GS Kickstart by zerohedge

VIEWS: 9,024 PAGES: 25

									October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

United States: Portfolio Strategy

US Weekly Kickstart
Your five-minute guide to the US equity market: performance, earnings, valuation, & more
“Things aren’t always what they appear to be.” 3Q earnings season is shaping up to be one of the best quarters ever with 52% of firms posting positive EPS surprises vs. historical average of 42%. However, only 33% of firms surprised on revenues, below 40% average. One cause for concern: 3Q GDP growth of 3.5% suggests the recession ended in summer, but just 26% of “end-demand” facing firms beat sales.
Performance
The S&P 500 fell 2.4% over the course of a volatile week in which the market fell as low as 1042 before rebounding 2.25% on the back of betterthan-expected 3Q GDP growth. Our 2009 year-end price target of 1060 implies no upside from current levels.

Size and style
Large-cap (S&P 500) outperformed small-cap (Russell 2000) by 295 bp over the past week and has outperformed by 277 bp ytd. Large-cap Telecom Services outperformed small-cap Telecom Services by 661 bp this week, but have underperformed by 1,141 bp YTD.
David J. Kostin
(212) 902-6781 | david.kostin@gs.com Goldman, Sachs & Co.

Nicole Fox
(212) 357-1744 | nicole.fox@gs.com Goldman, Sachs & Co.

Caesar Maasry

S&P 500 earnings
Our top-down EPS forecasts of $52 and $75 for 2009 and 2010 reflect +5% and +45% growth, respectively. Our pre-provision and write-down EPS forecasts are $69 for 2009 and $81 for 2010. Bottom-up consensus forecasts a 14% increase in 2009 to $56, and a 36% increase in 2010 to $77.

US Portfolio Strategy baskets
Our defensively-tilted baskets were the best performers this week. The Dividend Growth basket <GSTHDIVG> was the top performer, outperforming the S&P 500 by 85 bps. The Strong Balance Sheet basket <GSTHSBAL> outperformed the Weak Balance Sheet basket <GSTHWBAL> by 343 bp for the week.

(212) 902-9693 | caesar.maasry@gs.com Goldman, Sachs & Co.

Amanda Sneider
(212) 357-9860 | amanda.sneider@gs.com Goldman, Sachs & Co.

Valuation
Top-down, the S&P 500 trades at an NTM P/E of 15.0X (13.5X on pre-provision EPS). Bottom-up, it trades at NTM P/E of 14.7X and LTM P/B of 2.3X.

S&P 500 stock performance this week
Leaders: AMZN, CVH, RSH, MSFT, TSN. Laggards: GT, APOL, GCI, FSLR, NYT.

The Goldman Sachs Group, Inc. 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 affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification, see the end of the text. Other important disclosures follow the Reg AC certification, or go to www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

The Goldman Sachs Group, Inc.

Goldman Sachs Global Economics, Commodities and Strategy Research

Goldman Sachs Global Economics, Commodities and Strategy Research

1

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Conversations we are having with clients: “Things aren’t always what they appear to be”
On the surface – using bottom-line EPS as a gauge – corporate results for 3Q have been very strong. However, the driver of the positive EPS surprises – increased profit margins – remains troublesome. Cost cutting cannot continue indefinitely. A sustainable recovery requires rising revenues but top-line sales were disappointing in 3Q. More importantly, sales for the firms we classify as “end-demand” oriented were particularly weak. “Intermediary” firms posted strong sales
reflecting inventory re-stocking. Many clients pushed back on our stage-ofproduction analysis, arguing that one should expect firms with final demand to post weak top-line results at this point in the economic cycle.

Money flow: $600 billion potential inflow into US stocks in 2010
Earlier in the week we published a report titled Money flow: myths & realities surrounding potential equity inflows. We estimate the potential

net equity inflow over the next several quarters from individuals, institutional investors, and corporations will total $600 billion, equal to
6% of the current equity cap of the S&P 500. Individuals ($350 billion), institutional investors ($150 billion) and corporations ($100 billion) represent the primary sources of potential inflow (see Exhibit 1).

Potential inflow of $600 billion represents a bullish back-drop for stock investors heading into 2010. However, it will not be sufficient to sustain a
robust market rally without accompanying improvements in the US economy and the corporate earnings outlook. Evidence of final demand beyond inventory re-stocking and a recovery in top-line sales growth would spark equity capital inflows, in our opinion.

