pb americas the investment landscape – april 2010 private banking americas investment strategy...

PB Americas

The Investment Landscape – April 2010

Private Banking AmericasInvestment Strategy & Advisory Group

The Investment Landscape

April 2010


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

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

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©2010 Credit Suisse Securities (USA) LLC. All rights reserved.



Table of Contents

Executive SummaryCIO Webcast Market/Strategy Summary

Key Focus: – China

– Health Care

Guideline AllocationsGlobal Markets RecapMarket and Economic Outlook



April CIO Webcast – Key Focus: China

CLICK TO PLAY

PB Americas


Market / Strategy Summary



– Global growth on uptrend, investment and jobs outlook improving US economic reports continue to surprise to upside Solid US jobs growth should boost consumer confidence, spending

– Equities recover following early year selloff, outlook positive Upside from improving economy (earnings), fair valuations, high cash levels Favor quality growth, low debt and emerging markets exposure Overweight US, Asia ex-Japan (focus on China), and Brazil

– Central banks likely delay hikes, Treasury yields to see gradual rise Now expect Fed to raise rates to only 1% in 2010; 10Yr Treasury 4% - 4.25% Credit: spreads below 10 year average; security selection gains importance

– Currencies: Dollar neutral near term, longer term bearish due to deficits– Expect emerging market and commodity-related currencies to show strength

– Commodities: prices should trend higher, volatility may persist Overweight oil and base metals; demographics support agriculture Precious metals: rising yields negative for gold, prefer platinum and silver

Market/Strategy Summary – April 2010

Source: Credit Suisse Investment Strategy & Advisory



Global activity and outlook continues uptrendPurchasing Managers Index (PMI)

Source: Bloomberg via Credit Suisse IDC

25

35

45

55

Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10

China PMI Eurozone PMI UK PMI US PMI



US economic reports continue to surprise to upsideUS Economic Surprise Index (reports vs. consensus)

Source: Bloomberg

-150

-100

-50

0

50

100

Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10



US jobs growth should boost consumer confidence, spendingUS Nonfarm Payrolls (Monthly Change ,000s)

Source: Bloomberg

-779

+14+64

+162

-1000

-800

-600

-400

-200

0

200

400

Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10



After early year selloff, US leads global equity markets higher YTD % Change: S&P 500, MSCI EAFE, MSCI Emerging Markets

Source: Thomson-Datastream

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Dec-09 Jan-10 Feb-10 Mar-10

S&P 500 MSCI EAFE MSCI EM



2010 projected EPS of $78 supports higher market levels S&P 500 Annual Earnings Per Share Forecasts

Source: Bloomberg

59.7

78.0

93.8

50

60

70

80

90

100

Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10

2009 2010 2011

+20%

+31%



Equities and USD have both rallied, reversing earlier trendS&P 500 and EUR/USD Exchange Rate


700

900

1100

1300

1500

Mar-02 Mar-04 Mar-06 Mar-08 Mar-10

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

S&P 500 EUR/USD (Rt Axis)

Equity Strength /Dollar Weakness



10Y - 2Y spread likely to narrow from historic levels US Treasury Yield 10 Yr and 2 Yr


0

1

2

3

4

5

6


10Yr Yield 2Yr Yield

10Y: 3.83%

2Y: 1.02%



Credit spreads below average; security selection important Barclays US High Yield less 10-Yr Treasury (In bps)


0

200

400

600

800

1000

1200

1400

1600

1800

2000


Avg: 612 bps

12/16/08: 2045 bps

3/31/10: 464 bps



Expect commodity prices to trend higher, volatility may persistDJ UBS Commodity Index


200

250

300

350

400

450

500

Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10

+30%

PB Americas


Dashboard 2010Key Focus: China



China Growth expected to remain strong, driving global activity Export growth returns to pre-crisis levels, augmenting domestic

strength Equity valuations near 5 year avg. of 13; attractive given growth

outlook Loan growth still robust, slowing to more sustainable levels

Consumer Consumer confidence has improved, remains at low levels

Credit Bank lending surveys point to improving lending conditions

Commodities Rising liquidity (open interest) in commodities is supportive of prices

Cash Corporate cash levels (relative to market cap) remain elevated

Dashboard 2010 - Key Focus: China




Chinese growth to remain strong, driving global activityReal GDP Growth (Y-o-Y % Change)

Source: Credit Suisse

2010 Dashboard: China

6.2

7.99.1

10.7 10.9 9.9 9.48.5 9.0

-2.2 -1.8-0.8

1.6

4.4 4.6 4.5 4.0 4.4

-4

-2

0

2

4

6

8

10

12

Q1-09 Q2-09 Q3-09 Q4-09 Q1-10E Q2-10E Q3-10E Q4-10E 2011E

China Global



Export growth returns, augmenting domestic strengthChinese Exports, Y-o-Y % Change, 3 Month Moving Average



