inside advantage winter 2009

CLIENT SERVICE: THE MIKE O’HARA WAY p.3 ECONOMIC OUTLOOK p.4

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WHAT’S ON THE HORIZON FOR

2010?A Special Report from

David Hightower

3 Client Service: The Mike O’Hara Way Mike O’Hara shares his vision for client service excellence at Advantage Futures

4 What’s on the Horizon for 2010? Special Report from David Hightower, Principal, Hartfield Trading Partners

9 CME Interest Rates Capitalize on Intercommodity Treasury and Swap Spreads

10 Advantage Futures Seminar Series CME Group Metals, Fall 2009 Energy Overview, Gain an Advantage in FX Trading, Weathering the Grains Market

11 Upcoming Events Advantage Futures Seminar Series Calendar and Client Events

WINTER 2009

CONTENTS

ABOUT ADVANTAGE FUTURESAdvantage Futures ranks as one of the highest volume clearing firms in the industry, exceeding 1.5 billion contracts processed during the past six years. With an emphasis on superior technology, responsive risk management, customizable back office operations and highly personalized client services, Advantage Futures is the consummate clearing firm for institutions, hedge funds, CTAs, proprietary trading groups and professional traders. Skilled,dedicated personnel provide the most comprehensive, technology-driven clearing and execution services to

enable successful and efficient trading. Advantage Futures is a full clearing member of the CME Group (including CME, CBOT, NYMEX and COMEX), LIFFE, ICE Clear U.S., ICE Europe, The Clearing Corp., Options Clearing Corp. and CFE as well as a foreign approved participant of the Montreal Exchange. In addition, Advantage Securities is a member of the CBOE.

When you open an account with Advantage Futures, you not only trade, you Trade Up – to quicker connections, superior service and competitive pricing. At Advantage, you focus on trading

while we manage every other detail to your complete satisfaction. Advantage Futures continues to demonstrate record growth with more than $374 million in client funds on deposit as of August 2009. Our dedication to client service has lead to this success, and we are confident this ethic will continue to fuel our growth.

To learn more about Advantage Futures, please visit our Web site at www.advantagefutures.com or contact one ofour client representatives at 312.756.6460.

Mike O’Hara, Senior Vice President at Advantage Futures, is serious about client service. While technology, operations, and risk management attract clients to Advantage, Mike is confident that superior client service keeps them here. Client Service at Advantage is designed to improve every facet of the client’s experience. From account onboarding to technology optimization, the Advantage service philosophy encourages proactive involvement in helping clients achieve their goals. These objectives may include analyzing exchange membership options to getting started in automated, high frequency trading. Whatever the endeavor, Advantage service representatives will aid in the task.

Mike O’Hara is a strong believer in the lessons taught in The Nordstrom Way – his doctrine for service excellence. This book illustrates the concepts utilized by Nordstrom’s department store to earn its reputation for outstanding client service. With Mike’s urging, The Nordstrom Way has become required reading for all sales personnel at Advantage. Mike spends much of his time mentoring his team and

other employees on the importance of client service. He teaches three simple principles:

1) Follow the Golden Rule: Whenever possible, put yourself in your client’s position and understand how you would want to be treated. This simple concept is too often overlooked in client service. Clients always appreciate a sincere effort to understand their situation and like to know that everything possible is being done to meet their needs.

2) Every client is different: Many situations require tailor-made service and Advantage client representatives structure their services to accomplish just that. Others in the industry may rely on rigid bureaucracies to simplify client service at the expense of providing adequate responsiveness to client needs. In contrast, service at Advantage is prompt and personalized. We understand that every client is unique and customize our practices to suit each individual account.

3) Take a long-term approach: What a client says about you is more important than the

business he does with you. All too often in financial services, sales managers are focused only on getting a client in the door. While the initial sale is key, it is equally important to maintain a client’s positive perception of the company. Everyone with whom you conduct business should have a favorable impression of Advantage; they are more likely to recommend our company if their experience with us is a positive one.

So where does Mike see Advantage in five years? “Nordstrom. Disney.Four Seasons. These are all great companies driven by client service excellence. I want traders to feel the same way about Advantage Futures.” With such an emphasis on client service, it’s no coincidence that client referrals are the greatest driver of new business at Advantage.

Feel free to contact Mike at [email protected] or at 312.347.4932 with any questions or needs you might have. He’s ready to exceed your expectations.