Our reply is how could 3Q GDP hit 3.5% but none of the demand spill over to firms at the end of the production chain? (We recognize “cashfor-clunkers” added 1.7 pp to the headline figure and incentives for firsttime home buyers also helped). The gap in revenue surprises between “end demand” and “intermediary” firms has never been higher at 20pp (46% vs. 26%). Although not a long time series, it includes the early 2000s recovery.

Money market mutual fund industry assets currently total $3.4 trillion.
We expect the taxable money market mutual fund component to fall from $3.0 trillion to $2.0 trillion over the next 12 months, freeing up $1.0 trillion in potential flows into riskier assets. The robust flows out of money market mutual funds YTD have benefited bond funds but have not yet manifested in positive net flows for US equity mutual funds. Extraordinarily low yields have contributed to investors’ exodus from money market mutual funds since spring 2009. We expect the trend will continue in 2010 (see Exhibit 2).

Details of 3Q earnings so far
351 companies representing 78% of the equity cap of the S&P 500 have now released quarterly earnings. Another 95 firms are scheduled to report results next week.

The 3Q reporting season has been excellent in terms of earnings results.
In fact, 3Q 2009 earnings season is shaping up to be one of the best quarters ever with 52% of firms posting positive EPS surprises relative to consensus expectations compared with a historical average of 42%.

Individuals: $350 billion of potential money flow into equities. We expect
$600 billion of outflows from the $1.9 trillion of taxable money market mutual funds owned by individuals, with 50% going to stocks split between equity mutual funds and direct share purchases. Robust outflows YTD have benefited bond funds but have not yet benefited equity funds. An additional $50 billion could flow from savings to the US equity market.

However, 3Q results are less positive when measured by revenues. Only 33% of S&P 500 non-Financials and Utilities firms reported 3Q sales more than one standard deviation above consensus expectations compared with a historical average of 40%. More importantly, “end-demand” oriented firms had the weakest results while “intermediary” companies posted uniformly strong results. The “intermediary” companies have benefitted
from inventory re-stocking and 46% of these firms beat sales forecasts and 64% beat EPS forecasts.

Institutions: $150 billion from hedge funds and foreign investors. US
mutual funds no longer hold large cash positions as a percentage of total assets. If hedge funds modestly re-lever it would total $50 billion of equity inflow. Foreign investors buy $100 billion of US stocks annually.

“End-demand” oriented companies performed much worse. Just 26% of
the “end-demand” facing firms beat consensus sales expectations. In addition, 18% of the “end-demand” firms announced significant revenue shortfalls in 3Q. Despite the negative revenue surprises, aggressive cost cutting enabled 52% of the “end-demand” firms to beat EPS forecasts.

Corporations: $100 billion net flow from buybacks, M&A, pension contributions, and issuance. Non-financial corporations hold $760 billion
in cash, reflecting the severe cutback in all forms of capital spending. We expect $250 billion of cash M&A, buybacks, and pension spending offset by $150 billion in issuance.

Goldman Sachs Global Economics, Commodities and Strategy Research

2

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

The charts we are watching: Money flow and 3Q 2009 earnings season
Exhibit 1: $600 billion of potential flows into the US equity market
as of October 25, 2009
Cash Position Potential Net Equity Inflow

Exhibit 2: We expect taxable money market assets to fall from $3.0 to $2.0 trillion; as of October 14, 2009
4.0
Money Market Mutual Fund Assets ($ trillion)

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

TOTAL % of S&P 500 Market Cap

Source: ICI, Federal Reserve and Goldman Sachs Global ECS Research.

Source: ICI via Haver Analytics and Goldman Sachs Global ECS Research.

