investment strategy monthly slides january 2012 investment strategy & advisory team: barbara m....

Investment StrategyMonthly Slides

January 2012

Investment Strategy & Advisory Team:

Barbara M. Reinhard, CFAChief Investment Strategist, Managing [email protected]

Philipp E. Lisibach, [email protected]

Jimmy M. [email protected]

Samuel M. BaumannAssistant [email protected]

Scott P. RosenblattAssistant [email protected]

Ryan P. SullivanAssistant [email protected]

Private Banking Americas

As of January 10, 2012

This document is not complete without attached “Important Legal Information.”

2

Table of Contents

Investment Strategy Overview

Four Charts You Can’t Miss

Asset Allocation & Economic Outlook

Valuations

Fundamentals

Sentiment

Appendix

– Global Asset Class Returns

– Key Forecasts

(Click below to go to section)


3

Investment Strategy Overview

As of 1/09/2012Source: Private Banking (PB) Americas Investment Strategy &

Advisory

High growth equity sectors in a low economic growth environment.

Increase stable over cyclical growth in equity portfolios.

Position U.S. sector allocations towards stable growth sectors such as:

- Health Care, Telecom, Utilities, Consumer Staples

High dividend paying stocks and strategies during periods of low interest rates.

Stay overweight emerging market equities.

Increase municipal bond exposure, favoring 5-10 year maturities given yield curve shape.

High credit quality during periods of high liquidity.

Seek higher yield through different vehicles such as:

- Senior Bank Loans, MLPs, REITs with good coupons and coverage ratios

Certain investment vehicles referenced above may be available only to qualified, suitable investors.


4

Four Charts You Can’t Miss

Source: PB Americas Investment Strategy & Advisory

As of 1/06/2012Source: Bloomberg

Low Bond Yields Make High Dividend Stocks Attractive

U.S. Labor Market Continues To Improve Gradually

As of 12/31/2011 Source: Bloomberg

300

350

400

450

500

550

600

650

700

Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11

U.S. Initial J obless Claims 4 Week Moving Average

In thousands

U.S. Households Have Meaningfully Reduced Their

Financial Burden since 2008

As of 9/30/2011; Latest data availableSource: Federal Reserve

Data as of 11/30/2011Source: National Association of Realtors

U.S. Home Prices are Reaching a Bottom and Homes are

Now at their Most Affordable Level in the Last 20 Years

1.5

2.5

3.5

4.5

5.5

J an-07 J an-08 J an-09 J an-10 J an-11 J an-12

S&P 500 Dividend Yield US 10-Yr Treasury Yield

%

100

110

120

130

140

150

160

170

180

190

200

Nov-91 Nov-95 Nov-99 Nov-03 Nov-07 Nov-11

U.S. Homebuyer Affordability Index

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

Sep-81 Sep-86 Sep-91 Sep-96 Sep-01 Sep-06 Sep-11

Ratio of U.S. household debt payments to U.S. disposable personal income

%

Asset Allocation & Economic Outlook


6

Over-heating Slowdown Contraction Recovery

Sto

cks

Com

m

Bon

ds

Cash

Bon

ds

Sto

cks

Com

m

Cash

Bon

ds

Com

m

Sto

cks

Cre

dit

s

Cash

Com

m

Bon

ds

Outperform

Underperform

Cycle Clock*

*The Cycle Clock framework breaks the economic cycle into 4 phases (Overheating, Slowdown, Contraction & Recovery). For each of the 4 phases we examine which asset classes may perform better than other asset classes based upon historical performance data. However, past performance is not an indication nor a guarantee of future results.

GDP robust

Unemployment low

Tighter rate policy

Inflation rising

GDP dropping

Employment slowing

Tight rate policy

Inflation slowing

GDP contracting

Unemployment high

Easier rate policy

Inflation low

GDP picking up

Employment off

Easy rate policy

Inflation tame

As of 1/09/2012Source: Private Banking Global Research

Our Cycle Clock indicator is currently in the Contraction phase. The move from Recovery to Contraction in early October was both atypical and unusual of a business cycle, and has only previously occurred over two short periods in 1985 and 2002. As such, our recommended asset allocation (neutral tactical and positive strategic views on equities) is less typical of a normal Cycle Clock.