INSIDEADVANTAGE WINTER 2009 3

CLIENT SERVICE:THE MIKE O’HARA WAY

4 INSIDEADVANTAGE WINTER 2009

WHAT’S ON THE HORIZON FOR 2010?

A Special Report fromDavid Hightower


Commodity Outlook for 2010Presented for Advantage Futures by David Hightower

In retrospect, 2009 was a very impressive year for the commodity markets. For most of 2009 commodities were seen as “the” place to be, with many analysts touting them as a new and potentially sustainable investment class. Indeed, certain commodities forged very impressive rallies in the face of highly uncertain economic conditions, with the Continuous Commodity Index forging a gain of more than 30% from the end of 2008 to the October 2009 highs. If one also takes into consideration the low to high rally in crude oil prices of 74% and the 94% run up in sugar prices, it would seem like certain commodities are well on their way to pricing in a recovery.

With the sharp, surprising run-up in equity prices of 67% off of the March 2009 low, there are a number of analysts who view the equity markets as pricing in positive growth for 2010. While the outlook for the economy remains very suspect as of this writ-ing and many might consider the commodity markets as over-stating the recovery potential, it is possible that a bit of historical perspective will lead one to the conclusion that many commodity prices still have significant upward price potential ahead.

In our opinion, a large portion of the commodity price gains forged in 2009 were simply a rejection of severely deflated pric-ing. In some cases markets fell to (and even below) the cost of production and did so off of sentiment that suggested demand was going to fall to depression type levels and not recover for years.

But as the situation was so extreme (interest rates approach-ing zero, widely accepted expectations for a continuous deflation-

ary spiral and, for a while, little or no hope of an end to the crisis) the conditions that had sent prices to extreme lows in 2008 and early 2009 may not be repeated very soon. It could be very dif-ficult for markets like natural gas, crude oil, sugar, cotton orange juice, copper, coffee and corn to return to the lows they have forged over the last 18 months. And while markets like cocoa, soybeans, soybean oil, cotton and wheat may seem to lack the fundamentals that would allow for a strong upside extension, against a backdrop of a falling Dollar, fairly consistent global de-mand growth and ongoing investment flows toward commodities, even those “weak horses” can catch some spillover support.

One could say that 2009 was a year to “close your eyes and buy everything physical.” In contrast, 2010 looks like a year to be more selective. To be sure the direction of most commodity prices will still be largely a function of the direction of the economy, but while we have to assume that the US will slowly claw its way out of the sub-prime disaster, we have to be aware that there will likely be periodic setbacks.

However, never in history has the US Federal Reserve been so forced into a position of erring to the side of inflation. Adding into the equation what appears to be a long-term devaluation of the dollar and unprecedented quantitative easing by the most of the world’s central banks, one is presented with a spectacular, classic inflationary setup for commodities.

While the commodity appreciation potential is being rec-ognized by the “funds” that have poured in copious amounts of money to commodities, there could be some form of showdown in 2010 between commodity speculators and the regulators. How-ever, in the wake of the move toward proposed position limits in certain commodities, it would appear that inflows to commodities


from the funds have actually accelerated. In 2009 moves to restrict index trader activity in some markets forced them to rebalance their positions, which meant that while they may have liquidated positions in some markets they turned around and bought into some other markets. For example, they may have been forced to liquidate some longs in Chicago wheat, but they simply replaced those with longs in Kansas City wheat.

In the event that regulators make a move to lower position limits in 2010 there could be a temporary, aggressive liquidation in some markets. In most cases one might expect those commodity markets with massive long spec positions to see a concentrated liquidation event in the face of a change in spec position limits. (See the table below for markets with an unusually large spec positioning as a percentage of open interest.)

Average Weekly Percentage of Open InterestHeld by Non-Commercial and Nonreportable Traders in 2009