-30%

-20%

-10%

0%

10%

20%

30%

40%

50%


Chinese Exports to US Chinese Exports, Total



Equity valuations attractive given healthy growth outlookMSCI China Forward P/E

Source: Thomson-Datastream via Credit Suisse IDC


5

10

15

20

25


Avg: 13.4

3/31/10: 13.0



Loan growth still robust, slowing to more sustainable levels Chinese Loan Growth (Y-o-Y % Change)



0%

5%

10%

15%

20%

25%

30%

35%

40%

Feb-02 Feb-04 Feb-06 Feb-08 Feb-10



US consumer confidence has improved, remains at low levelsUS Consumer Confidence


2010 Dashboard: Consumer

20

40

60

80

100

120

140


Feb-09: 25.3

Mar-10:52.5



Bank lending surveys point to improving lending conditionsNet % of banks tightening lending standards (commercial & industrial loans)


2010 Dashboard: Credit

-40

-20

0

20

40

60

80

100

Feb-00 Feb-02 Feb-04 Feb-06 Feb-08 Feb-10

Lending tightening



Rising liquidity (open interest) is supportive of pricesCommodity Research Bureau (CRB) Open Interest

Source: Bloomberg

2010 Dashboard: Commodities

4000

5000

6000

7000

8000

9000

Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10



Corporate cash levels (vs. market cap) remain elevatedUS Non-Financial Corporate Cash / Market Cap


2010 Dashboard: Cash

0

2

4

6

8

10

12

14

16

Dec-77 Dec-81 Dec-85 Dec-89 Dec-93 Dec-97 Dec-01 Dec-05 Dec-09

PB Americas


Key Focus: US Health Care



The US spends 16% of GDP on health care, more than any other developed nation and 710 bps more than OECD average

The bill is projected to save $143 billion over 10 years– Total Cost: -$938 bln (Medicaid outlays, exchange subsidies)– Total Savings: +$511 bln (cuts in Medicare/caid fees paid)– Total Fees & Taxes: +$569 bln (health insurance taxes, fees & penalties)– Net Savings ~ $143 billion

Health Care underperformed by 15% over past 12 months and valuations remain depressed as uncertainty clouds sector outlook

Winners and losers not yet clear, but market moves point to facilities and drug retail as potential winners; managed care and biotech as losers

Key Focus: US Health Care




US spends more on health care than any other developed nationTotal Health Expenditure as % of GDP for select countries

Source: OECD Health Data 2009

KEY FOCUS: US HEALTH CARE

8.1

8.4

8.5

8.9

9.1

10.1

10.4

10.8

11.0

16.0

Japan

United Kingdom

Spain

OECD

Sweden

Canada

Germany

Switzerland

France

United States



2010 Senior rebate of $250 for Medicare prescription drug (donut hole) Insurers can’t exclude children with preconditions, lifetime limits prohibited Business with less than 50 employees get credit for 35% of premiums Children must be allowed to stay on parents’ plan until 27th birthday

2011 50% brand name drug discount for Prescription Plan or Medicare Advantage

2013 Contribution on flexible savings accounts capped at $2,500 Employers lose tax deduction for subsidizing prescription drug plan for Medicare

Part D eligible retirees 3.8% tax on investment income for families earning >$250k (individuals, $200k) Medicare payroll tax increase from 1.45% to 2.35% for individuals earning over

$200k, families $250k Medical device tax of 2.9%

Health Care Bill Key Points Timeline





2014 Health insurance required; no-coverage penalty = $95 in 2014, $325 in 2015,

$695 in 2016 Companies with 50+ employees must offer coverage or pay penalty of $2,000

per employee Insurers can’t refuse policies based on medical preconditions Health plans prohibited from imposing annual limits on coverage Health exchanges open Credit offered to Medicaid eligible and below 400% of poverty level* States required to expand Medicaid to childless adults (illegal immigrants not

eligible)

2018 Insurance companies will pay a 40% excise tax on “Cadillac” plans worth over

$27,500 for families ($10,200 individuals) (exempt-dental/vision plans)

Health Care Bill Timeline (con’t)



*Current poverty level: $22,500 for family of four



The bulk of fees and taxes take effect in later years Projected revenue (fees & taxes) by calendar year (US$, billions)

Source: Bureau of Labor Statistics


569

-1 6 833

54

65

87

99

106

112

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total



Health care sector underperformed by 15% past 12 months S&P 500 and S&P 500 Healthcare Sector (Indexed to 0 at 3/31/09)

