the economies that experienced them have already
burst, so another sharp downturn in house prices does not seem likely.
There appears to be two imbalances that could potentially lead to another global recession. First,
inflation rates have crept up in some important developing countries, notably in Brazil, China and
India. There is a risk that central banks could tighten too much, leading to recessions in those
economies. However, we think the risk of global recession that is induced by excessive monetary
tightening in the developing world is rather low. Inflation rates are not generally out of control at
present, and expectations of slower growth in most advanced economies will likely prevent
central bankers in developing countries from slamming on the brakes. Although we expect that
economic growth in most developing economies will slow somewhat in the quarters ahead, we do
not expect those countries to slip back into recession.
In our view, fiscal deficits in many advanced economies pose the bigger risk to global prosperity.
Greece, Portugal and Spain have announced significant fiscal retrenchment programs, and the
United Kingdom plans a fiscal adjustment worth roughly 10 percent of GDP over the next five
years. Germany, which is fiscally sound, is also contemplating budget cuts. The experience of
Canada, which made a fiscal adjustment equivalent to 9 percent of GDP in the 1990s, shows that
significant fiscal retrenchment can be successfully achieved. However, Canada spread its
adjustment out over a period of almost a decade rather than just a few years, and it had the
benefit of strong global growth at the time to offset the contractionary effects of fiscal
retrenchment. Moreover, Canada, which accounts for only 2 percent of global GDP, did not have a
debilitating effect on the global economy. A deep recession in the Eurozone, which represents
nearly 20 percent of global GDP, would have a more profound effect on the global economy.
However, we do not look for a deep recession in the euro area. We certainly expect that fiscal
retrenchment will exert powerful headwinds on European economic growth for the foreseeable
future, and we acknowledge that the probability of a mild recession in the euro area is not
insignificant. However, a mild European recession, should one in fact occur, would probably not
pull down the rest of the world, which is growing at a decent clip at present. As shown in the
forecast table on page 29, we expect global GDP growth in 2011 to be slower than in 2010.
However, another global recession, which is generally associated with a global GDP growth rate
that is slower than 2-¼ percent or so, is not the most likely scenario.
2
OECD Industrial Production

World 120
Index, 2005=100
120
The global economy is bouncing back from its

deepest downturn in decades, though
100 100
industrial production in the OECD nations
remains well below its pre-recession peak.
Purchasing manager indices have generally
remained in expansion territory, suggesting 80 80
that the global recovery remains intact. Most

regions of the world are growing again, with
Asia clearly in the vanguard. 60 60
Some investors fear that the global economy

will slide back into recession later this year or OECD Industrial Production: Apr @ 99.0
early next year as fiscal tightening takes hold in 40 40
1981 1985 1989 1993 1997 2001 2005 2009
some countries. Although we project that
growth in the second half of 2010 will be
slower than in the first half of the year, we do Global Purchasing Manager's Indices
not foresee a double-dip recession. Diffusion Index
65 65
Not only have interest rates been reduced to
unprecedented lows, but major central banks 60 60
have enacted “quantitative easing” programs
via unconventional purchases of private-sector 55 55
assets. Central banks in some major countries

(e.g., Australia and Canada) have started to 50 50
hike rates again, but the Fed, the ECB and the
45 45
Bank of Japan remain firmly on hold.
Deep global recession and the collapse in 40 40
commodity prices caused inflationary
Courtesy of J.P. Morgan
pressures to recede significantly. Commodity 35 35
Global PMI Manufacturing: Jun @ 55.0
prices have risen off their lows, but elevated Global PMI Services: Jun @ 54.9
unemployment rates have kept a lid on wage 30 30
2004 2005 2006 2007 2008 2009 2010
inflation. We forecast that CPI inflation rates
will trend higher this year, but runaway global
inflation à la the 1970s does not seem likely. Central Bank Policy Rates
8.0% 8.0%
ECB: Jul @ 1.00%
Global CPI 7.0%
Bank of Canada: Jul @ 0.50%
7.0%
Year-over-Year Percent Change US Federal Reserve: Jul @ 0.25%
16% 16% Bank of England: Jul @ 0.50%
6.0% 6.0%
14% 14%
5.0% 5.0%
12% 12%
4.0% 4.0%
10% 10%
3.0% 3.0%
8% 8%
2.0% 2.0%
6% Forecast 6%
1.0% 1.0%
4% 4%
0.0% 0.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
2% 2%
0% 0% Source: U.S. Department of Commerce, U.S. Department of Labor

1995 1998 2001 2004 2007 2010 and Wells Fargo Securities, LLC
3
Real GDP
United States 10.0%
Bars = CAGR Line = Yr/Yr Percent Change
10.0%
GDPR - CAGR: Q1 @ 2.7%
The United States endured its deepest post 8.0% GDPR - Yr/Yr Percent Change: Q1 @ 2.4% 8.0%
World War II recession in 2008-2009, but real 6.0% 6.0%
GDP subsequently expanded for three Forecast

4.0% 4.0%
consecutive quarters and all indicators suggest
that the economy posted another positive 2.0% 2.0%
growth rate in the second quarter of 2010. 0.0% 0.0%
Some of the rise in economic activity since the -2.0% -2.0%

middle of last year reflects the temporary
effects of government stimulus and a transient -4.0% -4.0%
swing in inventories. However, core measures -6.0% -6.0%
of consumer spending and business spending

-8.0% -8.0%
have posted solid gains over the past few 2000 2002 2004 2006 2008 2010
months.
The labor market is finally starting to recover Retail Sales Ex. Motor Vehicles & Gasoline Stations
as private sector payrolls have risen in seven 3-Month Moving Average
12% 12%
out of the last eight months. That said, it will
take years to fully recover the 8.4 million jobs 9% 9%
lost during the downturn, and the

6% 6%
unemployment rate, which currently stands at
9.5 percent, will likely remain elevated for the 3% 3%
foreseeable future. Moreover, we project that 0% 0%

the pace of economic recovery will remain slow
-3% -3%
as consumers continue to delever.
Core measures of inflation are very benign at -6% -6%
present, which allows the Federal Reserve to -9% -9%

keep rates low “for an extended period.”
-12% Year-over-Year Percent: Jun @ 4.2% -12%
Although the Fed has started to remove some Retail Sales, ex. Autos & Gas, 3-Month Annual Rate: Jun @ 3.8%
emergency measures that were put in place -15% -15%
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
more than a year ago, we do not look for an
increase in the fed funds rate until next year.
Private Sector Employment Change
Change in Employment, In Thousands
600 600
CPI vs. Core CPI 400 400

6.0% 6.0%
200 200
5.0% 5.0%
0 0
4.0% 4.0%
-200 -200
3.0% 3.0%
-400 -400
2.0% 2.0%
-600 -600
1.0% 1.0%
0.0% 0.0% -800 -800

Private Sector Employment: Jun @ 83.0
-1.0% -1.0% -1000 -1000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-2.0% CPI: May @ 2.0% -2.0%
Core CPI: May @ 0.9%
-3.0% -3.0% Source: U.S. Department of Commerce, U.S. Department of Labor
92 94 96 98 00 02 04 06 08 10 and Wells Fargo Securities, LLC
4
Eurozone Real GDP

Eurozone 6.0%
Bars = Compound Annual Rate Line = Yr/Yr % Change
6.0%
Following its 5 percent contraction between 4.0% 4.0%
early 2008 and mid-2009, the Eurozone 2.0% 2.0%
economy has started to recover. However, the

0.0% 0.0%
pace of the recovery remains painfully slow
with real GDP up only 0.7 percent between the -2.0% -2.0%
nadir in Q2 2009 and Q1 2010. Recent -4.0% -4.0%

monthly indicators point to continued growth
-6.0% -6.0%
in the second quarter. Industrial production in
the April/May period was 2.3 percent above -8.0% -8.0%
the first-quarter average, and the -10.0% Compound Annual Growth: Q1 @ 0.8% -10.0%
manufacturing PMI points to continued Year-over-Year Percent Change: Q1 @ 0.6%
expansion through June. -12.0% -12.0%
2000 2002 2004 2006 2008 2010
However, the recovery in the Eurozone is
hardly self-sustaining at present as growth in
private domestic demand (consumer spending Eurozone Industrial Production Index
and business fixed investment spending) has 12% 12%
remained sluggish. The main driver behind 9% 9%

recovery at present appears to be net exports. 6% 6%
Another global financial crisis, stemming this 3% 3%
time from the debt problems of some 0% 0%

European governments, seems to have been -3% -3%
averted, at least for now. However, some
-6% -6%
economies in the euro area face a bleak
-9% -9%
economic future. Much-needed austerity
measures will exert powerful headwinds on -12% -12%
growth over the next few years. -15% -15%

IPI: May @ 9.3%
Weak growth and benign inflation imply that -18%
3-Month Moving Average: May @ 9.0%
-18%
the European Central Bank can keep monetary -21% -21%