FEEDER CATTLE 73.5% MINNEAPOLIS WHEAT 48.6%

LUMBER 67.8% COPPER 48.5%

LEAN HOGS 63.3% SOYBEAN MEAL 47.9%

NATURAL GAS 62.8% COFFEE 47.2%

WHEAT 57.5% RICE 46.4%

SILVER 57.3% PLATINUM 45.7%

CORN 57.1% MILK 45.3%

LIVE CATTLE 56.8% CRUDE OIL 44.7%

SOYBEANS 56.7% COTTON 43.3%

KANSAS CITY WHEAT 54.6% SUGAR 42.5%

PALLADIUM 52.5% COCOA 41.5%

GOLD 52.4% HEATING OIL 38.5%

ORANGE JUICE 48.9% RBOB GAS 35.7%

SOYBEAN OIL 48.7% OATS 33.3%

Still the Greatest Bull Market…

When presenting a commodity outlook in the late 1980’s, I was openly laughed at by the some of the most respected livestock analysts of the time when I suggested that the price of cattle was influenced that day by the sharp decline in the Dow Jones Industrial Average! Well in advance of the historic 2004 to 2008 explosion in copper prices, I sent a roar of laughter through the main ballroom of the Mirage Hotel in Las Vegas when I told a crowd of international scrap copper producers that prices were destined to double or even triple. At a National Grain Trades Council meeting in Cabo San Lucas, Mexico in February 2006, I wasn’t even in the room when I received a public lashing from a fellow presenter who apparently thought my prediction of crude oil prices rising above $80 a bar-rel was preposterous. While it may sound like I am tooting my own horn with these stories, the point is that a number of well-informed, experienced and well-intentioned players have failed to grasp the enormity of the situation facing the commodity markets.

The sub-prime disaster may have temporarily derailed the stellar growth in developed countries, but the rapid acceleration in standards of living in the rest of the world will not be denied. And while the recent price gains have come a long way towards repair-ing the lack of investment in mining, exploration and production from the late 1970’s to the late 1990’s, the global commodity demand will continue to climb with the biggest explosion of capitalism in the his-tory of mankind.

In 2010 traders should be aware of which commodity markets

have tight fundamental setups and be prepared to get long or add to their long positions in the wake of any compacted washout brought about by regulatory changes. Telling the world they can’t own com-modities probably increases the interest in them two-fold!

Interest Rates

While interest rates showed a general decline into the end of 2009, the long-term outlook is for higher rates. However, one might characterize the near term outlook as completely devoid of a trend. In almost any other junction in history Treasury yields would have already begun to factor in some form of economic recovery by now. And in almost any other junction in history the Treasury market would also have begun to factor in the explosion of U.S. debt, but so far the threat from the Federal Reserve to hold interest rates down until recovery is assured has prevented the market from anticipating an upward push in interest rates.

As of December 1, 2009 the markets were still fretting over re-sidual financial concerns and the fear of a jobless recovery was still dominating the marketplace. However, with a lengthening string of declines in U.S. Ongoing Claims figures and a drop in Initial Claims to the vicinity of the potentially critical 425,000 growth/nor growth level, it would seem like the U.S. economy is gradually moving toward a sustained recovery. Therefore, our outlook for interest rates closely resembles the outlook for a dam that is riddled with leaks. In other words, we see interest rates holding at relatively low levels until a definitive crack quickly translates into a bursting of the Fed’s interest rate dam. Given that Treasury prices recently were sitting 12 full points above the June 2009 lows and that the US government continues to see its deficit explode, we think that traders have to ap-proach the short side of the debt markets. In our opinion, the biggest difficulty of maintaining a short position in any debt market might be the lack of change in conditions directly ahead and not neces-sarily from the amount of price adversity that will be encountered. As in currency intervention efforts, the U.S. Fed probably realizes that once their support is challenged and they are unable to prop up prices there could be a very pronounced, across the board decline in debt markets.

Energies

The oil market has become one of the major focal points of the anti-commodity investment movement; with the initial complaints arising from the fact that crude oil prices were able to rise in the face of high supply and fears of slack recession demand. However, the International Energy Agency has suggested that the financial crisis caused a setback of $90 billion in energy investment and that the world will need $10.5 trillion in added investment through 2030 just to begin a shift away from fossil fuel sources. Some analysts (that are in part supported by oil consumer watchdog groups) have con-ceded that it might take $80 crude oil prices just to attract enough investment to meet world demand in the coming 5 years.

Another problem that might be missed by those that blame soaring energy prices on excess speculation is the inefficiency of the US refinery industry. In addition to being an oligopoly of sorts, the industry is well into a major divestiture of refining assets by the large oil conglomerates. A lack of competition basically put a large measure of energy price control in the hands of US refiners. Since the refiners have no civic duty to keep product supplies ample, leav-ing product supplies tight actually helps them expand and protect their profits. In other words, we have a situation where those in charge of manufacturing oil into products have a profit incentive that can be expanded by fostering shortages.


