gs weekly 4.10
TRANSCRIPT
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April 9, 2010 United States: Portfolio Strategy
Goldman Sachs Global Economics, Commodities and Strategy Research 4
1Q 2010 Earnings Calendar (week of April 12, 2010)
Exhibit 1: 1Q 2010 Earnings Calendar
Source: Factset, Bloomberg and Goldman Sachs Global ECS Research.
* - Conviction list.
YTD Mkt Cap 1Q 2010 EPS Consensus 1Q 2010 P/E
Sector Company name Ticker Rating Return ($ bil) GS Consensus Std. Dev. YTD Revisions Yr/Yr Growth (NTM)
Monday, April 12, 2010
Materials Alcoa Inc AA Neutral (8)% $ 15 $ 0.08 $ 0.11 $ 0.05 (46)% 119 % 20.0 x
Tuesday, April 13, 2010
Industrials CSX Corp. CSX Sell 10 % $ 21 $ 0.62 $ 0.69 $ 0.05 0 % 11 % 16.4 xFastnal Co. FAST NC 23 7 0.33 0.01 1 0 33.9
Information Technology Intel Corp. INTC Neutral 10 % $ 123 $ 0.37 $ 0.37 $ 0.02 10 % 236 % 13.6 xLinear Technology Corp. LLTC Buy (6) 6 0.37 0.39 0.02 19 56 17.6
Wednesday, April 14, 2010
Consumer Discretionary Yum! Brands, Inc YUM Buy 15 % $ 19 $ 0.48 $ 0.52 $ 0.02 (1)% 8 % 16.7 x
Financials JPMorgan Chase & Co. JPM Buy* 10 % $ 182 $ 0.70 $ 0.64 $ 0.06 (2)% 60 % 15.0 xIndustrials Grainger (W.W.) Inc. GWW Neutral 18 % $ 7 $ 1.52 $ 1.37 $ 0.06 6 % 10 % 19.1 x
Thursday, April 15, 2010
Financials People's United Financial PBCT Neutral (0)% $ 6 $ 0.08 $ 0.08 $ 0.01 (18)% 0 % 43.3 xProgressive Corp. PGR Buy 9 13 0.36 0.37 0.03 0 (12) 13.6
Health Care Intuitive Surgical ISRG NC 12 % $ 13 $ 1.68 $ 0.15 11 % 133 % 43.8 x
Information Technology Advanced Micro Devices AMD Sell (3)% $ 5 $(0.16) $(0.11) $ 0.08 44 % 83 % NMGoogle Inc. GOOG Buy* (8) 137 6.87 6.56 0.20 3 27 20.8
Materials PPG Industries PPG Neutral 17 % $ 11 $ 0.70 $ 0.64 $ 0.07 21 % 237 % 17.5 x
Friday, April 16, 2010
Consumer Discretionary Gannett Co. GCI NC 20 % $ 4 $ 0.42 $ 0.05 24 % 68 % 8.6 xGenuine Parts GPC Buy* 14 7 0.67 0.61 0.02 3 9 16.1Mattel, Inc. MAT NC 18 9 (0.03) 0.03 29 79 14.4
Financials Bank of America Corp. BAC Buy* 24 % $ 187 $ 0.10 $ 0.09 $ 0.07 35 % (80)% 23.5 xFirst Horizon National FHN Neutral 13 3 (0.10) (0.16) 0.06 (33) 56 NMCharles Schwab SCHW Neutral 2 19 0.11 0.13 0.02 (24) (32) 27.5
Industrials General Electric GE Buy 23 % $ 198 $ 0.13 $ 0.17 $ 0.02 11 % (35)% 18.5 x
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April 9, 2010 United States: Portfolio Strategy
Goldman Sachs Global Economics, Commodities and Strategy Research 5
S&P 500 Performance
Exhibit 2: S&P 500 sector performance over the last weekas of April 8, 2010
Exhibit 3: S&P 500 price return and daily trading volume LTMas of April 8, 2010
Source: FactSet, and Goldman Sachs Global ECS Research. Source: FactSet, and Goldman Sachs Global ECS Research.
Exhibit 4: S&P 500 sector performance over time
as of April 8, 2010
Exhibit 5: BEST and WORST performing S&P 500 STOCKS BY SECTOR
as of April 8, 2010
Source: FactSet, and Goldman Sachs Global ECS Research. Source: FactSet, and Goldman Sachs Global ECS Research.