7

Outlook Summary

Alternative investments, such as private equity funds and hedge funds, are typically high-risk investment vehicles which are available only to qualified individuals or entities that are willing to assume above average risk and sustain limited liquidity with a portion of their net worth.


8

Guidance Allocations

Data as of 1/09/12Source: PB Americas Investment Strategy & Advisory

The proposed Benchmark and Strategic Asset Allocations for each of the risk budgets referenced above are created by the Private Banking Americas Investments Strategy & Advisory

group. The Benchmark Asset Allocation (BAA), for a 3-7 year time horizon, is the neutral position reflecting the predefined risk budgets and meets investment objectives over a full market cycle.

The Strategic Asset Allocation (SAA), for a 6-12+ month time horizon, expresses views resulting in temporary deviations from the BAA to generate expected excess returns or reduce risk.

Alternative investments are typically high-risk investment vehicles which are available only to qualified individuals or entities that are willing to assume above average risk and sustain limited

liquidity with a portion of their net worth. Please refer to the attached “Important Legal Information” for important disclosure relating to alternative investments.

BAA SAA BAA SAA BAA SAA BAA SAA BAA SAA

Cash 5.0% 4.0% 5.0% 3.0% 5.0% 2.0% 5.0% 2.0% 5.0% 2.0%

USD 5.0% 4.0% 5.0% 3.0% 5.0% 2.0% 5.0% 2.0% 5.0% 2.0%

Equities 0.0% 0.0% 20.0% 22.0% 40.0% 43.0% 55.0% 58.0% 65.0% 67.0%

USA 0.0% 0.0% 10.0% 11.5% 20.0% 22.5% 27.5% 30.5% 32.5% 35.0%

Developed Equities ex-US 0.0% 0.0% 6.0% 5.5% 12.0% 11.0% 16.5% 14.0% 19.5% 16.0%

Emerging Markets 0.0% 0.0% 4.0% 5.0% 8.0% 9.5% 11.0% 13.5% 13.0% 16.0%

Fixed Income 80.0% 80.0% 55.0% 54.0% 30.0% 29.0% 10.0% 9.0% 0.0% 0.0%

USD, Tax-Exempt 56.0% 60.0% 38.5% 40.5% 21.0% 22.0% 7.0% 8.0% 0.0% 0.0%

USD, Taxable 24.0% 18.0% 16.5% 12.0% 9.0% 6.0% 3.0% 0.0% 0.0% 0.0%

Non-USD, Taxable 0.0% 2.0% 0.0% 1.5% 0.0% 1.0% 0.0% 1.0% 0.0% 0.0%

Alternative Investments 15.0% 16.0% 20.0% 21.0% 25.0% 26.0% 30.0% 31.0% 30.0% 31.0%

Commodities 2.5% 3.0% 2.5% 3.0% 2.5% 3.0% 2.5% 3.0% 2.5% 3.0%

Gold 2.5% 3.0% 2.5% 3.0% 2.5% 3.0% 2.5% 3.0% 2.5% 3.0%

Hedge Funds 5.0% 5.0% 5.0% 5.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%

Private Equity 0.0% 0.0% 5.0% 5.0% 5.0% 5.0% 10.0% 10.0% 15.0% 15.0%

Real Estate (Property) 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 0.0% 0.0%

TOTAL 100% 100.0% 100% 100% 100% 100% 100% 100% 100% 100%

Risk BudgetRisk Budget Risk Budget1) LOW 2) LOW-MEDIUM 3) MEDIUM

Risk Budget5) HIGH

Risk Budget4) MEDIUM-HIGH


9

Economics: Global growth divergence: U.S. appears to gain momentum, Europe in

recession. In 2012 global growth is expected to reach

3.5%, mainly driven by the ongoing U.S. recovery and emerging Asian economies. Elections in seven of the G20 countries, accounting for 35% of global GDP, will make politics a critical factor this year. There may be additional volatility in financial markets fuelled by crucial debates surrounding entitlement cuts and tax policy.

