March 25th 2011

Eyes on Portugal
US shares ended up with Dow Jones Industrial Average rose 84.54 points or 0.7% to 12,170.56,
Nasdaq Composite finished at 2,736.42, up 38.12 points or 1.41%, and S&P 500 index edging
higher by 0.93% or 12.12 points to 1,309.66.

Despite worse-than-expected durable goods data, MENA tensions, high oil prices, and the most recent
European debt issue, stocks kept pushing higher on Thursday.

Durable goods orders fell -0.9% in February after rising 3.6% in January, worse than the expected
rise of 1.5%. Excluding transportation items, orders also fell 0.6% despite the consensus saw a rise of
2.5% after the orders dropped 3% in January. Jobless claims however, improved in the week ending
March 19th with the data reported claims at 382K, improved from a week earlier which was at 387K.
The market initially expected claims to be at 380K.

Portugal and Spain return to the center stage of European debt crisis issue. On Thursday, 30 Spanish
banks were downgraded by Moody‟s, while in Portugal the PM Jose Socrates resigned after his
austerity budget proposal was rejected by the parliament. Fitch downgraded Portugal‟s Issuer
Default Ratings to A- from A+ while the Short-term IDR has been reduced as well from F1 to F2. Fitch
also placed both on NEGATIVE rating outlooks. Afterwards, S&P also lowered Portugal‟s rating to
BBB from A-. Recently European officials said that bailing out Portugal could cost around $99 billion.

Elsewhere, UK was said to be potentially losing its AAA credit rating assigned by Moody‟s. According
to Telegraph, Moody‟s lowered the forecast for UK‟s growth from 2% to 1.6%.

Among the Dow 30, HPQ led the gainers on Thursday with 2.45% increase, followed by HD and PFE
with 2.02% and 1.91%, respectively. There were only three stocks in the red on Thursday: CSCO (-
1.25%), BAC (-1.25%), and CVX (-0.09%). With just one day to go before the week ends, AA still on
the lead with 6.21% of gains this week, while BA is second with 5.3% gains. At the third spot is HPQ
with 4.31% increase. Four stocks have made gains over 10% this month so far: CAT (+13.26%), CVX
(+12.86%), PFE (+11.85%), and DIS (+10.32%). These four are also top performers since the start
of this year (see the table on page 4).

The final day of the week will feature US GDP revision and consumer sentiment data. GDP for Q4 is
seen to be revised from 2.8% to 3.1%, while the consumer sentiment is seen edging lower in March
from 68.2 to 68.0.

1 .DJI 12,170.56 (+84.54 ● +0.70%) .SPX 1,309.66 (+12.12 ● +0.93%) .IXIC 2,736.42 (+38.12 ● +1.41%)
 March 25th 2011

Corporate News
BA updated its order book with 10 new orders coming from El Al Israel Airlines (four 737s),
Korean Air (two 747s) and FedEx (four 777s). BA‟s net orders for 737s was reduced by one,
however.
BAC announced 15 April as the date for announcing its Q1 financial results. Results are to be
announced at 7 AM ET, followed by an investor presentation at 8:30 AM ET. Following the Fed‟s
refusal of BAC‟s dividend hike proposal, Wells Fargo Securities removed BAC from its Priority
Stock List. FBR Capital also downgraded BAC to MARKET PERFORM from OUTPERFORM. On the
other hand, Goldman Sachs keeps BUY rating on BAC as dividends were not considered as
important as other matters such as capital buildup to comply with Basel 3, expense cutting and
solving the housing issues.
CAT reaffirmed its outlook on 2011 EPS at near $6 and revenues greater than $50B, lower than
the consensus of $6.12 and $51.5B. CAT‟s 2012 outlook is seen at $55B to $60B, with EPS at
$8.00 to $10.00. Consensus is at $59.4B and $7.98. For 2015, CAT expects EPS +15% to
+20% CAGR or around $15-$20.
CVX won deepwater permit for Keathley Canyon, 216 miles off Louisiana coastline.
GE and Rolls-Royce have no intention of abandoning the F136 engine program despite the “Stop
Work” order from the DoD.
HD‟s Long-term Issuer Default Rating has been affirmed at BBB+ at Fitch with outlook revised from
Stable to Positive.
FDA approved MRK‟s Zostavax, a live attenuated virus vaccine for preventing shingles in
individuals 50 to 59 years old. Now, the vaccine is available for people aged above 50 years
old. MRK on the other hand, plans to return betrixaban to Portola Pharmaceuticals.
PFE‟s Crizotinib is considered overlooked according to JPM as the asset may hold more than $1B
potential revenue opportunity.
PG & Teva Pharmaceutical Industries joined hands in consumer health care businesses to
accelerate growth. Teva expects OTC sales to rise about 50% as a result of the deal, despite no
money exchanged in the deal. The deal is also seen to yield joint sales of around $4B in a few
years.
WMT will place the HQ of its East Coast business unit in Atlanta. It will consist of almost 1,600
stores in 20 states from Florida to Maine. The number of associates will be around 560K. Rosalind
Brewer will lead the East Coast.

2 .DJI 12,170.56 (+84.54 ● +0.70%) .SPX 1,309.66 (+12.12 ● +0.93%) .IXIC 2,736.42 (+38.12 ● +1.41%)
 March 25th 2011

Stock Focus: Boeing, Co.