Source: Bloomberg


-5%

5%

15%

25%

35%

45%

55%

Mar-09 Jun-09 Sep-09 Dec-09 Mar-10

S&P 500 S&P Healthcare Sector



Health care sector valuations have trended lower vs marketS&P 500 Health Care Sector P/E relative to S&P 500 P/E (Trailing)

Source: Bloomberg


0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8


Health Care P/E Relative to S&P 500 P/E 15Yr Avg



Health Care Industries after bill passed: Top 3 and Bottom 3Monday (3/22) and week (3/22-25) after bill passed

Source: Bloomberg


-5.0% 0.0% 5.0% 10.0%

Managed Care

Biotech

HC Distributors

HC Supplies

HC Facilities

Drug Retail

HC Sector

S&P 500Monday

Week After (3/22-25)

PB Americas


Guideline Allocations & Tactical Overweights



Guideline Allocations


Asset Class 1 2 3 4 5 Focus

US Large Cap 8% 16% 20% 23% 23% Quality Growth, EM sales, Tech

US Sm/Mid Cap 2% 4% 4% 4% 4%

Non-US Equity, Developed 5% 8% 9% 12% 15% Diversified Exposure

Emerging Markets 6% 8% 10% 14% NJ A (China, India), Brazil

Fixed Income 40% 33% 21% 10% 2% Shorter Maturities

Short-term 45% 14% 8% 5%

Alternative Investments 19% 30% 36% 42%

Private Equity 6% 10% 14% 17%

Hedge Funds 8% 13% 14% 15% Distressed, EM, Convert Arb

Commodities 5% 7% 8% 10% Oil & Base MetalsProjected Volatility Range 0-4 4-7 7-9 9-11 11+

Volatility Budget

PB Americas


Global Markets Recap



Global Markets RecapEquities

Resolution to health care reform added to Feb.’s momentum in the US (S&P +6.0%), while EU resolve to address Greek debt worries helped euro area and non-US developed (DJ Euro Stoxx +7.9%). Emerging markets: strong March (+6.2%) pushed the group in the green for the year. Russia is top performer YTD on rising oil prices.

Continuing Feb.’s trend, sectors levered to industrial expansion (basic materials, industrials, financials) continued their outperformance. Telecomm, utilities and energy are bottom 3 sectors YTD.

In US, small cap (+8.1%) outperformed large cap (+6.1%) by 2.2% YTD, while value has bested growth in both small and large cap spaces.

Currency Positive economic news pushed dollar higher vs euro while

expectations for earlier US tightening helped USD reverse weakness against the yen. Higher energy prices gave strength to the Canadian dollar vs US dollar.




Global Markets Recap Interest Rates & Credit

US Treasury yields moved higher across the curve in March, causing parallel shift up: 2 Yr +21 bps and 10 Yr +22 bps. Most government yields are slightly lower on the year due to tame inflation reports and accommodative central banks.

Credit spreads narrowed again in March as risk aversion abated and investors reached for yield, pushing prices higher: US high yield spread fell 90 bps, emerging markets -50 bps. Tax-exempt yields narrowed and remain below Treasury (5Yr muni yield about 70% of Treasury).

Commodities Despite some volatility, most commodities continued to push higher in

March: copper +8.5%, oil +5.1%, gold +0.7%. Natural gas continues to be exception, down 20.1% (-34% YTD) due to abundance of supply.

Volatility The Volatility Index (VIX) edged lower (-4.6%) to 17.6, as progress on

US health and Greek debt issues helped keep the ‘fear index’ at low levels.




GLOBAL MARKETSTotal Return Through 03/31/10

Source: DataStream

Level Mar-10 YTD

EQUITIES (TR)S&P 500 1,169 6.0% 5.4%

MSCI EAFE (Local) 813 7.5% 4.4%

MSCI EM (Local) 43,602 6.2% 1.4%

US DOLLARVS. EURO 1.35 0.9% 6.0%

VS. YEN 93.44 5.1% 0.4%

COMMODITIESOIL ($ / barrel) 83.76 5.1% 5.5%

GOLD ($ / ounce) 1,113.15 0.7% 1.6%



GLOBAL EQUITY MARKETS YTD Price change in local currency (YTD through 3/31/10)


4.9%

4.9%

3.6%

2.6%

2.5%

0.8%

0.6%

0.4%

-2.9%

-5.1%

5.2%

5.8%MICEX (Russia)

Nikkei 225 (Japan)

FTSE 100 (UK)

S&P 500 (USA)

Bolsa (Mexico)

Bovespa (Brazil)

S&P TSX Comp (Toronto)

