Shyam Devani

Transcription

1 Market Commentary July 11, 2013 Tom Fitzpatrick Shyam Devani Dan Tobon For recent commentary or to access archived publications, visit our CitiFX Technicals website: Click here Chart of the Week Twists in the USD uptrend The overall medium term setup for the USD Index remains bullish The near term price action as well as recent events however warns us that we will not rally in a straight line This week s closes and the price action over the coming days may provide a better idea of whether we are likely to consolidate before further gains down the line as we suspect is likely to be the case Maybe we will be lucky enough to receive proper guidance and clarity from the FOMC meeting on 31 July instead of listening to what appears to be a divided group who don t know which direction they want to face and who seem to have a leader now with authority but no power. Local Markets Asia FX strength may return for the near term The ADXY appears to be turning higher after reaching its double top target and will post a bullish key week with a close above this week. This would also result in a double bottom with a 117 target. Specifically, USDINR, USDKRW, USDSDG and USDTWD - which combined account for 39% of the ADXY appear set to move lower in the next few days/weeks Ultimately, we still expect a stronger USD in the long term; however, the set-ups certainly suggest to us that there may be USD weakness in the near term Commodities Gold, Silver and Oil show additional signs of strength Both Gold and Silver are showing signs of gains ahead Silver is likely to outperform as it usually does when both markets rally Crude (Brent and Nymex) are breaking higher through important levels and should continue to rally from here Fixed Income Time for a consolidation? US 10 year yields seem to be trapped for now between decent levels at % and 2.74% A breach of either would be important though for now we suspect these levels could define the range in the short term Equities More stable in the short term but not in the medium term The short term bearish signs seen last week did not materialize in any meaningful losses and there are few short term bearish indications on the charts at the moment We need to respect that Equity markets have remained in an uptrend and may continue to be resilient over the coming weeks. Even if we do see higher highs on the Dow and/or S&P 500, we are concerned that this could be the last hurrah from a multi month perspective. Indeed this view will be a work in progress and we highlight where we can look for clues to support the more medium term cautious view

2 Foreign Exchange Twists in the USD uptrend The overall medium term setup for the USD Index remains bullish The near term price action as well as recent events however warns us that we will not rally in a straight line This week s closes and the price action over the coming days may provide a better idea of whether we are likely to consolidate before further gains down the line as we suspect is likely to be the case USD Index long term chart 5 years up 5 years up?? 8 years down 7 years down 7 years down 2 years sideways and then a higher low 3 years sideways and then a higher low 3 years sideways and then a higher low Source: Aspen graphics/bloomberg July 02, This long term charts suggests we are only half way through what looks a multi-year USD bull market Of course we are unlikely to rally in a straight line and indeed we have not made any further short term breaks as yet While we were expecting a bullish breakout soon, the following chart that compares the price action today with that seen after the 1995 turn warns us to be a little patient July 11,

3 USD Index monthly chart comparing current price action with that seen after the after 1995 turn Major breakout in Jan 1997 Monthly candles before the breakout in 1997 If this is going to remain similar, we may not see a bullish break before the end of the month Source: Aspen graphics/bloomberg July 11, Two months before the bullish breakout in Jan 1997, the USD Index posted a strong monthly hammer pattern (not at the lows of a correction but within a consolidation) The following month the index attempted to break higher. It actually made a higher high but it did not manage to sustain the move and instead came back down to post an indecisive monthly doji This time within the multi month consolidation we saw a hammer monthly pattern last month So far this month we attempted to breakout (at the start of this week when we made a higher high) but the rally was not sustained and we are back where we started the month. So at this stage the price action is similar. Of course we need to wait for the end of the month to see what the monthly candle will look like. If this is going to remain similar then we may have to wait a little while before the bullish break comes (perhaps next month after the next FOMC meeting on 31 July?) The weekly chart here may give a clue as to what we may see over the next few weeks. July 11,

4 USD (DXY) Index weekly chart 76.4% retracements Source: Aspen graphics/bloomberg July 10, The overall setup here is a 76.4% retracement against the Jan 2013 low where we also saw the rising trend line. These levels converged at which effectively held three weeks ago when we posted a bullish weekly reversal. The breakout level ahead is While we traded above there at the start of the week, we would need to see a weekly close above that before confirming a bullish break. Since then the market has come off and a weekly close this week below would give a bearish weekly reversal. Weekly momentum shows the possibility of triple negative divergence. It is important to remember at this stage that the shorter term bearish signs have not been confirmed/completed (potential reversal and divergence) so more price action is needed. We would not however be surprised to see some near term consolidation within what still looks like a long term uptrend Resistance levels beyond are at 86.47, and July 11,