(1.1)
(0.9)
(0.0)
0.2
0.5
1.0
1.0
1.3
1.92.4
0.8
(2.0) (1.0) 0.0 1.0 2.0 3.0
Health Care
Consumer Staples
Utilities
Telecom Services
Industrials
S&P 500
Information Tech
Materials
Energy
Cons DiscretionaryFinancials
1-week Total Return (%)
01
2
3
4
5
6
7
8
9
600700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
8-Apr-08
8-Jun-08
8-Aug-08
8-Oct-08
8-Dec-08
8-Feb-09
8-Apr-09
8-Jun-09
8-Aug-09
8-Oct-09
8-Dec-09
8-Feb-10
8-Apr-10
Sharestraded(billions)S
&P500PriceLevel
S&P 500 daily trading volume (rhs)
S&P 500 daily price level (lhs)
Total Return Percentage Change (%)
1-Week 1-Month 3-Month 6-Month YTD 12-Month
Financials 2 % 8 % 8 % 10 % 15 % 81 %
Industrials 1 7 9 21 14 66
Cons Discretionary 2 6 11 22 13 62
Materials 1 5 0 12 6 55
Consumer Staples (1) 2 5 9 5 32
Energy 1 3 (1) 5 4 29
Information Tech 1 4 2 14 3 52
Health Care (1) 1 1 13 3 35
Utilities (0) 1 (1) 6 (2) 20
Telecom Services 0 5 (2) 6 (3) 9
S&P 500 1 % 4 % 4 % 12 % 7 % 47 %
BEST STOCKS WORST STOCKS
Return (%) Return (%)
Sector Ticker 1-week YTD Ticker 1-week YTD
Cons Discr EK 28 % 82 % JCP (5)% 18 %
Consumer Staples DF 4 (8) ADM (4) (10)
Energy EOG 12 10 MEE (13) 10
Financials RF 11 63 ICE (5) (5)
Health Care KG 3 (1) FRX (11) (13)Industrials R 7 2 IRM (3) 17
Info Tech ADSK 7 22 MWW (6) (9)
Materials IP 9 3 MON (2) (15)
Telecom Services Q 4 31 VZ (2) (6)
Utilities EQT 3 (1) AEP (2) (1)
S&P 500 EK 28 % 82 % MEE (13)% 10 %
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April 9, 2010 United States: Portfolio Strategy
Goldman Sachs Global Economics, Commodities and Strategy Research 6
S&P 500 Performance (contd)
Exhibit 6: TOP 10 performing SUB-SECTORS over the last weekas of April 8, 2010
Exhibit 7: BOTTOM 10 performing SUB-SECTORS over the last weekas of April 8, 2010
Source: FactSet, and Goldman Sachs Global ECS Research. Source: FactSet, and Goldman Sachs Global ECS Research.
Exhibit 8: TOP 10 performing S&P 500 STOCKS over the last weekas of April 8, 2010 Exhibit 9: BOTTOM 10 performing S&P 500 STOCKS over the last weekas of April 8, 2010
Source: FactSet, and Goldman Sachs Global ECS Research. Source: FactSet, and Goldman Sachs Global ECS Research.
5
5
5
5
6
6
7
9
1228
0 5 10 15 20 25 30
Commercial Printing
Investment Banking & Brokerage
Homefurnishing Retail
Internet Retail
Region al Banks
Paper Products
Trucking
Casinos & Gaming
Motorcycle ManufacturersPhotog raphic Products
1-week Total Return (%)
(4)
(4)
(2)
(2)
(2)
(2)
(2)
(2)
(2)(2)
(5) (4) (3) (2) (1) 0
Auto Parts & Equip ment
Agricultural Products
Diversified Support Services
Managed Health Care
Fertilizers & Agricultural Chemicals
Construction Materials
Electroni c Components
Homebuilding
Soft DrinksProperty & Casualty Insurance
1-week Total Return (%)
Return (%)
Company Name Ticker Sector 1-week YTD
Eastman Kodak EK Cons Discr 28 82
Harley-Davidson HOG Cons Discr 12 27
EOG Resources EOG Energy 12 10
Wynn Resorts WYNN Cons Discr 11 48
Regions Financial Corp. RF Financials 11 63
American Int'l. Group AIG Financials 10 25
Washington Post WPO Cons Discr 10 12
Zions Bancorp ZION Financials 10 87
Huntington Bancshares HBAN Financials 9 62
International Paper IP Materials 9 3
S&P 500 Average 1 10
Return (%)
Company Name Ticker Sector 1-week YTD
Massey Energy Co. MEE Energy (13) 10
Forest Laboratories FRX Health Care (11) (13)
Tesoro Corp. TSO Energy (8) (2)
Monster Worldwide MWW Info Tech (6) (9)
Penney (J.C.) JCP Cons Discr (5) 18
IntercontinentalExchange Inc. ICE Financials (5) (5)
WellPoint Inc. WLP Health Care (4) 7
D. R. Horton DHI Cons Discr (4) 11
Johnson Controls JCI Cons Discr (4) 18
Aetna Inc. AET Health Care (4) 6
S&P 500 Average 1 10
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April 9, 2010 United States: Portfolio Strategy
Goldman Sachs Global Economics, Commodities and Strategy Research 7
Earnings and Sales
Exhibit 10: EARNINGS GROWTH: S&P 500 bottom-up consensus estimatesas of April 8, 2010
Exhibit 11: SALES GROWTH: S&P 500 bottom-up consensus estimatesas of April 8, 2010
Source: FactSet, and Goldman Sachs Global ECS Research. Source: FactSet, and Goldman Sachs Global ECS Research.
Exhibit 12: TOP-DOWN vs. BOTTOM-UP: Goldman Sachs vs. Consensus
as of April 8, 2010
Exhibit 13: REVISIONS: S&P 500 consensus EPS revisions
as of April 8, 2010
Source: FactSet, and Goldman Sachs Global ECS Research. Source: FactSet, and Goldman Sachs Global ECS Research.
