Thursday, October 26, 2006

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Thursday, October 26, 2006
Presented by Oslem Mesta
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Federal Reserve Bank

• Fed Open Market Committee met on Wednesday, rates
  will hold at 5.25 this meeting, but are likely
  to rise to rise in future meetings
• The economy is moderating due to a "cooling"
  housing sector but that "some inflation risks
  remain."
• St. Louis Fed Chief Poole says inflation must be
  kept in check
• Philly Fed Chief Plosser says raising rates to
  curb inflation is in best long-term interest of
  economy
• Dallas Fed Chief Fisher is wary of rising
  inflation rates
• Richmond Fed President Jeffrey Lacker again
  dissented, preferring another quarter-point hike
  in the Fed funds rate

3
International Markets

• British government bonds fell as investors sought
  riskier assets on expectations that global growth
  will stay strong
• Germany leads the continent in productivity hikes
  and labor flexibility. Despite a boost to VAT,
  experts predict a long-term rise in growth.
• China reported that third-quarter gross domestic
  product jumped 10.4 year-to-year after the
  economy clocked nearly 11 during the first half
  of 2006.
• After Texas Instruments reported
  weaker-than-expected quarterly sales and profit
  figures, the technology shares in Europe and Asia
  fell.

4
Exchange Rates

• The dollar ticked higher on Tuesday, buoyed by
  expectations that the U.S. Federal Reserve will
  reiterate inflation concerns after this week's
  policy meeting
• A series of stronger-than-expected U.S. economic
  data has forced markets to reconsider forecasts
  for a rate cut next year, pushing up bond yields
  and boosting the attraction of the high-yielding
  U.S. dollar.

5
Exchange Rates
Dollar VS Yen
Dollar VS Euro
6
Stock Index - Asia
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Stock Index - Europe
8
Sector Performance

• Leaders
• Telecommunications (3.10)
• Utilities (2.25)
• Energy - Oil Gas (2.01)
• Losers
• Technology (-.53)
• Industrials - Goods Services (-.23)
• Financials (-.02)

9
Consumer Staples

• Altrias profit slips, stock up on new plans to
  spin-off Kraft
• Leggett Platt down on lower than expected
  profits
• Colgate beats analyst opinion, even though
  profits are down for the quarter

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Consumer Staples
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Consumer Discretionary

• Honda falls due to earnings coming in 4.3 below
  last quarter. Sales in Japan down.
• Coach drops lawsuit against Target after Target
  showed that they legitimately purchased from a
  wholesaler
• Belgian fast-food chain Quick offered a friendly
  takeover by French state owned CDC

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Consumer Discretionary
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Consumer Goods Staples Discretionary

• Market Cap 2645.1B (2623.3B)
• P/E 31.31 (30.13)
• ROE 17.20 (16.30)
• Dividend Yield 2.00 (2.03)
• Long Term Debt to Equity 1.15 (1.15)
• Price to Book Value -3.19 (2.90)
• Net Profit Margin 6.74 (6.72)
• Price to Free Cash Flow 122.20 (-23.07)

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Industrial - Goods

• Shares of Texas Industries Inc. rose more than
  10.7 on Thursday, October 19th after a holding
  company controlled by the chief executive officer
  of an Egyptian construction giant disclosed an
  ownership stake in the construction materials
  company and hinted that it may seek to acquire
  control of it.
• Caterpillar sits at the bottom of the Dow
  performance list after last Friday's high-volume
  plunge. The post-earnings breakdown dropped the
  stock toward its 2006 low at 57. This and other
  factors suggest the start of a downtrend that
  will last another one to three months, at
  minimum.