The global growth pattern is expected to diverge further in 2012 with Europe’s leading indicators deteriorating and pointing to a recession. Meanwhile, U.S. indicators (rising purchasing manager indices) point to a modest acceleration in the near-term.

The political transitions in many of the Middle Eastern countries remain a source of uncertainty in energy markets in 2012.

Oil Price Rises Amid Tensions in The Middle East



U.S. Labor Market Continues To Improve Gradually


300

350

400

450

500

550

600

650

700


U.S. Initial J obless Claims 4 Week Moving Average

In thousands

30

50

70

90

110

130

150

J an-08 J an-09 J an-10 J an-11 J an-12

WTI Spot P rice

USD/bbl


10

Developed Markets

U.S. Emerging Markets

Asia Pacific ex-Japan Asia

Canada Latin America

UK Europe, Mid East, Africa

Japan

Europe ex-UK

Regional Outlook

Global Equities Valuations Look Undemanding

Note: Arrows represent the current PB Americas Investment Strategy & Advisory absolute market view for 6-12 months.1Strategic Asset Allocation, see slide 8 for more information

Equities: Sovereign issues continue to weigh on sentiment.

Valuations look reasonable overall, however headline risk remains and equities are likely to trade with elevated volatility in the near term.

The Eurozone looks attractive on a valuation basis, however lingering contagion risk keeps us cautious on the region.

With inflation less burdensome and growth expected to slow, many emerging markets are likely to benefit from looser (or less tight) monetary policies (Brazil, China).


As of 12/31/2011 Source: Bloomberg, DataStream

*EAFE: Europe, Australasia, and Far East

SAA1

SAA1

Equity Market Index 12 Month Target ScenariosDJ Euro

Stoxx 50 FTSE 100 Nikkei 225 MSCI EM

Spot 2,317 5,572 8,455 916Optimistic 3,001 6,367 11,500 1,441Main 2,740 5,809 9,800 1,257Pessimistic 2,490 5,273 7,200 970Data as of 12/31/2011


57911131517192123


MSCI EAFE Index* S&P 500 Index MSCI Emerging Market Index

12-Month Forward P /E Ratio

/ Indicates a strong investment conviction in over/underweight position. / Indicates a modest investment conviction in over/underweight position. Indicates a neutral investment conviction, or benchmark weighting

position.


11

U.S. Sector Outlook

Health Care Energy

Consumer Staples Industrials

Telecomm Services Consumer

Discretionary

Utilities Financials

Information Technology Materials

Average Strategist S&P 500 Year-end 2012

Target

Note: Arrows represent the current PB Americas Investment Strategy & Advisory absolute market view for 6-12 months.

/ Indicates a strong investment conviction in over/underweight position. / Indicates a modest investment conviction in over/underweight position. Indicates a neutral investment conviction, or benchmark weighting

position.

U.S. Equities: Macro data have continued to surprise to the upside.

We remain positive, with a defensive sector allocation on U.S. equities. Consensus is for modest gains in 2012.

Recent economic data releases (ISM manufacturing, consumer confidence, jobless claims) have surprised positively. An better macro environment should lead to an improved earnings outlook.

Prolonged euro weakness a headwind for U.S. companies with significant revenues derived from the Eurozone, as earnings are impacted when translated back into USD.


As of 1/5/2012Source: Bloomberg

S&P 500 Index 12 Month Target Scenarios

S&P 500 Index Level

Spot 1,258Optimistic 1,462Main 1,299Pessimistic 1,145 Data as of 12/31/2011

1250

1275

1300

1325

1350

1375

1400

1425

J ul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11

1344



12

Fixed Income: Preference for high quality credits, munis, and emerging

market debt. In 2012 interest rates are expected to

remain near zero in the U.S. Given the risk of extreme outcomes in Europe we favor high quality investment grade corporates.

