May 3rd 2011

Weighing the Osama Factor

The world was abuzz with the news of Osama bin Laden’s death on Monday sending the markets
upside down. Up first, then down for stocks and down first then up for the likes of oil and gold.

Dow Jones Industrial Average ended the day with a loss of 3.18 points or 0.02% at 12,807.36. S&P
500 index fell to 1,361.22 or down 2.39 points or 0.18% lower while NASDAQ Composite finished
down 0.33% or 9.46 points lower at 2,864.08.

AA topped the table with a rise of 1.29%, followed by AXP which gained 1.16%. MRK was next with
1% gains following the drug manufacturer’s earnings report last week. Oil and gas giants CVX and
XOM each share a 1.15% decline, sending both to the bottom of the table. Third worst was DD with
1.06% of decline.

There were no earnings released on Monday, but on Tuesday PFE will release its earnings report.
Economic news were also mild on Monday as the data front only featured ISM for April and
construction spending data for March.

ISM was reported down from 61.2 to 60.4, although it came in above the expected reading of 59.5.
Construction spending however, bounced 1.4% higher in March after slumping 2.4% in February. This
was better than the expected rise of 0.8%.

Tuesday will see factory orders data for April along with US auto sales report. Orders are seen
improving from declining 0.1% to a rise of 2.3% while auto sales are seen steady at 13.1 million.

Commodities generally on the retreat on Monday with US light crude settled down 41c at $113.52 a
barrel after climbing to $114.83 earlier in the session. Brent crude futures for June settlement was
also down 77c to $125.12 a barrel after hitting $126.54 and $.121.67.

In turn, spot gold finished 0.4% lower at 1,558.09 an ounce after soaring to $1,575.79 earlier in the
session. Gold futures for June delivery on the other hand, ended up 70c at $1,557.10 after being
traded between $1,540.30 and $1,577.40 an ounce. Gold’s weakness was triggered by the news of
Osama’s death as investors assumed risk factor had declined. Yet, later the death of Osama has been
considered as a potential resurgence of terrorisms as his followers are seen seeking revenge over his
death at the hands of the US forces.

In the corporate front, GE CEO Jeff Immelt said on Monday that Brazil is a priority market for GE.
The company aims at annualized revenue growth of around 40% in Brazil. This came from a revenue
base of $4B to $5B. In 2010, GE’s revenue was over $8B in LatAm. On another deal, GE and
Newcom struck a healthcare distribution agreement which will introduce GE’s healthcare products and
solutions to the Mongolian market. In Saudi, GE has been selected for a project of power plant
expansions by Saudi Electricity in a deal worth over $500M.

1 .DJI 12,807.36 (-3.18 ● -0.02%) .SPX 1,361.22 (-2.39 ● -0.18%) .IXIC 2,864.08 (-9.46 ● -0.33%)
 May 3rd 2011

Stock Focus: Kraft Foods, Inc.

KFT
Last May 2nd Resistances 34.02 34.98 36.18 38.18 39.15
$33.79 0.60% Supports 33.00 32.67 32.20 30.43 29.80
WTD MTD Outlook
0.60% 0.60% POSITIVE
POSITI
YTD 12-Month Price Tgt
7.24% 18.15% $34.98

KFT is set to release its earnings report this week and before that happens; let’s take a look at its
outlook from the technical perspective. Good news for the bulls would be that the EMAs are still rising,
but the bad news is that a bearish divergence is in progress of being formed on the RSI indicator.
MACD is still declining as well. In addition, recent peak at $33.90 was just below the technical
resistance at $34.02. Target is maintained at $34.98, though. Critical support lies at $30.43.

2 .DJI 12,807.36 (-3.18 ● -0.02%) .SPX 1,361.22 (-2.39 ● -0.18%) .IXIC 2,864.08 (-9.46 ● -0.33%)
 May 3rd 2011