5 EURUSD head and shoulders top after a good bearish weekly reversal at the highs H S S Source: Aspen graphics/bloomberg July 11, Once again we have learnt that EURUSD will take the scenic route to where it wants to go. The volatility this week has not changed the overall trend. The pair still looks like it is forming a head and shoulders top though we need to see sustained moves below 1.28 before confirming a bearish break. The pattern would target 1.18 over time (likely months) with interim support levels coming in at and (76.4% retracement of the rally from the 2012 lows and horizontal support). Note that a close this week above would give a bullish weekly which if seen would warn of a stronger short term bounce. GBPUSD Weekly chart levels in focus Source: Aspen graphics/bloomberg July 11, This year s lows converge with horizontal supports coming from price action seen in 2010 at While the bounce back has been aggressive, we remain below resistance levels in the area. A breach of if/when seen would open the way for the 2010 low at These are few if any support levels between those levels. July 11,

6 USDJPY Market Commentary July 11, % retracement against the highs and possible bearish weekly reversal Source: Aspen graphics/bloomberg July 11, USDJPY is in line for a bearish weekly reversal after testing the 76.4% retracement against the highs A reversal would be confirmed if we get a weekly close this week below If/when confirmed we would not be surprised to see a move down to Support below there is at (the 200 day moving average not shown) Overall the general setups still point towards a higher USD Index over the coming months and indeed years At this stage, the shorter term price action and indeed recent rhetoric from the Fed (Bernanke more precisely) suggests that we are likely to go through some consolidation before further gains later, possibly after the end of this month. Maybe we will be lucky enough to receive proper guidance and clarity from the FOMC meeting on 31 July instead of listening to what appears to be a divided group who don t know which direction they want to face and who seem to have a leader now with authority but no power. Weekly reversals are possible this week on the USD Index, EURUSD and USDJPY. If seen they would not change the overall trends though would suggest at least a consolidation if not short term USD weakness within the longer term uptrend. July 11,

7 Local Markets Asia FX strength may return for the near term The ADXY appears to be turning higher after reaching its double top target and will post a bullish key week with a close above this week. This would also result in a double bottom with a 117 target. Specifically, USDINR, USDKRW, USDSDG and USDTWD - which combined account for 39% of the ADXY appears set to move lower in the next few days/weeks Ultimately, we still expect a stronger USD in the long term; however, the set-ups certainly suggest to us that there may be USD weakness in the near term Asia USD (ADXY) Index - turning off of support Source: Aspen graphics/bloomberg July 11, The ADXY Index has met its double top target of 115 and now appears to be turning higher off of the 200 week moving average A close this week above would result in a bullish key week reversal (as well as a double bottom see next chart) Initial resistance is around 117, where the 55 week moving average and April low converge USDINR, USDKRW, USDSDG and USDTWD - which combined account for 39% of the ADXY appear to be the currency pairs most likely to move lower and support the move higher in ADXY We continue to expect a stronger USD in the long term; however, the set-up in ADXY and the corresponding currency pairs certainly suggest to us that there may be USD weakness in the near term July 11,

8 Asia USD (ADXY) Index - double bottom taking shape Source: Aspen graphics/bloomberg July 11, ADXY Index will post a double bottom with a close above (the same level above which the Index needs to close this week for a bullish key week). Should we see the close above, the double bottom will target 117, where the previously mentioned resistance also converges with the 55 day moving average. There is momentum divergence, though not triple, which suggests the down move may have run out of steam USDINR testing support Source: Aspen graphics/bloomberg July 11, USDINR is testing support at 59.48, the 21 day moving average, and a close below there opens the way towards 57, the 55 day moving average There has been negative momentum divergence which shows that the up move is likely to see a pause in the short term July 11,

9 USDKRW breaking lower Possible weekly reversal, watch the weekly close Source: Aspen graphics/bloomberg July 11, USDKRW has pushed through support at the 55 day moving average, opening the way towards 1100, the converging channel bottom and 200 day moving average USDKRW is also in line to post a bearish key week in continuation of the down move (see insert), further supporting a move lower. USDSGD approaching support Possible weekly reversal, watch the weekly close Source: Aspen graphics/bloomberg July 11, USDSGD is approaching good support around 1.26 where the upward sloping trend line and 55 day moving average converge There is momentum divergence as well, suggesting the move higher is running out of steam (not shown - momentum has also turned lower from high levels on the weekly chart) A bearish key week would be posted at the highs with a close below this week (see insert) July 11,