Exhibit 3: Few “End Demand” companies are beating sales estimates

Exhibit 4: “Intermediary” goods companies are posting their strongest quarter of sales surprises relative to “End Demand” companies

3Q Surprises
Raw Materials Intermediary Goods End Demand Total # of Co's 19 77 190 286 Positive Sales Earnings 26% 42% 46 64 26 52 31% 55% Negative Sales Earnings 11% 11% 8 3 18 5 15% 5%

Average Return
Since Report Since 30-Sep

30 pp

(291)bp 166 bp (195) (161) (101) (86) (139)bp (90)bp

"Intermediary" less "End Demand" Sales Surprises (% of companies)
3Q09 (46% - 26%)

20 pp

10 pp

Sales Beats Earnings Beats Sales In-Line Earnings In-Line Sales Misses Earnings Misses Total (# of stocks)

# of Co's 87 156 151 117 42 13 280

Stage-of-Processing Split Raw Mid End

6% 5 8 8 5 15 19

40% 31 24 22 14 15 77

54% 63 68 70 81 69 184

Median Surprise Sales Earnings 5% 17% 1 15 (0)% (0) (4)% (5) 0% 6% 1%

0 pp

(10)pp

(20)pp Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08

9%

Source: Compustat, I/B/E/S, and Goldman Sachs Global ECS Research.

Source: Compustat,I/B/E/S, and Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

Dec-09

Jan-11

$ billions Retail / Individual Money Market Assets Savings Deposits Institutional Investors Equity Mutual Funds Hedge Funds Foreign Investors Corporations Cash & Equivalents New Equity Issuance DB Pension Investment

Description / rationale Re-allocation to risk assets Re-allocation to risk assets Liquidity ratio near record low Increase in leverage Net purchases at 10-yr average Buybacks and M&A forecast De-leveraging and IPOs New contributions to plan

3.5 3.0 2.5 2.0

Money Market Mutual Fund Assets
($ trillions) $3.4 tn $3.0 tn All Funds
GS forecast

$ 1,920 5,800 130 760 $ 8,610

$ 300 50 50 100 200 (150) 50 $ 600 6%

$2.0 tn
1.5 1.0 0.5
Ocotober 2007

Taxable Funds

3

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

The charts we are watching: 3Q 2009 earnings season
Exhibit 5: Companies beating on earnings but not revenues Exhibit 6: Revenue Beaters outperforming the average S&P 500 stock

3Q 2009 Results (ex. Financials and Utilities)
261 Stocks Positive Surprise Inline Negative Total

120

Earnings Surprise
Positive 26% 26% 4% 56% Inline 7% 26% 7% 39% Negative 0% 2% 2% 4% Total 33%
110 115
Revenue Beaters

Revenue

54% 12%

105

Average S&P 500 stock (ex. Financials & Utilities)

100

95 31-Aug 30-Sep 31-Oct 30-Nov

Source: FirstCall, I/B/E/S, and Goldman Sachs Global ECS Research.

Source: FirstCall, I/B/E/S, and Goldman Sachs Global ECS Research.

Exhibit 7: Of the 146 stocks (56%) beating consensus 3Q EPS estimate by more than 1 standard deviation . . .

3Q 2009 Revenue and Earnings Beaters (68 stocks)
Leading sectors: Information Technology and Health Care Companies
AAPL ADBE AKAM AMD APH BRCM CVG EBAY EMC GLW GOOG INTC JBL JNPR KLAC LLTC LSI LXK MOLX MU NSM QLGC RHT SNDK SYMC WDC CELG GILD HSP ISRG LIFE LLY MCK MYL PKI RX TMO WAT ZMH AMZN BDK DV EXPE FO HAR JCI ORLY WHR WYNN AVY CTAS DOV LUV MAS MMM NOC FCX MWV NEM BTU DO FTI HAL NOV WMB EL KMB STZ SRCL GR HON LLL LMT CAG HSY MKC

3Q 2009 Cost Cutters (11 stocks)
Leading sectors: Industrials and Consumer Staples Companies
GCI MHP CEPH

Source: FirstCall, I/B/E/S, and Goldman Sachs Global ECS Research.