Price Performance - as of May 2nd 2011

Code Last Dy WTD MTD YTD 12-Mos
AA 17.22 1.29% 1.29% 1.29% 11.89% 47.94%
AXP 49.65 1.16% 1.16% 1.16% 15.68% 24.53%
BA 79.53 -0.31% -0.31% -0.31% 21.87% 23.92%
BAC 12.34 0.49% 0.49% 0.49% -7.50% -21.60%
CAT 114.37 -0.90% -0.90% -0.90% 22.11% 88.23%
CSCO 17.58 0.34% 0.34% 0.34% -13.10% -24.09%
CVX 108.18 -1.15% -1.15% -1.15% 18.55% 46.45%
DD 56.19 -1.06% -1.06% -1.06% 12.65% 55.35%
DIS 43.27 0.39% 0.39% 0.39% 15.36% 29.47%
GE 20.48 0.15% 0.15% 0.15% 11.97% 25.26%
HD 37.35 0.54% 0.54% 0.54% 6.53% 10.31%
HPQ 40.08 -0.72% -0.72% -0.72% -4.80% -12.89%
IBM 172.15 0.92% 0.92% 0.92% 17.30% 37.43%
INTC 22.91 -1.04% -1.04% -1.04% 8.94% 6.96%
JNJ 66.21 0.75% 0.75% 0.75% 7.05% 13.57%
JPM 45.18 -0.99% -0.99% -0.99% 6.51% 14.15%
KFT 33.79 0.60% 0.60% 0.60% 7.24% 18.15%
KO 67.72 0.39% 0.39% 0.39% 2.96% 31.75%
MCD 78.64 0.42% 0.42% 0.42% 2.45% 17.60%
MMM 96.92 -0.30% -0.30% -0.30% 12.31% 22.20%
MRK 36.31 1.00% 1.00% 1.00% 0.75% 7.78%
MSFT 25.66 -1.00% -1.00% -1.00% -8.06% -0.54%
PFE 21.02 0.24% 0.24% 0.24% 20.05% 38.02%
PG 65.18 0.43% 0.43% 0.43% 1.32% 6.70%
T 31.21 0.29% 0.29% 0.29% 6.23% 28.44%
TRV 63.52 0.38% 0.38% 0.38% 14.02% 28.40%
UTX 90.00 0.47% 0.47% 0.47% 14.33% 33.57%
VZ 37.56 -0.58% -0.58% -0.58% 4.97% 36.48%
WMT 55.04 0.11% 0.11% 0.11% 2.06% 8.86%
XOM 86.97 -1.15% -1.15% -1.15% 18.94% 43.85%

3 .DJI 12,807.36 (-3.18 ● -0.02%) .SPX 1,361.22 (-2.39 ● -0.18%) .IXIC 2,864.08 (-9.46 ● -0.33%)
 May 3rd 2011

Analysts' Upgrades & Downgrades

Code House Ratings PT
AA Goldman Sachs Neutral BUY $17 $22
CAT Citigroup Hold $108 $124
CAT Credit Suisse Outperform $121 $148
CAT Morgan Stanley Overweight $120 $127
CAT RBC Capital Outperform $120 $140
CAT RW Baird Outperform $129 $144
CVX RBC Capital Top Pick $125.00
CVX UBS AG Buy $123 $127
MRK JP Morgan Chase Overweight $42 $44
MRK UBS AG Buy $40.00
n Reiterate n Upgrade n Downgrade n Initiation
US Economic Calendar
Date Time Report Period Actual Forecast Previous
2-May 10:00 AM ISM Apr 60.4 59.5 61.2
2-May 10:00 AM Construction spending Mar 1.4% 0.8% -2.4%
3-May 10:00 AM Factory orders Apr 2.3% -0.1%
3-May TBA Motor vehicle sales Apr 13.1 mln 13.1 mln
4-May 8:15 AM ADP employment Apr 193K 201K
4-May 10:00 AM ISM nonmanufacturing Apr 58.5 57.3
5-May 8:30 AM Jobless claims 30-Apr 425K 429K
5-May 8:30 AM Productivity 1Q 2.1% 2.6%
5-May 8:30 AM Unit labor costs 1Q 0.8% -0.6%
6-May 8:30 AM Nonfarm payrolls Apr 188K 216K
6-May 8:30 AM Unemployment rate Apr 8.8% 8.8%
6-May 8:30 AM Avg hourly earnings Apr 0.3% 0.0%
6-May 3:00 PM Consumer credit Mar $5.0B $7.6B

Disclaimer: This report is provided for information purposes only. It is not an offer to sell or to buy any securities. This
report has been prepared based on sources believed to be reliable, but there is no assurance or guarantee regarding its
completeness and accuracy. The author accepts no responsibility or liability arising from any use of the report.

4 .DJI 12,807.36 (-3.18 ● -0.02%) .SPX 1,361.22 (-2.39 ● -0.18%) .IXIC 2,864.08 (-9.46 ● -0.33%)