April 14th 2011

JPM Penalized on Revenue Miss

The second Dow component to report its earnings was JPM. The financial giant reported a better-
than-expected EPS, sending it gapping upwards at the open. It turned south shortly afterwards
however, as its revenue missed the consensus. For more details on JPM earnings, see the next page.

Despite JPM turned tail and fell, the Dow Jones Industrial Average settled the day up 7.41 points or
0.06% at 12,270.99. S&P 500 index finished at 1,314.41, up 0.25 points or 0.02%, while the tech
stocks enjoyed better day as NASDAQ advanced 16.73 points or 0.61% to 2,761.52.

US light crude for May delivery ended up 86c to $107.11 a barrel while the Brent crude for May
delivery finished at $122.88 a barrel, up $1.96. The rise of oil prices were triggered by the
declining US gasoline inventory by 7M barrels last week, the biggest decline since October 1998.
From Libya, it was reported that most of the rebels’ daily output of 100,000 barrels were not
exported.

Gold also rose after hitting $1,444/oz. on Tuesday after Goldman Sachs announced it has exited
commodities. A combination of conflicts in MENA, debt crisis in Eurozone, and also Richard Fisher’s
comments on Fed’s policy as well as rebound in oil prices has pushed gold up from its recent slump.
Meanwhile, metal consultant GFMS said that gold price will be at $1,455 in 2011, with the price
range between $1,319 and $1,620 per oz.

Top gainers of the day were CAT (+0.99%), KFT (+0.81%), and KO (+0.57%). Top losers include
BAC (-1.48%), BA (-1.3%) and the ‘regular’ cast CSCO (-1.09%). Post earnings, AA still under
pressure, losing 0.9% by the end of the day. AA is the worst performer this week, having lost 7.65%
so far, followed by CVX which lost 5.33% and XOM (-3.25%). KFT and WMT were top gainers this
week, with gains of 2.31% and 2.07%, respectively.

1 .DJI 12,263.60 (-117.53.06 ● -0.95%) .SPX 1,314.16 (-10.30 ● -0.78%) .IXIC 2,744.79 (-26.72 ● -0.96%)
 April 14th 2011

Fed Watch
Dallas Federal Reserve President Richard Fisher in an interview with Handelsblatt newspaper said
that there’s a risk that the Fed may not be able to keep inflation under control. As one of the voting
members of the FOMC, it was not the first time Fisher being hawkish. Regardless, the most plausible
route could be the one pointed out by James Bullard a few days ago. The St. Louis Fed President said
suggested that the QE2 will be resumed until it ends in June. Afterwards, the Fed may take some time,
probably to assess the economic conditions after they pull the plug on QE2. If there are no negative
developments, it is very likely that by the end of the year or at the start of 2012, the tightening cycle
will begin.

Corporate Highlight
JPM announced Q1 EPS of $1.28, beating the consensus of $1.16 on Wednesday. It missed the
revenue estimates though, as revenue in Q1 was reported at $25.22B vs. consensus number of
$25.27B. Just like AA, JPM’s failure to deliver a ‘perfect’ earnings report has been punished as the
stock tumbled from $47.37 high and settled way lower at $46.25 after it set the intraday low at
$45.88. The 0.84% decline was likely caused by the missed revenue expectation, as well as the
statement from CEO Jamie Dimon suggesting that there will be no dividend hike for the next two
quarters. JPM announced a dividend raise to 25c per share as well as authorizing common stock
buyback program worth $15B. Apart from this, JPM’s EPS mostly derived from reduced credit card
loan reserves (around 29c).

Dimon also warned that mortgage-related issues will continue for a while, and that retail financial
services hurt by these issues. On NIM, JPM sees pressure on this next quarter. JPM’s investment
banking fees rose 23% YoY to $1.8B, loan loss reserves at $29.8B in Q1, down $8.4B YoY.