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Industrial - Goods
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Industrials - Goods

• Market Cap 1390.5B (1345.8B)
• P/E 20.44 (22.83)
• ROE 15.29 (15.41)
• Dividend Yield 1.90 (1.91)
• Long Term Debt to Equity 1.64 (1.91)
• Price to Book Value -22.33 (-17.60)
• Net Profit Margin 6.88 (7.05)
• Price to Free Cash Flow -36.94 (-86.06)

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Industrial - Services

• On average, offshore drillers are expected to
  post an average of 44 earnings growth in the
  quarter ending and land drillers to show 48
  growth.
• "Earnings season for the offshore drillers is
  likely to be mixed," as issues related to
  operating costs - particularly for GlobalSantaFe
  and Transocean - temper stronger daily contract
  rates.
• The Forbes Logistics Index for the week ended
  Oct. 20, 2006, fell 2
• The business of long-haul trucking is starting to
  take off in China as the nation builds up the
  economies of its interior cities and upgrades its
  road networks

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Industrial - Services
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Industrials - Services

• Market Cap 3169.4B (3056.5B)
• P/E 26.24 (26.53)
• ROE 14.09 (14.22)
• Dividend Yield 1.28 (1.29)
• Long Term Debt to Equity 1.48 (1.32)
• Price to Book Value 3.25 (5.05)
• Net Profit Margin 5.61 (5.69)
• Price to Free Cash Flow 69.36 (-184.02)

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Financials

• On Wednesday, Wells Fargo announced it will
  become the first major U.S. bank to offer
  consumer remittance services to China and Vietnam
  and has expanded its consumer remittance services
  to the Philippines
• Wells Fargo will pay a dividend of 0.28 Dec. 1
  to shareholders of record on Nov. 3.
• Metavante Corporation, the banking and payments
  technology subsidiary of Marshall Ilsley
  Corporation, announced that, beginning January
  2007, its LINK2GOV business unit can process
  credit card payments related to federal business
  tax Forms 941(1) and 940(2) for an expanded
  number of filing years 1997 through present
  balance due(3).
• Expedited payment services are increasingly in
  demand across the consumer segment, and they're
  equally attractive to businesses dealing with a
  meticulous federal tax payment schedule," said
  Edward Braswell, president, LINK2GOV.

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Financials
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Financials

• Market Cap 5925.2B (5888B)
• P/E 14.58 (14.62)
• ROE 16.8 (15.86)
• Dividend Yield 2.71 (2.73)
• Long Term Debt to Equity 2.63 (2.28)
• Price to Book Value 2.91 (2.90)
• Net Profit Margin 14.75 (14.64)
• Price to Free Cash Flow 34.43 (15.11)

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Utilities

• Energy conglomerate Duke Energy Corp. on Tuesday
  said it anticipates earnings growth of 4 percent
  to 6 percent over the next three years, following
  the previously announced spin-off of its natural
  gas unit.
• The spin-off is expected to occur on Jan. 1,
  2007.
• A quarterly cash dividend of 0.32 per share is
  payable on Dec. 18 to shareholders of record on
  the close of business Nov. 17.

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Utilities
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Utilities

• Market Cap 1053.6B (1020.9B)
• P/E 33.91 (34.04)
• ROE 16.28 (16.41)
• Dividend Yield 3.91 (4.01)
• Long Term Debt to Equity 2.13 (2.16)
• Price to Book Value 2.66 (2.68)
• Net Profit Margin 9.22 (9.22)
• Price to Free Cash Flow -64.59 (-69.28)

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Health Care
DJ US Health Care Index
27
Health Care

• Several Health Care Providers report favorable 3Q
  earnings thanks to moderating medical costs and
  increased Medicare benefits.
• Dow US Health Care Providers Index up 2.65 for
  the week.

• Last week, six of the seven reporting U.S. based
  drugmakers beat analyst earnings estimates.
• The Dow Pharma index is up 2.23 over the last
  week.

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Health Care

• Market Cap 2647.0B (2591.4B)
• P/E 34.62 (33.77)
• ROE 14.56 (14.46)
• Dividend Yield 1.59 (1.62)
• Long Term Debt to Equity 0.55 (0.52)
• Price to Book Value 5.48 (5.37)
• Net Profit Margin 11.43 (11.35)
• Price to Free Cash Flow 95.31 (91.60)

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Information Technology

• AMD announced the completion of its merger with
  the Canadian graphics chipmaker, ATI Tech, and
  that its new class of processors, codenamed
  Fusion, will integrate both the CPU and the
  graphics capabilities on the same chip, and will
  be available by late 2008 or early 2009.
• NAVTEQ , a leading global provider of digital map
  data for location-based solutions and vehicle
  navigation, has been selected by Applied Data
  Consultants, Inc. to license its U.S. street map
  data for enhanced phone book distribution in 2007.