The fixed income segment of our Strategic Asset Allocation remains unchanged compared to last month. We continue to prefer exposure to high quality investment grade bonds and we maintain a small overweight position to emerging markets local currency denominated bonds with limited exposure to Europe.

Municipal bonds have given up some of their attractive valuation compared to U.S. Treasuries, yet remain favorably valued. Default rates are expected to stay relatively low and tax revenues are projected to improve going forward with the continuation of the U.S. economic recovery.

Fixed Income Outlook

Positive Negative Neutral

Note: Arrows represent the current PB Americas Investment Strategy & Advisory absolute market view for 6-12 months.1Strategic Asset Allocation, see slide 8 for more information


As of 12/31/2011 Source: Thomson Reuters MMD, Bloomberg

U.S. Municipal

U.S. Investment Grade Corp.

Emerging Markets

U.S. Treasury Inflation Protected

U.S. High Yield

U.S. Treasuries

U.S. Securitized

Municipals Remain Attractive Compared to U.S. Treasuries

SAA1

97.3

%


60

80

100

120

140

160


Muni / Treasury Spread Average

+1 Standard Deviation -1 Standard Deviation

%


13

Currencies: EUR expected to be under pressure, emerging Asian currencies

likely to gain. Volatility is projected to persist in 2012 as

financial market funding conditions, elections, and economic growth remain risk factors. Safe haven currencies such as the USD, CHF, and JPY could benefit temporarily in time of elevated market volatility.

EUR: The European Central Bank’s interest rate reduction cycle is expected to continue putting further pressure on the EUR vs. USD, as the relative yield advantage of the EUR fades.

Emerging Asian currencies with strong external balances are preferred. Continued U.S. economic recovery is projected to be a positive for the Mexican peso (MXN), in the event of lower overall market risk.


Note: Arrows represent the current PB Americas Investment Strategy & Advisory absolute market view for 6-12 months.


USD vs. CHF EUR vs. USD

USD vs. CAD NZD vs. USD

USD vs. MXN AUD vs. USD

USD vs. BRL USD vs. JPY

GBP vs. USD

Data as of 1/06/2012Source: Bloomberg

Currency Outlook

EUR Reaches a 16-month Low vs. USD


1.15

1.20

1.25

1.30

1.35

1.40

1.45

1.50

1.55

1.60

1.65

J an-08 J an-09 J an-10 J an-11 J an-12

EURUSD


14

Commodities: 2011 was challenging; however depressed prices may present

value. Macro uncertainty led by the financial crisis

and economic growth uncertainty made 2011 a challenging year for commodities. The Dow Jones UBS Commodity Index finished the year down 13%.

Precious metals, particularly gold, were the bright spot in 2011, gaining 10% for the year. As a result of its recent pullback, we believe gold is within fair value range. Further, a continued low interest rate environment may act as a catalyst for higher prices.

Industrial metals remain neutral as growth concerns exist in both developed and emerging markets. Chinese trade data due in January will provide an indication on current state of demand.


Note; Arrows represent the current PB Americas Investment Strategy & Advisory absolute market view for 6-12 months.


Commodity Outlook

Data as of 12/31/2011Source: Bloomberg, All Indices Rebased to 100 as of 12/31/2010

Precious Metals

Industrial Metals

Livestock

Agriculture

Energy

Other Than Precious Metals, Commodities Struggled During

2011


70

80

90

100

110

120

130

140

Dec-10 Mar-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11

DJ UBS Total Return DJ UBS Agg Sub-IndexDJ UBS Precious Metals Sub-Index DJ UBS Industrial Metals Sub-IndexDJ UBS Energy Sub-Index DJ UBS Livestock Sub-Index


15

Alternatives: Global Macro hedge funds continue to be top performing

strategy. Through November 2011, the global macro

hedge fund strategy – our top pick for most of 2011 – was able to navigate market volatility and generate consistent returns for most months of the year. Global macro is up 6.0% through November 2011, versus the S&P 500 index, up 1.1%. Hedge funds at large, as measured by the CS Dow Jones Index, are down 2.3%.

