Credit Suisse - Near-term relief

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Research Weekly                                 19/06/2012

         ThyssenKrupp 4.375% 02/17
 Buy     in EUR
         Negative technical pressures to
                                                  Near-term relief for
         Republic of Argentina 7%
         10/15 in USD
         High carry protects against down-
                                                  risky assets

         AXA, Cisco Systems, Petro-
 Buy     bras (ADR), Saint-Gobain,
         Sberbank and Teva (ADR)
         Recent underperformers with fun-
         damentally intact investment

         2M Bullish Risk Reversal on
 Buy     WTI
         With higher implied volatilities and
         still-constructive oil fundamentals,
         we think extracting some yield
         while positioning for potential up-
         side looks attractive.

Tactical views                                  Tactical views                                  Tactical views
After the elections: Hel-                       Continue to focus on emer-                      Sentiment for equities to
las calling Brussels                            ging markets and high yield                     gradually improve post-
page 2                                          bonds page 2                                    Greek election page 3

Tactical views                                  Tactical views                                  Tactical views
Investing in volatility in                      EUR/USD to consolidate,                         Equity indices are lingering
commodities page 3                              SNB to continue buying for-                     at key technical levels
                                                eign currency page 3                            page 3

  Important disclosures are found in the Disclosure appendix. Credit Suisse does and seeks to do business with companies
  covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could af-
  fect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
  For a discussion of the risks of investing in the securities mentioned in this report, please refer to the following Internet link:
2    Tactical views                                                                                    19/06/2012     Credit Suisse - Research Weekly

                                                                              After the second round of elections in Greece, the chances of
    Tactical views                                                            a stable government being formed have increased markedly
                                                                              compared to the first round in May. The conservative New
    Near-term relief for                                                      Democracy (ND) party came in first place with 79 seats and
                                                                              also secured the extra 50 seats in the 300-strong parliament
    risky assets                                                              that are distributed to the strongest party. ND’s most likely co-
                                                                              alition partner, the socialist Pasok party, received 33 seats in
                                                                              parliament, giving both parties a relatively comfortable com-
                                                                              bined majority of 162 seats – 11 more than needed, and 13
                                                                              more than after the previous election. Antonis Samaras, leader
                                                                              of the ND, is currently in charge of trying to form a govern-
                                                                              ment that would optimally also include the Democratic Left,
                                                                              such that the governing coalition would represent not just the
                                                                              majority of seats in parliament but also a near majority of
                                                                              votes. The chances of this happening have increased since the
                                                                              Democratic Left gave up its demand that it would only join a
                                                                              government that included the second-placed radical-left party,
                                                                              Syriza. The latter has already made clear that it would not join
                                                                              a coalition government, and instead remain in opposition. In
                                                                              any case, the country does not have much time to lose, given
                                                                              that it will supposedly run out of cash by mid-July, and needs
                                                                              to start negotiations with the troika (EU, IMF and ECB) regard-
    Olivier P. Müller
                                                                              ing austerity measures. According to media reports, Greece, +41 44 333 01 46
                                                                              could ask for an extension of the time frame to implement the
                                             Investment horizon: 1-6 months   imposed austerity measures from two to four years.
    The Greek elections over the weekend saw a victory for the
    pro-austerity New Democracy party, which was certainly a re-
    lief for risky assets and their market liquidity, bringing near-
    term uncertainty and deadlock to an end. Given the upcoming
    macro events and data points this week (e.g. G–20 Summit
                                                                              Continue to focus on emer-
    now under way, FOMC meeting this Wednesday, EU leaders’                   ging markets and high yield
    Summit next week) and the time needed to form a govern-
    ment in Greece and make it operational, the underlying
    nervousness is certainly likely to continue for a few more                Sylvie Golay Markovich
    weeks. But we think that any policy action would be generally   , +41 44 334 54 37
    market positive. With this in mind, we present several new                                                        Investment horizon: 1-6 months
    trade recommendations in this issue of Research Weekly. In
    equities, we recommend investing in stocks which we think
                                                                              The results of the Greek elections have not brought any major
    look fundamentally intact, but which have performed poorly
                                                                              relief, with fixed income investors still awaiting a comprehens-
    and are poised to rebound, and our technical analyst flags that
                                                                              ive resolution for the Eurozone crisis. Spanish 10-year bond
    General Electric and CSX (a logistics company) look attractive.
                                                                              yields are trading above 7% at the time of writing. Still, strong
    In fixed income, we feature one bond in EUR from ThyssenK-
                                                                              safe-haven-flow demand is gradually abating, with German
    rupp, for which we expect technical selling pressures to abate,
                                                                              Bund yields rising since the beginning of the month. Still, this
    and one USD sovereign bond from Argentina with a high carry
                                                                              could also be partly driven by regulation changes for pension
    limiting downside risk. And in commodities, we feature a 2-
                                                                              funds in Northern Europe. The negative rate performance in
    month Bullish risk reversal on the WTI crude oil September
                                                                              EUR weighed on high quality bonds, with most investment
    2012 contract, which, at the same time, allows investors to ex-
                                                                              grade segments posting negative returns last week, while
    tract yield and be positioned for increasing oil prices.
                                                                              emerging market (EM) and high yield (HY) bonds performed
                                                                              positively. The next key event likely to bring more clarity about
                                                                              policy actions in Europe will be the EU leaders’ summit at the
                                                                              end of June. Until then, we expect credit and sovereign
                                                                              spreads to remain volatile. Still, given the strong corporate and
    After the elections: Hellas                                               EM sovereign fundamentals and our anticipation of a contin-
    calling Brussels                                                          ued recovery in the US economy, the default outlook should re-
                                                                              main benign, ultimately benefiting HY and EM bonds. In this re-
    Björn Eberhardt                                                           gard, we add two bonds to our Trading Corner, one issued by, +41 44 333 57 43                      Argentina and one by ThyssenKrupp.                 (19/06/2012)
                                             Investment horizon: 1-6 months
3    Tactical views                                                                                    19/06/2012    Credit Suisse - Research Weekly