BA
Last Mar 24th Resistances 74.79 76.00 77.52 79.44 82.79
$72.76 0.06% Supports 71.90 71.05 70.35 69.60 68.75
WTD MTD Outlook
5.30% 5.10%
NEUTRAL
YTD 12-Month
11.49% 0.21% Strategy BUY dips to 71.90, PT 76.00, risk < 68.75

Back then I was recommending entering LONG around $66s but unfortunately, BA only hit around
$67s before catapulted higher. Queues of new orders and potential coming of dividend will support
the aircraft manufacturer. BA is seen to rise higher towards $76.00, with the risk is seen should the
stock falls below 68.75. Entry could be started as the price dips towards $71.90. Rising MACD,
„relaxed‟ RSI, and rising EMAs suggest the room for a rise is plenty.
3 .DJI 12,170.56 (+84.54 ● +0.70%) .SPX 1,309.66 (+12.12 ● +0.93%) .IXIC 2,736.42 (+38.12 ● +1.41%)
 March 25th 2011

Price Performance - as of Mar 24th 2011

Code Last Dy WTD MTD YTD 12-Mos
AA 17.11 0.94% 6.21% 6.08% 11.18% 20.15%
AXP 45.59 1.27% 3.21% 3.94% 6.22% 10.49%
BA 72.76 0.06% 5.30% 5.10% 11.49% 0.21%
BAC 13.48 -1.25% -3.99% -0.88% 1.05% -24.48%
CAT 108.37 1.51% 3.15% 13.26% 15.71% 72.43%
CSCO 17.36 -1.25% 1.28% -17.06% -14.19% -33.31%
CVX 105.38 -0.09% 2.51% 12.86% 15.48% 38.97%
DD 53.68 0.41% 1.30% 6.74% 7.62% 44.15%
DIS 42.86 1.47% 3.95% 10.32% 14.26% 22.77%
GE 19.78 1.28% 2.75% -2.08% 8.15% 8.68%
HD 37.36 2.02% 3.78% 1.80% 6.56% 15.49%
HPQ 43.10 2.45% 4.31% -5.30% 2.38% -18.91%
IBM 160.04 0.32% 2.66% 0.52% 9.05% 24.79%
INTC 20.38 0.44% 2.26% -5.03% -3.09% -8.57%
JNJ 59.03 0.53% 0.79% -1.63% -4.56% -9.46%
JPM 45.73 0.29% -0.02% 2.67% 7.80% 2.19%
KFT 31.28 0.55% 0.94% 2.46% -0.73% 3.44%
KO 64.69 0.65% 3.17% 3.99% -1.64% 17.62%
MCD 74.93 0.54% 2.66% 2.25% -2.38% 12.31%
MMM 92.58 0.48% 4.05% 5.88% 7.28% 10.78%
MRK 32.72 0.28% 2.54% -1.06% -9.21% -12.40%
MSFT 25.81 1.06% 4.07% -7.02% -7.52% -11.88%
PFE 20.30 1.91% 0.59% 11.85% 15.93% 18.37%
PG 61.14 0.38% 0.89% -4.77% -4.96% -3.37%
T 28.54 1.42% 2.15% 3.82% -2.86% 10.45%
TRV 58.83 0.68% 1.33% 5.41% 5.60% 9.07%
UTX 82.76 1.10% 3.24% 1.63% 5.13% 12.43%
VZ 37.18 0.54% 3.74% 4.35% 3.91% 19.86%
WMT 52.59 1.84% 2.08% -7.25% -2.48% -5.41%
XOM 82.73 0.16% 2.33% 4.73% 13.14% 23.51%

4 .DJI 12,170.56 (+84.54 ● +0.70%) .SPX 1,309.66 (+12.12 ● +0.93%) .IXIC 2,736.42 (+38.12 ● +1.41%)
 March 25th 2011

Analysts' Upgrades & Downgrades

Ratings Price Target
Code House
Previous Current Previous Current
BAC Wells Fargo Priority List Removed - -
BAC FBR Capital Outperform Market Perform $18.00 $15.00
MMM Argus Buy Buy - $104.00
PFE JPM Overweight Overweight $25.00 $25.00
T Bernstein Market Perform Outperform. - -
WMT William Blair Outperform Market Perform - -
n Sector-wide n Upgrade n Downgrade n Initiation

US Economic Calendar
Date Time Report Period Actual Forecast Previous
21-Mar 10:00 AM Existing home sales Feb 4.88 mln 5.1 mln 5.36 mln
22-Mar 10:00 AM FHFA home prices Jan -0.3% n/a -1.0%
23-Mar 8:30 AM New home sales Feb 250K 290K 301K
24-Mar 8:30 AM Jobless claims 19-Mar 382K 380K 387K
24-Mar 8:30 AM Durable goods orders Feb -0.9% 1.5% 3.6%
24-Mar 8:30 AM Durables ex-transport Feb -0.6% 2.5% -3.0%
25-Mar 8:30 AM GDP revision Q4 - 3.1% 2.8%
25-Mar 9:55 AM Consumer sentiment March - 68.0 68.2

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.

5 .DJI 12,170.56 (+84.54 ● +0.70%) .SPX 1,309.66 (+12.12 ● +0.93%) .IXIC 2,736.42 (+38.12 ● +1.41%)