10 USDTWD turning off resistance Market Commentary July 11, 2013 Source: Aspen graphics/bloomberg July 11, USDTWD appears to be turning off of resistance (converging 200 week moving average and July 2012 high) and will post a bearish key week with a close below this week. Momentum is also turning lower from high levels. Initial support is at the 55 week moving average, currently at 29.60,and a break below there opens the way towards 28.91, the 2012 and 2013 lows A weekly close this week below would give a bearish weekly reversal July 11,

11 Commodities Gold, Silver and Oil show additional signs of strength Both Gold and Silver are showing signs of gains ahead Silver is likely to outperform as it usually does when both markets rally Crude (Brent and Nymex) are breaking higher through important levels and should continue to rally from here Gold Weekly chart 38% move down and double top target met 2008: 34% move down Source: Aspen graphics/bloomberg July 10, Gold has met and marginally exceeded the double top target of $1,260. The move down here is similar in magnitude to the deep correction seen in 2008 when Gold fell by 34%. This time Gold has fallen 38% into the low two weeks ago. The stabilisation seen over the past two weeks and the subsequent short term bounce this week is leading momentum to cross back up from stretched levels. July 11,

12 Gold Daily chart Market Commentary July 11, 2013 Source: Aspen graphics/bloomberg July 10, Initial resistance is at $1,321 which was the previous low from April. The 55 day moving average (which is downward sloping) currently stands at $1,365 and a close above there would be an important bullish break given the large gap to the 200 day moving average which is at $1,570, marginally above good resistance in the $1,522-$1,532 area. The price action at the lows here reminds us of the S&P 500 in 2009 Gold price action compared with the S&P 500 in 2009 Source: Aspen graphics/bloomberg July 10, Once the first impulsive low at 741 was regained by the S&P it never revisited it. We also had a decent day moving average gap on the S&P 500 as we do now in Gold July 11,

13 Gold/Silver Ratio daily chart 76.4% retracement against the lows Long term 76.4% retracement Short term 76.4% retracement Source: Aspen graphics/bloomberg July 10, A move up is gold outperforming silver. Generally, Silver tends to outperform in a rally and underperform when gold and silver are trending down. The ratio held the long term 76.4% retracement on the log scale chart of the move down from October We see triple negative divergence indicating a turn back down. The short term daily chart (right) also shows a 76.4% retracement against the recent high on 26 June. There is a large day moving average gap showing a stretched market. A breach of would confirm a bearish break. Note that the parallel of the trend across the highs will converge with in 5 sessions. Gold/Silver Ratio long term chart Source: Aspen graphics/bloomberg July 10, Silver outperformed Gold between Oct 1978 and January 1980 by 64%. Anything similar this time would put the ratio below 25 (and suggest a very strong rally ahead for Silver). July 11,

14 Silver Weekly chart Market Commentary July 11, 2013 Source: Aspen graphics/bloomberg July 10, The recent move down was 63% and not dissimilar in magnitude to that seen in 2008 when Silver fell just short of 61%. We are now seeing triple positive divergence being completed on the weekly chart which reflects weakness in the downtrend and warns of a turn back up. The last time positive divergence was seen was in 2012 when Silver hit a low of $26.15 and before that was at the trend lows in However on both of those occasions it was double divergence and not triple like we have now. The divergence now is a stronger indication of weakness in the downtrend. Medium term resistance levels are at $26.08-$ July 11,

15 Silver daily chart 76.4% retracement against the lows 76.4% retracement against the lows Source: Aspen graphics/bloomberg July 10, A bullish daily reversal was posted at the trend lows After the initial bounce up to $20.11, we cam back to test and hold the 76.4% retracement against the lows The trend line down and 21 day moving average both effectively converge with the high of the initial bounce which is now a short term pivot A close above $ would be a short term bullish break opening the way for the 55 day moving average at $21.85 That level would be the more important pivot over an extended horizon given the large gap to the 200 day moving average which currently stands at $ July 11,