    Sentiment for equities to                                                 policy action should help to support commodity prices, while at
                                                                              the same, see nervousness among participant remain high. In
    gradually improve post-Greek                                              this context, we reiterate our recommendation to take advant-
    election                                                                  age of the increased volatility environment to extract some
                                                                              yield, while at the same time, positioning for a potential move
    Olivier P. Müller                                                         higher once event risks are out of the way. Last week, we, +41 44 333 01 46                     showcased such a strategy for the gold market. This week, we
                                                                              take a closer look at the oil market.            (19/06/2012)
                                             Investment horizon: 1-6 months

    Corporate news flow – apart from financials, which are ex-
    posed to peripheral Europe – is fairly limited these days, and
    the next scheduled news flow is not set to take place until               EUR/USD to consolidate,
    early July when the Q2 reporting season starts in the US, with
    Alcoa traditionally the first to report. Corporate fundamentals
                                                                              SNB to continue buying for-
    look fairly solid as per corporate earnings for 2012E and                 eign currency
    2013E, which point to 11%–13% earnings growth for de-
                                                                              Marcus Hettinger
    veloped markets. Furthermore, with corporate cash still at a              Head of Global Forex Research
    55-year high, there is apparently a substantial amount of       , +41 44 333 13 63
    money waiting to be deployed, and valuation is supportive on
                                                                                                                     Investment horizon: 1-6 months
    several metrics and provides a cushion in the event of further
    earnings downgrades. While all these arguments support our
    positive strategic stance on equities (6–12+ month investment             We expect EUR/USD to consolidate around the 1.25 area
    horizon), investors do not seem to be focusing much on this,              ahead of key events this week. Rate spreads have narrowed,
    as the prevailing market drivers are now politics and macroeco-           and the significant rise in Spanish and Italian bond yields is
    nomic news flow. The Credit Suisse Investment Committee                   weighing on EUR/USD. However, net short positioning by tac-
    nevertheless upped its tactical view (1–6 month investment ho-            tical investors indicates that the market is vulnerable to positive
    rizon) to neutral on 7 June 2012 on the basis that most of the            surprises. While the EMU debt crisis remains in focus, the mar-
    bad news (Greece, Spanish banks, global economic soft                     ket may shift attention to the USA this week as the Fed will
    patch) is now discounted in stock prices. Thus, we have                   meet. Indications of further measures by the Fed to ease finan-
    moved from recommending investors remove underweights to                  cial conditions would likely see risky currencies and the EUR
    recommending they gradually (i.e. over time) build over-                  being supported, while the USD is then vulnerable to a liquida-
    weights. While minor dips remain likely, we think that the at             tion of long positions. We expect EUR/CHF to stay above
    least near-term favorable outcome of the Greek election could             1.20, but the SNB needs to continue intervening in the cur-
    lead to improving sentiment and money flows into equities.                rency market to provide CHF, which international and Switzer-
    Even so, event risk relating to upcoming macro and political              land based investors demand. Currency reserves are likely to
    events, data points and meetings are likely to keep volatility el-        grow further. Monday’s release of figures on banks’ sight de-
    evated. We would use potential weak spots as an opportunity               posits – an indication of intervention – showed an increase of
    to augment equity positions.                      (19/06/2012)            CHF 18 bn for the week ending 15 June.

    Investing in volatility in com-
    modities                                                                  Equity indices are lingering at
                                                                              key technical levels
    Karim Cherif, +41 44 334 56 39                          Pascal Zingg
                                                                    , +41 44 333 24 59
                                             Investment horizon: 1-6 months
                                                                                                                     Investment horizon: 1-6 months

    In the commodity space, optimism ahead of and after the
    Greek election was more short-lived, as most markets re-                  The S&P 500 Stock Market Index is currently lingering below
    traced earlier gains. We would, however, note that technical              key technical resistances, and the short-term picture has im-
    momentum in several markets – most notably in precious                    proved further compared to last week. The index continues to
    metals – has started to bottom, and from a technical perspect-            exhibit rising short-term momentum (shaded indicator) and the
    ive, this hints at some improvement. With the Eurozone struc-             medium-term momentum is in the early stage of a bottoming
    tural debt issues still unresolved, we expect further volatile and        process. A close above the 1360/65 key resistances is
    choppy trading sessions ahead. In the meantime, the focus                 needed to confirm further medium-term strength of the S&P
    this week will be once again on central bank policy, as the               500 Index. In addition, if the aforementioned resistances are
    FOMC will meet tomorrow Wednesday. Any hints of more                      broken, a quick rise toward 1400/1420 is likely to unfold.
4    Tactical views                                                                                    19/06/2012    Credit Suisse - Research Weekly