2010E Earnings Per Share Growth Annual
1QE 2QE 3QE 4QE 2010E 2011E
Financials 548 256 181 171 232 49
Energy 1492 68 40 42 86 27
Materials 164 107 30 33 68 29
Consumer Discretionary 795 37 15 7 44 18
Information Technology 82 57 36 11 39 14
S&P 500 70 37 29 27 38 21
Utilities 8 9 6 24 11 4
Health Care (4) 4 4 25 7 10Consumer Staples 7 4 4 4 5 10
Industrials (4) (3) 22 4 4 18
Telecom Services (11) (6) 3 12 (1) 10
S&P 500 (ex-Financials) 52 24 18 16 25 16
2010E Sales Per Share Growth Annual
1QE 2QE 3QE 4QE 2010E 2011E
Energy 38 33 27 24 30 13
Materials 15 20 7 7 12 7
Information Technology 9 12 9 5 9 7
S&P 500 5 8 7 6 7 7
Health Care 2 3 0 4 2 4
Consumer Staples 1 2 2 3 2 5
Consumer Discretionary (5) 3 3 1 0 6
Industrials (6) (2) 4 2 (1) 5Telecom Services (3) (3) (2) (1) (2) 1
Contribution to EPS Annual earnings growth rates
GS Top-Down EPS Bottom-up GS Top-Down Bottom-Up
2010E 2011E 2010E 2011E 2010E 2011E 2010E 2011E
Energy $10 $15 $10 $12 93 % 45 % 86 % 27 %
Materials 2 3 2 3 69 15 68 29
Telecom Services 3 3 2 2 32 1 (1) 10
Consumer Discretionary 5 5 7 8 5 5 44 18
Utilities 3 4 3 4 15 1 11 4
Information Technology 11 12 14 16 7 10 39 14
Industrials 7 8 7 8 6 16 4 18
Health Care 12 13 12 13 10 4 7 10
Consumer Staples 9 9 9 10 4 3 5 10
S&P 500 ex-Financials 63 71 67 77 18 13 25 16
Financials Operating EPS 12 19 12 17 251 54 232 49
S&P 500 Operating EPS $76 $90 $78 $95 33 % 20 % 38 % 21 %
+ Provisions & Writedowns 5 1 NA NA (63) (82) NA NA
S&P 500 EPS ex-P&W 81 91 NA NA 13 13 NA NA
75
76
77
78
79
80
31-Dec
31-Jan
28-Feb
31-Mar
30-Apr
ConsensusBottom-Up
$78
GoldmanSachs
$76
S&P 500 2010E EPS
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April 9, 2010 United States: Portfolio Strategy
Goldman Sachs Global Economics, Commodities and Strategy Research 8
Revisions
Exhibit 14: EARNINGS and SALES REVISIONSAggregate dollars % change, as of April 8, 2010
Exhibit 15: Stocks with the most POSITIVE and NEGATIVE EPS REVISIONSas of April 8, 2010
Source: FirstCall, I/B/E/S, FactSet, and Goldman Sachs Global ECS Research. Source: FirstCall, I/B/E/S, FactSet, and Goldman Sachs Global ECS Research.
Exhibit 16: S&P 500 1-Month Earnings Revisions Sentiment
as of April 8, 2010
Exhibit 17: 1-Month Earnings Revision Sentiment by SECTOR
as of April 8, 2010
Source: FirstCall, I/B/E/S, FactSet, and Goldman Sachs Global ECS Research. Source: FirstCall, I/B/E/S, FactSet, and Goldman Sachs Global ECS Research.
EPS REVISIONS SALES REVISIONS1 month 3 month 1 month 3 month
10E 11E 10E 11E 10E 11E 10E 11E
Information Technology 1.1 % 1.2 % 8.9 % 7.7 % 0.8 % 0.9 % 5.8 % 6.4 %
Consumer Discretionary 0.7 0.9 6.7 4.3 (0.2) 0.8 1.4 1.8
Industrials 0.4 0.9 2.8 3.3 0.3 0.2 1.0 1.6
Materials 0.2 (0.3) 3.8 2.7 0.6 0.1 4.3 2.9
Health Care (0.1) (0.1) (0.6) (0.6) 0.1 (0.1) 1.0 0.8
Telecommunication Services (0.1) 0.0 (4.7) (5.8) 0.0 (0.1) 0.1 (0.2)
Consumer Staples (0.1) (0.0) 0.0 (0.1) 0.2 (0.3) 0.8 1.0
Utilities (0.3) (0.5) (1.7) (2.6) NM NM NM NM
S&P 500 (0.3) (0.1) 1.6 1.0 0.5 0.4 2.0 0.4
Financials (1.8) (0.8) (2.4) (1.7) NM NM NM NM
Energy (2.6) (2.1) (1.3) (2.3) 1.9 1.1 2.6 (5.7)
POSITIVE EPS REVISIONS NEGATIVE EPS REVISIONS1 month 3 month 1 month 3 month
Ticker Revis. Return Revis. Return Ticker Revis. Return Revis. Return
MU 55 % 10 % 68 % (5)% DFS (27)% 9 % (30)% 3 %
LEN 55 0 69 8 HIG (24) 6 (19) 9
CMA 29 13 65 26 GT (23) (5) (61) (19)
AMD 27 9 70 (0) ETFC (22) 2 (389) (6)
CLF 26 22 100 38 C (20) 26 (61) 25
DHI 18 (7) NM (1) COG (18) (7) (16) (16)
NSM 13 (1) 14 (4) SUN (16) 5 (39) 4
X 11 9 (63) 1 XL (16) (0) (11) 6
ODP 11 5 67 15 APC (14) 3 9 9
WYNN 9 25 24 27 RRC (12) (4) (8) (10)
S&P 500 (0)% 4 % 2 % 4 % (0)% 4 % 2 % 4 %
(30)%
(20)%
(10)%
0 %
10 %
20 %
30 %
(60)%
(40)%
(20)%
0%
20%
40%
60%
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
S&P500Mo
nthly%
Return
1-MonthRe
visionSentiment
1-Month 2010 EPS Revision Sentiment (lhs)[(# pos. revisions - # neg. revisions)/ total revisions]
Price Performance (rhs)
S&P 500
(20)%
(15)%
(10)%
(5)%
0 %
5 %
10 %
15 %
20 %
25 %
ConsumerDiscr
Industrials
InfoTech
Materials
S&P500
ConsumerStaples
HealthCare
TelecomS
ervices
Financials
Utilities
Energy
Earnin
gsSentiment
1-Month Earnings Revision Sentiment by Sector[(# pos. revisions - # neg. revisions)/ total revisions]
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April 9, 2010 United States: Portfolio Strategy
Goldman Sachs Global Economics, Commodities and Strategy Research 9
Valuation
Exhibit 18: Aggregate valuation metrics for S&P 500 and sectorsbottom-up consensus valuation, as of April 8, 2010
Exhibit 19: Standard deviation vs. 10-year history (Z-Score)bottom-up consensus, as of April 8, 2010
Source: Compustat, FirstCall via FactSet, and Goldman Sachs Global ECS Research. Source: Compustat, FirstCall via FactSet, and Goldman Sachs Global ECS Research.