DJ Euro Stoxx (Euro Area)

Kospi (S Korea)

BSE Sensex (India)

Hang Seng (Hong Kong)

Shanghai SE Comp (China)



GLOBAL EQUITY MARKETS Mar-10 Price change in local currency (March 2010)


7.9%

6.7%

6.2%

6.1%

5.9%

5.8%

5.2%

3.5%

9.6%

9.5%

1.9%

3.1%

MICEX (Russia)

Nikkei 225 (Japan)

DJ Euro Stoxx (Euro Area)

BSE Sensex (India)

Kospi (S Korea)

FTSE 100 (UK)

S&P 500 (USA)

Bovespa (Brazil)

Bolsa (Mexico)

S&P TSX Comp (Toronto)

Hang Seng (Hong Kong)

Shanghai SE Comp (China)



GLOBAL SECTORS (S&P 1200 Global)Price change in USD (YTD Through 03/31/10)


Sector Mar-10 YTD

Industrials 8.1% 8.8%Consumer Discretionary 7.9% 6.1%Financials 7.7% 3.3%Consumer Staples 3.3% 3.2%Information Technology 7.7% 3.2%Basic Materials 8.8% 2.1%Health Care 1.7% 0.4%Energy 4.2% -1.9%Telecomm Services 3.9% -3.8%Utilities 2.5% -4.9%

S&P Global 1200 6.0% 2.4%



US EQUITY RETURNS (Size & Style)Total Return Through 03/31/10

Source: Thomson-Datastream, Bloomberg

Mar-10 YTD

Russell 1000 (Lg Cap) 6.1% 5.7%

Russell 1000 Value 6.5% 6.8%

Russell 1000 Growth 5.8% 4.6%

Russell 2000 (Sm Cap) 8.1% 8.9%

Russell 2000 Value 8.3% 10.0%

Russell 2000 Growth 7.9% 7.6%

DJIA 5.3% 4.8%

NASDAQ 11.9% 5.9%



US SECTORS (S&P 500)Price Change Through 03/31/10


S&P Sector Mar-10 YTD

Industrials 8.8% 12.5%Financials 8.8% 10.8%Consumer Discretionary 7.7% 10.0%Consumer Staples 3.6% 5.0%Health Care 2.4% 2.9%Basic Materials 7.6% 2.4%Information Technology 6.8% 1.7%Energy 2.9% 0.1%Utilities 2.4% -4.6%Telecomm Services 5.4% -5.7%

S&P 500 5.9% 4.9%



CURRENCY% Change As of 03/31/10


Level Mar-10 YTDMAJORS

USD vs. Euro 1.35 0.9% 6.0%

USD vs. Japanese Yen 93.44 5.1% 0.4%

USD vs. British Pound 1.52 0.4% 6.5%

USD vs. Swiss Franc 1.05 -1.9% 1.8%

AMERICASUSD vs. Canadian Dollar 1.01 -4.0% -3.2%

USD vs. Mexican Peso 12.33 -3.5% -5.6%

USD vs. Brazilian Real 1.78 -1.3% 2.4%



GLOBAL INTEREST RATES10Y Gov’t Bond Yield (12/31/09 & 03/31/10)


3.8

3.4

4.1

1.3

3.6

1.9

3.8

3.1

3.9

1.4

3.6

1.8

USA Euro area UK Japan Canada Switzerland

Dec-09 Mar-10



US FIXED INCOME & RATESAs of 03/31/10


Level Mar-10 YTD

Barclays US Aggregate (TR) 104 -0.07% 1.91%

US TREASURY

5 Yr Treasury Yield 2.55% 25 bps -13 bps

10 Yr Treasury Yield 3.83% 22 bps -1 bps

Yield Curve (10Y - 2Y) 281 bps 1 bps 12 bps

LENDING RATES

Fed Funds 0.25% Unch Unch

3 Mo LIBOR 0.29% 4 bps 4 bps

1 Yr LIBOR 0.92% 8 bps -6 bps

Prime 3.25% Unch Unch



CREDITSpread to 10-Yr Treasury As of 03/31/10 (Basis Points)


Current Chg (Bps) Chg (Bps)Spread Mar-10 YTD

Barclays US Muni Bond -24 -10 -2

Barclays US Inv Grade Corp 60 -17 -16

Barclays US High Yield 464 -90 -58

Barclays Global Aggregate Credit -4 -24 -31

Barclays Global High Yield 479 -96 -76

JPM Emerging Market Bond 261 -50 -33



COMMODITIES% Change As of 03/31/10 (Spot Price)


Level Mar-10 YTD

WTI Crude Oil ($/bbl) 83.76 5.1% 5.5%

Natural Gas (Henry Hub, $/MMBtu)