    Overall, the relative outperformance of US equities versus the
    MSCI World Stock Market Index is expected to continue, and           S&P 500 Index
    we reiterate our technical overweight recommendation for US          Bar chart with short-and medium-term momentum indicators
    stocks. Despite the potential for a global stock market recov-         0.0%

    ery, we remain cautious about European periphery countries.                                                                                 14 00

                                                                          23 .6%
    Finally, we advise investors to slightly increase their equity ex-                                                                          13 50
                                                                          38 .2%
    posure in selected stocks, which offer the potential of a early                                                                             13 00
                                                                          50 .0%
    technical-related medium-term momentum bottom scenario.               61 .8%
                                                                                                                                                12 50
                                                                                                                                                12 00

                                                                         10 0.0 %
                                                                                                                                                11 50

                                                                                                                                                10 00

                                                                                                                                                  50 0


                                                                                                                                                 -50 0

                                                                                                                                                -10 00

                                                                            No v     De c    2 012    Fe b   Mar    Apr   May     Jun     Jul

                                                                         Source: Metastock, Reuters
5     Fixed income trade recommendations                                                                                                                                 19/06/2012              Credit Suisse - Research Weekly

                                                                                                                               Argentina – local law bonds look attractive
    Fixed income trade recommendations                                                                                         Our negative view on Argentina seems properly reflected in
                                                                                                                               bond prices. Although medium-term challenges remain, pesific-
    Adding Boden 15s                                                                                                           ation rumors have exacerbated bond price volatility. This envir-
                                                                                                                               onment has generated opportunities for risk tolerant investors
    and TKAGR 17s to                                                                                                           looking for tactical trades. In this respect, Boden 15s look to
                                                                                                                               us to be the most attractively priced local law bond. The high
    the Trading Corner                                                                                                         carrying yield offers a buffer against potential setbacks. We im-
                                                                                                                               plement this trade with a stop-loss set at –3%. If global mar-
                                                                                                                               ket conditions remains positive and the Argentinean yield curve
                                                                                                                               normalizes, we would expect a high single-digit total return on
                                                                                                                               this position.

                                                                                                                               ThyssenKrupp – ratings downgrade leads to technical
                                                                                                                               selling pressure
                                                                                                                               Since the unexpected downgrade of ThyssenKrupp (TKAGR)
                                                                                                                               by S&P to BB, outlook Negative, TKAGR bonds have come
                                                                                                                               under pressure, dropping by several points. Current yields are
                                                                                                                               in the 4%–5% range depending on the maturity (equating to a
                                                                                                                               spread of Bunds+350–450 bp). While trading conditions for
                                                                                                                               the company lack visibility and the strategic about-turn in-
    Mariano Arrieta
                                                                                                                               volving the decision to exit the Americas steel business does, +41 44 332 92 83                                                                        little to instill confidence, we think current spread levels price
                                                                                                                               in much of the downside. In our view, the liquidity profile looks
    Michael Weber
    Head of Global Credit Research                                                                                             adequate and we note that the company may secure disposal, Tel. +41 44 333 54 25                                                                     proceeds that enable the company to lower its indebtedness
                                                                                                                               materially. We do, however, revise our fundamental profile to
                                                                     Investment horizon: 1-6 months
                                                                                                                               Stable from Positive. This reflects our expectation that near-
                                                                                                                               term trading conditions remain difficult, particularly in the
                   Republic of Argentina 7% 10/15 in USD                                                                       European steel activities, but balanced by continued efforts to
      Buy          High carry protects against downside.                                                                       review its diversified portfolio of activities with the aim of slim-
                                                                                                                               ming the portfolio and using disposal proceeds to de-leverage.
                   ThyssenKrupp 4.375% 02/17 in EUR
      Buy          Negative technical pressures to abate.

    New Fixed Income trade recommendation
    Rec.        ISIN                       Curr.       Security description Is-                Rating S&P /                     Vol.           Dura-          Stopp        Open                Open            Open             Target BM-
                                                       suer                                    Moody's / Fitch*                 (m)            tion           Loss         YTM /               clean           BM-              Spread ***
                                                                                                                                                                           YTC (%)             price**         Spread
    BUY         DE000A1MA9H4               EUR         TKAGR 4 3/8                             BB/Baa3/BBB-                     1,250          4.1            98           4.4                 99.61           400              325
                                                       02/28/2017 THYSSENK-
                                                       RUPP AG
    BUY         ARARGE03F144               USD         ARGBOD 7 10/03/2015                     NR/NR/B                          5,818          2.8            72           18.1                74.95           1766             1500
                                                       REPUBLIC OF ARGEN-
    *) e stands for expected rating while p stands for provisional rating, both are subject to receipt of final documentation; u stands for unsolicited rating **) Prices are indicative only and subject to normal market volatility. ***) BM
    stands for benchmark. BM spreads refer to the yield spread of the relevant government benchmark bond. For other open recommendations, please visit our intranet website. For a recap of open and closed trade recommenda-
    tions, please refer to your Relationship Manager
                                                                                                                                                                                                             Source: Bloomberg, Credit Suisse
6    Equity trade recommendations                                                                      19/06/2012    Credit Suisse - Research Weekly

                                                                              AXA has decided to shift capital to growth markets (organic
    Equity trade recommendations                                              and external growth). Additionally, AXA’s business profile is
                                                                              geared to both improving industry dynamics and financial mar-
    Rebound stocks                                                            kets. The timing risk clearly depends on the resolution of the
                                                                              EUR crisis. The stock trades at a significant valuation discount
                                                                              of more than 30% in terms of P/B. Despite the company’s
                                                                              peripheral assets, we believe the stock’s valuation is very at-
                                                                              tractive. AXA is probably our riskiest BUY recommendation in
                                                                              the insurance space.                             (18/06/2012)