1997 1999 2001 2003 2005 2007 2009
policy accommodative for an extended period.
Indeed, we believe the ECB will keep its main
policy rate at 1.00 percent, where it has been Government Debt and Deficits
maintained since May 2009, well into 2011. 120%
Percent of GDP
120%
Debt
Eurozone Consumer Price Inflation 110%
Deficit
110%
Year-over-Year Percent Change 100% 100%
5.0% 5.0%
Core CPI: Jun @ 0.9% 90% 90%
CPI: Jun @ 1.4%
80% 80%
4.0% 4.0%
70% 70%
60% 60%
3.0% 3.0%
50% 50%
40% 40%
2.0% 2.0%
30% 30%
20% 20%
1.0% 1.0%
10% 10%
0% 0%
0.0% 0.0% Greece Ireland Portugal Spain
-1.0% -1.0% Source: Bank of England, EuroStat, IHS Global Insight, Statistics
1997 1999 2001 2003 2005 2007 2009 Canada and Wells Fargo Securities, LLC
5
Japanese Real GDP

Japan 10%
10%
Japan’s economy is showing preliminary signs

5% 5%
of slowing, but is not yet signaling a return to
recession. In fact, the economy got off to a
stronger-than-expected start this year when 0% 0%
first-quarter GDP advanced at a 5.0 percent

annualized rate. Strong export growth to China -5% -5%
and the rest of Asia, combined with steady

consumer spending growth stoked by -10% -10%
government incentives, has helped the country

reemerge from a deep recession over the -15% -15%
past year. Compound Annual Growth: Q1 @ 5.0%
Year-over-Year Percent Change: Q1 @ 4.2%
We anticipate a marked slowing in Japanese -20% -20%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
growth in the second half of the year into 2011,
guided by slowing consumer spending growth
and plateauing business spending growth. Volume of Japanese Foreign Trade
Even so, Japan’s GDP growth should average a 50% 50%
healthy 3.4 percent this year, slowing to 40% 40%

around 1.6 percent in 2011.
30% 30%
A steeper-than-expected decline in export
20% 20%
growth is a major downside risk to the forecast
today. A plunging euro and global financial 10% 10%
market volatility is bringing Japanese investors 0% 0%

back home, pushing up the yen and reducing -10% -10%
long-term Japanese interest rates. A strong yen
could crimp exports and intensify deflationary -20% -20%
pressures on an already weakening economy. -30% -30%
Deflation appears more entrenched as a result. -40%

Export Volume: May @ 36.4%
Import Volume: May @ 20.1%
-40%
We are forecasting consumer prices to drop -50% -50%

another 0.9 percent in 2010 after falling 1998 2000 2002 2004 2006 2008 2010
1.3 percent last year.

Japanese Exchange Rate
JPY per USD
150 150
JPY per USD: Jul @ 88.6
Japanese Consumer Price Index
Year-over-Year Percent Change 140 140
3.0% 3.0%
130 130
2.0% 2.0%
120 120
1.0% 1.0%
110 110
0.0% 0.0%
100 100
-1.0% -1.0% 90 90
-2.0% -2.0% 80 80
1996 1998 2000 2002 2004 2006 2008 2010
"Core" CPI: May @ -1.6%
CPI: May @ -0.9%
-3.0% -3.0% Source: Bloomberg LP, IHS Global Insight and
1998 2000 2002 2004 2006 2008 2010
Wells Fargo Securities, LLC
6
U.K. Real GDP

United Kingdom 6.0%
6.0%
After six consecutive quarters of contraction in 4.0% 4.0%
which real GDP fell more than 6 percent, 2.0% 2.0%

economic growth in the United Kingdom has
0.0% 0.0%
returned to positive territory again. However,
the recovery remains frustratingly slow, with -2.0% -2.0%
GDP up only 0.7 percent between Q3 2009 and -4.0% -4.0%

Q1 2010.
It appears that the economy accelerated in the
-6.0% -6.0%
second quarter. The volume of retail sales was -8.0% -8.0%
up 1.0 percent in the April-May period relative -10.0% Compound Annual Growth: Q1 @ 1.3% -10.0%
to the first quarter, and PMIs for the Year-over-Year Percent Change: Q1 @ -0.2%
-12.0% -12.0%
manufacturing and service sectors remained 2000 2002 2004 2006 2008 2010
well in expansion territory through June.
On June 22, Chancellor of the Exchequer
U.K. Purchasing Managers' Indices
Osborne presented his budget blueprint for the Index
65 65
next five fiscal years. Osborne is looking to
make a fiscal correction worth roughly 60 60
10 percent of current GDP through fiscal year
2016. Spending cuts will account for the bulk 55 55
of the deficit reduction, which should exert
headwinds on economic growth over the next 50 50
year or two.
The overall rate of CPI inflation is well above
45 45
the Bank of England’s target of 2 percent at 40 40

present, and the increase in the value-added
tax that will go into effect on January 4 should 35 35
UK Manufacturing: Jun @ 57.5
keep inflation elevated into early 2011. That UK Services: Jun @ 54.4
said, we believe the Bank of England will 30 30
2000 2002 2004 2006 2008 2010
refrain from raising rates until economic
recovery becomes more firmly established.
Thus, we expect the Bank to be on hold well U.K. Deficit Reduction
into next year. £140
Cumulative Contribution, Billions of Pounds
£140
Due to Tax Increases
U.K. Consumer Price Index £120
Due to Spending Reductions
£120
6.0% 6.0%
£100 £100
5.0% 5.0%
£80 £80
4.0% 4.0% £60 £60
£40 £40
3.0% 3.0%
£20 £20
2.0% 2.0%
£0 £0
2011 2012 2013 2014 2015 2016
1.0% 1.0% Fiscal Year
CPI: Jun @ 3.2%

0.0% 0.0% Source: Bank of England, EuroStat, IHS Global Insight, Bloomberg,
1997 1999 2001 2003 2005 2007 2009 LP and Wells Fargo Securities, LLC
7
Australian Real GDP

Australia 10%
10%
The Australian economy expanded at a 8% 8%
2.0 percent annualized rate in the first quarter. 6% 6%

It was the fifth consecutive quarter of growth
for the economy. The largest contribution to 4% 4%
growth came from public sector spending while

2% 2%
exports actually weighed on growth in the
quarter. 0% 0%
Prospects for the Australian economy are not -2% -2%

as bright as they were just few months ago.
When financial markets began to get jittery -4% Compound Annual Growth: Q1 @ 2.0% -4%
about the sovereign debt crisis in Europe, the Year-over-Year Percent Change: Q1 @ 2.7%
-6% -6%
Aussie dollar began to slide. Since mid-April, 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
the currency has slipped about 6 percent on
balance against the greenback due to
expectations of slower global growth. The Australian Exchange Rate and CRB Index
USD per AUD, Index
hand-wringing that has weighed on commodity 1.000 500.0
AUD Exchange Rate: Jul @ 0.84 (Left Axis)
prices has been reflected in the roughly CRB Index: Jun @ 258.5 (Right Axis)
7 percent decline in the CRB index during the 0.900
450.0
same time period.

400.0
Since September 2009, the RBA has raised the 0.800
cash target rate 150 bps to its present level of 350.0
4.50 percent. At its July meeting, the bank left 0.700
rates unchanged and affirmed that the current 300.0
level is appropriate “pending further 0.600

250.0
information about international and local
conditions.” Inflation is presently in the upper 0.500
200.0
half of the target zone. However, with an
unstable outlook for the Eurozone, any RBA 0.400 150.0
move from here is as much a reflection on 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
global economic developments as it is an

assessment of the domestic recovery.
Australian Consumer Price Index
8.0% 8.0%
Australian Retail Sales and Housing

Year-over-Year Percent Change, 3-Month Moving Average
12.0% 90.0% 6.0% 6.0%
8.0% 60.0% 4.0% 4.0%
4.0% 30.0% 2.0% 2.0%
0.0% 0.0% 0.0% 0.0%
Overall CPI : Q1 @ 2.9%

-2.0% -2.0%
-4.0% -30.0%
1995 1998 2001 2004 2007 2010
Retail Sales: May @ 1.6% (Left Axis)

Housing Approvals: May @ 35.1% (Right Axis)
1998 2000 2002 2004 2006 2008 2010 Wells Fargo Securities, LLC
8
Canadian Real GDP

Canada 8.0%
8.0%
The Canadian economy grew at a 6.1 percent 6.0% 6.0%
pace in the first quarter. Gains were led by 4.0% 4.0%

increases in consumer spending as well as
manufacturing. It was the fastest pace of 2.0% 2.0%
growth in Canada since the 1990s, and it

0.0% 0.0%
increased the pressure on the Bank of Canada
(BoC) to increase rates. -2.0% -2.0%
For the second quarter in a row, nearly half of -4.0% -4.0%

the growth in the first quarter came from the
quickening pace of consumer spending. -6.0% Compound Annual Growth: Q1 @ 6.1% -6.0%
However recent signs suggest the Canadian Year-over-Year Percent Change: Q1 @ 2.2%
-8.0% -8.0%
consumer might be losing some momentum. 2000 2002 2004 2006 2008 2010
Retail sales data for the month of April came in
much weaker than expected, declining
2.0 percent on the month. Canadian Employment
Month-over-Month Change in Employment, In Thousands
Canadian employers have added to payrolls 125 125
every month so far this year. In fact, the 100 100
Canadian economy has added more than 75 75
300,000 jobs so far this year, which would be 50 50
commensurate with job growth of roughly 25 25