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Information Technology
31
Information Technology

• Market Cap 5702.7B (5594.3B)
• P/E 22.97 (28.96)
• ROE 14.82 (14.66)
• Dividend Yield 1.94 (1.98)
• Long Term Debt to Equity 0.62 (0.60)
• Price to Book Value 6.17 (6.42)
• Net Profit Margin 10.77 (10.60)
• Price to Free Cash Flow -27.16 (49.69)

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Basic Materials

• News of dramatically lower-than-expected oil
  inventories boosted demand for gold.
• Alcan Inc., the world's second-largest maker of
  primary aluminum, is seeking to replace Cynthia
  Carroll, president of its primary metal group,
  who will leave the company in mid-January to head
  Anglo American Plc, the world's third-largest
  miner.
• Rob McEwen said on Wednesday he will appeal an
  Ontario court ruling that says the company he
  founded, Goldcorp, does not have to hold a
  shareholder vote on its planned acquisition of
  Glamis Gold an Ontario supreme court agreed.

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Basic Materials
34
Basic Materials

• Market Cap 4408.3B (4188B)
• P/E 13.46 (13.24)
• ROE 26.08 (25.74)
• Dividend Yield 2.31 (2.43)
• Long Term Debt to Equity 0.43 (0.44)
• Price to Book Value 3.56 (3.59)
• Net Profit Margin 11.68 (11.69)
• Price to Free Cash Flow 1.89 (50.74)

35
Energy

• Thomas L. Mitchell is leaving his post as vice
  president and controller of Apache Corp. to
  become senior vice president and chief financial
  officer of Noble Corp.
• Exelon pegged a new 52-week high in Friday's
  trading and has been in an uptrend for an
  extended period (appreciating 150 since April
  2003).
• The administrative law judge assigned to review
  the ComEd Rate Stabilization Program endorsed the
  proposal and recommended full Illinois Commerce
  Commission approval.

36
Energy
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Energy

• Market Cap 1544.0B (1441.6B)
• P/E 8.70 (13.31)
• ROE 27.90 (25.71)
• Dividend Yield 2.89 (2.43)
• Long Term Debt to Equity 0.28 (0.44)
• Price to Book Value 2.92 (3.59)
• Net Profit Margin 10.80 (11.70)
• Price to Free Cash Flow 45.00 (58.27)

38
Telecommunications Services

• ATT rivals consumer groups assail BellSouth
  deal and completes acquisition of USi
• On Monday, ATT beat earnings forecasts for its
  fiscal third quarter as profit rose 74 from a
  year earlier to 2.17 billion on sales of 15.64
  billion. Excluding special items, third-quarter
  net income jumped 34 to 63 cents per share,
  nearly 9 over views.
• SP downgrades ATT to hold because they
  concerned about the impact of competitive
  pressure on revenues, targeting the price at 36
• BellSouth Corp. said profit rose 26 percent to
  1.18 billion, or 65 cents a contribution by
  Cingular Wireless.
• Cingular had net income of 847 million on 9.6
  billion in revenue, compared with net income of
  222 million on 8.7 billion in revenue in the
  third quarter of 2005.

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Telecommunications Services - Domestic

• Market Cap 428.3B (393.4B)
• P/E 19.00 (18.96)
• ROE 12.40 (14.66)
• Dividend Yield 3.24 (1.98)
• Long Term Debt to Equity 0.79 (0.60)
• Price to Book Value 7.62 (6.42)
• Net Profit Margin 9.40 (10.60)
• Price to Free Cash Flow 69.40 (49.69)

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Telecommunications Services
Domestic
Foreign
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Week of 10/23/2006