                                                                              Cisco Systems
                                                                              Uwe Neumann
                                                                    , +41 44 334 56 45

                                                                                                                     Investment horizon: 1-6 months

                                                                              Cisco’s core switching and router divisions (currently 60% of
                                                                              product sales) are benefiting from a strong network/server up-
                                                                              grade cycle. However, its dominant market position has come
    Andreas Tomaschett                                                        under increasing competitive pressure, and the weakening eco-, +41 44 333 37 39                    nomic environment led to a lower growth outlook and a cut to
                                             Investment horizon: 1-6 months   the company’s earnings estimates. Cisco’s management is
                                                                              now guiding more rationally and took the right steps to adjust
                                                                              its business to a lower growth environment, which, in our view,
             AXA, Cisco Systems, Petrobras (ADR), Saint-                      makes the value case strong, especially as the stock has been
     Buy     Gobain, Sberbank and Teva (ADR)                                  underperforming recently, which in our view is unjustified.
             Recent underperformers with fundamentally intact in-                                                             (19/06/2012)
             vestment cases.

    In this week’s trade recommendation, we highlight the oppor-
    tunities to invest in BUY-recommended “rebound stocks,”                   Petrobras (ADR)
    which should benefit from decreasing risk aversion. This is in
    line with our recent tactical short-term view change on equities          Pascal Rohner
                                                                    , +41 44 334 56 88
    from neutral to positive. The risks surrounding the Eurozone
    debt crisis still persist. However, in our view, share prices now                                                Investment horizon: 1-6 months
    discount most of the bad news. In addition, potential ECB
    policy actions could support market sentiment. Hence, we                  The discovery of a new oil hot spot in Brazil has captured the
    have selected six rebound stocks, which have underperformed               attention of the entire oil industry and gives Petrobras potential
    the broad market this year, but with investment cases which               production upside. Petrobras is projected to become one of
    are still fundamentally intact and offer attractive upside poten-         the world’s largest oil producers and transform from a net im-
    tial to the current share price. Our earlier recommendations,             porter to a net exporter in the next few years. The share’s re-
    “Stocks from old periphery countries” (reiterated 15 May,                 cent underperformance due to weak production figures and in-
    2012), “Emerging market dividends” (reiterated 15 May,                    creased government influence seems overdone, in our view,
    2012) and “USD earners” (opened 30 May, 2012), remain                     and we believe this is a good entry point as news flow is likely
    open and valid. These trades should benefit from an improving             to improve over the course of the year.            (18/06/2012)
    market environment, but should also provide some downside
    protection due to their more defensive characteristics.

                                                                              Saint Gobain
                                                                              Raffael Morger
    AXA                                                             , +41 44 334 13 36

                                                                                                                     Investment horizon: 1-6 months
    Javier José Lodeiro, +41 44 334 56 44

                                             Investment horizon: 1-6 months
7     Equity trade recommendations                                                                                                       19/06/2012       Credit Suisse - Research Weekly

    French construction materials company, Saint Gobain, has                                                   boosting investments through its increased lending facilities to
    suffered from a weak economic growth outlook and bad senti-                                                corporates. The improving business sentiment in Russia and
    ment due to the worsening Eurozone debt crisis. Rather than                                                the ability to constantly deliver solid results form the basis of
    depending on new housing growth, it is exposed to the less                                                 our positive outlook on the stock. Improving risk sentiment
    sensitive renovation market. Despite its European focus, it is                                             would likely unlock the stock’s value.             (18/06/2012)
    ready to capture growth in emerging markets (currently 20%
    of sales) and the USA (13% of sales). We believe the market
    is pricing in an overly negative scenario, and therefore see up-
    side potential in the event of a recovery.
                                                                                                               Teva (ADR)
                                                                                                               Thomas Claudio Kaufmann
                                                                                                     , +41 44 334 88 38

                                                                                                                                                          Investment horizon: 1-6 months
                                                                                                               Teva is the world’s largest generics manufacturer and should
    Dominik Garcia, +41 44 334 25 38                                                         benefit from its existing branded products, proprietary drug
                                                                                                               pipeline and strategic positioning as a future leader in the new
                                                                 Investment horizon: 1-6 months                biosimilars market. A ruling on the Copaxone patent challenge
                                                                                                               is imminent and should act as a significant catalyst for the
    Sberbank has the most extensive branch network in Russia                                                   share as we assign a high probability that Teva will prevail. Fur-
    and holds a dominant position in the Russian retail banking                                                thermore, Jeremy Levin joined the company as its new CEO
    market. The company should be a major beneficiary of the im-                                               and is expected to give a strategy update in Q4 2012.
    proved banking penetration in Russia and plays a critical role in                                                                                            (19/06/2012)