3 million in the United States. 0 0
The BoC has become the first central bank -25 -25
from a G7 nation in this economic cycle to raise -50 -50
its key lending rate. The 25 bp increase brings
-75 -75
the overnight rate to 0.50 percent. The BoC
-100 -100
had to balance the need to stabilize fast-paced
Change in Employment: Jun @ 93.2K
economic growth at home against the risk of -125
6-Month Moving Average: Jun @ 51.4K
-125
financial market disruptions in Europe. -150 -150

2002 2004 2006 2008 2010
Further hikes this year are likely, in our view,
but will need to be weighed against the
probability of further financial troubles in Canadian Retail Sales
Europe. 12.0%
Year-over-Year Percent Change, 3-Month Moving Average
12.0%
Central Bank Policy Rates

8.0% 8.0% 8.0% 8.0%
US Federal Reserve: Jul @ 0.25%
7.0% Bank of Canada: Jul @ 0.50% 7.0%
4.0% 4.0%
6.0% 6.0%
5.0% 5.0% 0.0% 0.0%
4.0% 4.0%
-4.0% -4.0%
3.0% 3.0%
Total: Apr @ 7.4%
Excluding Autos: Apr @ 6.1%
2.0% 2.0%
-8.0% -8.0%
2000 2002 2004 2006 2008 2010
1.0% 1.0%
0.0% 0.0% Source: Bloomberg LP, IHS Global Insight and

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Wells Fargo Securities, LLC
9
Norwegian Real GDP

Norway 16.0%
16.0%
Compound Annual Growth Rate: Q1 @ -0.5%
After experiencing a mild recession in

12.0%
Year-over-Year Percent Change: Q1 @ -0.5%
12.0%
2008/2009, economic growth has returned to
the Norwegian economy. Although real GDP
8.0% 8.0%
edged down 0.5 percent (annualized rate) in
the first quarter, the outturn reflects weakness
4.0% 4.0%
in the county’s oil and gas sector. “Mainland”
GDP, which excludes the energy sector, has
expanded for four consecutive quarters. 0.0% 0.0%
That said, the pace of recovery in Norway is

-4.0% -4.0%
slow at present. “Mainland” GDP has risen
only 1.1 percent since its nadir in Q1 2009, and
-8.0% -8.0%
the sluggish pace of growth in manufacturing 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
production—just 0.2 percent in the April/May
period relative to the first quarter—suggests
that economic growth in the second quarter Norwegian Real GDP
remained lackluster. 7.5% 7.5%
There are not many inflationary pressures in

6.0% 6.0%
the Norwegian economy at present. The overall
rate of CPI inflation has receded to 1.9 percent, 4.5% 4.5%
and the core rate of inflation is lower at only
1.3 percent. The unemployment rate is low— 3.0% 3.0%
only 2.8 percent at present—but wages have
shown few signs of acceleration yet. 1.5% 1.5%
Norges Bank, the country’s central bank, has

0.0% 0.0%
slowly raised its main policy rate to
2.00 percent at present from 1.25 percent last -1.5% -1.5%
October, the last rate hike occurring on May 5. Mainland GDP : Q1 @ 1.1%
Year-over-Year Percent Change: Q1 @ -0.5%
Although the Bank will probably hike rates -3.0% -3.0%
further in the months ahead, the pace of 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
monetary tightening will likely remain quite

slow if economic growth does not strengthen Norwegian Manufacturing Production
and inflation remains benign. 8%
8%
Norwegian Consumer Price Index 6% 6%

6% 6%
4% 4%
2% 2%
4% 4% 0% 0%
-2% -2%
-4% -4%
2% 2%
-6% -6%
-8% -8%
Manufactring Production: May @ 2.6%
0% 0%
-10% -10%
1997 1999 2001 2003 2005 2007 2009
CPI: Jun @ 1.9%

-2% -2% Source: Bloomberg LP, IHS Global Insight and
2000 2002 2004 2006 2008 2010 Wells Fargo Securities, LLC
10
Singapore Real GDP

Singapore 20.0%
20.0%
Singapore’s economy is coming off a sizzling 15.0% 15.0%

first half of the year, as economic activity and
exports bounce back rapidly from the 2009 10.0% 10.0%
economic and financial crisis. There is little
sign in the economic data, as yet, of an impact 5.0% 5.0%
from the sovereign debt crisis in Europe,

though some impacts are sure to show up 0.0% 0.0%
before too long. Because Singapore is such a

-5.0% -5.0%
small, globally-open economy, it will be highly
sensitive to any pullback in global growth or
-10.0% -10.0%
regional trade.
Singapore’s manufacturing recovery remained -15.0% -15.0%
2000 2002 2004 2006 2008 2010
solid through the second quarter. Although the
manufacturing PMI slipped back a bit in June,
it has been above the critical 50 level that Singapore Manufacturing PMI
Index
signals expansion for 14 consecutive months. 70 70
Production and new order expansion has been

much stronger than manufacturing 65 65
employment, which has edged back into
contraction territory. Retail sales have been 60 60
lagging the rest of the economy, dropping 5.7
percent in May on a year-ago basis.
55 55
Singapore’s consumer inflation held steady in
May, rising 3.2 percent from a year ago. Last 50 50
year at this time, inflation was barely visible
with consumer inflation at 0.2 percent. 45 45
The rise in inflation over the past year has been Singapore Manufacturing PMI: Jun @ 51.3
enough for the Monetary Authority to begin 40 40
moving the currency band on the Singapore 2000 2002 2004 2006 2008 2010
dollar, allowing the currency to appreciate.

This is how Singapore effectively tightens Singapore Retail Sales
monetary policy. 25%
25%
Singapore Consumer Price Index 20% 20%

8.0% 8.0%
15% 15%
CPI: May @ 3.2%
7.0% 7.0%
10% 10%
6.0% 6.0%
5% 5%
5.0% 5.0%
0% 0%
4.0% 4.0%
-5% -5%
3.0% 3.0%
2.0% 2.0% -10% -10%
1.0% 1.0% -15% -15%

Retail Sales: May @ -5.7%
0.0% 0.0% -20% -20%
2005 2006 2007 2008 2009 2010
-1.0% -1.0%

1998 2000 2002 2004 2006 2008 2010
Wells Fargo Securities, LLC
11
South Korean Real GDP

South Korea 20%
20%
South Korea’s economic outlook has been little 15% 15%
changed by the turmoil in global financial 10% 10%

markets, though downside risks are building. A
5% 5%
bigger-than-expected drop in export growth on
slowing Chinese, U.S. and European demand 0% 0%
would have a larger-than-average impact on -5% -5%

South Korea’s economic prospects.
The year got off to a strong start, which will
-10% -10%
help the annual increases look impressive, -15% -15%
even if the country experiences a sharp -20%

Compound Annual Growth: Q1 @ 8.8%
-20%
pullback in activity into the end of the year. We Year-over-Year Percent Change: Q1 @ 8.1%
-25% -25%
currently anticipate South Korean GDP growth 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
of 6.1 percent in 2010, slowing to around
3.7 percent in 2011.
South Korean Industrial Production Index
So far, there is no sign in the economic data Year-over-Year Percent Change
40% 40%
that the economy is about to suddenly turn
cold. South Korean industrial production
30% 30%
jumped another 2.6 percent in May to a new
record high. Industrial production is now 20% 20%
21.5 percent higher than a year ago, largely due
to a resurgence of exports. 10% 10%
Export growth continued to beat analyst

0% 0%
expectations through June, though the year-
on-year growth rates are starting to slow on
-10% -10%
difficult comparisons from a year ago. The
volume of exports in June was up 20 percent -20% -20%
IPI: May @ 21.4%
on a year-ago basis.
South Korea’s labor market has firmed nicely -30%
1998 2000 2002 2004 2006 2008 2010
-30%
over the past year. June unemployment

dropped back to 3.5 percent from 4.8 percent
in January. South Korean Export & Import Volumes
Year-over-Year Precent Change, 3-Month Moving Average
40% 40%
South Korean Unemployment Rate

Percent and 12-Month Moving Average 30% 30%
5.0% 5.0%
20% 20%
4.5% 4.5%
10% 10%
4.0% 4.0%
0% 0%
3.5% 3.5%
-10% -10%
Volume of Exports: May @ 20.1%
Volume of Imports: May @ 23.8%
3.0% 3.0% -20% -20%
2000 2002 2004 2006 2008 2010
Unemployment Rate: Jun @ 3.5%
12-Month Moving Average: Jun @ 3.8%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Wells Fargo Securities, LLC
12
Swedish Real GDP

Sweden 10%
10%
After enduring a fairly painful recession—real 5% 5%

GDP tumbled nearly 8 percent between
Q4 2007 and Q1 2009—economic growth has
0% 0%
returned to Sweden. Indeed, real GDP
expanded 5.9 percent at an annualized rate in
-5% -5%
the first quarter of 2010 relative to the
previous quarter on the strength of domestic
-10% -10%
demand.
Most monthly indicators suggest that the -15% -15%
economy expanded further in the second Compound Annual Growth: Q1 @ 5.9%
quarter. Industrial production shot up Year-over-Year Percent Change: Q1 @ 2.9%
-20% -20%
5.1 percent in the April/May period relative to 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
the previous quarter, and the high level of the
manufacturing PMI in June points in the
direction of further strength. The value of retail Swedish Manufacturing PMI
spending in the April-May period grew 70 70
1.1 percent relative to the first-quarter average.