Source: FirstCall, I/B/E/S, and Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

4

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

3Q 2009 Earnings Season Update
Exhibit 8: 3Q Earnings Season Summary
as of October 29, 2009

S&P 500 EQUAL-WEIGHTED
Number of Companies Std Dev Surprises (a) Reported Total % of Co's Positive Negative In-Line 39 53 74 % 64 % 5% 31 % 52 76 68 63 2 33 47 59 80 60 4 36 23 41 56 57 4 39 27 30 90 56 0 44 46 78 59 50 2 46 47 62 79 78 15 39 35 23 40 58 13 52 32 28 35 80 11 57 4 9 44 25 0 75 351 500 70 % 52 % 6% 41 % 289 421 500 500 500 500 500 69 % 100 % 100 99 100 100 54 % 46 % 37 26 27 38 4% 12 % 16 26 19 15 41 % 41 % 45 48 53 47 Absolute Surprises (b) Avg 3Q Positive Negative In-Line Surprise 85 % 5% 10 % 7% 83 4 13 21 89 6 4 21 83 9 9 16 89 11 0 37 78 15 7 11 69 29 2 11 65 26 9 4 71 25 4 11 50 25 25 (4) 79 % 15 % 7% 15 % 81 % 70 % 62 52 54 62 11 % 21 % 30 40 37 28 8% 8% 8 8 9 10 16 % 17 % 7 (16) (5) (1) since 31-Aug-09 EPS Revisions Total P/E (NTM) 2009 2010 Return Current 31-Aug 0.8 % 1.3 % 2.0 % 14.4 13.7 8.3 7.0 5.9 19.9 21.4 2.4 3.3 5.0 20.5 18.7 1.2 1.1 7.0 14.3 13.9 4.5 5.6 3.1 20.6 22.3 2.9 4.5 4.8 18.4 17.6 0.9 (1.0) 0.4 14.8 16.2 2.5 3.5 16.1 21.2 20.8 1.5 (2.0) 1.6 12.5 12.5 (2.9) (1.8) 1.8 16.4 15.3 2.8 % 2.7 % 4.7 % 17.5 17.5 3.2 % 3.3 % 5.5 % 17.9 17.7

Health Care Information Technology Industrials Consumer Staples Materials Consumer Discretionary Financials Energy Utilities Telecom Services S&P 500 S&P 500 ex. Financials

Comparative Data (full earnings season) 2Q 2009 500 1Q 2009 499 4Q 2008 497 3Q 2008 500 2Q 2008 500

0.5 % 1.0 % (6.6) (6.9) (5.0) (17.9) (7.9) (20.2) (2.5) (5.1)

S&P 500 CAP-WEIGHTED
Weight of Companies Std Dev Surprises (a) Reported Total % of Co's Positive Negative In-Line 14 19 71 % 70 % 0% 29 % 4 9 43 66 1 33 11 12 88 63 3 35 61 3 3 88 0 39 57 3 3 97 0 43 55 13 15 89 19 27 44 9 10 88 6 50 34 8 12 70 2 65 27 10 12 81 2 72 22 3 4 85 9 69 78 100 78 % 51 % 5% 44 % 65 85 76 % 50 % 2% 47 % Absolute Surprises (b) Avg 3Q Positive Negative In-Line Surprise 90 % 1% 9% 17 % 87 8 5 13 94 3 4 7 63 3 34 4 96 4 0 68 75 24 0 (1) 93 6 1 5 96 2 2 8 53 41 5 6 69 21 11 4 83 % 12 % 5% 10 % 84 % 10 % 6% 12 % since 31-Aug-09 EPS Revisions Total P/E (NTM) 2009 2010 Return Current 31-Aug 4.9 % 6.4 % 6.7 % 16.2 16.8 5.3 3.4 5.7 17.0 17.0 1.5 0.5 0.1 11.4 11.9 (6.5) (5.1) 1.4 13.9 13.3 17.1 6.4 3.3 17.9 20.9 6.1 2.9 0.7 16.4 19.7 (0.3) 2.3 5.0 16.0 16.5 1.2 1.7 6.9 14.1 13.8 1.8 1.1 12.0 14.5 13.9 (0.3) (0.7) 0.2 12.2 12.3 2.5 % 2.4 % 4.8 % 14.8 15.3 2.1 % 2.3 % 5.5 % 14.6 14.7

Information Technology Consumer Discretionary Health Care Telecom Services Materials Financials Industrials Consumer Staples Energy Utilities S&P 500 S&P 500 ex. Financials

(a) In-line if reported earnings are within one standard deviation of consensus estimates two weeks before reporting date. (b) Positive if greater than consensus estimates two weeks before reporting date. Source: Compustat, Bloomberg , First Call and Goldman Sachs Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