Real property continues to be a strategic position in the Credit Suisse Global Asset Allocation Framework with a positive outlook. Well-placed and managed investments across regions and geographies may provide investors with an enhanced yield (see table).

Private equity outlook remains constructive for the longer term. Current activity in the space is focused around secondary funds and smaller Leveraged Buy-out (LBO) transactions that involve less leverage and have more access to financing in the current environment.


Data as of 11/30/2011; Latest data availableSource: Private Banking Investment Strategy and Advisory Group,

Bloomberg

Global Macro Navigated Volatility and Provided

Consistent Returns Through November 2011

Global Commercial Real Estate Continues to Offer Enhanced Yields

Data as of11/30/2011Source: Credit Suisse, Colliers, PMA, ** USD/Square Foot

Global Office Rental Space Net Yield Rent** VacancyChicago 5.7% 34 20%Los Angeles 6.0% 36 18%New York 4.8% 70 11%Bogota 10.0% 38 5%Mexico City 10.0% 30 11%Sao Paulo 11.0% 69 3%

U.S.

Emerging Markets: Latin America

Alternative investments, such as private equity funds and hedge funds, are typically high-risk investment vehicles which are available only to qualified individuals or entities that are willing to assume above average risk and sustain limited liquidity with a portion of their net worth.

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

J an-11 Mar-11 May-11 J ul-11 Sep-11 Nov-11

S&P 500 IndexCredit Suisse Dow J ones Hedge Fund IndexGlobal Macro Hedge Fund Sub-Index

%

Valuations


17

5

10

15

20

25

30


12-Month Forward P /E Ratio Average


U.S. Equities - The Valuation Math Favors Investors


S&P 500 Index 12-Month Forward P/E Ratio

11.7x


18

5

10

15

20

25

30




EAFE* Equities – Sovereign Debt Issues Remain an Overhang to the Eurozone

As of 12/31/2011 Source: DataStream*EAFE: Europe, Australasia, and Far East

MSCI EAFE - 12-Month Forward P/E Ratio

10.0x


19

Emerging Market Equities – At a Discount to Developed Market Equities

As of 12/31/2011 Source: DataStream

MSCI Emerging Market - 12-Month Forward P/E Ratio

9.1x

5

10

15

20

25





20

Municipals – Remain Attractive Compared to U.S. Treasuries

As of 12/31/2011 Source: Thomson Reuters MMD,

Bloomberg

G.O. AAA Muni Yield as % of 10-Year US Treasury Yield

97.3%

60

80

100

120

140

160


Muni / Treasury Spread Average


%


21

0

300

600

900

1200

1500

1800

2100


High Yield Bond Spread Average


High Yield – Macro Environment Continues to Keep Spreads Under Pressure

Barclays High Yield Index spread over U.S. Treasuries in basis points (bps)


723


22

Emerging Market Debt – Growth Dynamics Make Spreads Attractive

JP Morgan Emerging Market Bond Index spread over U.S. Treasuries in basis points (bps)


