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1 27/11/2013 Investment Daily Investment Strategy & Research Private Banking & Wealth Management Welcome to Investment Daily Our goal is to always and everywhere keep you informed of financial and economic developments, and our thinking on investment strategy as a result. michael.strobaek@credit-suisse.com, Investment horizon: 3-6 months I would like to personally welcome you to our new publications landscape. This week, we are launching a new Investment Daily, which you are now reading, alongside a new Investment Weekly and a much enhanced Investment Monthly. Reading these publications will help you navigate markets and make the right investment decisions. These are our ultimate goals. Today, equity markets move in a similar manner to the late 1990 s. Every day, the screens are green. The underlying market trend is strong, valuation is OK, inflation is low, and economies slowly improving. Central banks are printing money like there was no tomorrow, to speed up economies and prevent another tail event. But partying all night long can give the worst hangovers. Froth can easily turn to frost, as moods change fast and people reassess reality. After remarkable gains so far this year, sentiment indicators appear stretched. We believe equity markets are due for a much needed consolidation, if not a healthy correction, as the Fed tapers as early as December or January. In either case, we will then buy equities again, and close our current small underweight position. QE is coming towards an end, but forward guidance for low US rates will stay. In Europe, the ECB is close to loosening policy further. It is concerned about too low inflation and growth in the Eurozone. That is what Mario Draghi told a collection of bankers, myself included, last Friday at a gathering in Frankfurt. For markets, that ought to be good news for the medium term. () Market Snapshot World equity indicies S&P 500 Euro Stoxx 50 Nikkei-225 SMI FTSE-100 1, , , , , MSCI AC Asia Pacific MSCI Emerging markets Fixed Income USD 2Y USD 10Y EUR 10Y CHF 10Y Currencies EUR/USD USD/JPY EUR/CHF USD/CHF GBP/USD AUD/USD Commodities Gold Brent oil , , d w This material is not investment research or a research recommendation for regulatory purposes as it does not constitute substantive research or analysis. Please find further important information at the end of this document.

2 2 Investment Daily 27/11/2013 Credit Suisse - Investment Daily Macro Brazil likely to raise interest rates to 10% today In a world of near-zero interest rates in major economies, some EM central banks tighten to limit inflation or currency weakening. Nora Wassermann Global Macro Research nora.wassermann@credit-suisse.com, Brazil is likely to raise rates by another 50 bp today, bringing the policy rate (SELIC) to 10.0%. Inflation has declined for four consecutive months but remains elevated at 5.8% YoY (October) and close to the upper limit of the central bank s inflation target range. Several upside risks for inflation remain, including pass-through from currency weakening, tight labor market conditions (=wage pressure), still-robust credit growth and an easier fiscal policy. As long as these risks remain, the Banco Central do Brasil (BCB) is likely to stay vigilant. Today, the central bank s message will probably be that rates can rise further and at least one more rate hike is likely to follow in mid- January. (27/11/2013) YESTERDAY S DATA RELEASES USA: Building permits and house price gains at multiyear highs More positive signs from the US housing market. The number of building permits steadily rose in the past two months, from 926K in August to 974K in September and 1034K in October, the highest level since June The Case-Shiller house price index for 20 large metropolitan areas showed the largest annual increase since early 2006 (13.3% YoY) in September. House prices in this measure remain 20% below their peak in 2006 but are now approaching levels last seen in USA: Consumer confidence drops again Consumer confidence (Conference Board survey) continued to decline in November ( 2 points to 70.4) after a strong fall in October ( 7.8 points to 72.4). Lower expectations accounted for most of the decline, though the assessment of the present situation also decreased again. Hungary: Monetary easing continues The Hungarian Central Bank (MNB) delivered the 16th consecutive policy rate cut from 3.4% to %. Despite improving economic activity, the MNB signals further easing. But it will only deliver this if the financial environment is benign enough to prevent a substantial depreciation of the Hungarian forint as a result. South Africa: Q3 GDP growth weakens due to strikes GDP growth weakened to an annualized rate of 0.7% QoQ (vs. 1.0% QoQ expected), down from % QoQ in Q2. While mining and services contributed positively, manufacturing was a drag due to strikes in the auto sector. Going forward, we expect manufacturing to rebound and the recovery to continue at a moderate pace. INVESTOR WATCH LIST US durable goods orders ex-transport (Oct.); Consensus: 0.4% MoM, Prior: 0.2% MoM Considering that the ISM new orders index, which usually leads capital expenditure, recorded robust prints through Q3, markets expect a rebound in core goods orders. The headline figure, impacted by volatile aircraft orders, is expected to have declined by 2.0% MoM. UK GDP second estimate (Q3); Consensus: 0.8% QoQ, Prior: 0.8% QoQ Focus will be on the breakdown by expenditure, with consensus expecting domestic consumption to have been the driver of GDP growth alongside an increase in capital spending. The contribution of net trade is expected to have been negative. Consumer confidence (University of Michigan) (Nov.); Consensus: 73.0, Prior: 7 The final estimate of consumer confidence is expected to show a slight upward revision from the first estimate (72.0). Nevertheless, this would still leave the index below the October value. Indicators and events 10:30 14:00 14:30 15:00 Tuesday, ZA: GDP (% QoQ, annualized), Q3 HU: Hungarian Central Bank policy meeting US: Building Permits ('000), Oct. US: Case-Shiller Home Price index (% YoY), Sep. 16:00 US: Consumer confidence (Conference Board), Nov. Wednesday, :30 10:30 14:30 15:55 7:45 10:00 11:00 TH: Bank of Thailand monetary policy meeting UK: GDP (% QoQ), second estimate, Q3 US: Durable goods orders (% MoM), Oct. US: Consumer confidence (University of Michigan), Nov., final BR: Banco Central do Brasil policy meeting Thursday, SZ: GDP (%QoQ), Q3 EMU: M3 Money supply (% YoY), Oct. BR: Inflation (% YoY), Oct. P: Prior; C: Consensus; A: Actual All times are CET P C A Source: Global Economics, Credit Suisse