So is it a good one or a bad one? The market pointed at the latter. However, the dip in JPM may set
up a great opportunity for establishing long positions. Among other financial giants such as C, BAC,
GS, and WFC, JPM is the rather the most favorable among them. Expect JPM to recover from the
setback and aims at our target at $55.70 later on.

2 .DJI 12,263.60 (-117.53.06 ● -0.95%) .SPX 1,314.16 (-10.30 ● -0.78%) .IXIC 2,744.79 (-26.72 ● -0.96%)
 April 14th 2011

Corporate News
BA is said to invest in Indian defense industry. The value is seen at $300M.
GE denied the report that stated it would repay tax refund worth $3.2B, saying that the report is
a hoax.
Global PC deliveries totaled 84.3M units in Q1, falling 1.1% from a year earlier. The report from
Gartner indicated that Q1 is usually a slow period for PC sales, but this time around it is not just a
normal seasonal slowdown, but there’s also a potential sluggishness. Prior forecast pointed at 3%
growth in Q1.
MMM announced its new company 3M AST Ltd. which is based in Cheonan Korea. The new
company provides advanced sputtering and plating services, materials and manufacturing
capabilities for flexible circuits used in mobile devices, touch-screen panel and display.
PG plans to invest in Indonesia over the next three years to expand its business. The investment
will worth $100M and it will be used to set up its first factory in Indonesia and to support its
distribution networks there. Elsewhere in Europe, PG along with Unilever has been fined by
European Commission for a total of 315.2M euros for price fixing.
UTX raised dividend by 12.9% for Q2 to 48c per common share. The dividend is payable June
10 to shareholders of record date of May 20th. Ex-dividend date is May 18.

3 .DJI 12,263.60 (-117.53.06 ● -0.95%) .SPX 1,314.16 (-10.30 ● -0.78%) .IXIC 2,744.79 (-26.72 ● -0.96%)
 April 14th 2011

Stock Focus: Bank of America, Corp.

BAC
Last Apr 13th Resistances 13.64 13.88 14.70 14.95 15.31
$13.27 13.11% Supports 13.11 12.93 12.72 12.59 11.95
WTD MTD Outlook
1.56% 0.45%
NEGATIVE
YTD 12-Month
0.52% 25.57% Strategy SHORT while below $13.88, risk > $14.70, PT @ $11.95

A bearish candle on Wednesday has reaffirmed the stance on BAC at NEGATIVE. Falling RSI, down-
to-near-flat EMAs and MACD also weigh on the stock. BAC is seen heading towards $11.95 and a
SHORT is favored. Risk is seen above $14.70. The upcoming Q1 earnings announcement could
become the catalyst of the fall.

4 .DJI 12,263.60 (-117.53.06 ● -0.95%) .SPX 1,314.16 (-10.30 ● -0.78%) .IXIC 2,744.79 (-26.72 ● -0.96%)
 April 14th 2011