3.84 -20.1% -33.9%

Gold ($/oz) 1,113 0.7% 1.6%

Silver ($/oz) 17.50 8.6% 3.0%

Platinum ($/oz) 1,776 3.0% 8.9%

Copper ($/lb) 3.55 8.5% 6.6%

LME Metals Index 3,610 9.0% 6.2%

Corn ($/Bushel) 3.22 -10.3% -14.5%

Wheat (Soft Red, $/Bushel)

3.83 -13.8% -6.8%



HEDGE FUND STRATEGIESCredit Suisse/Tremont Hedge Fund IndexAs of 2/26/10 (most recent data available)

Source: Credit Suisse/Tremont Hedge Fund Index, Thomson-Datastream

Feb-10 YTDBEST PERFORMING STRATEGIES YTD

Distressed 0.3% 2.3%

Global Macro 1.1% 2.2%

Fixed Income Arbitrage 0.1% 2.1%

WORST PERFORMING STRATEGIES YTDDedicated Short Bias -3.9% -3.6%

Managed Futures 1.8% -2.1%

Equity Market Neutral -1.4% -1.3%

CS/Tremont HF Index 0.7% 0.9%

S&P 500 Total Return 3.1% -0.6%



CBOE Volatility Index (VIX)


0

10

20

30

40

50

60

70

80

Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10

PB Americas


Looking Ahead – 2010Market & Economic Outlook



Market & Economic Outlook Summary Global growth strong, likely more self-sustaining as business

investment and private consumption outlooks improve. Emerging markets remain driver (healthy domestic demand, recovering exports), but inflation pressures rising. Positive job creation in US should lead to improved consumer confidence and spending; forecast 2010 GDP growth of 3.5% (highest in developed world).

Recent equity rally (following early year selloff) likely has further near term upside. Strategic outlook positive due to low debt/high cash levels, attractive valuations and improving and increasingly global economy. Remain overweight US, emerging Asia and Brazil.

In the US, focus on companies with global exposure (particularly emerging markets), high cash levels and low debt. Overweight technology and consumer staples. Underweight utilities which faces headwinds from rising rates.




Market & Economic Outlook Summary Special measures from central banks slowly being removed, likely

to be followed by more formal tightening of rates later in 2010/early 2011. Now expect fed funds at 1% end 2010 (down from 1.50%), still conditional on employment picture improving. 2010 forecast ECB +50 bps; BOE +100 bps; BOJ on hold as deflation persists.

Credit spreads below historic averages, broad based price gains likely limited – security selection gains importance. Recommend staying with short to medium maturities to limit interest rate risk. US muni bonds: focus on high quality general obligation bonds.

US dollar neutral near term; bearish medium and long term (deficits and lack of rate support). Positive on commodity-related currencies.

Commodity prices should continue upward trend. Demand from developed economies likely to drive further upside in base metals and oil. Rising rates negative for gold prices, prefer platinum.




GLOBAL ECONOMIC OUTLOOKReal GDP Growth

Source: Credit Suisse estimates

2009E 2010E Comments

Global -0.7% 4.3%Growth likely more self sustaining, global employment stabilized. Emerging markets leading developed markets. GDP growth Q1E: 4.4%, Q2E 4.6%.

USA -2.4% 3.5%Growth expected to be supported by corporate profitability, inventory cycle & improved financial conditions, which should lead to improvement in employment. Longer term headwinds remain. Q1E 3.3%, Q2E 4.0%.

Euro Area -4.0% 1.5%Surprise in euro area manufacturing PMI (56.6 in Mar. vs. 54.2 in Feb), and Germany's unemployment rate point to further improvement.

UK -5.0% 1.5%Positive signals from Feb. retail sales & March PMI (highest since '94). Election polls point to minority gov't - could increase policy uncertainty.

J apan -5.2% 1.9%Upgrade of Q1E growth to +1.2% from -0.7% as exports (driven by emerging markets) and consumption surprised on the upside.

Non-J apan Asia

5.9% 8.1%China March PMI rebounded to 55.1 (+3.1 points) as demand in smaller urbanized areas & exports grow stronger. India '10E growth upgraded to 8.3% (from 7.9%), China unchanged at 9.6%.

EEMEA* -4.3% 3.4%Russian recovery in manufacturing remains muted. March PMI unchanged at 50.2. 2010E GDP growth Russia 3.7%, Turkey 4.5%

Latin America

-2.0% 4.7%Brazil to lead region '10 growth with 6.5% followed by Mexico 4.8%. Healthy consumption and investment likely drivers of Brazilian growth.