65 65
The deep recession caused the unemployment
rate to rise sharply. Although there are 60 60
tentative indications that the unemployment

55 55
rate may be stabilizing, it remains near
9 percent, the highest rate in about 10 years. 50 50
The Riksbank (the country’s central bank) cut 45 45

its main policy rate to only 0.25 percent last
summer, and high unemployment and benign 40 40
inflation allowed the central bank to maintain

35 35
the unprecedented low level for its policy rate Swedish Manufacturing PMI: Jun @ 62.4%
for nearly a year. However, the Riksbank hiked 30 30
rates by 25 bps on July 1, citing recent strength 2002 2003 2004 2005 2006 2007 2008 2009 2010
in the Swedish economy. Although the

Riksbank likely will hike further in the months Swedish Unemployment Rate
ahead, it probably won’t slam on the brakes. 12%
Not Seasonally Adjusted
12%
Swedish Consumer Price Index Unemployment Rate: May @ 8.8%
5.0% 5.0%
CPI: Jun @ 0.9% 10% 10%
4.0% 4.0%
3.0% 3.0% 8% 8%
2.0% 2.0% 5
6% 6%
1.0% 1.0%
0.0% 0.0%
4% 4%
1997 1999 2001 2003 2005 2007 2009
-1.0% -1.0%

13
Swiss Real GDP

Switzerland 6.0%
6.0%
Switzerland experienced a mild recession in

late 2008/early 2009, but real GDP has 4.0% 4.0%
subsequently grown for three consecutive

quarters. Not only have exports rebounded, 2.0% 2.0%
which has helped to boost growth in the very

open Swiss economy, but domestic demand is 0.0% 0.0%
growing again as well.

The few data releases that we have from the -2.0% -2.0%
second quarter suggest that growth has

remained positive. The manufacturing PMI -4.0% -4.0%
stood at a very high level through June, and the Compound Annual Growth: Q1 @ 1.6%
KOF leading economic indicator rose in June -6.0% -6.0%
to its highest level in four years. In addition, 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
the recent decline in the unemployment rate

suggests that the labor market is starting to Swiss Manufacturing PMI
strengthen. Diffusion Index
70 70
However, 50 percent of Swiss exports are
destined for the euro area. Fiscal retrenchment 65 65
in the euro area in conjunction with recent

60 60
appreciation of the Swiss franc vis-à-vis the
euro likely will exert some headwinds on Swiss 55 55
export growth in the months ahead.
The overall rate of CPI inflation is just 50 50
0.5 percent at present, and the core rate of 45 45

inflation is only 0.2 percent. With benign
inflation and uncertainties about the economic 40 40
outlook, the Swiss National Bank (SNB) can 35 35

afford to keep its target for three-month Swiss Swiss Manufacturing PMI: Jun @ 65.7
LIBOR at 0.25 percent, where it has been 30 30
1997 1999 2001 2003 2005 2007 2009
maintained since March 2009, for the
foreseeable future.
Swiss Unemployment Rate
Seasonally Adjusted
4.5% 4.5%
Swiss Consumer Price Index

Year-over-Year Percent Change 4.0% 4.0%
3.5% 3.5%
CPI: Jun @ 0.5%
3.0% 3.0%
3.5% 3.5%
2.5% 2.5%
2.0% 2.0% 3.0% 3.0%
1.5% 1.5%
2.5% 2.5%
1.0% 1.0%
0.5% 0.5% 2.0% 2.0%
0.0% 0.0% Unemployment Rate: Jun @ 3.9%

1.5% 1.5%
-0.5% -0.5%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-1.0% -1.0%

14
Taiwanese Real GDP

Taiwan 15.0%
15.0%
Taiwan’s economic expansion remains robust 12.5% 12.5%
despite volatile global financial markets. Two 10.0% 10.0%
important developments stand out over the past 7.5% 7.5%

month. As we expected, Taiwan’s central bank
5.0% 5.0%
was one of the few globally to recently raise its
benchmark interest rate, and on the trade front, 2.5% 2.5%
Taiwan signed a controversial trade agreement 0.0% 0.0%
with Mainland China. -2.5% -2.5%
The Economic Co-operation Framework -5.0% -5.0%

Agreement (ECFA) removes tariffs on hundreds
-7.5% -7.5%
of products, and stands to boost bilateral trade Year-over-Year Percent Change: Q1 @ 13.3%
with China that already totals $110 billion a -10.0% -10.0%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
year. Economically, the deal benefits Taiwan
more than China, but it will also give China
more political leverage and inroads into Taiwan Taiwanese Rates
longer term. Taiwan’s companies will also gain Overnight Rate, 10-Yr Government Bonds
6.00% 6.00%
access to Chinese service sectors in banking and
insurance.
5.00% 5.00%
Despite growing fears of a global economic
slowdown, Taiwan’s central bank raised its
4.00% 4.00%
benchmark interest rate for the first time since
2008 on June 24th, joining other Asian
countries such as India and Malaysia in raising 3.00% 3.00%
borrowing costs. The bank increased the

discount rate on 10-day loans to banks to 1.375 2.00% 2.00%
percent from a record low 1.25 percent. On June

30, the central bank also raised the interest rate 1.00% 1.00%
it pays on reserves to banks to reflect increased Overnight Rate: Jul @ 0.19%

Taiwan 10-Yr Government: Jul @ 4.02%
funding costs. 0.00% 0.00%
Taiwan’s exports continue to exceed analyst

2000 2002 2004 2006 2008 2010
expectation, surging another 16.4 percent in

May. Exports are now 57.9 percent above a Taiwanese Merchandise Trade Balance
year ago. 140.0
Billions of New Taiwan Dollars, Not Seasonally Adjusted
140.0
Taiwanese Exchange Rate 120.0 120.0

TWD per USD
36.00 36.00 100.0 100.0
TWD per USD: Jul @ 32.088
80.0 80.0
35.00 35.00
60.0 60.0
40.0 40.0
34.00 34.00
20.0 20.0
33.00 33.00 0.0 0.0
-20.0 -20.0
32.00 32.00 Merchandise Trade Balance: Jun @ 43.2 TWD
-40.0 -40.0
12-Month Moving Average: Jun @ 66.9 TWD
-60.0 -60.0
31.00 31.00
1998 2000 2002 2004 2006 2008 2010
30.00 30.00 Source: Bloomberg LP, IHS Global Insight and

15
Argentine Economic Activity Index

Argentina 15%
15%
After the slowdown created by the global 10% 10%
turmoil, the Argentine economy is booming 5% 5%

again. The economy posted a 6.8 percent
growth rate during the first quarter of the year 0% 0%
compared to the same quarter a year earlier as

-5% -5%
both personal consumption expenditures and
government expenditures surged by -10% -10%
7.3 percent and 8.4 percent, respectively.
-15% -15%
The biggest negative during the first quarter of
the year, other than the fact that government -20% -20%
consumption continues to surge, was that Economic Activity: Apr @ 9.7%

-25% -25%
exports of goods and services increased by only 1998 2000 2002 2004 2006 2008 2010
4.2 percent while imports of goods and services
surged by 30.1 percent, all compared to the
same quarter a year earlier. This performance Argentine Consumer Price Index
of exports and imports suggests that the 14% 14%
Argentine currency is overvalued again.

The Fernández-Kirchner administration,
12% 12%
unable to keep inflation under tabs, is trying to 10% 10%

combat the real appreciation of the currency,
which has been caused by accelerating 8% 8%
inflation, by imposing trade restrictions on

imports from different countries. This is 6% 6%
creating misgivings against the Argentine

4% 4%
government outside of the country.
We have increased the forecast for 2010 2% 2%
economic growth for Argentina to 5.9 percent. Consumer Price Index: Jun @ 11.0%
For 2011, we expect the economy to slow down 0% 0%
2004 2005 2006 2007 2008 2009 2010
a bit but achieve a relatively strong
performance of 4.7 percent. We expect the
government to continue its spending spree in Argentine Exchange Rate
2011 as the presidential elections approach. 4.00
BRL per USD
4.00
ARS per USD: Jul @ 3.934
Argentine Merchandise Trade Balance
Millions of USD, Not Seasonally Adjusted 3.75 3.75
$3,000 $3,000
3.50 3.50
$2,000 $2,000
3.25 3.25
$1,000 $1,000
3.00 3.00
$0 $0 2.75 2.75
2.50 2.50
-$1,000 -$1,000
04 05 06 07 08 09 10
Merchandise Trade Balance: May @ USD $1,905M

-$2,000 -$2,000 Source: Bloomberg LP, IHS Global Insight and
16
Brazilian Real GDP

Brazil 12%
12%
The Brazilian economy is surging again after 9% 9%
the brief period marked by the worldwide 6% 6%
financial crisis. And this strong growth is

3% 3%
helping the whole of South America. Brazil is
becoming the center of influence it has always 0% 0%
wanted to be, and it has happened under the -3% -3%

presidency of Luiz Inacio “Lula” da Silva, much
-6% -6%
to the dismay of the Brazilian right.
The Brazilian economy grew by an impressive -9% -9%
11.4 percent annualized growth during the first -12% Compound Annual Growth: Q1 @ 11.4% -12%
quarter. Even though growth has slowed since Year-over-Year Percent Change: Q1 @ 8.6%
-15% -15%
then, we are increasing our forecast for this 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
year to 7.2 percent. While there are some risks
in this forecast due to the central bank’s
tightening of monetary policy, the economy Brazilian Consumer Price Index
should have no problem posting strong growth 18% 18%
during the year. For next year, we expect the CPI: Jun @ 4.8%
economy to remain strong but to slow down 15% 15%

from today’s record-breaking pace.
As expected, the rate of inflation has started to 12% 12%
accelerate, and the central bank has tightened

monetary policy to counteract this acceleration 9% 9%
in prices. However, we do not expect inflation

to get out of hand and expect the country to 6% 6%
remain strong with stable prices.