16 Nymex bullish breaks taking hold Source: Aspen graphics/bloomberg July 10, Nymex Crude continues to push higher towards the shorter-term double bottom target of $ (green line). In the process, it has broken through the trend line coming from 2011, supporting the move higher Should the double bottom target be met, it would take Nymex near important resistance around the $ area, the neckline of a larger double bottom and the 2011 high. A break higher through there would confirm the larger double bottom (blue line), which would then target $140-$145, just shy of the all-time high at $147. For now, though, the main focus remains the shorter-term double bottom, which also lines up well with what is happening in Brent Crude July 11,

17 Brent is also breaking higher Market Commentary July 11, 2013 Source: Aspen graphics/bloomberg July 10, Brent Crude continues to push towards its double bottom target of $113+ after breaking through the $106 resistance / neckline area Brent / Nymex ratio testing good support Source: Aspen graphics/bloomberg July 11, The Brent Nymex ratio is testing good support around 1.02 (converging channel bottom, upward sloping trend line and 76.4% retracement of the up move). This should be considered a pivot. A break lower, should we see it, would open the way towards and would suggest Nymex may continue to outperform. In addition, such a level would actually lead to the Brent-Nymex spread going negative, which was historically the norm prior to July 11,

18 Fixed Income Time for a consolidation? US 10 year yields seem to be trapped for now between decent levels at % and 2.74% A breach of either would be important though for now we suspect these levels could define the range in the short term Levels on US 10 year yields Source: Aspen graphics/bloomberg July 10, The trend line resistance from the major high in 2007 at 2.74% has limited the movers up in yields However we remain above the horizontal levels at 2.39%-2.41% and our suspicion is that we can stay between 2.39%-2.74% in the near term A breach of either of those levels would have to be respected It should be noted that momentum has not been this stretched since 2006 July 11,

19 Equities More stable in the short term but not in the medium term The short term bearish signs seen last week did not materialize in any meaningful losses and there are few short term bearish indications on the charts at the moment We need to respect that Equity markets have remained in an uptrend and may continue to be resilient over the coming weeks. Even if we do see higher highs on the Dow and/or S&P 500, we are concerned that this could be the last hurrah from a multi month perspective. Indeed this view will be a work in progress and we highlight where we can look for clues to support the more medium term cautious view S&P 500 and Dow Industrials daily charts Source: Aspen graphics/bloomberg July 10, What looked like short term bearish breaks through the 55 day moving averages on the S&P 500 and Dow had little follow through Instead the trend line on the Dow (right chart) held and both indices are trading well above the 55 day moving averages There are few if any bearish short term indications on these charts at this stage The long term charts below however give a warning sign that from a multi month horizon, we should be careful July 11,

20 Consumer confidence and the S&P 500 Moves higher from Jan 1996 to May 2000 (4 years and 4 months before turning) Moves higher from Mar 2003 to July 2007 (4 years and 4 months before turning) Marginal new high in Oct 2007 was not sustainable with confidence having already peaked Moves higher from Feb 2009 to June 2013 (4 years and 4 months so far) Sharp pullback into October 1998 where we saw equity market retrace 22% Sharp pullback into October 2005 where we saw the equity market retrace just 6.25% (As housing market was booming) Sharp pullback into October 2011 where we saw the equity market retrace 22% Source: Aspen graphics/bloomberg July 03, The obvious point this chart makes is that the level of the S&P 500 does not reflect the relative confidence of consumers While consumer confidence has just posted a trend high, it is significantly below the 2007 high while the S&P 500 is trading above levels from 2007 The second point is that the Equity market trends down when consumer confidence turns down In 2000, Equities peaked first in March and consumer confidence posted a double top in May. Equities did not trend down aggressively until Consumer confidence fell away In 2007, consumer confidence peaked in July and the Equity market made a marginal new high in October. That high was unsustainable and we fell away as confidence collapsed Once the Consumer confidence turns, the Equity market is unable to sustain new highs. So we will have to wait for the next releases of consumer confidence. If indeed the measure turns lower then we would be careful with the sustainability of an elevated S&P 500 July 11,

21 Market Commentary July 11, 2013 What warning signs do we have for consumer confidence? Consumer confidence and 30 year mortgage rates The second point is that the last consumer confidence number was released before yields spiked up, more specifically before mortgage rates went up last month The chart above shows that the highs in confidence seen in 2000 and 2007 both saw a sharp increase in mortgage rates like seen over the past few weeks. This should have a significant impact on confidence particularly as we consider that On May 1, with the national average 30 year mortgage rate at 3.40%, the monthly mortgage cost for a an average house (using national average price of $275k) was $1,220 Eight weeks later, to maintain the same monthly mortgage cost at the current rate (4.51%), one would have to look at a house 13% cheaper ($240K). So for the average home buyer, the mortgage rate increase over the last 8-9 weeks means they need to shop for homes 13% below the price they were previously looking at to keep monthly costs the same. Increased liabilities and less disposable income does not sound like something that should bring about a higher degree of confidence to consumers. July 11,