Exhibit 20: Historical NTM P/E and LTM P/B values for the S&P 500aggregate bottom-up consensus valuation, as of April 8, 2010
Exhibit 21: Top stocks by fastest 2010 earnings growth and lowest NTM P/Eby sector, as of April 8, 2010
Source: Compustat, FactSet, and Goldman Sachs Global ECS Research. Source: Compustat, FactSet, and Goldman Sachs Global ECS Research.
EV/
Sales
EV/
EBITDA
Price/
Book
FCF
Yield
PEG
Ratio
NTM
P/E
S&P 500 1.5x 8.8x 2.5x 6.2 % 1.4x 15.1x
Materials 1.5 10.5 3.0 4.9 1.8 17.9
Industrials 1.9 11.7 3.0 7.1 1.7 17.7
Consumer Discretionary 1.3 8.4 2.9 8.2 1.2 16.9
Financials NM NM 1.4 NM 2.0 16.8
Information Technology 2.3 10.5 4.2 6.3 1.1 15.5
Telecommunication Services 1.8 5.3 1.7 13.3 3.1 14.8
Consumer Staples 1.2 9.2 3.7 6.4 1.6 14.7
Energy 1.0 7.8 2.2 1.2 1.0 13.4
Health Care 1.2 8.2 2.9 7.7 1.3 12.1
Utilities NM 7.0 1.5 2.8 2.8 12.1
EV/
Sales
EV/
EBITDA
Price/
Book
FCF
Yield P/E
PEG
Ratio
Median
Z-Score
S&P 500 (0.8) (0.9) (0.8) (1.3) (0.7) 0.7 (0.8)
Health Care (1.7) (1.6) (1.1) (0.7) (1.7) (0.5) (1.3)
Consumer Staples 1.0 (0.3) (0.7) (0.1) (0.8) (1.1) (0.5)
Telecommunication Services (1.2) (0.8) (0.1) (0.8) (0.1) 1.4 (0.5)
Information Technology 0.1 (0.9) 0.9 (0.0) (1.3) (1.2) (0.4)
Utilities NM (0.5) (0.1) NM 0.1 1.3 (0.0)
Consumer Discretionary 2.3 0.4 2.6 (1.4) (0.2) (0.7) 0.1
Energy (0.3) 1.6 (0.4) 1.3 1.2 (0.5) 0.4Materials 1.1 0.8 1.5 0.6 0.7 0.1 0.8
Industrials 0.8 1.2 1.5 0.7 2.1 2.1 1.3
Financials NM NM (1.0) NM 1.3 2.2 1.3
2.5
012
345
6
1/76 1/79 1/82 1/85 1/88 1/91 1/94 1/97 1/00 1/03 1/06 1/09
LTMP/B(x)
10-yr rolling avg
P/B
15.1
0
5
10
15
20
25
30
1/76 1/79 1/82 1/85 1/88 1/91 1/94 1/97 1/00 1/03 1/06 1/09
NTMP/E(x)
10-yr rolling avg
P/E
GROWTH ALUEFastest EPS Growth (%) Lowest P/E (x)
Sector Ticker 2010E 2011E Ticker NTM Rel to SPX
Cons Discr CBS 88 20 GCI 8.6 0.6
Consumer Staples WFMI 63 13 SVU 8.4 0.6
Energy HES 82 35 CHK 8.3 0.6
Financials HIG 78 38 AIG 8.2 0.5
Health Care ESRX 38 27 FRX 7.7 0.5
Industrials RHI 85 NM PBI 10.3 0.7
Info Tech ALTR 92 7 WDC 6.5 0.4
Materials IP 68 40 FCX 11.0 0.7
Telecom Services FTR 59 1 CTL 11.1 0.7
Utilities PPL 70 (4) PPL 8.2 0.5
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April 9, 2010 United States: Portfolio Strategy
Goldman Sachs Global Economics, Commodities and Strategy Research 10
S&P 500 Factor Performance
Exhibit 22: S&P 500 factor return ranking for the week ended April 8, 2010 (a)
(a) Factor return analysis uses S&P 500 companies included in the Goldman Sachs Americas coverage universe with stock prices greater than $5 at the time of publication.
(b) Growth, Value and Profitability analysis is based on Goldman Sachs Investment Profile scores (IP Scores). Growth, value and profitability metrics are indexed based on composites of several methodologies todetermine the stocks percentile ranking within the regions coverage universe. The precise calculation of each metric may vary depending on the fiscal year, industry and region but the standard approach is as
follows: Growth is a composite of next years estimate over current years estimate, e.g. EPS, EBITDA, Revenue. Return is a year one prospective aggregate of various return on capital measures, e.g. CROCI,
ROACE, and ROE. Multiple is a composite of one-year forward valuation ratios, e.g. P/E, dividend yield, EV/FCF, EV/EBITDA, EV/DACF, Price/Book.
(c) Other metric analysis based on current market prices and data sourced from NASDAQ and NYSE via FactSet.
Source: NASDAQ and NYSE via FactSet, IDC, and Goldman Sachs Global ECS Research.