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As of the middle of November, the US refinery operating rate had slipped to a level where roughly 20% of capacity was idled. In the past this type of idling has only been seen in the face of severe weather damage to refineries or from depressionary expectations. While crude oil prices might appear to be expensive at $80 per barrel, the prospect of a product-led rally, a Dollar-led rally or a rally off any global setback in production is plausible in 2010. While US gasoline stocks currently stand at 210 million barrels, if they fall below the 200 million barrel level prior to mid April 2010, it could signal a return to crude oil prices above the $100 per barrel level by summer 2010.

Metals

With the US Federal Reserve backed into a corner by a mountain of toxic assets and soaring US deficit spending, the easy way out is to invite, foster and perhaps even beg for inflation. With the world currency markets and even US politicians seemingly willing to invite, foster and perhaps even beg for a significantly lower US Dollar, there would seem to be yet another historical inflationary building block in place.

While gold has been the popular choice of investors as a hedge against inflation and against holding the US dollar or other paper currencies, its record high price may cause a shift to other assets

such as silver, palladium, crude oil and even agricultural markets. It should be noted that world demand for silver has exceeded the supply (mine production plus scrap) for most of the past two decades, as jewelry and industrial demand for silver has remained strong. Furthermore, as the world emerges from the recession, we would expect the silver market to show an even larger production deficit, as mining is expensive and soaring prices thus far have not resulted in a commensurate rise in output.

With silver prices seriously lagging behind the record run in gold prices and spec long positioning in silver nowhere near record levels, we think that silver will be a better long-side performer in 2010 than gold, potentially capable of trading to $22 to $26 an ounce.

Soft Commodities

The sugar market appears poised to begin another leg higher, as a further tightening of world supply going into the first half of 2010 is expected. The potential for a surge in buying from fund traders due to inflationary economic environment also adds to the bullish setup. Furthermore, traders believe that India is close to increasing the amount of white sugar it will allow to be imported duty-free by another 1 million tonnes, and there has also been talk that they are booking another 2-3 million tonnes of raw sugar imports for March delivery.

(Continued on p.11)

INTEREST RATES COMMODITIES \ EQUITIES \ FX \ ENERGY \ METALS \ WEATHER

Implied Treasury and Swap spreads on CME Globex

offer traders an efficient way to take a position on

changes in the yield curve, or to isolate and trade swap

spread exposure. They offer easier and more efficient

execution of the most commonly traded spread strat-

egies, and eliminate the risk involved with executing

each leg individually. And with CME Group’s new Inter-

commodity Spread Curve Tracker (ICS Curve Tracker),

monitoring the levels of your Treasury and Swap

spreads is easier than ever, allowing you to track your

spreads over time, and giving you a clearer picture of

profits and losses. Learn more at cmegroup.com/ics.

Trade Implied Treasury and Swap Spreads:

between U.S. Treasury futures, and between Treasury and Interest Rate Swap futures

trade, eliminating “slippage” and leg risk

automated arbitrage between outright and spread order books

Tracker makes it simpler and easier to track levels of each spread

Treasury and swap spread trading with no leg risk

IMPLIED TREASURY AND SWAP SPREADS

CME Group is a trademark of CME Group Inc. The Globe logo, CME, Chicago Mercantile Exchange and Globex are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of

particular exchange and the applicable rulebook should be consulted. Copyright © 2009 CME Group. All rights reserved.

NOW INCLUDING NEW “ULTRA” T-BOND FUTURES

Beginning January 11, 2010


What are Intercommodity Treasury and Swap spreads?Intercommodity Treasury and Swap spreads (ICS) are implied, predefined spreads which facilitate the execution of Treasury curve and Treasury/Swap spread strategies. Traded on the CME Globex electronic platform, ICS allow you to trade these spreads as one strategy, without slippage or execution risk. The spread ratios are pre-defined, and they are expected to remain unchanged absent substantial changes in the marketplace. Changes to the ratios typically occur prior to the listing of spreads for deferred expiration months, and they are usually due to changes in the cheapest-to-deliver securities into Treasury futures.

Trading in Intercommodity Treasury and Swap spreads is strong and growing. From the time the implied spreads were listed on CME Globex on December 15, 2008 through mid-December 2009, more than 830,000 spreads have traded, representing nearly five million legs.

What are the advantages?Removing the need to leg into the spreads means that you can execute them quickly and efficiently, which mitigates the risk of not executing the spread at your desired price. Those who may be trading these spreads in the cash market will also find that implied Intercommodity spreads offer a more cost-effective way to execute them. In addition, this avoids the challenges faced by traders using auto-spreaders, who may miss getting a leg filled in volatile markets. In general, implied functionality enhances liquidity and creates efficient markets.

