April 8th 2011

Shutdown or No Shutdown?
The budget debate continues between the House and the Obama administration. The damage, should
the shutdown indeed occurs, will be severe as it would mean lots of government-employed workers
will stop working, and businesses of federal contractors and other related companies as well as small
businesses to national parks and museums will all suffer losses.

Despite the seemingly cliffhanger situation, it would be a big surprise if a compromise cannot be
reached. It is more likely that such compromise will be reached and that the shutdown will be averted.
After all, the damage caused by such shutdown will be very severe and could potentially derail the
recovery process of the US economy.

In anticipation of the budget resolution and to the next week’s earnings report, the market has stayed
relatively flat on Thursday. The Dow 30 slipped 17.26 points, down 0.14% to 12,409.49 while the
S&P 500 index ended 2.03 points or 0.15% lower at 1,333.51 and NASDAQ composite finished at
2,796.14, down 3.68 points or 0.13%.

Jobless claims data for the week ending April 2nd pointed at a brightening prospect of US labor
market as claims slipped from 392K to 382K, lower than the anticipated 385K. Consumer credit also
improved from $4.45B in January to $7.62B in February, significantly better than the consensus of
$4.70B. Friday will feature the wholesale inventory which rarely capable of moving the market.

1 .DJI 12,409.49 (-17.26 ● -0.14%) .SPX 1,333.51 (-2.03 ● -0.15%) .IXIC 2,796.14 (-3.68 ● -0.13%)
 April 8th 2011

Corporate News
 AA with CO2 Solution and Codexis collaborate on carbon capture technology. AA will fund the
project which will cost it $13.5M. Ahead of its earnings announcement on Monday, Deutsche Bank
expects AA to report EPS for Q1 at $0.28. The better-than-consensus number reflects the rising
aluminum prices. Consensus number itself is at 27cents, with revenue of $6.14 billion compared to
last year’s EPS of $0.17 per share and $4.89 billion. Deutsche Bank kept the Buy rating on AA.
Citigroup however, lowered AA’s estimated EPS from 27c to 25c while keeping the rating at
HOLD. Cost headwinds and equity dilution are Citi’s reasons for the revision. Citi’s PT on AA
remains at $17.00.
 BA’s weekly delivery update shows 18 new orders coming from Turkish Airlines (15 737s), Qatar
Airways (2 737s) and one 777 from unidentified customer. Meanwhile, during the first quarter, BA
has delivered 87 737 Next Generation, 13 777, and four 767. The total of 104 deliveries was
lower than the deliveries during the first quarter of 2010. Q4 2010 also had higher deliveries at
116 units. Elsewhere, rival Airbus of EADS reported a total of 199 deliveries in the first quarter.
 After soaring a day earlier, CSCO faltered on Thursday. Citi lowered CSCO’s PT to $20 from
$22 as lack of confidence in the company’s execution capability will keep the stock sideways. Citi
maintains CSCO’s HOLD rating, however. Meanwhile, Pacific Crest said that CSCO’s lost market
share and its margin risk are exaggerated and that for the last three years market share has
been stable while expense has been under control, thus helping margins. At Wells Fargo Annual
Summit on technology transformation, CSCO CEO Chambers said CSCO has to improve in
operational areas. CSCO however, will not attempt to fix what is not broken. That is, the company
won’t be backing off its innovation model. On public sector, Chambers said that the sector will
remain to be challenging although AsPac/EM look promising. Regarding the switching market,
Chambers see pressure ahead in the near-term. CSCO’s acquisition strategy according to
Chambers, CSCO will remain as acquisitive as before although tax policy will have to be closely
watched in case that adjustment is necessary.
 Barclays Capital sees 1Q11 earnings will see upside surprises from companies exposed to Brent
oil pricing such as CVX and XOM (look at Upgrades & Downgrades table). Both are seen as
beating consensus by wide margin, especially CVX.
 GE plans to build solar panel plant which will employ 400 workers and provide 100 MW of
electricity to customers.
 Digitimes reported that semiconductors for tablet and e-book reader are hot with growth of more
than 2,000% in 2010 which worth $3.3B.
 IBM flies to the cloud with its “SmartCloud” computing services which would enable large
companies to save costs on equipment and software by storing their data on IBM’s servers and
access it via the internet.
 INTC is seen beating consensus on its next earnings report as the company’s enterprise product
segments continue to perform well and that headwinds are overdone.
 MMM plans to build a manufacturing plant in China to produce solar materials and renewable
energy products. Two-phased construction will start in Q2’11.

2 .DJI 12,409.49 (-17.26 ● -0.14%) .SPX 1,333.51 (-2.03 ● -0.15%) .IXIC 2,796.14 (-3.68 ● -0.13%)
 April 8th 2011

 According to Gartner, MSFT will beat Apple by 2015. Apple will rise to17.2% from 15.7% in
2011, while MSFT will rise from 4.2% to 19.5%.
 PG recalls ten shades of Clairol Natural Instincts in the US, Canada and Puerto Rico. PG said that
the kits may create unwanted color result.
 FCC told T & VZ to share networks for smaller competitors.
 WMT had planned to use “pop-up” store business strategy last year although it decided to use
the Express instead which utilizes smaller format. This year, WMT may try to apply “pop-up”
strategy according to NY Post.