426

0

200

400

600

800

1000

1200

Dec-99 Dec-02 Dec-05 Dec-08 Dec-11

Emerging Market Bond Spread Average


Fundamentals


24

30

35

40

45

50

55

60

65


U.S. Eurozone China Global

Global PMIs Are Beginning to Improve


Global Purchasing Managers Index

U.S. Recessionary Level: 42


25

Indicators in a Downward Sloping Phase, Europe in Contraction

As of 10/01/2011; Latest data available Source: OECD

OECD Composite Leading Indicator Indices

United States Europe

Japan China

85

90

95

100

105

110

Oct-91 Oct-96 Oct-01 Oct-06 Oct-11

85

90

95

100

105


85

90

95

100

105


90

95

100

105

110


Sentiment


27

-8

-6

-4

-2

0

2

4

6

8

10

Dec-81 Dec-86 Dec-91 Dec-96 Dec-01 Dec-06 Dec-11

Daily Global Risk Appetite

Sentiment – Investor Sentiment is Gradually Improving

As of 12/30/2011 Source: Credit Suisse Global Strategy

Research

Credit Suisse Daily Risk Appetite Index

Panic

Euphoria


28

-50

-30

-10

10

30

50

Dec-87 Dec-91 Dec-95 Dec-99 Dec-03 Dec-07 Dec-11

Bull-Bear 3 week Moving Avg.

Average +1 Standard Deviation -1 Standard Deviation

…And Has Become Less Bearish Over Recent Weeks.

As of 12/30/2011 Source: American Association of Individual

Investors

AAII Bull – Bear Investor Sentiment Surveys

Bullish

Bearish

Appendix


30

Global Asset Class Returns

As of 12/31/2011 Source: Bloomberg, DataStream, Cambridge Associates

*Annualized**EAFE: Europe, Australasia, and Far East ***Latest data available as of 11/30/2011****U.S. Private Equity Index The Cambridge Associates only quarterly data available, latest data available

6/30/2011

Equity (TR, USD)1M YTD 1 Year

1 Year Standard Deviation

3 Year* 3 Year

Standard Devaition*

5 Year*5 Year

Standard Devaition

10 Year* 10 Year

Standard Deviation

MSCI All Country World -0.2% -7.3% -7.3% 18.8% 12.0% 20.2% -1.9% 21.8% 4.2% 17.8%

S&P 500 Index 1.0% 2.1% 2.1% 16.3% 14.1% 18.3% -0.2% 19.3% 2.9% 16.2%

MSCI EAFE** -0.9% -12.1% -12.1% 20.2% 7.6% 22.1% -4.7% 23.4% 4.7% 19.1%

MSCI Europe -3.8% -17.6% -17.6% 27.7% 1.2% 29.2% -8.3% 29.7% 2.7% 24.8%

MSCI Japan 0.8% -14.3% -14.3% 15.6% 1.7% 17.1% -6.6% 17.9% 3.0% 17.1%

MSCI Emerging Markets -1.2% -18.4% -18.4% 26.0% 20.1% 25.5% 2.4% 30.2% 13.9% 24.9%

Fixed Income (TR, USD)1M YTD 1 Year


3 Year* 3 Year

Standard Devaition*

5 Year*5 Year

Standard Devaition

10 Year* 10 Year

Standard Deviation

Citigroup 3 Months Treasury Bills Index 0.0% 0.1% 0.1% 0.0% 0.1% 0.0% 1.4% 3.6% 1.9% 3.7%

Barclays Global Aggregate Bond Index 0.7% 5.6% 5.6% 5.4% 6.0% 6.3% 6.5% 5.3% 7.2% 4.7%

Barclays U.S. Aggregate Bond Index 1.1% 7.8% 7.8% 2.4% 6.8% 2.7% 6.5% 14.6% 5.8% 11.4%

Barclays Muni Bond Index 1.9% 10.7% 10.7% 2.9% 8.6% 4.3% 5.2% 22.5% 5.4% 18.7%

Barclays High Yield Index 2.7% 5.0% 5.0% 9.8% 24.1% 10.8% 7.5% 21.3% 8.9% 18.2%

JP Morgan Emerging Market Bond Index Plus 1.3% 9.2% 9.2% 7.1% 15.4% 7.1% 8.1% 7.5% 11.6% 5.9%

Alternative Investments1M YTD 1 Year


3 Year* 3 Year

Standard Devaition*

5 Year*5 Year

Standard Devaition

10 Year* 10 Year

Standard Deviation

Dow Jones UBS Total Return Index -3.7% -13.3% -13.3% 21.2% 6.4% 18.4% -2.1% 22.5% 6.6% 18.7%