* EEMEA = Emerging Europe, Middle East, Africa



Healthy 2010 growth outlook led by emerging markets & US 2010 Real GDP Growth Forecasts (Y-o-Y)


3.4%

1.5% 1.5%1.9%

8.1%

3.5%

4.7%4.3%

Global Non-JapanAsia

LatinAmerica

US EEMEA Japan Euro-15 UK



GLOBAL EQUITIES OUTLOOK


Weight (Local) Comments

USA OverCorporate cash at record levels, potential catalyst for future buybacks / M&A / capex (benefits tech). High-yielders attractive if market rally stalls & volatility increases.

Asia ex-J apan

OverRise in US payrolls (+162k in March) historically positive for equities in region. Consensus earnings upgrades have continued and become more broad-based.

Latin America

NeutralEarnings revised up in past 6 months in Brazil, higher levels for oil & iron ore may lead to further upside. Mexico less compelling, domestic economy facing headwinds.

UK NeutralValuations reasonable, highest dividend yield of major global regions. Continued weak pound positive for exports, defensive index profile negative if equity rally continues.

J apan NeutralCompanies and analysts have been cautious in forecasts, may lead to some future upside earning surprises. Policy reform necessary for longer-term rally.

EEMEA* UnderRussia has seen strong earnings upgrades on sustained higher oil prices. Constructive on Israel, 2010 EPS growth expected to be among strongest of region.

Euro Area UnderPeripheral Europe still subject to some headline risk, conversely Germany looks compelling & continued euro weakness helps exports. EPS outlook has deteriorated.

* Emerging Europe, Middle East, Africa



Global Equities Snapshot (As of 03/31/10)

Source: Standard and Poor’s, Bloomberg, MSCI Barra, CS estimates

Index12 Mo. % Change**

Estimated 2010 Y-o-Y Engs Growth*

P/E (Current Price /

2010 Engs)* Sample ETFs

S&P 500 (USA) 49.0% 30.4% 15.0 SPY, IVV

DJ Euro Stoxx (Euro Area) 46.2% 25.9% 11.0 IEV, FEZ, FEU

FTSE 100 (UK) 50.7% 44.8% 11.8 EWU

TOPIX (Japan) 24.1% n/a 36.3 EWJ, ITF

MSCI Emerging Markets 56.1% 30.0% 12.5 EEM

MSCI Emerging Asia 57.1% 32.7% 13.1 GMF

MSCI Latin America 55.9% 25.2% 13.0 ILF, GML

MSCI Emerging Europe 83.0% 26.4% 8.8 GUR

MSCI China 57.7% 23.0% 13.6 FXI

MSCI Brazil 52.4% 26.8% 12.8 EWZ

MSCI India 92.1% 29.4% 17.1 PIN

MSCI Russia 81.0% 35.5% 7.7 RSX

MSCI World 45.6% 29.1% 13.9 ACWI, VT

* Source: IBES, Datastream - As of March 30, 2010 **March 30, 2009-March 30, 2010 (in local currency)



EQUITY INDEX FORECASTS


Mar-10 End-10E

S&P 500 1,169 1,300 - 1,325

DJ EURO STOXX 277 280 - 290

FTSE 100 (UK) 5,680 5,300 - 5,700

NIKKEI 225 (Japan) 11,090 10,300 - 10,800

BOVESPA (Brazil) 70,372 77,000 - 80,000

BOLSA (Mexico) 33,266 35,000 - 37,000



S&P 500 SECTOR OUTLOOK


Sector Weight Comment

Information Technology

OverInternational growth continues in the double digits yet domestic remains low. Focus on co's with global exposure, high cash-flow and sound balance sheets.

Consumer Staples

OverValuation remains supportive (especially for beverages), strong global exposure adds to sales and earnings growth, focus on strong brand names.

Financials NeutralDiscussions around reforms limit earnings visibility, yet sector has been top performer in March. Focus on stable balance sheets & good risk management.

Health Care NeutralResolution on health care reform offers first edition of rulebook for investors, details remain unclear. Valuation attractive, Biotech offers highest growth.

Industrials NeutralBest performing sector year to date with +12.5%, infrastructure investments and manufacturing key themes, rising commodity costs a threat.

Energy NeutralUpstream production maintains low growth, however downstream remains the focus. Coal fundamentals improving on supply constrains.

Materials NeutralInventories for base metals continue to decline = higher prices. Chemicals outperformed on successful cost control/higher operating leverage.

Telecomm Svcs

NeutralAverage revenues per user continue to decline paired with margin pressure due to higher acquisition cost and subsidies. Sales and earnings growth muted.