22 Portfolio: Position, Instrument and date Comment Entry price, stop Target Exit date and price Profit/Loss No positions at the moment Source: Aspen Graphics / Bloomberg June 11, Short-term conviction views 1 Instrument View / Comment Date Established Target Level today DXY Index USDZAR USDINR Comment 11 July: Failure to push higher and at risk of a bearish weekly reversal with negative divergence. Unlikely to rally in the short term. The short term target was met and now we have a neutral stance Close above the resistance 9.83 levels suggests further gains up to the area (76.4% retrace of the move down from 2008 ) Higher highs after a bullish outside month. No reason why we cannot rally to the multiyear parallel of the trend line at 64+ March 11, (min) Target Met but uptrend still in place June June USDCAD Comment 11 July: back below the reverse head and shoulders neckline at Will likely need to wait for a more solid breakout 24 June and (extended horizon: 1.17) 1.04 EURUSD Comment 11 July: No follow through below Choppy markets likely to prevail in the short term 24 June Target met. Extended to USDILS Comment 11 July: No follow through on the rally above Neutral stance at this stage 26 June minimum 3.60 USDNOK Comment 11 July: A weekly close back below 6.17 would lead us to step away from the short term bullish stance 08 July (more medium term) Brent Closed above the double bottom neckline after the 200 week moving average held as support 08 July 2013 $ $ EURJPY Short term 76.4% retrace against the highs and break lower 10 July Source: Aspen Graphics / Bloomberg June 11, Convictions represent the views of the CitiFX Technicals staff and not actual trades. July 11,

23 Long-term conviction views 2 Market Commentary July 11, 2013 Summary of our strong conviction 2013 views as we open the year. As we continually note, when and if factors/dynamics change, we will adjust them into our thought process. These are our views we hold with conviction today. As we head through the year, we will update our level of conviction on an ongoing basis. Instrument View for 2013 as at the end of 2012 Conviction at the start of Jan 2013 Comment Level today US 10 Year Yield EURUSD 10 year yields to head towards 1%-1.2% before popping up higher Fall to 1.20 in Q1 and possibly even this year Strong Strong View seemed to be well on track as we moved to 1.61% on 01 May. Following a better NFP and the subsequent tapering talk yields moved significantly higher. Despite this, we are somewhat sceptical of the sustainability of this move and think that the June effect may see yields fall again in H2,2013 While we did see a fall towards in Q1 the move was shallower than we expected. We do however continue to expect lower levels on EURUSD. While is a high (but not unachievable) bar this year a move to at least still remains a likely outcome. 2.60% DXY Index A 15% rally towards Strong We retain the view that the USD-Index will continue higher despite the fact that to date the pace of the rally has been slower than expected USDJPY Move back over 90 after the US yield dynamic takes place Strong though timing is a work in progress We achieved the 90 level and a lot more so far this year. While USDJPY has been consolidating since its peak in May we expect even higher levels in the medium-long term Brent Crude Break above the 2012 highs ($128) A move to new all-time high is a real danger (above $147) Strong long term bullish stance Brent went bid in the earlier part of the year hitting a peak of just above $119. It has since consolidated/corrected. Overall the outlook still looks constructive for higher levels. $ Gold $2,055-$2,060 in Q1 and ultimately a rally to $2,400 Strong long term bullish stance Gold never made any serious attempt to rally and went into a much deeper correction on the break below $1,520.There is good reason to believe that this correction may be close to running its course and we retain a bullish medium term view. We expect much higher Gold levels to still materialise over the next 2-3 years. $1,281 Dow Jones Move down to and possibly below 10,000 Strong The Equity market has continued to perform well despite our concerns about a correction lower. While we still believe a substantial correction is possible, we need to see more significant developments to support that view. 15,419 Source: Aspen Graphics / Bloomberg July 11, Convictions represent the views of the CitiFX Technicals staff and not actual trades. July 11,