Last Week Spread (%) Performance Spread of Top Quintile Less Bottom Quintile (%)
Last Last Five Trading Days Last Last
Growth Metrics(b) Week 2-Apr 5-Apr 6-Apr 7-Apr 8-Apr Month Quarter
EPS Growth 1.8 0.0 0.8 0.5 (0.1) 0.6 2.0 3.2
GROWTH 1.1 0.0 0.7 0.4 (0.3) 0.3 1.2 3.1
EBITDA Growth 1.1 (0.1) 0.6 0.6 (0.2) 0.2 1.5 2.3
Sales Growth 0.4 (0.2) 0.5 0.3 (0.3) 0.1 0.7 (0.3)
Value Metrics(b)
EV/FCF 1.4 0.5 0.1 0.9 (0.6) 0.5 0.6 2.8
VALUATION 1.1 (0.5) 0.1 0.8 (0.0) 0.8 2.7 10.1
P/E 1.1 (0.2) 0.3 0.5 (0.2) 0.6 3.3 9.1
P/B 0.9 (0.7) (0.1) (0.1) 0.8 0.9 2.9 9.8
P/div 0.6 (0.1) 0.7 (0.2) 0.2 0.1 0.8 0.9
EV/EBITDA 0.2 (0.7) 0.0 0.6 (0.2) 0.5 2.5 7.6
EV/DACF 0.1 (0.7) (0.2) 0.7 0.0 0.3 2.7 6.4
Profitability Metrics(b)
CROCI (0.1) (0.5) 0.0 (0.6) 0.8 0.1 0.4 0.9
PROFITABILITY (0.4) (0.8) 0.1 (0.8) 1.2 (0.1) (0.6) 1.3
ROCE (0.4) (0.8) 0.3 (0.7) 0.8 (0.1) (0.0) 2.3
ROE (0.7) (0.6) (0.4) (0.9) 1.0 0.3 (0.3) 1.2
Other Metrics(c)
Short Interest Level 1.7 0.0 1.3 0.5 0.1 (0.3) 3.7 6.3
Equity Capitalization (0.4) 0.0 (0.8) (0.3) 0.3 0.5 (0.8) (1.9)
(1) 0 1 2
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April 9, 2010 United States: Portfolio Strategy
Goldman Sachs Global Economics, Commodities and Strategy Research 11
Style and Size
Exhibit 23: Total return by style and size over timeas of April 8, 2010
Exhibit 24: Total return by SECTOR for S&P 500 vs. Russell 2000as of April 8, 2010
Source: FactSet, and Goldman Sachs Global ECS Research. Source: FactSet, and Goldman Sachs Global ECS Research.
Exhibit 25: GROWTH vs. VALUE relative performance over timeRussell 1000 Growth vs. Value, as of April 8, 2010
Exhibit 26: LARGE CAP vs. SMALL CAP relative performance over timeS&P 500 vs. Russell, as of April 8, 2010
Source: FactSet, and Goldman Sachs Global ECS Research. Source: FactSet, and Goldman Sachs Global ECS Research.
Total Return Percentage Change (%)1-Week 1-Month 3-Month 6-Month YTD
Large Cap vs. Small Cap
S&P 500 1 4 4 12 7
Russell 2000 2 5 9 16 12
Large vs. Small (bps) (155) (66) (476) (341) (526)
Growth vs. Value
Russell 1000 Growth 0 4 4 13 6
Russell 1000 Value 1 5 5 13 9
Growth vs. Value (bps) (72) (172) (128) 76 (346)
Weight (%) 1-Week (% Return) YTD (% Return)Sector SP500 R2000 SP500 R2000 (bps) SP500 R2000 (bps)
Telecom Services 3 1 0 (0) 36 (3) (2) (87)
Financials 17 21 2 3 (66) 15 15 (50)
Utilities 3 3 (0) 1 (97) (2) 4 (664)
Information Tech 19 18 1 2 (118) 3 9 (604)
Industrials 10 15 1 2 (145) 14 9 535
Cons Discretionary 10 15 2 3 (149) 13 23 (984)
Materials 4 5 1 3 (182) 6 11 (515)
Health Care 12 14 (1) 1 (184) 3 10 (664)
Consumer Staples 11 3 (1) 1 (207) 5 10 (428)
Energy 11 5 1 4 (230) 4 10 (665)
Index 100 100 1 2 (155) 7 12 (526)
85
90
95
100
105
110
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Value outperforming
Growth outperforming85
87
89
91
93
95
97
99
101
103
105
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
S&P 500 outperforming
Russell 2000 outperforming
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April 9, 2010 United States: Portfolio Strategy
Goldman Sachs Global Economics, Commodities and Strategy Research 12
Global Equity Market and Mutual Fund Performance
Exhibit 27: GLOBAL EQUITY MARKET performance over the past weekas of April 8, 2010
Exhibit 28: US EQUITY MUTUAL FUND performance vs. benchmarkas of April 8, 2010
Source: FactSet and Goldman Sachs Global ECS Research. Source: Lipper, Factset, and Goldman Sachs Global ECS Research.
Exhibit 29: GLOBAL EQUITY MARKET performance over timeas of April 8, 2010
Exhibit 30: International and other MUTUAL FUND performanceas of April 8, 2010
Source: FactSet, and Goldman Sachs Global ECS Research. Source: Lipper, FactSet, and Goldman Sachs Global ECS Research.