The only domestic risk for the Brazilian 3% 3%
economy this year and next remains the

presidential elections later this year. Right now 0% 0%
1998 2000 2002 2004 2006 2008 2010
it seems that Dilma Rousseff, the candidate of
Lula da Silva’s Worker’s Party, is going to win
the elections. Thus, it will be interesting to see Brazilian Merchandise Trade Balance
if she can continue Lula’s success story. $6,000
Millions of USD, Not Seasonally Adjusted
$6,000
Brazilian Exchange Rate $5,000 $5,000

BRL per USD
4.00 4.00
$4,000 $4,000
3.50 3.50 $3,000 $3,000
$2,000 $2,000
3.00 3.00
$1,000 $1,000
2.50 2.50
$0 $0
2.00 2.00 -$1,000 -$1,000

Merchandise Trade Balance: May @ $3,443
-$2,000 -$2,000
1.50 1.50 1998 2000 2002 2004 2006 2008 2010
BRL per USD: Jul @ 1.763

99 00 01 02 03 04 05 06 07 08 09 10 Wells Fargo Securities, LLC
17
Chilean Real GDP

Chile 12%
12%
The Chilean economy dropped by an 9% 9%
annualized growth rate of 5.9 percent during 6% 6%
the first quarter of the year, due, in large part,

3% 3%
to the devastating earthquake. However, the
early indication for the economy’s performance 0% 0%
during the second quarter of the year is very -3% -3%

promising. According to the index of economic
-6% -6%
activity, the Chilean economy surged by
7.1 percent during May of this year compared -9% -9%
to the same month a year earlier. -12% Compound Annual Growth: Q1 @ -5.9% -12%
After recovering considerably from last year’s

-15%
-15%
collapse, Chilean exports and imports plunged 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
again in June, threatening the strong recovery
in economic activity seen in other indicators.
Exports dropped by a strong 21.8 percent year- Chilean Consumer Price Index
on-year in June, while imports plunged by 56.8 12% 12%
percent during the same period of time. This

drop was on top of the 25.7 percent drop in
exports and the 38.8 percent drop in imports 8% 8%
recorded in June of last year, all compared to
June of the previous year.
It is clear that the Chilean economy was 4% 4%
booming until May of this year. However, we

may see some slowdown coming down the
pipeline, especially if trade continues to 0% 0%
weaken. Having said this, the domestic
economy continues to surge, as portrayed by
CPI: Jun @ 1.2%
the retail sales index. However, domestic -4% -4%
consumption is not enough to keep the Chilean 1998 2000 2002 2004 2006 2008 2010
economy from slowing down during the second

half of the year.
Chilean Retail Sales
15% 15%
Chilean Exchange Rate

BRL per USD 12% 12%
800 800
9% 9%
6% 6%
700 700
3% 3%
600 600 0% 0%
-3% -3%
Retail Sales: May @ 18.0%
500 500
-6% -6%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CLP per USD: Jul @ 537.100

400 400 Source: Bloomberg LP, IHS Global Insight and
99 00 01 02 03 04 05 06 07 08 09 10 Wells Fargo Securities, LLC
18
Chinese Real GDP

China 14.0%
14.0%
12.0% 12.0%
Real GDP growth in China came rocketing
back from the sharp slowdown that occurred in 10.0% 10.0%
late 2008/early 2009. Because Chinese banks

were not overly leveraged, the government 8.0% 8.0%
directed them to increase lending aggressively.

6.0% 6.0%
In addition, the government stimulated the
economy via acceleration of planned 4.0% 4.0%
infrastructure spending.
With the economy firmly back on track, the 2.0% 2.0%
government directed banks earlier this year to Year-over-Year Percent Change: Q2 @ 10.3%
0.0% 0.0%
slow down the pace of credit creation before 2000 2002 2004 2006 2008 2010
inflation becomes an issue. And the slowdown
in real GDP growth—from 11.1 percent in the
first quarter to 10.3 percent in the second Chinese Loan Growth
quarter—suggests that its efforts have born Year-over-Year Percent Change
35% 35%
some fruit.
Will Chinese authorities tighten too much? 30% 30%
Probably not. Not only has growth started to
slow, but CPI inflation may be starting to roll 25% 25%
over. In addition, the decline in the stock

market, which is down 25 percent since mid- 20% 20%
April, and evidence suggesting that house

15% 15%
prices are no longer rising, reduces the need
for the government to slam on the brakes. 10% 10%
On June 19, Chinese authorities decided to
reintroduce some flexibility into the 5% 5%
yuan/dollar exchange rate. As the forecast on Chinese Loan Growth: Jun @ 18.2%
page 29 makes clear, however, we do not 0% 0%
99 01 03 05 07 09
expect runaway appreciation of the renminbi
because Chinese authorities generally do not
change economic policies in a dramatic Chinese Fixed Investment Spending
fashion. 60.0%
60.0%
Chinese CPI Inflation

Year-over-Year Percent Change 50.0% 50.0%
10% 10%
Overall CPI: Jun @ 2.9%
Non-food CPI: Jun @ 1.5%
8% 8% 40.0% 40.0%
6% 6%
30.0% 30.0%
4% 4%
20.0% 20.0%
2% 2%
10.0% 10.0%
0% 0%
Fixed Investment Spending: Jul @ 25.5%
0.0% 0.0%
-2% -2% 2000 2002 2004 2006 2008 2010

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Wells Fargo Securities, LLC
19
Indian Real GDP

India 12%
12%
Real GDP growth in the Indian economy has

fluctuated over the past year or so due to the 9% 9%
effects of last year’s drier-than-normal
monsoon. The agricultural sector accounts for
roughly 15 percent of Indian GDP, and rainfall
6% 6%
amounts can have a noticeable effect on the
overall rate of GDP growth.
Monsoons aside, the underlying state of the 3% 3%
Indian economy is rather strong at present.
The year-over-year rate of industrial
production growth dipped a bit in May, but the Year-over-Year Percent Change: Q1 @ 8.6%
0% 0%
high reading on the manufacturing PMI 2004 2005 2006 2007 2008 2009
suggests that growth held up well in June. Not
only have exports been strong, but the
explosion in auto sales—up 29 percent in the Indian Industrial Production Index
second quarter relative to the same period in 18.0% 18.0%
2009—shows that Indian consumers are alive
and well. 15.0% 15.0%
Wholesale price inflation, which is the

benchmark inflation gauge in India, has shot 12.0% 12.0%
up this year. The numerous indices of CPI

inflation are all in double-digit territory, and 9.0% 9.0%
they likely will remain there for the foreseeable

future due to the recent decision by the 6.0% 6.0%
government to remove fuel price subsidies.

In response to strong growth and the potential 3.0% 3.0%
for inflation to move higher, the Reserve Bank

of India has started to take back some of its 0.0% 0.0%
1997 1999 2001 2003 2005 2007 2009
previous rate cuts by hiking its main policy rate
by 75 bps since mid-March.
Indian Wholesale Price Inflation
14% 14%
Wholesale Price Inflation: Jun @ 10.6%
Reserve Bank of India Repo Rate 12% 12%
Percent
10.00 10.00
10% 10%
8% 8%
8.00 8.00
6% 6%
6.00 6.00 4% 4%
2% 2%
4.00 4.00
0% 0%
-2% -2%
2.00 2.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Repo Rate: Jul @ 5.50%

2007 2008 2009 2010 Wells Fargo Securities, LLC
20
Mexican Real GDP

Mexico 8.0%
8.0%
The Mexican economy has continued to grow 6.0% 6.0%
during the second quarter of the year, but there 4.0% 4.0%
are initial signs that growth is slowing down. 2.0% 2.0%
Both the coincident and leading indicators 0.0% 0.0%

posted negative rates of growth during April of
-2.0% -2.0%
this year. While it is too early to call this a
double-dip, it is clear that the economy is -4.0% -4.0%
starting to slow down, most likely following the -6.0% -6.0%
lead of the U.S. economy. -8.0% -8.0%
Mexican industrial production seems to have -10.0% -10.0%

peaked in March of this year when it posted a
-12.0% -12.0%
year-earlier rate of 7.8 percent but slowed 2004 2005 2006 2007 2008 2009 2010
down to a 6.1 percent rate in April. Industrial
production in Mexico is highly dependent on
U.S. consumer demand and thus will probably Mexican Industrial Production Index
reflect the latest slowdown in U.S. 15.0% 15.0%
consumption during the second quarter of the

year. Therefore, don’t be surprised if we see 10.0% 10.0%
industrial production in Mexico slowing down
further during the next several months. 5.0% 5.0%
On the positive side, consumer prices have

continued to moderate as the economy 0.0% 0.0%
weakened during the second quarter of the

year. This will guarantee that the central bank -5.0% -5.0%
will remain on the sidelines and keep interest

rates at current low levels. -10.0% -10.0%
However, domestic consumption will not be Mexican Industrial Production: May @ 8.4%
enough for the economy to start accelerating -15.0% -15.0%

