Daily Trading Stance Thursday, May 21, 2009

Theme Comment
IMF urges UK to cut public expenses. UK cannot afford the current spending level due to stressed household balance sheets and
banks balance sheets that will remain a threshold for an economic recovery. GBP could be under pressure on the back of this.
BofA seeks to repay TARP funds ($45 bn.) by the end of the year which is considerable faster than expected. This is made possible
by an expected raise of capital of $35 bn. by the end of September. This will supportive of financials in today’s trading.
The FOMC minutes from yesterday made the US dollar trade lower on signs (according to the FOMC) of a financial and economy
recovery making investors leave US treasuries and move into more risky assets (like equities).
A group of Indiana Pension Funds that holds secured debt in Chrysler filed yesterday for a block of the Chrysler sale (Disctrict
Court) claiming the plan is illegal and tramples their rights. The offer is pay of a 30 cent a dollar. This could halt the GM
restructuring as the US Government is using the same template for the restructuring here.

Economic Data Releases

Country Time (GMT) Name Expectation Prior Comment
UK 08:30 Retail Sales MoM (APR) 0.5% 0.3%
US 12:30 Initial Jobless Claims (MAY) 625K 637K
US 14:00 Leading Indicators (APR) 0.8% -0.3%

FX Daily stance Comment

EURUSD 0/+ Rally may stall at 1.3810. Still buy dips to 1.3725-35 for 1.3830+. Stop 1.37
EURJPY 0/- Res at 130.70-80 seen holding for a slide to 129.50-70
USDJPY 0/- Failure to hold 95.0 brings downside into focus. Sell to 95.10-30, stop abv 95.70
GBPUSD 0/+ Buy retracements to 1.5725 for rebound thru 1.5810-15. Tgt 1.5980.
AUDUSD 0/+ Expect 0.7715-35 suppt to hold for a rebound thru 0.7810 for 0.79 target

FX-Options Comment
EURUSD Saw continued buying throughout the day of 7 mth 1.55 EUR calls. Option market is
definitely expecting spot to trade higher over the coming weeks.
USDJPY Vols stay bid throughout the session as psot makes new lows. We did not see the usual
offer on spot rally today so likely to see a move for lower spot over next week.
AUDUSD Market is looking to buy 1-3mth downside (6900-7200 area) while short date gamma is
offered.

Equities Daily stance Comment

DAX 0/+ Buy on dips towards 5004 targeting 5060. S/L below 4948.
FTSE 0/+ Buy on dips towards 4434 targeting 4492. S/L below 4386.
S&P500 0/+ Buy on dips towards 903 targeting 915. S/L below 894.
Nasdaq100 0/+
DowJones 0/+

Commodities Daily Stance Comment

Gold 0/+ Slow grind higher likely to target 950.0. Suppt comes in at 934.0
Silver 0/+ Upward bias. Suppt now comes in at 14.25 for 14.60 test
Oil 0/+ Buy dips to 60.75 for a re-test of o/n highs at 62.25

Earnings Releases
Country Time (GMT) Name EPS exp. EPS prior Comment
UK (G(GMT)(GM
- Investec 0.183 0.278
UK T) - Scottish and Southern Energy 0.799 0.240
US Aft-Mkt Dell 0.338 0.360
 Daily Trading Stance

US Breakeven 10 Year 140

Top 100 Global Stocks CDS Index
3

2,5
120

100
1,5

1
80

0,5

60
0

-0,5 40
10-jan 10-mar 10-maj 10-jul 10-sep 10-nov 10-jan 10-mar 10-maj 22-05-2008 22-07-2008 22-09-2008 22-11-2008 22-01-2009 22-03-2009

US Breakeven 10 Year Saxo CDS Index

USD breakeven 10 Year – an expression for measuring inflation Credit Default Swaps are expressions for the perceived
expectations. default risk in a company. Now at 97.
AAA and BAA Corporate Bonds vs. 30yr US Treasuries
EURUSD Opt. Vol.
35 7

6
30

5
25

4
20

3
15

2
10
1
5
0
0 okt-07 jan-08 apr-08 jul-08 okt-08 jan-09 apr-09
maj-07 jul-07 sep-07 nov-07 jan-08 mar-08 maj-08 jul-08 sep-08 nov-08 jan-09 mar-09 maj-09

EUR-USD OPT VOL 1W EUR-USD OPT VOL 1M EUR-USD OPT VOL 1Y Moody BAA - US Generic Govt 30 Year Yield Moody AAA - US Generic Govt 30 Year Yield

Volatility at different time horizons. Too low, now? Spreads are easing, but still showing tight corporate debt
markets.

CEE-German Govt. Bond Spreads CBOE SPX VOLATILITY INDEX

12 90

80
10
70

8 60

50
6
40

4 30

20
2
10

0 0
jul-08 aug-08 sep-08 okt-08 nov-08 dec-08 jan-09 feb-09 mar-09 apr-09 nov-08 dec-08 jan-09 feb-09 mar-09 apr-09 maj-09
GDMA Hungarian - German Czech Republic - German Poland - German CBOE SPX VOLATILITY INDX

Some optimism after the G20 meeting. Especially for Hungary. The VIX Index is edging lower. Now below 40.