Price Performance - as of Apr 13th 2011

Code Last Dy WTD MTD YTD 12-Mos
AA 16.55 -0.90% -7.65% -6.29% 7.54% 23.23%
AXP 46.10 0.17% -0.39% 1.99% 7.41% -0.04%
BA 72.13 -1.30% -1.82% -2.43% 10.53% -0.41%
BAC 13.27 -1.48% -1.56% -0.45% -0.52% -25.57%
CAT 107.63 0.99% -1.99% -3.34% 14.92% 58.07%
CSCO 17.25 -1.09% -2.27% 0.58% -14.73% -35.95%
CVX 103.81 -0.36% -5.33% -3.42% 13.76% 27.47%
DD 53.82 0.13% -2.85% -2.09% 7.90% 35.09%
DIS 41.70 0.17% -0.14% -3.23% 11.17% 13.19%
GE 19.94 -0.35% -1.24% -0.55% 9.02% 5.73%
HD 37.67 -0.24% 0.56% 1.65% 7.44% 6.93%
HPQ 41.13 0.12% 1.06% 0.39% -2.30% -20.86%
IBM 163.95 0.43% -0.06% 0.54% 11.71% 27.09%
INTC 19.78 0.10% -1.20% -1.98% -5.94% -13.40%
JNJ 59.60 -0.57% 0.24% 0.59% -3.64% -7.31%
JPM 46.25 -0.84% -1.26% 0.33% 9.03% 8.62%
KFT 32.40 0.81% 2.31% 3.32% 2.82% 9.46%
KO 67.28 0.57% 0.01% 1.42% 2.30% 25.87%
MCD 76.89 0.30% 1.12% 1.05% 0.17% 8.92%
MMM 92.86 0.53% -0.39% -0.68% 7.60% 4.73%
MRK 33.47 -0.27% -0.59% 1.39% -7.13% -4.48%
MSFT 25.63 -0.04% -1.69% 0.95% -8.17% -16.08%
PFE 20.46 0.00% 0.00% 0.74% 16.85% 22.37%
PG 62.99 0.16% 1.76% 2.26% -2.08% 1.34%
T 30.18 -0.95% -1.73% -1.40% 2.72% 15.81%
TRV 59.93 0.40% 0.59% 0.76% 7.57% 18.11%
UTX 84.21 0.27% -0.71% -0.52% 6.97% 12.35%
VZ 37.69 0.13% -0.08% -2.21% 5.34% 30.42%
WMT 53.63 0.21% 2.07% 3.04% -0.56% -0.02%
XOM 83.16 -0.02% -3.25% -1.15% 13.73% 22.71%

5 .DJI 12,263.60 (-117.53.06 ● -0.95%) .SPX 1,314.16 (-10.30 ● -0.78%) .IXIC 2,744.79 (-26.72 ● -0.96%)
 April 14th 2011

Analysts' Upgrades & Downgrades

Ratings Price Target
Code House
Previous Current Previous Current
BA Nomura - Reduce - $66.00
MCD Argus Buy Buy - $88.00
PFE Citigroup - Hold $20.00 $23.00
n Reiterate n Upgrade n Downgrade n Initiation
US Economic Calendar
Date Time Report Period Actual Forecast Previous
12-Apr 8:30 AM Trade balance Feb -$45.8B -$42.9B -$47.0B
12-Apr 8:30 AM Import prices Mar 2.7% 2.0% 1.4%
12-Apr 2:00 PM Federal budget Mar - n/a -$65B
13-Apr 8:30 AM Retail sales Mar 0.4% 0.5% 1.1%
13-Apr 8:30 AM Retail sales ex-autos Mar 0.8% 0.7% 1.1%
13-Apr 10:00 AM Inventories Feb 0.5% 0.7% 1.0%
13-Apr 10:00 AM Job openings Feb 3.1M n/a 2.8M
13-Apr 2:00 PM Beige book
14-Apr 8:30 AM Jobless claims 9-Apr 382K
14-Apr 8:30 AM Producer price index Mar 0.7% 1.6%
14-Apr 8:30 AM Core PPI Mar 0.2% 0.2%
15-Apr 8:30 AM Consumer price index Mar 0.4% 0.5%
15-Apr 8:30 AM Core CPI Mar 0.2% 0.2%
15-Apr 8:30 AM Empire state index Apr 17.0 17.5
15-Apr 9:15 AM Industrial production Mar 0.6% 0.0%
15-Apr 9:55 AM Consumer sentiment Apr n/a 67.5

Disclaimer: This report is provided for information purposes only. It is not an offer to sell or to buy any securities. This
report has been prepared based on sources believed to be reliable, but there is no assurance or guarantee regarding its
completeness and accuracy. The author accepts no responsibility or liability arising from any use of the report.

6 .DJI 12,263.60 (-117.53.06 ● -0.95%) .SPX 1,314.16 (-10.30 ● -0.78%) .IXIC 2,744.79 (-26.72 ● -0.96%)