5

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

S&P 500 3Q2009 Earnings Calendar – November 2-6
Sector Monday, November 2, 2009 Consumer Discretionary Consumer Staples Company name Ford Motor Sysco Corp. Clorox Co. Dean Foods Anadarko Petroleum Chesapeake Energy Corp. Loews Corp. Principal Financial Group Humana Inc. Republic Services Inc Vulcan Materials Consolidated Edison Northeast Utilities Viacom Inc. Polo Ralph Lauren Archer-Daniels-Midland Marathon Oil Corp. Cameron International Corp Pioneer Natural Denbury Resources Inc. Rowan Cos. Hartford Financial Svc.Gp. Vornado Realty Hcp Inc IntercontinentalExchange Inc. UnumProvident Corp. Medco Health Solutions Inc. AmerisourceBergen Corp. DaVita Inc. Tenet Healthcare Corp. Emerson Electric Rockwell Collins Expeditors Int'l Jacobs Engineering Group Pitney-Bowes Mastercard Cognizant Tech Solutions Sun Microsystems Inc. American Tower Corporation Frontier Communications Ticker
F SYY CLX DF APC CHK L PFG HUM RSG VMC ED NU VIA.B RL ADM MRO CAM PXD DNR RDC HIG VNO HCP ICE UNM MHS ABC DVA THC EMR COL EXPD JEC PBI MA CTSH JAVA AMT FTR

Rating Buy* Neutral Neutral Neutral Neutral Buy NC Neutral Neutral Neutral NC Sell* Neutral Buy Buy NC Neutral Buy* Buy NC Neutral Sell Neutral Buy Neutral NC Neutral Buy NC Buy Neutral Buy NC Neutral Sell Buy Buy Neutral Buy Neutral

YTD Return 219 % 23 % 10 1 67 % 63 23 % 18 4% 9% (29)% 11 % (0) 49 % 68 9 25 % 91 173 41 57 58 % 7 16 28 16 36 % 28 8 377 11 % 34 1 (8) 3 60 % 123 116 30 % (7)

Mkt Cap ($ bil) $ 24 $ 16 8 3 $ 31 17 $ 13 9 $7 $8 $6 $ 11 4 $ 17 4 20 $ 24 9 5 4 3 $ 10 9 9 8 7 $ 27 7 6 2 $ 30 8 7 5 5 $ 22 12 6 $ 15 2

GS $(0.20) $ 0.43 0.97 0.36 $(0.39) 0.70 0.64 $ 1.80 $ 0.35

3Q 2009 EPS Consensus Std. Dev. $(0.12) $ 0.45 0.95 0.33 $(0.33) 0.65 $ 0.89 0.65 $ 1.77 $ 0.37 $ 0.38 $ 0.13 $ 0.01 0.02 0.02 $ 0.09 0.03 $ 0.23 0.03 $ 0.04 $ 0.02 $ 0.06 $ 0.04 0.03 $ 0.03 0.07 0.07 $ 0.05 0.03 0.07 0.03 0.04 $ 0.38 0.09 0.09 0.02 0.01 $ 0.01 0.01 0.03 0.02 $ 0.03 0.04 0.02 0.04 0.01 $ 0.12 0.01 0.11 $ 0.01 0.03

Consensus 3Q 2009 YTD Revisions Yr/Yr Growth 75 % (10)% (3) (2) (167)% (2) (21)% (18) (5)% (26)% (49)% (5)% (15) (1)% (12) NM (46)% (23) (87) (42) (51) (22)% (7) (13) (13) (5) 3% 1 3 (12) (23)% (26) (29) (30) (23) (0)% (2) (112) (12)% (12) 91 % (2)% 4 18 (120)% (24) 370 % (32) 19 % (24)% (30)% 6% (21) 2% (18) (65) (79)% (27) (92) (67) (41) 181 % 9 (28) 11 0 14 % 10 11 71 (32)% (23) (26) (26) (19) 18 % 8 17 7% 0

P/E (NTM) NM 15.2 x 14.0 11.4 NM 11.2 9.1 x 9.7 6.7 x 17.6 x 58.3 x 13.2 x 13.3 12.6 x 19.2 12.6 10.9 x 19.4 51.9 24.4 10.9 6.7 x 13.0 14.1 22.1 8.1 18.6 x 12.8 13.2 61.0 19.9 x 15.4 29.7 15.6 10.8 19.5 x 23.5 NM 51.7 x 11.0