2004 2005 2006 2007 2008 2009 2010
again, and thus current monetary expansion
will not be able to support economic activity
for the rest of the year. Economic activity will Mexican Consumer Price Index
accelerate if the U.S. consumer remains strong. 12%
12%
Mexican Exchange Rate

MXN per USD
16.00 16.00 10% 10%
MXN per USD: Jul @ 12.79
15.00 15.00
8% 8%
14.00 14.00
13.00 13.00 6% 6%
12.00 12.00
4% 4%
11.00 11.00
CPI: Jun @ 3.7%

10.00 10.00
2% 2%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
9.00 9.00

21
Polish Real GDP

Poland 9.0%
9.0%
Poland’s economic growth slowed in the first
quarter to 3.0 percent year over year, down
slightly from the 3.3 percent pace of the fourth
6.0% 6.0%
quarter. Growth was driven by a 2.2 percent
rise in government consumption, which was
triple the pace of the prior quarter, as well as a
2.2 percent increase in personal consumption.
Trade also contributed as exports rose slightly 3.0% 3.0%
more than imports. Fixed capital formation,

however, was a big drag, falling 12.4 percent as
the harshest winter in decades thwarted
construction projects. Resumption of these 0.0% 0.0%
1996 1998 2000 2002 2004 2006 2008 2010
projects will likely show up in the second
quarter data.
Employment rose 0.5 percent year over year in Polish Employment Growth
May, the first increase since January 2009. 7 7
However, the unemployment rate, at 6 6

11.9 percent, remains higher than a year ago
5 5
and wage growth remains subdued, suggesting
support from personal consumption will likely 4 4
remain constrained. 3 3
Weak demand continues to put downward 2 2

pressure on inflation, which fell to 2.2 percent 1 1
year over year in May, down from April’s
0
2.4 percent and the lowest since August 2007. 0
This will allow the central bank to keep interest -1 -1
rates at record lows. -2 -2
Bronislaw Komorowski, who is pro-business -3

Employment Growth: May @ 0.5%
-3
and pro-European Union, won the July 4 2005 2006 2007 2008 2009 2010
presidential election. Although the markets

cheered the win, reforms could be difficult to Polish Unemployment Rate
pass as local and parliamentary elections loom. 25
Not Seasonally Adjusted
25
Unemployment Rate: May @ 11.9%
Polish Consumer Price Index
12.0% 12.0% 20 20
CPI: Jun @ 2.3%
10.0% 10.0%
15 15
8.0% 8.0%
10 10
6.0% 6.0%
5 5
4.0% 4.0%
0 0
2.0% 2.0% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Wells Fargo Securities, LLC
22
Russian Real GDP

Russia 10%
10%
Russia’s GDP growth finally turned positive in

8% 8%
6% 6%
the first quarter for the first time since the
third quarter of 2008, rising 2.9 percent from a 4% 4%
year ago. Trade fueled the bulk of growth as 2% 2%
the trade surplus more than doubled from a 0% 0%
year ago thanks to a surge in exports, driven -2% -2%

primarily by the rising demand for oil. -4% -4%
Household consumption also contributed,
-6% -6%
rising 0.3 percent on a year-ago basis, a vast
-8% -8%
improvement from the 9.4 percent plunge in
the fourth quarter. The contraction in -10%
-10%
investment continued, dropping 7.1 percent, -12% -12%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
but this was an improvement over the
9.5 percent fourth quarter decline.
Despite being much higher than a year ago, the Russian Merchandise Trade Balance
Billions of USD, Seasonally Adjusted
trade surplus has shrunk since January as $20 $20
imports have risen twice as much as exports. $18

Merchandise Trade Balance: May @ $12.2B
$18
Exports have actually dropped over the past
$16 $16
couple of months as the global economy has
softened, whereas imports continued to rise. $14 $14
Retail sales growth continued to improve, $12 $12
rising 11.7 percent in May from a year ago. The $10 $10
ruble’s strong appreciation from the lows of $8 $8
2009, along with a falling unemployment rate
$6
and rising real wages, are supporting the $6
rebound in domestic demand. $4 $4
Yet, spending growth remains weak compared $2 $2
to historical trends. This, along with a stronger $0 $0

ruble compared to a year ago, has pushed 2001 2003 2005 2007 2009
annual inflation down to just 5.7 percent in

June—extremely low by Russian standards. Russian Retail Sales
This will keep interest rates low for some time. 120%
120%
Russian Consumer Price Index

Year-over-Year Percent Change 100% 100%
20% 20%
80% 80%
18% 18%
60% 60%
16% 16%
14% 14% 40% 40%
12% 12% 20% 20%
10% 10%
0% 0%
8% 8% Retail Sales: May @ 11.7%

-20% -20%
1998 2000 2002 2004 2006 2008 2010
6% 6%
CPI: Jun @ 5.7%
4% 4% Source: Bloomberg LP, IHS Global Insight and
2002 2003 2004 2005 2006 2007 2008 2009 2010 Wells Fargo Securities, LLC
23
South African Real GDP

South Africa 8.0%
8.0%
In the first quarter of 2010, the South African 6.0% 6.0%
economy posted its third consecutive quarter

4.0% 4.0%
of economic expansion, growing at a
4.6 percent annualized pace. After a nasty 2.0% 2.0%
recession in 2009, the economy is rebounding.

0.0% 0.0%
Finance Minister Gordhan has made remarks
about the economic impact of the World Cup. -2.0% -2.0%
Greece was in a similar position to benefit

-4.0% -4.0%
economically from the Summer Games in
2004. In our analysis of IMF current account -6.0% Compound Annual Growth: Q1 @ 4.6% -6.0%
data, we were unable to find a discernable Year-over-Year Percent Change: Q1 @ 1.4%

-8.0% -8.0%
jump in spending for either personal or 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
business travel, nor did we find an above trend
rate of growth in other sectors. However,
“Other Services: Personal, Cultural and South African Unemployment
Rate
Recreational” showed a spike in spending that 26.0% 26.0%
was more than $600 million dollars higher Unemployment Rate: Q1 @ 25.2%
than average in 2004. That comprises roughly

2 percent of the overall economy, a big number
to be sure, but the impact faded the following 24.0% 24.0%
year. So, any lift from hosting the games or in
this case, the World Cup, is only temporary.
The unemployment rate in South Africa is
among the highest in the world. Though there 22.0% 22.0%
is some evidence that consumers are spending

again, retail sales are back in positive growth
territory on year-over-year basis.
With inflation fairly benign, the South African 20.0%
Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10
20.0%
Reserve Bank has cover to ease rates further at

its July 22nd meeting, should the SARB deem it
necessary. Real South African Retail Sales
18% 18%
South African Consumer Price Index 15% 15%

15% 15%
12% 12%
9% 9%
12% 12%
6% 6%
3% 3%
9% 9%
0% 0%
-3% -3%
6% 6%
-6% -6%
Wholesale & Retail Sales: May @ 4.6%
-9% -9%
3% 3%
2003 2004 2005 2006 2007 2008 2009 2010
CPI: May @ 4.6%

0% 0% Source: Bloomberg LP, IHS Global Insight and
2003 2005 2007 2009 Wells Fargo Securities, LLC
24
Turkish Real GDP

Turkey 12.5%
Year-over-Year Percentage Change
12.5%
Turkey’s economy grew 11.7 percent on a year-

10.0% 10.0%
7.5% 7.5%
over-year basis in the first quarter, up from 6.0
percent in the fourth quarter. The big increase 5.0% 5.0%
reflects base effects, as the economy hit bottom 2.5% 2.5%
in the first quarter of 2009. Nonetheless, 0.0% 0.0%
manufacturing led the way with a 20.6 percent -2.5% -2.5%

jump. Real estate rose 11.4 percent, and -5.0% -5.0%
construction rose 8.0 percent. Agriculture saw
-7.5% -7.5%
a 3.8 percent dip. Growth was entirely
-10.0% -10.0%
domestic driven as the trade deficit nearly
tripled from a year ago as imports rose almost -12.5%
-12.5%
six times as much as exports. -15.0% -15.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
The strength in imports is a result of a stronger
domestic economy and a rising demand for
inputs used in manufactures for export. Turkish Merchandise Trade Balance
Millions of USD, Not Seasonally Adjusted
Industrial production was up 15.6 percent on a $0 $0
year-ago basis in May, led by production of -$1,000 -$1,000

electrical machinery, medical equipment and
-$2,000 -$2,000
fabricated metal products. Motor vehicle and
parts production growth has cooled to -$3,000 -$3,000
26.0 percent year over year, down from 71.1 -$4,000 -$4,000
percent in February.
-$5,000 -$5,000
Although the economy has strengthened, -$6,000 -$6,000
inflation remains muted. Consumer prices rose
-$7,000
just 8.4 percent year over year in June, the -$7,000
smallest increase since January. The -$8,000 -$8,000
unemployment rate has declined from a year -$9,000 -$9,000