    New Equity trade recommendation
    Company                      ISIN                   Rec.        Currency          Last            Target    EPS      EPS     P/E       P/E        DPS        Div Yield        Market
                                                                                      price           price     2012E    2013E   2012E     2013E      2012E      2012E            cap
    AXA                          FR0000120628 BUY                   EUR               9.72            13        1.93     2.05    5.0       4.7        0.8        7.90%            22.9
    CISCO SYSTEMS                US17275R1023 BUY                   USD               17.14           21        1.82     1.90    9.4       9.0        -          0.00%            91.8
    PETROBRAS ADR                US71654V4086 BUY                   USD               19.00           28        2.78     3.38    6.8       5.6        0.9        4.70%            122.3
    SAINT-GOBAIN                 FR0000125007 BUY                   EUR               26.66           39        3.57     3.95    7.5       6.8        1.3        5.00%            14.2
    SBERBANK                     RU0009029540 BUY                   USD               2.66            3         0.52     0.57    5.1       4.7        0.1        3.40%            57.0
    TEVA (ADR)                   US8816242098 BUY                   USD               37.95           48        5.35     5.81    7.1       6.5        1.0        2.60%            35.8
    For a recap of open and closed trade recommendations, please refer to your Relationship Manager
                                                                                                                                                                 Source: Bloomberg, Credit Suisse
8     Commodity trade recommendations                                                                                                                      19/06/2012            Credit Suisse - Research Weekly

                                                                                                                    be priced out completely. Whether this is justified is arguable.
    Commodity trade recommendations                                                                                 That makes a rebound more likely. While valuation is more at-
                                                                                                                    tractive, we would also point out that there are cyclical factors
    Looking for a mod-                                                                                              at work that will probably lead to a tightening supply/demand
                                                                                                                    balance in the coming months. First, global oil demand growth
    erate rebound in                                                                                                bottomed already in January. So far, supply has more than
                                                                                                                    compensated for the increase in demand, which is why oil in-
    crude oil                                                                                                       ventories have risen. On the flip-side of this, the supply in-
                                                                                                                    crease has drawn down spare production capacities. As a res-
                                                                                                                    ult, there is now less flexibility in the oil system. In the coming
                                                                                                                    months, we are entering the seasonally stronger period for oil
                                                                                                                    demand. For instance, in Saudi Arabia alone, crude oil con-
                                                                                                                    sumption could increase by as much as 300,000 barrels per
                                                                                                                    day during the summer – thus reducing spare production capa-
                                                                                                                    city further. At the same time, inventory levels have also
                                                                                                                    reached a seasonal peak. So all in all, the crude oil market bal-
                                                                                                                    ance looks set to tighten in the coming months. The fact that
                                                                                                                    despite lower prices, OPEC did not cut output at its meeting
                                                                                                                    last week, also indicates that producer countries are acknow-
                                                                                                                    ledging tightening fundamentals.

    Karim Cherif
                                                                                                                    Technical indicators for oil better than for most other, +41 44 334 56 39                                                                commodities
                                                                                                                    Another important factor to note is that even after the correc-
                                                                Investment horizon: 1-6 months
                                                                                                                    tion, oil is not in a technical downtrend. The technical situation
                                                                                                                    for crude oil is neutral and thus better than for most other com-
                  2M Bullish Risk Reversal on WTI                                                                   modities. Short-term momentum actually seems to have bot-
      Buy         With higher implied volatilities and still-constructive oil                                       tomed, increasing the chance of a rebound.
                  fundamentals, we think extracting some yield while po-
                  sitioning for potential upside looks attractive.                                                  Buy bullish risk reversals on WTI crude oil
                                                                                                                    The correction in oil prices in May was strong enough to re-
                                                                                                                    move the overvaluation, but not significant enough to push the
    After having traded relatively stable since the start of the year,                                              technical picture to negative. On the fundamental side, we are
    crude oil prices underwent a steep drop in May. WTI oil prices                                                  entering the seasonally stronger period of the year for oil. This
    fell from above USD 100 to below USD 85. Its European                                                           should result in a tighter market balance and increase the
    counterpart, Brent, fell from about USD 120 to below USD                                                        chances of a rebound in prices. At the same time, implied
    100. Over the past few weeks, there have been more and                                                          volatility rose significantly in May and might now have reached
    more indications that the correction is coming to an end. For in-                                               a near-term top. Similar to our gold trade idea last week, we
    stance, prices have traded sideways over the past week or so,                                                   think market participants can take advantage of the volatility
    and short-term technical momentum seems to have bottomed.                                                       level to hedge against the possibility of a rebound in oil prices,
    After the correction, we would argue that the market condi-                                                     while at the same time, generating some yield. At the time of
    tions for oil have changed, opening the possibility for interest-                                               writing, buying a 2-month call option on WTI oil with a strike at
    ing trading and hedging opportunities.                                                                          USD 90 and financing this option by selling a 2-month put op-
                                                                                                                    tion with a strike at USD 80 generated a yield of approximately
    Oil market fundamentals are tightening                                                                          1.3% (about 8% annualized). If the oil price rebounds above
    One noteworthy consequence of the correction in May is that                                                     the upper strike, the investor participates in the upside. Below
    it completely removed the overvaluation. At current levels, both                                                the lower strike, the investor will be exposed to the downside.
    WTI and Brent are trading almost exactly at fair value. The geo-                                                With this strategy, an investor can generate yield, while, at the
    political risk premium due to a potential escalation of the situ-                                               same time, have a certain exposure to oil prices once they
    ation surrounding the Iranian nuclear program now seems to                                                      start moving.                                     (19/06/2012)