(3)
(2)
(2)
(1)(1)
0
0
1
1
1
2
1
(3) (2) (1) 0 1 2 3
France (CAC 40)
Germany (Dax)
Europe (DJ Stoxx 600)
Spain (IBEX 35)
UK (FTSE 100)
Brazil (Bovespa)
Japan (Nikkei)
U.S. (S&P 500)
Korea (KOSPI)
Australia (ASX 200)
Mexico (Bolsa)
China (MSCI China)
% Weekly price change
Avg. Total Return (%) Stdev No. of AUM
Lipper Indices 1-week YTD 1-Week YTD Funds $ bil
Large-Cap Core Funds 0.7 6.4 0.5 1.7 30 259
Benchmark: S&P 500 0.8 7.0
Out / (Underperformance) (bps) (2) (55)
Large-Cap Growth Funds 0.9 6.1 0.4 1.5 30 254
Benchmark: Russell 1000 Growth 0.5 5.7
Out / (Underperformance) (bps) 41 37
Large-Cap Value Funds 0.8 7.5 0.4 1.5 30 227Benchmark: Russell 1000 Value 1.2 9.2
Out / (Underperformance) (bps) (44) (168)
Small-Cap Core Funds 1.7 10.5 0.5 2.3 29 NA
Benchmark: Russell 2000 2.3 12.2
Out / (Underperformance) (bps) (59) (172)
Price Return (%) USD
1-Week 1-Month 3-Month 2010 YTD 2009
Mexico (Bolsa) 1 7 6 11 52
Korea (KOSPI) 1 5 3 7 62
U.S. (S&P 500) 1 4 4 6 23
Japan (Nikkei) 0 2 3 6 16
Australia (ASX 200) 1 4 1 4 69
Brazil (Bovespa) 0 5 (1) 2 144
China (MSCI China) 2 5 (0) 2 63
UK (FTSE 100) (1) 3 (1) (0) 37
Europe (DJ Stoxx 600) (2) 1 (4) (2) 32
Germany (Dax) (2) 3 (5) (4) 28
France (CAC 40) (3) (0) (8) (6) 26
Spain (IBEX 35) (1) (2) (15) (14) 34
Average (0) 3 (1) 1 49
Avg. Total Return (%) Stdev No. of AUM
Lipper Indices 1-week YTD 1-week YTD Funds $ bil
International Equity
Global Funds (0) 4 0.7 2.4 30 183
International Funds (1) 3 0.4 2.5 30 394
European Funds (1) 1 0.5 2.9 10 19
Emerging Market Funds 1 6 0.3 1.4 29 NA
Real Estate and Natural Resources
Real Estate 2 12 0.5 1.5 30 39
Natural Resource 1 4 0.5 1.7 9 NA
Fixed Income
General U.S. Government Funds Index (0) 1 0.2 0.5 29 NA
A Rated Bond Funds Index 0 2 0.1 1.0 29 NA
BBB Rated Funds Index 0 3 0.1 1.4 30 NA
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Fund Flows
Exhibit 32: Domestic equity mutual fund flows, 4-week moving averageweek ended April 7, 2010
Exhibit 33: Weekly mutual fund flows and assets tracked by AMGWeek ended April 7, 2010; excluding ETFs
Source: Compustat, FactSet, and Goldman Sachs Global ECS Research. Source: Compustat, FactSet, and Goldman Sachs Global ECS Research.
Exhibit 34: Average daily TRADING TURNOVER over the last weekby sector, as of April 8, 2010
Exhibit 35: Top ten S&P 500 STOCKS by daily average trading turnoveras of April 8, 2010
Daily average turnover = daily avg t rading value / avg market cap (over the past 5 trading days).Daily average turnover = daily avg t rading value / avg market cap (over the past 5 trading days).
Source: Compustat, FactSet, and Goldman Sachs Global ECS Research. Source: Compustat, FactSet, and Goldman Sachs Global ECS Research.
(10.0)
(8.0)
(6.0)(4.0)
(2.0)
0.0
2.0
4.0
6.0
8.0
10.0
Jan-92
Jan-94
Jan-96
Jan-98
Jan-00
Jan-02
Jan-04
Jan-06
Jan-08
Jan-10
$billions
Domestic Equities, 4-week moving avg
AMG Weekly Mutual Fund Flows, ex-ETFs ($ billions)
Total AMG Weekly Flows 1-Week Flow Inflow/(Outflow)
Assets 4-Week Avg This week % of Assets (Cons. Weeks)
All Equity 1,745 0.9 1.2 0.1 % 7
U.S. Equity 1,311 0.5 0.6 0.0 2
Int'l Equity 311 0.3 0.5 0.2 1
Global 123 0.0 0.0 0.0 2
Equity Income 79 0.1 0.3 0.4 7
Gold & Nat Res 28 0.1 0.1 0.3 1
Money Market 2,690 (27.3) (14.3) (0.5) (13)
All Bonds 879 3.3 3.5 0.4 56
Govt Treasury 18 0.3 0.0 0.2 26
0.5
0.7
0.7
0.7
0.7
1.0
1.0
1.1
1.2
1.9
0.9
0.0 1.0 2.0
Cons Staples
Utilities
Health Care
Industrials
Telecom Services
S&P 500
Energy
Info Tech
Financials
Cons Discr
Materials
% Daily Avg Trading Turnover
Avg Daily 1-Week
Trading Total
Company Ticker Sector Turnover (%) Return (%)
Massey Energy Co. MEE Energy 28.1 (13)
American Int'l. Group AIG Financials 19.4 10
United States Steel Corp. X Materials 12.0 1
AK Steel AKS Materials 9.7 2Eastman Kodak EK Consumer Discretionary 9.4 28
Tesoro Corp. TSO Energy 6.1 (8)
Micron Technology MU Information Technology 5.1 4
Abercrombie & Fitch ANF Consumer Discretionary 4.7 1
Forest Laboratories FRX Health Care 4.4 (11)
Zions Bancorp ZION Financials 4.4 10
S&P 500 Average 1.3 1
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Risk and Dispersion
Exhibit 36: Goldman Sachs Risk BarometerIndex is number of standard deviations from the average * 100
Exhibit 37: VIX Volatility Indexas of April 8, 2010
Note: Metrics included are implied option volatility (S&P 500 and NASDAQ 100), normalized skew, highyield credit spreads, credit derivative swap spreads, mutual fund net flows, and cash levels.