Gold -10.5% 10.1% 10.1% 26.6% 21.0% 20.0% 19.7% 21.3% 18.8% 18.2%

Dow Jones CS Hedge Fund Index*** -0.8% -2.3% 0.5% 5.8% 8.7% 5.8% 3.6% 7.5% 6.6% 5.9%

Barclay CTA Managed Futures Index*** 0.2% -3.2% 0.2% 5.8% 1.6% 5.4% 4.9% 6.0% 5.5% 6.8%

Cambridge Associates Private Equity Index**** n/a 10.1% 24.8% 2.7% 6.5% 13.7% 10.1% 12.1% 11.3% 11.4%


31

Key Forecasts*

Commodities12/31/1

13M 12M

EnergyWTI Crude Oil (USD/barrel) 98.83 105 100US Natural Gas (USD/mmbtu) 2.99 3.00 4.25

Precious Metals (Spot, USD/ounce)

Gold 1563.70 1750 1900Silver 27.84 32 27Platinum 1401.00 1650 2000

Base Metals (USD/pound)Aluminum 0.92 0.80 0.85Copper 3.45 3.40 3.80

Agriculture ($/bushel)Wheat 6.53 5.60 5.30Corn 6.47 5.70 5.40

Real GDP (%) 2012 2013 Inflation ’12

Global 3.70 3.50 3.10U.S. 1.60 1.80 1.40Eurozone 1.80 0.30 1.50Japan -0.30 1.70 0.00Non-Japan Asia 7.30 6.90 4.90Latin America 4.40 3.60 6.80

Interest Rates***12/31/1

13M 12M

U.S. 1.882.2 – 2.4%

2.4 – 2.6%

Eurozone 1.831.7 – 1.9%

1.9 – 2.1%

UK 1.982.3 – 2.5%

2.6 – 2.8%

Japan 0.990.9 – 1.1%

1.1 – 1.3%

Currencies (USD vs.)12/31/1

1 3M 12M

Euro** 1.30 1.30 1.28

Japanese Yen 76.91 74.00 71.00

British Pound** 1.55 1.55 1.57

Swiss Franc 0.94 0.96 0.98

Canadian Dollar 1.02 1.05 1.05

Australian Dollar** 1.02 0.93 0.90

New Zealand Dollar** 0.78 0.70 0.68

Mexican Peso 13.94 13.90 13.10

Brazilian Real 1.87 1.83 1.74

Data as of 12/31/2011 *3month, 12month, or Year-end forecasts as indicated; **Level with USD as counter currency, price change with USD as base currency, *** 10 year government bond Source: PB Global Research, CS Latin American Equity Strategy, Bloomberg, Thomson Reuters DataStream