    New commodity trade recommendations
    Publication                  Entry date            Buy /          Underlying                                   Entry       Premi-        Tar-    Stop-       Spot         Comment
                                                       Sell                                                        level       um            get     loss        under-
    CCS/18/06/12                 18/06/12              BUY            2M bullish risk reversal on WTI                          1.30%                                          Long call strike at USD 90, shortput
                                                                      crude September 2012                                                                                    strike at USD 80.
    Source: Credit Suisse, Bloomberg; CCS = Currency & Commodity Strategy, RM = Research Monthly, RF = Research Flash / * Spot rate of underlying instrument as of London open on Friday preceding publication of document.
                                                                                                                              For a recap of open and closed trade recommendations, please refer to your Relationship Manager
9     Technical research trade recommendations                                                                                               19/06/2012   Credit Suisse - Research Weekly

    Technical research trade recommendations                                                                 General Electric
                                                                                                             Daily bar chart with short-and medium-term momentum indicat-
    Technical buy sig-                                                                                       ors

    nals triggered in                                                                                                                                                                   20.0



    General Electric &                                                                                                                                                                  18.5



    CSX                                                                                                                                                                                 17.0









                                                                                                                  2012      Feb       Mar          Apr    May       Jun          Jul

                                                                                                             Source: Metastock, Reuters

    Pascal Zingg
                                                                                                             The medium-term technical momentum of CSX is rising and a, +41 44 333 24 59                                                         break through the zero line is expected to happen in the next
                                                                                                             1–2 weeks. In addition, short-term momentum (shaded indicat-
                                                                 Investment horizon: 1-6 months
                                                                                                             or) is already rising, and a test of the USD 23 key resistance
                                                                                                             can be expected. Furthermore, the stock recently managed to
                  General Electric (GE.N) and CSX (CSX.N)                                                    break above the 200-day moving average (red line inside
      Buy         Medium-term technical buy signals triggered.                                               chart) and this indicates that even more strength for the long-
                                                                                                             and medium-term investment horizon can be expected. We re-
                                                                                                             commend buying the stock from a technical standpoint with a
                                                                                                             stop-loss at USD 21.59.                         (19/06/2012)
    General Electric
    General Electric (GE.N) is currently forming a medium-term
    momentum bottom close to the oscillator zero line. This would
    imply that further medium-term strength is likely to follow.                                             CSX
                                                                                                             Daily bar chart with short-and medium-term momentum indicat-
    Short-term momentum (shaded indicator) is already rising and
    managed to break above the zero line. In addition, the stock is                                                                                                                     24.0
    trading solidly above the rising long-term 200-day moving aver-                                                                                                                     23.5

    age (red line inside chart) and we expect the stock to break                                                                                                                        23.0

    above the 20/20.40 resistances. We recommend buying Gen-                                                                                                                            22.5

    eral Electric from a technical standpoint with a stop-loss at                                                                                                                       22.0

    USD 18.87.







                                                                                                                  2012      Feb       Mar          Apr    May       Jun          Jul

                                                                                                             Source: Metastock, Reuters

    New technical trade recommendation
    Company                                              ISIN                                         Rec.    Currency                    Last price            Stop-loss
    General Electric                                     US3696041033                                 BUY     USD                         19.75                 18.87
    CSX                                                  US1264081035                                 BUY     USD                         22.69                 21.59
    For a recap of open and closed trade recommendations, please refer to your Relationship Manager
                                                                                                                                                                   Source: Reuters, Credit Suisse
10                                                                                                   19/06/2012    Credit Suisse - Research Weekly

     Risk disclaimer                                                        sume this risk. Structured securities are complex instruments,
                                                                            typically involve a high degree of risk and are intended for sale
     Investors should consider this report as only a single factor in       only to sophisticated investors who are capable of understand-
     making their investment decision. For a discussion of the risks        ing and assuming the risks involved. The market value of any
     of investing in the securities mentioned in this report, please        structured security may be affected by changes in economic,
     refer to the following Internet link:                                  financial and political factors (including, but not limited to, spot
                                                                            and forward interest and exchange rates), time to maturity,
                                                                            market conditions and volatility, and the credit quality of any is-
                                                                            suer or reference issuer. Any investor interested in purchasing
     CS may not have taken any steps to ensure that the securities
                                                                            a structured product should conduct their own investigation
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     commended that you consult an independent investment ad-
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          The price, value of and income from any of the securities
                                                                            ate and, in consequence, initial capital paid to make the invest-
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11                                                                                                                  19/06/2012      Credit Suisse - Research Weekly