Consumer Discretionary

NeutralRe-acceleration of international growth driven from the emerging market consumer offset by domestic weakness based on high unemployment

Utilities UnderSecond consecutive month worst performing sector and negative for the year; attractive dividend yield yet headwind from looming interest rate increases.



S&P 500 Sector Snapshot (As of 03/31/10)

Source: Standard and Poor’s, Bloomberg, CS estimates

Sector

12 Mo. Relative Performance vs.

S&P 500**

Estimated 2010 Y-o-Y Engs Growth*

P/E (Current Price /

2010 Engs)*Sample Sector

ETFs

Consumer Discretionary 20.5% 38.7% 17.0 XLY, VCR

Consumer Staples -14.9% 5.8% 14.8 XLP, VDC

Energy -19.9% 92.7% 12.9 XLE, IYE

Financials 33.9% 200.0% 16.3 XLF, IYF, IYG

Health Care -14.9% 15.4% 12.2 XLV, IYH

Industrials 22.0% 9.3% 17.6 XLI, IYJ

Materials 6.5% 65.4% 17.4 XLB, IYM

Technology 9.8% 35.8% 15.9 XLK, IGM, IYW

Telecomm Services -40.8% 3.8% 14.4 IYZ, VOX

Utilities -31.0% 11.6% 11.7 XLU, IDU

S&P 500 46.6% 30.4% 15.0 SPY, IVV

*Standard and Poor's Estimates (Bottom-Up) as of March 31, 2010

**12 Mo. Relative Performance as of March 31, 2010



POLICY RATE OUTLOOKGovernment Policy Rates (%)


Mar-10 2010E Comments

USA 0-0.25 1.00With employment numbers improving, Fed likely to soften statement and remove 'extended period' of low rates at April meeting. +75 bps possible in H2.

Euro Area 1.00 1.50ECB tightening more moderately than anticipated (collateral rules extension beyond Dec. '10). No change at April meeting expected. +50 bps in H2 likely.

UK 0.50 1.50No incremental news expected from BoE at April meeting. Bank expected to raise rates by 50 bps in Q3.

J apan 0.10 0.10Improvement of corporate sentiment and better than projected personal consumption point to BoJ adopting 'wait and see' stance.

Canada 0.25 1.25Stronger GDP than BoC forecast foreshadows more hawkish policy stance. First hike likely to occur in J uly (+25 bps).

Mexico 4.50 5.50Slightly more hawkish tone in last central bank statement as bank prepares markets for rate hikes; project total of 100 bps by August.

Brazil 8.75 10.75Rise in iron ore & steel prices could lead to higher inflation expectations. Policy rate forecast raised to 10.75%; April meeting +50 bps projected.



INTEREST RATE OUTLOOK10-Yr Government Bond Yield

Source: Bloomberg, Credit Suisse estimates

Mar-10 2010E Comments

USA 3.83% 4.00% - 4.25%US bonds yields projected to grind higher over coming quarters due to Fed rate normalization ahead, improving economic data and larger US deficit.

Euro Area 3.09% 3.80% - 4.00%Yields could inch higher with expected improvement in employment & diminished focus on the periphery over course of 2010.

UK 3.94% 4.20% - 4.40%Gradual recovery projected to lift yields over course of the year. BoE expected to raise rates in H2 '10.

J apan 1.40% 1.80% - 2.00%Yen could lose some ground in H2 when other central banks start raising rates putting upward pressure on J apanese yields.



CREDIT OUTLOOK


Weight Comments

US Investment Grade Corp.

OverExpect further tightening into Q2 driven by economic data and Q1 earnings reports. Environment supportive; short term widening should provide entry opportunities. Overweight TMT, financials and utilities for incremental yields.

US High Yield OverHY spreads 90 bps tighter in March. Bulk of the rally is likely behind us, but market should remain well supported. Yields still attractive for investors seeking current income. May be less interest rate sensitive in rising rate environment.

Emerging Markets

OverExpect tighter spreads at year end although speed should slow down. Many EM countries in better fiscal condition than developed ones. Overweight credits such as Argentina for better valuation.

US Municipal NeutralMoody's & Fitch announcement to recalibrate munis to "global" rating will allow easier comparison vs. taxable credits, but diminish the granularity of muni ratings. Focus on high quality GOs. Credit selection and diversification key.

Mortgage-Related

UnderFed's exited from MBS market on Mar 31. MBS to Treasury spread should remain range bound in 2010 (lower than long term average). Spread should revert to historical average over next few years as Fed reduces MBS holdings.