Merchandise Trade Balance: May @ -4,834.2 USD
ago, but it remains much higher than the pre-
-$10,000 -$10,000
crisis average. This, along with a stronger lira 2002 2004 2006 2008 2010
compared to a year ago, has kept prices in
check and will likely keep interest rates at
Turkish Industrial Production Index
historically low levels for some time. Year-over-Year Percent Change
25.0% 25.0%
Turkish Consumer Price Index 20.0% 20.0%

120.0% 120.0% 15.0% 15.0%
10.0% 10.0%
100.0% 100.0%
5.0% 5.0%
0.0% 0.0%
80.0% 80.0%
-5.0% -5.0%
60.0% 60.0% -10.0% -10.0%
-15.0% -15.0%
40.0% 40.0%
-20.0% IPI: May @ 15.6% -20.0%
-25.0% -25.0%
20.0% 20.0% 1998 2000 2002 2004 2006 2008 2010
CPI: Jun @ 8.4%

25
U.S. Trade Weighted Dollar Major Index

Dollar Exchange Rates 115
March 1973=100
115
The weighted-average value of the dollar 110 110
versus major currencies has trended higher 105 105
this year. Some of the greenback’s biggest gains 100 100
have come at the expense of the euro and other 95 95

European currencies. The dollar slipped versus
90 90
many emerging market currencies earlier this
year, but it has regained its footing over the 85 85
past few weeks as risk aversion has risen. 80 80
The appreciation of the dollar versus European 75 75
currencies this year reflects the stronger 70 70

economic upturn to date in the United States Major Currency Index: Jul @ 77.2
65 65
than on the other side of the Atlantic Ocean. In 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
addition, the Eurozone’s widely publicized
fiscal problems have reduced the attractiveness
of euro assets in the eyes of many investors. Euro-zone Exchange Rate
USD per EUR
The United State’s current account deficit has 1.70 1.70
narrowed considerably over the past few years, 1.60 1.60
which exerts fewer headwinds on the dollar. At

1.50 1.50
the same time, net capital inflows into the
United States have trended higher over the 1.40 1.40
past year or so, which have also helped boost 1.30 1.30
the greenback.
1.20 1.20
Wells Fargo projects the dollar will appreciate
modestly over the next few quarters versus 1.10 1.10
most major currencies, as the U.S. economic 1.00 1.00

recovery continues to prompt foreign buying
0.90 0.90
of higher-yielding U.S. assets. However, USD per EUR: Jul @ 1.270
“commodity” and emerging market currencies 0.80 0.80
1999 2001 2003 2005 2007 2009
will likely appreciate further on a trend basis,
as commodity prices continue to grind higher
and as increasing levels of risk tolerance cause Monthly Net Securities Purchases
capital to flow to those countries. $160
Billions of Dollars
$160
Current Account Deficit

Quarterly in Billions of Dollars, Seasonally Adjusted $120 $120
$40 $40
$80 $80
$0 $0
$40 $40
-$40 -$40
$0 $0
-$80 -$80
-$40 -$40
-$120 -$120
-$80 -$80
Net Securities Purchases: Apr @ $83 Billion
-$160 -$160 3-Month Moving Average: Apr @ $90 Billion
-$120 -$120
2004 2005 2006 2007 2008 2009 2010
-$200 -$200
Balance on Current Account: Q1 @ $-109.0 B

-$240 -$240 Source: Bloomberg LP, Federal Reserve Board, IHS Global Insight,
92 94 96 98 00 02 04 06 08 Intl. Monetary Fund and Wells Fargo Securities, LLC
26
Crude Oil
Energy $160
NYMEX Front-Month Contract, Dollars per Barrel
$160
Oil prices remained volatile during the $140 $140
last quarter as the U.S. and world economy $120 $120

traveled a very patchy road with the European
sovereign debt crisis weighing on commodity $100 $100
prices. Furthermore, an appreciating U.S.

$80 $80
dollar had its own effect on the price of oil,
which dropped to the low $70s at the height of $60 $60
the European debt crisis. However, emerging
market growth trumped all other effects and oil $40 $40
prices regained strength during the last part of $20 $20

the second quarter. Crude Oil: Jul @ $76.09
We still expect emerging market economic

$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$0
strength to keep the price of petroleum fairly

high during the rest of the year. However, the
risk to this forecast will increase if economic Crude Oil Inventory
growth in developed and emerging market 25% 25%
economies slows down. Furthermore, crude oil 20% 20%

inventory growth has turned positive, which
should keep petroleum prices from increasing 15% 15%
too much during this year. 10% 10%
Meanwhile, as expected, natural gas prices in 5% 5%

the United States have trended upward in the
0% 0%
past several months, but remain fragile.
Markets seem to expect the BP oil spill to put -5% -5%
upward pressure on natural gas and oil prices

-10% -10%
in the near future if deepwater exploration and
production is limited by political fiat. -15% -15%
Oil Inventory: Jul @ 2.5%
While the risks of an economic slowdown -20%
2005 2006 2007 2008 2009 2010
-20%
around the world have increased, the growth in

emerging markets is still supportive of
relatively high commodity prices. Natural Gas
Henry Hub Spot, Dollars per MMBTU
$16 $16
Natural Gas Storage $14 $14

45% 45%
$12 $12
$10 $10
30% 30%
$8 $8
15% 15% $6 $6
$4 $4
0% 0%
$2 $2
Natural Gas: Jul @ $4.44
$0 $0
-15% -15%
2005 2006 2007 2008 2009 2010
Natural Gas Storage: Jul @ -1.6%

27
CRB Metals Index

Metals 1,200
Index
1,200
The recovery in metals prices faltered during 1,000 1,000

the second quarter of the year as the European
sovereign debt crisis sent shockwaves through 800 800
the world market reminiscent of the 2008
post-Lehman Brothers collapse. Recently,
600 600
markets have pointed to another recovery
phase helped by the recent recovery of the euro
400 400
and the weakness of the U.S. dollar, as
reflected by the CRB Metals Index. While it is
200 200
too early to know if this recovery has teeth, at
least the fact that prices are no longer falling is CRB Metals Index: Jul-9 @ 716.99
0 0
a good sign for the markets. 2002 2004 2006 2008 2010
One of our biggest concerns is the strength and

sustainability of emerging market growth,
basically driven by China. If there are Copper Price
Dollars per Pound
indications that Chinese growth is starting to $5.00 $5.00
slow down considerably, then we can see

another round of weakness for metals prices. A
$4.00 $4.00
second, and important, risk is related to
renewed concerns about lingering Eurozone
growth and debt issues that could potentially $3.00 $3.00
wreak havoc on world economic growth again.

Aluminum and copper prices were not the $2.00 $2.00
exception during this correction. However,
copper prices remain very strong compared to
the prices experienced during the early part of $1.00 $1.00
this decade.
Copper: Jul-9 @ $3.05
Meanwhile, aluminum prices could see further $0.00
2002 2004 2006 2008 2010
$0.00
weakness during the rest of the year due to the

still strong level of inventories, which have
remained stable but very high compared to the Aluminum Price
early part of this decade. $1.75
Dollars per Pound
$1.75
Aluminum: Jul-9 @ $0.90
Aluminum Inventories
Thousands of Metric Tons, London Metal Exchange
2,000 2,000 $1.50 $1.50
Aluminum: Jul-9 @ 1,565,600
$1.25 $1.25
1,500 1,500
$1.00 $1.00
1,000 1,000
$0.75 $0.75
500 500
$0.50 $0.50
2002 2004 2006 2008 2010
0 0 Source: Bloomberg LP, IHS Global Insight and