     Disclosure Appendix                                                              Company                     Rating                     Date
                                                                                                                  HOLD                       27/10/2011
                                                                                                                  HOLD                       26/10/2011
     Analyst certification
                                                                                                                  BUY                        29/07/2011
     The analysts identified in this report hereby certify that views about the                                   BUY                        22/06/2011
     companies and their securities discussed in this report accurately reflect                                   BUY                        29/04/2011
     their personal views about all of the subject companies and securities. The
                                                                                      SBERBANK (SBER RU)          BUY                        31/05/2012
     analysts also certify that no part of their compensation was, is, or will be
                                                                                                                  BUY                        30/03/2012
     directly or indirectly related to the specific recommendation(s) or view(s) in
     this report.                                                                                                 BUY                        21/03/2012
                                                                                                                  BUY                        02/12/2011
                                                                                                                  BUY                        27/10/2011
     Knowledge Process Outsourcing (KPO) Analysts mentioned in this report
                                                                                                                  HOLD                       26/09/2011
     are employed by Credit Suisse Business Analytics (India) Private Limited.
                                                                                                                  BUY                        02/09/2011
                                                                                                                  BUY                        31/08/2011
     Important disclosures                                                                                        BUY                        19/07/2011
     Credit Suisse policy is to publish research reports, as it deems appropri-                                   BUY                        06/06/2011
     ate, based on developments with the subject company, the sector or the           TEVA (ADR) (TEVA US)        BUY                        05/06/2012
     market that may have a material impact on the research views or opinions                                     BUY                        16/02/2012
     stated herein. Credit Suisse policy is only to publish investment research                                   BUY                        04/11/2011
     that is impartial, independent, clear, fair and not misleading.
                                                                                                                  BUY                        05/08/2011
     The Credit Suisse Code of Conduct to which all employees are obliged to
                                                                                                                  BUY                        13/05/2011
     adhere, is accessible via the website at:
                                                                                      THYSSEN KRUPP (TKA          HOLD                       17/05/2012
                                                                                                                  HOLD                       15/02/2012
     For more detail, please refer to the information on independence of finan-                                   HOLD                       09/12/2011
     cial research, which can be found at:
                                                                                                                  HOLD                       17/08/2011
                                                                                                                  HOLD                       12/08/2011
                                                                                                                  HOLD                       16/05/2011
     The analyst(s) responsible for preparing this research report received com-
     pensation that is based upon various factors including Credit Suisse's total
     revenues, a portion of which is generated by Credit Suisse Investment            Fundamental and/or long-term research reports are not regularly pro-
     Banking business.                                                                duced for (SAINT-GOBAIN). The Global Research department reserves
                                                                                      the right to terminate coverage at short notice. Please contact your Rela-
                                                                                      tionship Manager for the specific risks of investing in securities of these
     Equity rating history as of (19/06/2012)                                         companies. The subject issuer (AXA, CISCO SYSTEMS, GENERAL
                                                                                      ELECTRIC CO, PETROBRAS ADR, SBERBANK, TEVA (ADR),
     Company                    Rating                    Date                        THYSSEN KRUPP) currently is, or was during the 12-month period pre-
     AXA (CS FP)                BUY                       14/05/2012                  ceding the date of distribution of this report, a client of Credit Suisse. Cred-
                                BUY                       17/02/2012                  it Suisse provided investment banking services to the subject company
                                BUY                       27/10/2011
                                                                                      (AXA, CISCO SYSTEMS, GENERAL ELECTRIC CO, PETROBRAS ADR,
                                                                                      SBERBANK, TEVA (ADR), THYSSEN KRUPP) within the past 12
                                BUY                       09/08/2011
                                                                                      months. Credit Suisse provided non-investment banking services, which
                                BUY                       04/08/2011
                                                                                      may include Sales and Trading services, to the subject issuer (AXA,
                                BUY                       06/05/2011                  CISCO SYSTEMS, GENERAL ELECTRIC CO, SBERBANK, TEVA
     CISCO SYSTEMS (CSCO        BUY                       01/06/2012                  (ADR), THYSSEN KRUPP) within the past 12 months. Credit Suisse has
                                                                                      managed or co-managed a public offering of securities for the subject is-
                                BUY                       10/02/2012                  suer (CISCO SYSTEMS, GENERAL ELECTRIC CO, PETROBRAS ADR,
                                BUY                       09/02/2012                  TEVA (ADR)) within the past three years. Credit Suisse has managed or
                                BUY                       10/11/2011                  co-managed a public offering of securities for the subject issuer (CISCO
                                BUY                       08/11/2011                  SYSTEMS, GENERAL ELECTRIC CO, PETROBRAS ADR, TEVA (ADR))
                                HOLD                      14/09/2011                  within the past 12 months. Credit Suisse has received investment banking
                                HOLD                      25/08/2011                  related compensation from the subject issuer (CISCO SYSTEMS, GENER-
                                HOLD                      11/08/2011                  AL ELECTRIC CO, PETROBRAS ADR, SBERBANK, TEVA (ADR)) within
                                HOLD                      13/05/2011
                                                                                      the past 12 months. Credit Suisse has received compensation for
                                                                                      products and services other than investment banking services from the
     GENERAL ELECTRIC CO        BUY                       23/04/2012
     (GE US)
                                                                                      subject issuer (AXA, CISCO SYSTEMS, GENERAL ELECTRIC CO,
                                                                                      SBERBANK, TEVA (ADR), THYSSEN KRUPP) within the past 12
                                BUY                       23/01/2012
                                                                                      months. Credit Suisse expects to receive or intends to seek investment
                                BUY                       24/10/2011
                                                                                      banking related compensation from the subject issuer (AXA, CISCO SYS-
                                BUY                       25/07/2011
                                                                                      TEMS, GENERAL ELECTRIC CO, PETROBRAS ADR, SAINT-GOBAIN,
                                BUY                       25/04/2011                  SBERBANK, TEVA (ADR), THYSSEN KRUPP) within the next three
     PETROBRAS ADR (PBR         BUY                       16/05/2012                  months. As at the date of this report, Credit Suisse acts as a market
     US)                                                                              maker or liquidity provider in the securities of the subject issuer (CISCO
                                HOLD                      10/02/2012                  SYSTEMS, GENERAL ELECTRIC CO, PETROBRAS ADR, TEVA
                                BUY                       15/11/2011                  (ADR)). Credit Suisse holds a trading position in the subject issuer (AXA,
                                BUY                       25/07/2011                  CISCO SYSTEMS, GENERAL ELECTRIC CO, PETROBRAS ADR,
                                BUY                       16/05/2011                  SAINT-GOBAIN, SBERBANK, TEVA (ADR), THYSSEN KRUPP). As at
     SAINT-GOBAIN (SGO FP)      BUY                       04/05/2012                  the end of the preceding month, Credit Suisse beneficially owned 1% or
                                BUY                       17/04/2012                  more of a class of common equity securities of (SBERBANK).
                                HOLD                      17/02/2012
12                                                                                                                      19/06/2012        Credit Suisse - Research Weekly