CURRENCY OUTLOOK


US Dollar Mar-10 2010E Comments

vs. Euro* 1.35 1.40 - 1.45Peripheral fiscal stress bearish for euro short term although euro should strengthen medium and long term (US deficits, lack of rate support). Bouts of risk aversion could boost USD; rate could be volatile in 2010.

vs. J apanese Yen

93.5 85 - 90H1-10: narrow yield differential and net creditor status should help yen. H2-10: yen could weaken when other central banks raise rates.

vs. British Pound*

1.52 1.58 - 1.62Economic recovery positive for pound, balanced by dovish BoE and election uncertainty. Pound could also be vulnerable to deleveraging.

vs. Canadian Dollar

1.02 1.00 - 1.04Canada's improving growth outlook and rising commodity prices could be balanced by rich valuation. C-dollar neutral.

vs. Mexican Peso

12.37 12.00 - 13.00Peso stronger in March, likely to benefit from US recovery, however, policy makers could intervene if peso strengthens. Neutral.

vs. Brazilian Real

1.78 1.60 - 1.70Brazilian real slightly stronger in Mar. Higher commodity prices and favorable capital flows should translate into marginally bullish real.

*indicates inverse exchange rate quotation



CURRENCY FORECASTS


Mar-10 2010EINTEREST RATE DRIVEN CURRENCIES

Euro / US Dollar 1.35 1.40 - 1.45=US Dollar / Japanese Yen 93.5 85 - 90

British Pound / US Dollar 1.52 1.58 - 1.62

US Dollar / Swiss Franc 1.05 0.96 -1.00

US Dollar / Mexican Peso 12.37 12.00 - 13.00

COMMODITY CURRENCIESUS Dollar / Canadian Dollar 1.02 1.00 - 1.04

US Dollar / Brazilian Real 1.78 1.60 - 1.70

Australian Dollar / US Dollar 0.92 0.90 - 0.94

NZ Dollar / US Dollar 0.71 0.70 - 0.74



HEDGE FUND OUTLOOKThrough February, 2010 (most recent data available)


Strategy Weight Comments

Event Driven OverPositive performance in Feb. 2010 should be conducive to both distressed debt and merger arbitrage strategies. Strategy tends to do well through recovery phase.

Emerging Markets OverEM Asia and Latam outperformed EM Europe in Feb. as European sovereign debt crisis weighed on sentiment. Despite recent market pullback, EM fundamentals intact.

Convertible Arb OverModestly positive returns for the strategy in Feb. Primary issuance was low which could weigh on the return potential if it continues as new issues tend to outperform the general markets.

Equity Long/Short Over2nd best performing strategy in Feb. Returns were primarily driven by long books. Environment for stock picking remains favorable. Healthcare sector could provide opportunities given the reform.

Global Macro NeutralSome managers continued to profit from concerns over country indebtedness. FX and commodity trades contributed to the returns. Prefer discretionary over systematic managers.

Managed Futures UnderTrend followers benefited as markets rallied later in the month as well as gained from interest rate and currency futures. Environment could be challenging if there is lack of clear trends going forward.



COMMODITIES OUTLOOK

Source: Credit Suisse

Weight Comments

Base Metals

Over

Prices have recovered from early year selloff, supported by strong fundamentals and broadening economic growth. Demand from developed economies recovering while Chinese demand continues to be strong. Copper is preferred metal.

Energy Over

Oil prices likely established new range above $80; we expect further gains. Emerging markets still oil demand driver; US consumption showing tentative signs of growth. Natural gas inventories at more normal levels, but price upside is limited.

Agriculture Neutral

Price volatility should fall following March 31 plantings report. Constructive long term on sector (diversified exposure) due to demographic trends. Near term cautious on wheat & sugar; positive on corn (ethanol demand) and soy (Chinese imports).

Precious Metals

Under

Rising interest rates negative for gold prices and will likely limit upside (even if dollar weakens as we expect). Prefer silver, platinum and palladium as they are less vulnerable to rising yields and have more exposure to economic recovery.



COMMODITIES FORECASTS

Source: Bloomberg, Thomson-Datastream, Credit Suisse estimates

Mar-10 2010E

ENERGY

WTI Crude Oil (USD/ barrel) 83.8 85 - 95

US Natural Gas (USD/mmbtu) 3.84 5.50 - 6.00

PRECIOUS METALS (Spot, USD/ounce)Gold 1,113 1100 - 1200

Silver 17.5 18 - 19

Platinum 1,776 1800 - 1900

BASE METALS (Spot, USD/Pound)Aluminum 1.04 1.05 - 1.10Copper 3.55 3.80 - 4.00Zinc 1.06 1.15 - 1.20

Agriculture (USD/bushel)Wheat 3.83 4.5 - 5.5Corn 3.22 4.0 - 5.0

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