3 .DJI 12,409.49 (-17.26 ● -0.14%) .SPX 1,333.51 (-2.03 ● -0.15%) .IXIC 2,796.14 (-3.68 ● -0.13%)
 April 8th 2011

Stock Focus: Chevron Corp.

CVX
Last Apr 7th Resistances 109.37 111.44 111.73 112.00 112.80
$108.94  0.26% Supports 107.51 107.03 105.23 104.63 103.77
WTD MTD Outlook
 0.86%  1.35%
POSITIVE
YTD 12-Month
 19.39%  33.77% Strategy Buy dips to 107.51, risk < 103.77, PT 112.00, 112.80

Last month, CVX was expected to dip towards $95.60 before hitting $103.41. CVX fell only to as
low as $97.60

4 .DJI 12,409.49 (-17.26 ● -0.14%) .SPX 1,333.51 (-2.03 ● -0.15%) .IXIC 2,796.14 (-3.68 ● -0.13%)
 April 8th 2011

Price Performance - as of Apr 7th 2011

Code Last Dy WTD MTD YTD 12-Mos
AA 18.12 -0.06% 2.72% 2.60% 17.74% 34.92%
AXP 46.16 -0.26% 0.54% 2.12% 7.55% 0.09%
BA 74.29 0.77% 0.66% 0.49% 13.84% 2.57%
BAC 13.61 -0.80% 1.19% 2.10% 2.02% -23.67%
CAT 109.85 -1.04% -1.51% -1.35% 17.29% 61.33%
CSCO 17.91 -0.89% 3.35% 4.43% -11.47% -33.49%
CVX 108.94 0.26% 0.86% 1.35% 19.39% 33.77%
DD 55.57 -0.80% 0.36% 1.09% 11.41% 39.48%
DIS 42.04 -0.54% -3.02% -2.44% 12.08% 14.12%
GE 20.35 -0.97% 1.19% 1.50% 11.26% 7.90%
HD 37.83 0.88% 0.69% 2.08% 7.90% 7.38%
HPQ 41.08 -0.24% -0.53% 0.27% -2.42% -20.95%
IBM 164.38 0.21% 0.48% 0.80% 12.01% 27.43%
INTC 20.03 0.40% -2.10% -0.74% -4.76% -12.30%
JNJ 59.48 -0.30% 0.17% 0.39% -3.83% -7.50%
JPM 47.40 -0.50% 2.05% 2.82% 11.74% 11.32%
KFT 31.78 0.09% 0.95% 1.34% 0.86% 7.36%
KO 67.44 -0.28% 2.12% 1.66% 2.54% 26.17%
MCD 76.01 -0.93% 0.26% -0.11% -0.98% 7.68%
MMM 93.19 -0.67% 0.78% -0.33% 7.98% 5.10%
MRK 33.33 -0.06% 0.09% 0.97% -7.52% -4.88%
MSFT 26.20 0.19% 2.30% 3.19% -6.13% -14.21%
PFE 20.33 0.20% -0.05% 0.10% 16.11% 21.59%
PG 62.13 0.60% 0.26% 0.86% -3.42% -0.05%
T 30.54 0.23% -0.55% -0.23% 3.95% 17.19%
TRV 59.79 -0.25% 0.67% 0.52% 7.32% 17.84%
UTX 85.36 -0.35% 1.34% 0.84% 8.43% 13.89%
VZ 37.76 -0.24% -1.82% -2.02% 5.53% 30.66%
WMT 53.00 0.04% 1.22% 1.83% -1.72% -1.19%
XOM 85.76 0.68% 1.50% 1.94% 17.29% 26.55%

5 .DJI 12,409.49 (-17.26 ● -0.14%) .SPX 1,333.51 (-2.03 ● -0.15%) .IXIC 2,796.14 (-3.68 ● -0.13%)
 April 8th 2011

Analysts' Upgrades & Downgrades

Ratings Price Target
Code House
Previous Current Previous Current
AA Citigroup Hold Hold $17.00 $17.00
AA Deutsche Bank Buy Buy - -
CSCO Citigroup Hold Hold $20.00 $22.00
CSCO Pacific Crest Outperform Outperform $25.00 $25.00
CVX Barclays Capital Overweight Overweight $115.00 $130.00
INTC JMP Securities Buy Buy $25.00 $25.00
XOM Barclays Capital Equal Weight Equal Weight $90.00 $95.00
n Sector-wide n Upgrade n Downgrade n Initiation
US Economic Calendar
Date Time Report Period Actual Forecast Previous
5-Apr 10:00 AM ISM Non-Manufacturing Mar 57.3% 59.0% 59.7%
5-Apr 2:00 PM FOMC Minutes 15-Mar - - -
7-Apr 8:30 AM Jobless Claims 2-Apr 382K 385K 392K
7-Apr 3:00 PM Consumer Credit Feb $7.62B $4.70B $4.45B
8-Apr 10:00 AM Wholsesale Inventories Feb 1.0% 1.0%

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.

6 .DJI 12,409.49 (-17.26 ● -0.14%) .SPX 1,333.51 (-2.03 ● -0.15%) .IXIC 2,796.14 (-3.68 ● -0.13%)