Who trades these kinds of spreads?Among others, Treasury and Swap spreads are traded by hedge funds, asset managers, proprietary traders, and active individual traders. Any market participant looking to manage duration and credit risk exposure, take advantage of arbitrage opportunities, or capitalize on anticipated changes in the yield curve, will find that Intercommodity spreads are a fast and efficient way to implement these strategies.

What kinds of Treasury and Swap spreads are listed?CME Group offers futures on 2-, 3-, 5- and 10-Year T-Notes, 30-Year T-Bonds, and on 5-, 7-, 10-, and 30-Year Interest Rate Swaps. This broad product suite allows us to offer a wide variety of spread possibilities. There are currently 14 different implied Intercommodity Treasury and Swap spread combinations listed, which provides opportunities to execute yield curve and credit spreads, whether your outlook is short-term or long-term. The ratio and contract month of the spread is embedded in the spread name, for example, “NOB 05-03 H0” indicates that the 10-year T-Note vs. 30-Year T-Bond spread (NOB) for March 2010 (H0) is listed at a ratio of five 10-Year T-notes vs. three 30-Year T-Bonds (05-03).

How are the spreads quoted?The minimum spread tick is equal to the minimum tick of the front leg of the spread. For example, the minimum tick for a “FYT” spread (5-Year T-Note vs. 10-Year T-note) would be one-quarter of one thirty-second ($7.8125), corresponding to the minimum tick

size of the 5-Year T-Note. The spread quotes are based on (net change of front leg) - [(net change of second leg) / price ratio].

How can I track Intercommodity spread positions?CME Group has created an Intercommodity Spread Curve Tracker (ICS Curve Tracker) which helps you track the levels of each spread. The ICS Curve Tracker displays the difference in the weighted prices of the two legs of the spread, rather than the net change. This provides a continuous time series, allowing you to track Treasury and Swap spreads over time, make decisions about when to put trades on and take them off, and have a better idea of the profit and loss status of your positions. You can get access to the ICS Curve tracker at www.cmegroup.com/ics.

There is a new Long-Term “Ultra” Treasury Bond futures contract launching on January 11, 2010—where do Ultra T-bond futures fit in with the current array of Intercommodity spreads?Ultra T-Bond futures, which are designed to allow you to manage long-dated Treasury yield exposure, will add to the Intercommodity spread opportunities. ICS will be offered for Ultra T-Bond futures against the other Treasury futures and the 30-year Interest Rate Swap futures contract. The Ultra T-Bond futures ICS generating a great deal of interest are the 30-Year T-Bond vs. Ultra T-Bond, the “BOB” spread, and the Ultra T-Bond vs. 30-Year Interest Rate Swap futures, the “UOS” spread. The UOS allows you to create synthetic market exposure to the 30-year swap spread, while the BOB allows you to capitalize on shifts in the long end of the yield curve, for risk management and potentially enhanced returns.

How can I learn more about Intercommodity Treasury and Swap Spread trading and Ultra T-Bond futures?In addition to the ICS Curve Tracker, you can visit www.cmegroup.com/ics to get the current Intercommodity spread ratios, live quotes on all of the spreads, and access a webinar archive that explains Implied Price Functionality. There is a variety of information on the new Ultra T-Bond futures available at www.cmegroup.com/ultra. The CME Group Interest Rate Resource Center also provides access to our latest tools, research, strategy papers, reference materials, and archives of all of our webinars. For example, in the New Opportunities in Treasury and Swap Spreads webinar (July 15, 2009), two veteran traders discuss the yield curve and how they incorporate Intercommodity spread functionality on CME Globex into their trading strategies.

For additional questions, contact a member of the CME Group Interest Rate Products and Services Team:

- Pete Barker, Director, 312.930.8554, [email protected] Jeff Kilinski, Director, 312.648.3817, [email protected] Jonathan Kronstein, Associate Director, 312.930.3472, [email protected] Suzanne Spain, Associate Director, 312.338.2651, [email protected]

Capitalize on Intercommodity Treasury and Swap SpreadsQ&A with Peter Barker, Director, Interest Rate Products, CME Group


Trading MetalsOctober 7, 2009

David Hightower, Principal, Hartfield Trading Partners and Bruce Gilbert, Director of Metals Products, CME Group, joined Advantage Futures on October 7 to share their knowledge and insight on trading strategies for CME Group Metals contracts, and news and updates from CME Group.