2002 2004 2006 2008 2010 Wells Fargo Securities, LLC
28
July 15, 2010
Wells Fargo Internat ional Economic Forecast Wells Fargo Ba nk Currency Strategy Group Forecast
(Year-ov er-Yea r Percent C hange) (End of Quart er Rates)
GDP CPI 2010 2011
2009 2010 2011 2009 2010 2011 Q3 Q4 Q1 Q2 Q3 Q4
Global (PPP weight s) -0.7% 4.7% 3.9% 2.8% 4.1% 3.8% Major Currencies
Global Chartbook: July 2010
Global (Market Exchange Rat es) -2.0% 3.5% 2.7% n/a n/a n/a Euro ($/€) 1.27 1.25 1.22 1.19 1. 16 1.13
U.K. ($/£) 1.53 1.51 1.48 1.45 1. 44 1.44
1
Advanced Economies -3.4% 2.5% 2.0% -0.3% 1.2% 1.0% U.K. (£/€) 0.83 0.83 0.82 0.82 0. 81 0.78
United Stat es -2.4% 2.9% 2.3% -0.3% 1.4% 1.2% Japan (¥/$) 90 90 91 93 96 99
Eurozone -4.1% 0.9% 1.1% 0.3% 1.4% 0.9% Canada (C$/US$) 1.02 0.99 0.99 1.02 1. 04 1.07
United Kingdom -4.9% 1.2% 1.8% 2.2% 3.1% 2.3% Switzerland (CHF/$) 1.06 1.07 1.09 1.11 1. 14 1.17
Japan -5.3% 3.4% 1.6% -1.3% - 0.9% 0.0%
Korea 0.2% 6.1% 3.7% 2.8% 2.7% 2.9% Ot her Currencies
Canada -2.5% 3.5% 2.8% 0.3% 1.7% 2.1% Aust ralia (US$/A$) 0.89 0.91 0.91 0.89 0. 87 0.85
China (CNY/$) 6.76 6.72 6.63 6.53 6. 43 6.33
1
Developing Economies 2.5% 7.2% 6.2% 6.5% 7.4% 7.1% Sout h Korea ($/KRW) 1184 1158 1133 1108 1083 1075
China 8.5% 10.5% 9.0% -0.7% 3.0% 3.2% Singapore ($/SGD) 1.37 1.36 1.35 1.34 1. 33 1.33
India 7.4% 8.6% 7.6% 11.4% 11.8% 7.3% T aiwan ($/T WD) 32.04 32.00 31.83 31.42 30. 92 30.42
Mexico -6.5% 4.2% 3.6% 5.3% 4.5% 4.7% Mexico ($/MXN) 12.75 12.58 12.37 12.17 12. 03 12.00
Brazil -0.2% 7.2% 6.3% 4.9% 5.5% 6.5% Norway (NOK/$) 6.23 6.27 6.34 6.41 6. 55 6.79
Rus sia -8.3% 3.9% 4.1% 11.8% 6.2% 7.7% Sweden (SEK/$) 7.40 7.47 7.57 7.68 7. 85 8.05
Fore cast as of: July 7, 2010 Fore ca st a s of: July 14, 2010
1
Aggregated Using PPP We ights
Wells Fargo International Interest Rat e Forecast

(End of Quarter Rates)
3-Mont h LIBOR 10-Year Bond
2010 2011 2010 2011
Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4
U.S. 0.60% 0.60% 0.60% 0.60% 0.65% 1.15% 3.00% 3.20% 3.30% 3.40% 3.60% 4.00%
Japan 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 1.25% 1.25% 1.30% 1.35% 1.40% 1.40%
Euroland 0.90% 1.00% 1.10% 1.10% 1.15% 1.40% 2.70% 2.75% 2.85% 3.00% 3.50% 3.70%
U.K. 0.75% 0.75% 0.75% 0.80% 1.25% 1.75% 3.50% 3.60% 3.70% 4.00% 4.20% 4.30%
Canada 1.00% 1.40% 1.40% 1.50% 2.25% 2.75% 3.20% 3.45% 3.50% 3.80% 4.00% 4.20%
Fo recas t a s of: July 7, 20 10
ECONOMICS GROUP
29
WELLS FARGO SECURITIES, LLC
Wells Fargo Securities, LLC Economics Group
Diane Schumaker-Krieg Global Head of Research (704) 715-8437 diane.schumaker@wellsfargo.com

& Economics (212) 214-5070
John E. Silvia, Ph.D. Chief Economist (704) 374-7034 john.silvia@wellsfargo.com

Mark Vitner Senior Economist (704) 383-5635 mark.vitner@wellsfargo.com
Jay Bryson, Ph.D. Global Economist (704) 383-3518 jay.bryson@wellsfargo.com
Scott Anderson, Ph.D. Senior Economist (612) 667-9281 scott.a.anderson@wellsfargo.com
Eugenio Aleman, Ph.D. Senior Economist (612) 667-0168 eugenio.j.aleman@wellsfargo.com
Sam Bullard Senior Economist (704) 383-7372 sam.bullard@wellsfargo.com
Anika Khan Economist (704) 715-0575 anika.khan@wellsfargo.com
Azhar Iqbal Econometrician (704) 383-6805 azhar.iqbal@wellsfargo.com
Ed Kashmarek Economist (612) 667-0479 ed.kashmarek@wellsfargo.com
Tim Quinlan Economist (704) 374-4407 tim.quinlan@wellsfargo.com
Kim Whelan Economic Analyst (704) 715-8457 kim.whelan@wellsfargo.com
Wells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S broker-dealer
registered with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the
Securities Investor Protection Corp. Wells Fargo Securities, LLC, distributes these publications directly and through
subsidiaries including, but not limited to, Wells Fargo & Company, Wells Fargo Bank N.A, Wells Fargo Advisors, LLC,
and Wells Fargo Securities International Limited. The information and opinions herein are for general information use
only. Wells Fargo Securities, LLC does not guarantee their accuracy or completeness, nor does Wells Fargo Securities,
LLC assume any liability for any loss that may result from the reliance by any person upon any such information or
opinions. Such information and opinions are subject to change without notice, are for general information only and are
not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized
investment advice. Wells Fargo Securities, LLC is a separate legal entity and distinct from affiliated banks and is a
wholly owned subsidiary of Wells Fargo & Company © 2010 Wells Fargo Securities, LLC.
SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE

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July 15, 2010

Global Chartbook: July 2010

This report is available on wellsfargo.com/research and on Bloomberg WFEC

OECD Industrial Production

 The global economy is bouncing back from its

that the global recovery remains intact. Most

 Some investors fear that the global economy

assets. Central banks in some major countries

0% 0% Source: U.S. Department of Commerce, U.S. Department of Labor

World War II recession in 2008-2009, but real 6.0% 6.0%

GDP subsequently expanded for three Forecast

growth rate in the second quarter of 2010. 0.0% 0.0%

 Some of the rise in economic activity since the -2.0% -2.0%

swing in inventories. However, core measures -6.0% -6.0%

of consumer spending and business spending

lost during the downturn, and the

foreseeable future. Moreover, we project that 0% 0%

present, which allows the Federal Reserve to -9% -9%

CPI vs. Core CPI 400 400

0.0% 0.0% -800 -800

Eurozone Real GDP

 Following its 5 percent contraction between 4.0% 4.0%

early 2008 and mid-2009, the Eurozone 2.0% 2.0%

economy has started to recover. However, the

nadir in Q2 2009 and Q1 2010. Recent -4.0% -4.0%

remained sluggish. The main driver behind 9% 9%

 Another global financial crisis, stemming this 3% 3%

time from the debt problems of some 0% 0%

growth over the next few years. -15% -15%

the European Central Bank can keep monetary -21% -21%

Japanese Real GDP

 Japan’s economy is showing preliminary signs

first-quarter GDP advanced at a 5.0 percent

and the rest of Asia, combined with steady

government incentives, has helped the country

healthy 3.4 percent this year, slowing to 40% 40%

market volatility is bringing Japanese investors 0% 0%

pressures on an already weakening economy. -30% -30%

 Deflation appears more entrenched as a result. -40%

We are forecasting consumer prices to drop -50% -50%

1.3 percent last year.

U.K. Real GDP

 After six consecutive quarters of contraction in 4.0% 4.0%

which real GDP fell more than 6 percent, 2.0% 2.0%

GDP up only 0.7 percent between Q3 2009 and -4.0% -4.0%

second quarter. The volume of retail sales was -8.0% -8.0%

the Bank of England’s target of 2 percent at 40 40

4.0% 4.0% £60 £60

CPI: Jun @ 3.2%

Australian Real GDP

 The Australian economy expanded at a 8% 8%

2.0 percent annualized rate in the first quarter. 6% 6%

growth came from public sector spending while

 Prospects for the Australian economy are not -2% -2%

same time period.

cash target rate 150 bps to its present level of 350.0

4.50 percent. At its July meeting, the bank left 0.700

rates unchanged and affirmed that the current 300.0

level is appropriate “pending further 0.600

global economic developments as it is an

Australian Retail Sales and Housing

8.0% 60.0% 4.0% 4.0%

4.0% 30.0% 2.0% 2.0%

The global economy is bouncing back from its

Some investors fear that the global economy

Some of the rise in economic activity since the -2.0% -2.0%

Following its 5 percent contraction between 4.0% 4.0%

Another global financial crisis, stemming this 3% 3%

Japan’s economy is showing preliminary signs

Deflation appears more entrenched as a result. -40%

After six consecutive quarters of contraction in 4.0% 4.0%

The Australian economy expanded at a 8% 8%

Prospects for the Australian economy are not -2% -2%

The Canadian economy grew at a 6.1 percent 6.0% 6.0%

For the second quarter in a row, nearly half of -4.0% -4.0%

After experiencing a mild recession in

That said, the pace of recovery in Norway is

There are not many inflationary pressures in

Norges Bank, the country’s central bank, has

Singapore’s economy is coming off a sizzling 15.0% 15.0%

South Korea’s economic outlook has been little 15% 15%

Export growth continued to beat analyst

After enduring a fairly painful recession—real 5% 5%

The Riksbank (the country’s central bank) cut 45 45

Switzerland experienced a mild recession in

Taiwan’s economic expansion remains robust 12.5% 12.5%