3 3 Investment Daily 27/11/2013 Credit Suisse - Investment Daily Latest recommendation changes 21/11/2013 NIDEC MITSUI & CO. SONY CANON PANASONIC KYOCERA MAHINDRA & MAHINDRA LIMITED CAMPBELL SOUP EXIDE INDUSTRIES LIMITED AMERICA MOVIL Sec. No Sec. No Sec. No Sec. No Sec. No Sec. No Sec. No Sec. No Sec. No Sec. No For the detailed analysis accompanying the recommendations listed, please refer to the latest Global Research Company Notes and Research Alerts Credit rating changes highlights Issuer ENI SpA Current rating (S&P / Moody's / Fitch) A, Watch Neg / A3, Negative / A+, Negative The table generally shows the most recent rating changes from S&P, Moody s or Fitch in our coverage universe. New bond issues Name CAD 100 m 2.625% AUST & NZ BANKING GROUP EUR 1000 m 1.625% HSBC FRANCE 1250 m 1.5% ROYAL BK SCOTLND GRP PLC Maturity 10/12/ /12/ /11/2016 Sett. Date 10/12/ /12/ /11/2013 Agency Fitch Rating NR / Aa2e NR / A1e Action BBB+ / Baa1 Outlook ISIN From A+, Stable XS FR XS Issue price SELL To A+, Negative Source: Credit Suisse Market price YTM-MP The inclusion of a bond in the table above is for information purposes only and does not mean that Fixed Income & Global Credit Research is providing any investment view or recommendation on this particular new issue. The ratings shown in the ratings column are S&P / Moody's. 2.65% 1.60% 1.37%

4 4 27/11/2013 Credit Suisse - Investment Daily Disclaimer / Important Information This material has been prepared by the Private Banking & Wealth Management division of Credit Suisse ( Credit Suisse ). Although it may contain contributions of research analysts or quote research reports, it is not investment research or a research recommendation for regulatory purposes as it does not constitute substantive research or analysis. Some of the articles in the publication may have been published by Credit Suisse Research and may be found on the Research website ( including the necessary disclaimers and disclosure statements. This material is provided for informational and illustrative purposes and is intended for your use only. It does not constitute an invitation or an offer to the public to subscribe for or purchase any of the products or services mentioned. 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5 5 27/11/2013 Credit Suisse - Investment Daily ties, or related financial instruments. This report does not represent a valuation in the meaning of the Federal Law On Valuation Activities in the Russian Federation and is produced using Credit Suisse valuation models and methodology. Spain: When distributed or accessed from the EEA, this is distributed by Credit Suisse Asset Management Limited (authorised and regulated by the Financial Conduct Authority) or any other Credit Suisse entities locally authorized, as it is specified in the following local disclaimers. Thailand: This report is distributed by Credit Suisse Securities (Thailand) Limited, regulated by the Office of the Securities and Exchange Commission, Thai- land, with its registered address at 990 Abdulrahim Place Building, 27/F, Rama IV Road, Silom, Bangrak, Bangkok Tel United Kingdom: This report is issued by Credit Suisse (UK) Limited and Credit Suisse Securities (Europe) Limited. Credit Suisse Securities (Europe) Limited and Credit Suisse (UK) Limited, both authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, are associated but independent legal entities within Credit Suisse. The protections made available by the Financial Conduct Authority and/or the Prudential Regulation Authority for retail clients do not apply to investments or services provided by a person outside the UK, nor will the Financial Services Compensation Scheme be available if the issuer of the investment fails to meet its obligations. Imprint Publisher michael.strobaek@credit-suisse.com Information about other Investment Strategy & Research publications Credit Suisse AG Investment Publishing Uetlibergstrasse 231, P.O. Box 300, CH-8070 Zürich publications.investment@credit-suisse.com Internet Intranet (for employees only) Subscription (clients) Please contact your customer advisor to subscribe to this publication Subscription (internal) For information on subscriptions please visit Authors michael.strobaek@credit-suisse.com Nora Wassermann Global Macro Research nora.wassermann@credit-suisse.com

Global Economy and markets What does the long term tell us?

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