Global Equity Indices12/31/1

112M

U.S. (S&P 500) 1,258 1,299

Eurozone (Euro Stoxx 50) 2,317 2,740

UK (FTSE 100) 5,572 5,809

Japan (Nikkei 225) 8,455 9,800

MSCI Emerging Markets 916 1,257

Brazil (Bovespa) 56,754 63,000

Mexico (IPC) 37,078 35,000


32

Important Legal Information

This information is not intended to be a recommendation or opinion regarding the equity securities of the referenced companies. This material may not be used or relied upon for any purpose other than as specifically contemplated by a written agreement with Credit Suisse Securities (USA) LLC (CSSU). This material has been prepared by the Investment Strategy & Advisory Group of the Private Banking USA business of CSSU and not by the CSSU research department. It is provided for informational purposes, is intended for your use only and does not constitute an invitation or offer to subscribe for or purchase any of the products or services mentioned. The material is not intended to provide a sufficient basis on which to make an investment decision. It is intended only to provide observations and views of the Investment Strategy & Advisory Group, which may be different from, or inconsistent with, the observations and views of CSSU research department analysts, CSSU traders or sales personnel, or the proprietary positions of CSSU. Observations and views expressed herein may be changed by the Investment Strategy & Advisory Group at any time without notice. Past performance is not an indication or guarantee of future performance, and no representation or warranty, expressed or implied is made regarding future performance. The material set forth above has been obtained from or based upon sources believed to be reliable but CSSU does not represent or warrant its accuracy or completeness and is not responsible for losses or damages arising out of errors, omissions or changes in market factors. This material does not purport to contain all of the information that an interested party may desire and, in fact, provides only a limited view of a particular market. CSSU may, from time to time, participate or invest in transactions with issuers of securities that participate in the markets referred to herein, perform services for or solicit business from such issuers, and/or have a position or effect transactions in the securities or derivatives thereof. The material does not constitute objective research under FSA rules. The most recent CSSU research on any company mentioned is available to online subscribers at www.credit-suisse.com/pbclientview. CSSU does not provide legal or tax advice. Consult your personal accounting, legal, and tax advisor with respect to any legal or tax implications.

Private equity funds, hedge funds and other alternative investments are complex instruments that are not suitable for every investor, may involve a degree of risk, and may be appropriate investments only for sophisticated investors who are capable of understanding and assuming the risks involved. Before entering into any transaction, an investor should determine if the product suits his or her particular circumstances and should independently assess (with his or her professional advisers) the specific risks and the legal, regulatory, credit, tax and accounting consequences. CSSU makes no representation as to the suitability of any alternative investment product for any particular investor nor as to the future performance of any such products. Any offering of interest in any private equity fund, hedge fund or other alternative investment product shall only be made pursuant to the offering material for each such product, which will be provided to each prospective investor before making his or her investment decision and which contains information about such product's investment objectives, the terms and conditions of an investment in such product and also contains tax information and risk disclosures that involve significant risks, such as loss of entire investment, illiquidity, restrictions or transferring of interests, volatility of performance, and currency risks. Before deciding to invest in a private equity fund, hedge fund, or other alternative investment, prospective investors should read the relevant offering material for such product and pay particular attention to the risk factors contained therein. Prospective investors should have the financial ability and willingness to accept the risk characteristics of such investment.

The issuer of a fixed income security may be, or become, unable to make coupon and / or principal payments. Fixed income investments typically decline as interest rates rise. Inflation erodes the real value of interest payments. Some fixed income investments are callable forcing early redemption.


33

Direct investments in senior secured or "leveraged" loans are typically made by sophisticated institutional investors. Sophisticated and suitable private clients may invest

in leveraged loans via an investment in a mutual fund, exchange traded fund or an alternative investment fund, provided they meet the applicable investment qualification,

i.e. generally an accredited investor or qualified purchaser. The primary risks associated with investing in senior secured loan funds are as follows: First, it is possible that

the borrower of the senior secured loan will fail to make a scheduled interest payment, or potentially default on the principal amount. Furthermore, the amount of public

information available with respect to senior secured loans is generally less extensive than that available for more widely rated, registered exchange-listed securities.

Finally, because interest rates of senior loans reset frequently, in a declining interest rate environment, the loans' interest rates will be reset to lower levels, potentially

reducing the investor's income.

The Private Banking USA business in CSSU is a regulated broker dealer and investment advisor. It is not a chartered bank, trust company or depository institution. It is

not authorized to accept deposits or provide corporate trust services and it is not licensed or regulated by any state or federal banking authority. Internal Revenue Service

Circular 230 Disclosure: As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is

not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or

recommending to another party any plan or arrangement addressed herein.

This material may be distributed in Mexico by Banco Credit Suisse (México), S.A., for information purposes only, this may not be construed as an offer or an invitation to

enter into any transaction or purchase any security or investment product that may not be undertaken under Mexican applicable regulation.

©2012 Credit Suisse Securities (USA) LLC. All rights reserved

Important Legal Information

investment strategy monthly slides january 2012 investment strategy & advisory team: barbara m....

Documents

investment objectives

highrisk investment

asset classes

important legal information

economic cycle

strategic asset allocations

miss source

market cycle