24 Contacts Global Head of Value Added Services & Products Stephane Knauf London Corporate Solutions Group Joakim Lidbark London FX Technicals Tom Fitzpatrick New York FX Strategy Steve Englander New York Quantitative Investor Solutions Aysu Secmen New York Structuring Group Michele Ghidoni London Value Added Products Nicolas Thomet New York Published by: CitiFX Wire 11 July 2013 Contact: Citigroup Inc. All rights reserved. CITI and Arc Design is a registered service mark of Citigroup Inc. July 11,

25 Disclaimer In any instance where distribution of this communication is subject to the rules of the US Commodity Futures Trading Commission ( CFTC ), this communication constitutes an invitation to consider entering into a derivatives transaction under U.S. CFTC Regulations 1.71 and , where applicable, but is not a binding offer to buy/sell any financial instrument. This communication is prepared by a member of the Sales and Trading Department of Citi which distributes this communication by or through its locally authorised affiliates (collectively, Citi ). Sales and Trading Department personnel are not research analysts, and the information in this communication ( Communication ) is not intended to constitute research as that term is defined by applicable regulations. Unless otherwise indicated, any reference to a research report or research recommendation is not intended to represent the whole report and is not in itself considered a recommendation or research report. All views, opinions and estimates expressed in this Communication (i) may change without notice and (ii) may differ from those views, opinions and estimates held or expressed by Citi or other Citi personnel. This Communication is provided for information and discussion purposes only. Unless otherwise indicated, (i) it does not constitute an offer or recommendation to purchase or sell any financial instruments or other products, (ii) it does not constitute a solicitation if it is not subject to the rules of the CFTC (but see discussion above regarding communication subject to CFTC rules) and (iii) it is not intended as an official confirmation of any transaction. Unless otherwise expressly indicated, this Communication does not take into account the investment objectives or financial situation of any particular person. Recipients of this Communication should obtain advice based on their own individual circumstances from their own tax, financial, legal and other advisors before making an investment decision, and only make such decisions on the basis of the investor's own objectives, experience and resources. The information contained in this Communication is based on generally available information and, although obtained from sources believed by Citi to be reliable, its accuracy and completeness cannot be assured, and such information may be incomplete or condensed. Citi often acts as an issuer of financial instruments and other products, acts as a market maker and trades as principal in many different financial instruments and other products, and can be expected to perform or seek to perform investment banking and other services for the issuer of such financial instruments or other products. The author of this Communication may have discussed the information contained therein with others within or outside Citi and the author and/or such other Citi personnel may have already acted on the basis of this information (including by trading for Citi's proprietary accounts or communicating the information contained herein to other customers of Citi). Citi, Citi's personnel (including those with whom the author may have consulted in the preparation of this communication), and other customers of Citi may be long or short the financial instruments or other products referred to in this Communication, may have acquired such positions at prices and market conditions that are no longer available, and may have interests different from or adverse to your interests. Investments in financial instruments or other products carry significant risk, including the possible loss of the principal amount invested. Financial instruments or other products denominated in a foreign currency are subject to exchange rate fluctuations, which may have an adverse effect on the price or value of an investment in such products. No liability is accepted by Citi for any loss (whether direct, indirect or consequential) that may arise from any use of the information contained in or derived from this Communication. Past performance is not a guarantee or indication of future results. Any prices provided in this Communication (other than those that are identified as being historical) are indicative only and do not represent firm quotes as to either price or size. You should contact your local representative directly if you are interested in buying or selling any financial instrument or other product or pursuing any trading strategy that may be mentioned in this Communication. Although Citibank, N.A. (together with its subsidiaries and branches worldwide, "Citibank") is an affiliate of Citi, you should be aware that none of the financial instruments or other products mentioned in this Communication (unless expressly stated otherwise) are (i) insured by the Federal Deposit Insurance Corporation or any other governmental authority, or (ii) deposits or other obligations of, or guaranteed by, Citibank or any other insured depository institution. IRS Circular 230 Disclosure: Citi and its employees are not in the business of providing, and do not provide, tax or legal advice to any taxpayer outside of Citi. Any statements in this Communication to tax matters were not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer s particular circumstances from an independent tax advisor. Citi specifically prohibits the redistribution of this Communication in whole or in part without the written permission of Citi and Citi accepts no liability whatsoever for the actions of third parties in this respect. Copyright 2013 Citigroup Inc. and/or its affiliates. All rights reserved. CITI, CITI and Arc Design, CITIBANK and CITIGROUP are trademarks and service marks of Citigroup Inc. and/or its affiliates and are used and registered throughout the world. July 11,