Fall 2009 Energy OverviewOctober 13, 2009

Advantage Futures, Fundamental Analytics and CME Group hosted an interactive panel on October 13, to discuss factors facing the energy markets in the fourth quarter of 2009 and beyond. The panelists include Dr. Joel Fingerman of Fundamental Analytics, Dave Wear of Integrys Group, Brian Marozas of Integrys Group, and Dr. Vincent Kwasniewski of Illinois River Energy.

Gain an Advantage in FX TradingNovember 10, 2009

Cornelius Luca, President and Author, LUCA Global Research and David Schulz, Director FX Products, CME Group, joined Advantage Futures and CME Group on November 10 to explain the role of foreign currency among the classic asset classes, financial markets at the end of 2009, and trading FX futures versus OTC FX.

Weathering the Grain MarketDecember 8, 2009

Joe D’Aleo of Weather Services International, Dan Basse of AgResource Company, and Gail Martell of Martell Crop Projections joined Advantage Futures and Weather Services International on December 8 to discuss forecasting of weather and grains markets.

Don’t miss our upcoming 2010 seminars with topics including:

➤ Economic Outlook 2010➤ Tax Strategies & Legal Structure➤ Euribor with Liffe

Our seminars can be viewed at the Seminar Center on the Advantage Futures website at www.advantagefutures.com

Advantage Futures Seminar Series 2009


UPCOMING EVENTSwhere should you be?

ADVANTAGE FUTURES SEMINAR SERIES

Economic Outlook 2010 Randall Kroszner, University of Chicago January 26, 2010 CME Auditorium, 30 S. Wacker Drive Chicago, IL

Tax Strategies & Legal Structure Lance A. Zinman, Partner, Katten Muchin Roseman Phil Ryan, CPA, Partner, Ryan & Juraska February 18, 2010 CBOT Visitor Center Theatre, 141 W. Jackson Blvd., 5th Floor Chicago, IL

Trading the European Yield Curves Cosponsored by NYSE Liffe March 24, 2010 CBOT Visitor Center Theatre, 141 W. Jackson Blvd., 5th Floor Chicago, IL

ADVANTAGE FUTURES CLIENT EVENTS

Check with your Advantage Futures client representative for our latest client events. In addition, you can register at www.advantagefutures.com/signup_form.html to receive the latest news from Advantage Futures. To register to attend Advantage Futures seminars and client events, please contact Shery Johnson at [email protected] or 312.347.3844.

Follow our updates on Twitter at www.twitter.com/futuresnews

Indian officials have pegged production for the 2009-10 season at just 16 million tonnes compared with consumption near 22.5-23.0 million. Back in May traders were not expecting world supplies to be very tight, due to expectations for a production surge in Brazil and a strong recovery in India as well. But the monsoon rains in India did not materialize in a timely manner, and production collapsed in some key areas.

Brazil producers are expected to continue to shift to more sugar and less ethanol production this year, as sugar prices are high and ethanol exports are expected to fall to 3 billion liters from 4.5 billion last year.

After two successive years of disappointing production out of India and tightening world supplies, the world ending stocks/usage ratio for 2009/10 is now forecast at just 15.8%, the lowest in at least 40 years. In short, the data suggests that we are approaching one of the tightest supply periods for sugar on record. We look for 28.00-36.00 cents as a possible upside target for sugar in 2010.

To learn more about David Hightower and to subscribe to The Hightower Report, please visit www.futures-research.com.

***This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity options and/or options on futures thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of The Hightower Report is strictly prohibited.

(Continued from p.7 - “What’s on the Horizon for 2010?”)

INSIDEADVANTAGETHIS ISSUE:

ECONOMIC OUTLOOK 2010

CLIENT SERVICE: THE MIKE O’HARA WAY

CME INTEREST RATES:CAPITALIZE ON INTERCOMMODITYTREASURY & SWAPSPREADS

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Disclosure Statement This information is not to be construed as an offer to sell or a solicitation or an offer to buy commodities herein named. The factual information of this report has been obtained from sources believed to be reliable, but it is not necessar-ily all inclusive and is not guaranteed as to the accuracy and is not to be con-strued as representation by Advantage. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.

Copyright © 2009 Advantage Futures. All rights reserved.

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