Source: Goldman Sachs Global ECS Research. Source: Goldman Sachs Global ECS Research.
Exhibit 38: S&P 500 stock and sector average correlationas of April 8, 2010
Exhibit 39: Credit Default Swaps, 5-Year On-the-run Spreadsas of April 8, 2010
Source: Goldman Sachs Global ECS Research. Source: Goldman Sachs Global ECS Research.
(300)
(200)
(100)
0
100
200
300
400
Dec-94
Nov-95
Nov-96
Nov-97
Nov-98
Nov-99
Nov-00
Nov-01
Nov-02
Nov-03
Nov-04
Nov-05
Nov-06
Nov-07
Nov-08
Nov-09
Nov-10
Risk Aversion
Increasing
Risk AversionDecreasing
8-Apr-10
0
15
30
45
60
75
90
Jan-90
Jan-92
Jan-94
Jan-96
Jan-98
Jan-00
Jan-02
Jan-04
Jan-06
Jan-08
Jan-10
Jan-12
81All time hig h on 20-Nov-08
16
8-Apr-10
0.72
0.37
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Dec-89
Dec-90
Dec-91
Dec-92
Dec-93
Dec-94
Dec-95
Dec-96
Dec-97
Dec-98
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
AverageCorrelation
Average stock correlation
Average sector correlation
(200)
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
0
50
100
150
200
250
300
Oct-07
Dec-07
Feb-08
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
HighYiel
dCDX(bps)
InvestmentGra
deCDX(bps)
CDX (IG) (lhs)
CDX (HY) (rhs)
A il 9 2010 U i d S P f li S
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Goldman Sachs Recommendations and Forecasts
Exhibit 40: Goldman Sachs Recommended Sector Weightings (a)as of April 8, 2010
Exhibit 41: Goldman Sachs US Economics quarterly GDP forecastsas of April 8, 2010
(a) Sector weightings last rebalanced December 7, 2009.
Source: Goldman Sachs Global ECS Research. Source: Goldman Sachs Global ECS Research.
Exhibit 42: Goldman Sachs COMMODITY and CURRENCY forecastsas of April 8, 2010
Exhibit 43: Goldman Sachs US Economics forecastsas of April 8, 2010
Source: Goldman Sachs Global ECS Research. Source: Goldman Sachs Global ECS Research.
Sector WeightingsTotal Goldman Sachs Current GS GS
Return Recommended S&P 500 Overweight / Alpha
Sectors YTD Sector Weightings Weight Underweight YTD
Information Technology 3 % 19 % 300 bp (11)bp
Energy 4 11 300 (9)
Materials 6 4 200 (2)
Consumer Staples 5 11 0 0
Industrials 14 10 0 0
Financials 15 17 0 0
Telecom Services (3) 3 (100) 9
Consumer Discretionary 13 10 (200) (12)
Utilities (2) 3 (200) 17
Health Care 3 12 (300) 12
S&P 500 7 % 100 % 0 bp 4 bp
Overweight
Neutral
Underweight
2.52.0
1.5 1.5
2.53.0
3.5 3.5
0.0 %
0.5 %
1.0 %
1.5 %
2.0 %
2.5 %
3.0 %
3.5 %
4.0 %
Q1E Q2E Q3E Q4E Q1E Q2E Q3E Q4EUSGDP
Growth(qoqannualized%)
2010 2011
Forecasts
units Current 3m 6m 12m
Energy
WTI Crude Oil $/bbl 85.39 92.00 97.00 96.50
NYMEX Nat. Gas $/mmBtu 3.91 5.50 5.50 6.00
RBOB Gasoline $/gal 2.32 2.44 2.50 2.39
MetalsLME Copper $/mt 7892 7850 8045 7825
London Gold $/troy oz 1153 1260 1315 1390
London Silver $/troy oz 17.98 21.00 21.90 23.20
Currencies
Euro / US Dollar EUR/$ 1.34 1.35 1.35 1.35
US Dollar / Yen $/ 93.1 92.0 94.0 98.0
Sterling / US Dollar /$ 1.52 1.55 1.61 1.61
% Annual Change2009A 2010E 2011E
Real GDP (2.4)% 2.5% 2.4%
Consumer Spending (0.6) 1.9 1.4
Total Fixed Investment (18.4) (3.5) 4.1
Business Fixed Investment (17.8) (3.5) 2.3
Residential Investment (20.5) (3.7) 10.9
Federal Government Spending 5.2 5.2 4.1Exports of Goods and Services (9.6) 12.2 7.5
Imports of Goods and Services (13.9) 7.9 2.5
Core CPI 1.7 0.8 0.1
Unemployment Rate 9.3 9.8 10.1
Fed Funds Rate 0.1 0.2 0.2
2-year Treasury Rate 0.9 0.9 2.0
10-year Treasury Rate 3.8 3.3 4.0
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Constituents of High Sharpe Ratio Basket
Exhibit 47: High Sharpe Ratio Basketas of April 8, 2010
Source: Compustat, FactSet and Goldman Sachs Global ECS Research.