     Additional disclosures for the following jurisdictions                               RESTRICTED                                In certain circumstances, internal and ex-
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                                                                                                                                    of communications, including e.g. an in-
     ates as disclosed in this report, Credit Suisse Hong Kong Branch does not                                                      vestment recommendation during the
     hold any disclosable interests. United Kingdom: For fixed income dis-                                                          course of Credit Suisse engagement in
     closure information for clients of Credit Suisse (UK) Limited and Credit                                                       an investment banking transaction.
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     For further information, including disclosures with respect to any other is-
     suers, please refer to the Credit Suisse Global Research Disclosure site             Credit Suisse HOLT
     at:                                                                                  With respect to the analysis in this report based on the HOLT(tm) method-                                    ology, Credit Suisse certifies that (1) the views expressed in this report ac-
                                                                                          curately reflect the HOLT methodology and (2) no part of the Firm's com-
                                                                                          pensation was, is, or will be directly related to the specific views disclosed
     Guide to analysis                                                                    in this report. The Credit Suisse HOLT methodology does not assign rat-
                                                                                          ings to a security. It is an analytical tool that involves use of a set of propri-
                                                                                          etary quantitative algorithms and warranted value calculations, collectively
     Equity rating allocation as of (19/06/2012)
                                                                                          called the Credit Suisse HOLT valuation model, that are consistently ap-
                                                                                          plied to all the companies included in its database. Third-party data (includ-
                                                              Investment banking
                                               Overall              interests only        ing consensus earnings estimates) are systematically translated into a num-
                                                                                          ber of default variables and incorporated into the algorithms available in
     BUY                                      46.03 %                      46.91 %        the Credit Suisse HOLT valuation model. The source financial statement,
     HOLD                                      47.3 %                      46.03 %        pricing, and earnings data provided by outside data vendors are subject to
     SELL                                      5.56 %                           6%        quality control and may also be adjusted to more closely measure the un-
     RESTRICTED                                1.11 %                       1.06 %        derlying economics of firm performance. These adjustments provide con-
                                                                                          sistency when analyzing a single company across time, or analyzing mul-
                                                                                          tiple companies across industries or national borders. The default scenario
     Relative stock performance                                                           that is produced by the Credit Suisse HOLT valuation model establishes
     At the stock level, the selection takes into account the relative attractive-        the baseline valuation for a security, and a user then may adjust the de-
     ness of individual shares versus the sector, market position, growth pro-            fault variables to produce alternative scenarios, any of which could occur.
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     commendations are "overweight," "neutral", and "underweight" and are as-             security. The default scenario that is produced by the Credit Suisse HOLT
     signed according to relative performance against the respective regional             valuation model establishes a warranted price for a security, and as the
     and global benchmark indices.                                                        third-party data are updated, the warranted price may also change. The de-
                                                                                          fault variables may also be adjusted to produce alternative warranted
                                                                                          prices, any of which could occur. Additional information about the Credit
     Absolute stock performance
                                                                                          Suisse HOLT methodology is available on request.
     The stock recommendations are BUY, HOLD and SELL and are depend-                     CFROI(r), CFROE, HOLT, HOLTfolio, HOLTSelect, HS60, HS40, Value-
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     BUY                                     10% or greater increase in absolute
                                             share price
                                                                                          For technical research
     HOLD                                    variation between -10% and +10% in
                                             absolute share price                         Where recommendation tables are mentioned in the report, "Close" is the
     SELL                                    10% or more decrease in absolute             latest closing price quoted on the exchange. "MT" denotes the rating for
                                             share price                                  the medium-term trend (3-6 months outlook). "ST" denotes the short-term
     RESTRICTED                              In certain circumstances, internal and ex-   trend (3-6 weeks outlook). The ratings are "+" for a positive outlook (price
                                             ternal regulations exclude certain types     likely to rise), "0" for neutral (no big price changes expected) and "-" for a
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     TERMINATED                              Research coverage has been concluded.        ded for purchase (opening purchase). "P&L" gives the profit or loss that
                                                                                          has accrued since the purchase recommendation was given.
                                                                                          For a short introduction to technical analysis, please refer to Technical Ana-
     Absolute bond performance
                                                                                          lysis Explained at:
     The bond recommendations are based fundamentally on forecasts for total    
     returns versus the respective benchmark on a 3-6 month horizon and are
     defined as follows:
                                                                                          Global disclaimer / important information
     BUY                                     Expectation that the bond issue will out-
                                             perform its specified benchmark              For a discussion of the risks of investing in the securities mentioned in this
     HOLD                                    Expectation that the bond issue will per-    report, please refer to the following Internet link:
                                             form in line with the specified bench-
     SELL                                    Expectation that the bond issue will un-     References in this report to Credit Suisse include subsidiaries and affili-
                                             derperform its specified benchmark           ates. For more information on our structure, please use the following link:
13                                                                                                                     19/06/2012      Credit Suisse - Research Weekly                                        Distribution of research reports
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14                                                                                                                  19/06/2012    Credit Suisse - Research Weekly

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