6-Mo Expected 6-Mo Expected
Current Expected Implied Return / Current Expected Implied Return /Rating Price Return Vol Implied Vol Rating Price Return Vol Implied Vol
Consumer Discretionary Industrials
Apollo Group APOL NC $63.00 26 % 38 % 0.67 Iron Mountain Inc. IRM NC $26.52 29 % 24 % 1.23
Kohl's Corp. KSS Buy 56.63 15 25 0.58 Donnelley (R.R.) & Sons RRD NC 22.54 20 27 0.74
Gannett Co. GCI NC 17.79 23 43 0.52 Snap-On Inc. SNA NC 44.58 16 27 0.60
Target Corp. TGT Neutral 55.64 8 23 0.36 Fluor Corp. FLR Neutral 49.74 8 30 0.27
Comcast Corp. CMCSA Not Rated 18.43 6 27 0.21 Equifax Inc. EFX NC 35.60 2 23 0.09
Consumer Staples Information Technology
Wal-Mart Stores WMT Buy $55.38 12 % 17 % 0.72 McAfee Inc. MFE Neutral $39.74 21 % 26 % 0.78Altria Group, Inc. MO Neutral 20.68 10 16 0.63 Compuware Corp. CPWR NC 8.50 21 34 0.61
Molson Coors Brewing Co. TAP Neutral 43.05 12 23 0.53 Intel Corp. INTC Neutral 22.31 15 27 0.56
Kroger Co. KR CS 22.38 10 23 0.44 Hewlett-Packard HPQ Buy 53.63 11 23 0.48
Dean Foods DF Neutral 16.66 8 30 0.25 Yahoo Inc. YHOO Neutral 17.35 10 27 0.36
Coca-Cola Enterprises CCE Not Rated 28.03 (5) 20 (0.27) Novell Inc. NOVL NC 5.86 8 31 0.25
Xerox Corp. XRX NC 10.42 6 31 0.18
Energy MEMC Electronic Material WFR NC 15.64 6 46 0.13
Chesapeake Energy Corp. CHK Neutral $24.11 43 % 36 % 1.19 Electronic Arts ERTS CS 19.19 (3) 35 (0.07)
Southwestern Energy SWN Buy* 40.74 39 39 1.00
Range Resources Corp RRC NC 48.33 33 36 0.93 MaterialsHalliburton Co. HAL Buy* 31.66 30 34 0.89 Pactiv Corp. PTV Buy $25.69 21 % 28 % 0.74
El Paso Corp. EP Neutral 11.43 25 33 0.76 Owens-Illinois Inc OI Buy 37.59 6 34 0.18
XTO Energy XTO Neutral 47.75 10 19 0.53
Telecommunication Services
Financials AT & T Inc. T Buy $26.02 13 % 19 % 0.70
Chubb Corp. CB Neutral $51.67 15 % 20 % 0.77 MetroPCS Communication PCS Neutral 7.40 8 49 0.17
State Street Corp. STT Neutral 46.38 20 30 0.68
JPMorgan Chase & Co. JPM Buy* 45.76 16 27 0.58 Utilities
Marsh & McLennan MMC Neutral 24.21 9 21 0.43 AES Corp. AES NC $11.28 54 % 39 % 1.37
NASDAQ OMX Group NDAQ Buy* 21.71 11 28 0.38 Allegheny Energy AYE Not Rated 23.02 11 20 0.57Allstate Corp. ALL Sell 33.10 6 23 0.28
Northern Trust Corp. NTRS Neutral 57.82 3 24 0.12
Health Care
Gilead Sciences GILD Neutral $45.82 21 % 25 % 0.83
Baxter Internat ional Inc . BAX Neutral 57.70 15 20 0.75
Cephalon Inc CEPH Buy 66.78 16 27 0.58
Tenet Healthcare Corp. THC Buy* 5.95 24 48 0.51
Amgen AMGN Buy 60.52 13 27 0.49 Basket Median 13 % 27 % 0.55
Boston Scientific BSX Sell* 6.98 13 45 0.30 S&P 500 Median 7 % 28 % 0.26
April 9, 2010 United States: Portfolio Strategy
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Recent US Portfolio Strategy
Please contact your Goldman Sachs salesperson for access to additional research or if you wish to be added to the US Portfolio
Strategy research distribution list.
Exhibit 48: Recent research from US Portfolio Strategy
Source: Goldman Sachs Global ECS Research.
Latest Market Research Publication Date
US Thematic Views: GARP Update April 1, 2010
US Sector Views: Global vs. Domestic tug-of-war within the US equity market March 25, 2010
US Portfolio Strategy: Using Sharpe Ratios to enhance fund returns March 19, 2010
US Equity Views: 4Q Earnings preview: Earnings rise, sales trough, margins expand January 19, 2010US Portfolio Strategy 2010 Outlook: Cyclical start; defensive finish December 7, 2009
Franchise Research Publication Date
Global Dividend Swap Monitor: Updating our bottom-up dividend forecasts following the results season April 1, 2010
Global Portfolio Strategy: Macro Conference - Asia 2010: Takeaways February 12, 2010
Global Portfolio Strategy: The New BRICS Nifty 50 - EM and DM Baskets November 4, 2009
Periodical Research Description Frequency Timing / Recent ReleaseHedge Fund Trend Monitor Analysis of hedge fund holdings and positioning Quarterly February 22, 2010
S&P 500 Beige Book Qualitative assessment of S&P 500 quarterly earnings reports Quarterly February 5, 2010
Strategy Baskets Overview of US Portfolio Strategy thematic baskets Quarterly August 19, 2009
US Monthly Chartbook Monthly report on where to invest in the S&P 500 Monthly April 6, 2010
US Weekly Kickstart Five minute guide to the US equity market Weekly Friday PM
Where to Invest Now Marketing presentation highlighting recent research and best trade ideas Monthly March 5, 2010
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