Energy Financials Health Care Industrials Materials Utilities Tuesday, November 3, 2009 Consumer Discretionary Consumer Staples Energy

$ 0.94 0.32 $ 0.60 1.39

$ 1.04 0.37 $ 0.56 1.30 0.56

$ 0.54 0.54 0.11 0.47 $ 0.69 1.02 0.54 1.15 $ 0.71 0.39 0.01 $ 0.60 0.91 0.65 0.54 $ 2.91 0.41 (0.22) $ 0.15 0.16

$ 0.57 0.53 0.07 0.16 0.52 $ 1.13 1.16 0.51 1.15 0.64 $ 0.72 0.40 0.99 (0.02) $ 0.60 0.87 0.29 0.68 0.54 $ 2.92 0.41 (0.20) $ 0.16 0.15

Financials

Health Care

Industrials

Information Technology

Telecommunication Services
* Conviction List.

Source: Compustat, First Call, Bloomberg and Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

6

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

S&P 500 3Q2009 Earnings Calendar – November 2-6 (cont’d)
Sector Wednesday, November 4, 2009 Consumer Discretionary Company name Comcast Corp. Time Warner Inc. News Corporation Pulte Homes, Inc. Molson Coors Brewing Co. Whole Foods Market Inc. Devon Energy Corp. XTO Energy Baker Hughes Murphy Oil El Paso Corp. Prudential Financial Allstate Corp. Marsh & McLennan Health Care REIT Becton, Dickinson Watson Pharmaceuticals Donnelley (R.R.) & Sons Cisco Systems QUALCOMM Inc. Automatic Data Processing Inc. Microchip Technology Inc. International Flav/Frag Titanium Metals Integrys Energy Group Time Warner Cable Starbucks Corp. Directv Group CBS Corp International Game Technology Scripps Network Interactive CVS Corp. Sara Lee Corp. Dr. Pepper Snapple Group Spectra Energy Corp. Sunoco., Inc. Public Storage Kimco Realty NASDAQ OMX Group Ticker
CMCSA TWX NWSA PHM TAP WFMI DVN XTO BHI MUR EP PRU ALL MMC HCN BDX WPI RRD CSCO QCOM ADP MCHP IFF TIE TEG TWC SBUX DTV CBS IGT SNI CVS SLE DPS SE SUN PSA KIM NDAQ

Rating Buy Buy* Neutral Neutral Buy Neutral Buy Neutral Not Rated Neutral Neutral Neutral Sell Buy NC Sell Sell NC Neutral Buy Neutral Sell NC NC NC Neutral Neutral Not Rated Neutral Buy Neutral Buy* Sell Buy Buy* Neutral Buy Buy Neutral

YTD Return (10)% 41 34 (15) 3% 251 4% 24 40 45 34 59 % (3) 6 14 1% 30 66 % 44 % 19 5 33 33 % 2 (13)% 60 % 106 14 58 59 74 28 % 23 70 30 % (24) (4)% (24) (23)

Mkt Cap ($ bil) $ 43 36 27 3 $8 5 $ 30 25 14 12 7 $ 22 16 13 5 $ 16 4 $4 $ 136 70 20 5 $3 1 $3 $ 14 14 12 9 6 3 $ 53 8 7 $ 13 4 $ 10 5 3

GS $ 0.25 0.56 0.18 (0.75) $ 1.00 0.20 $ 0.85 0.82 0.86 0.23 $ 1.28 1.01 0.28 $ 1.25 0.67

3Q 2009 EPS Consensus Std. Dev. $ 0.25 0.52 0.18 (0.64) $ 0.95 0.18 $ 0.90 0.84 0.35 0.99 0.22 $ 1.33 1.01 0.26 0.77 $ 1.24 0.65 $ 0.45 $ 0.02 0.02 0.01 0.30 $ 0.06 0.02 $ 0.09 0.06 0.03 0.08 0.02 $ 0.21 0.08 0.05 0.02 $ 0.01 0.02 $ 0.04 $ 0.01 0.02 0.02 0.00 $ 0.04 0.01 $ 0.06 $ 0.03 0.01 0.02 0.02 0.02 0.02 $ 0.01 0.08 0.02 $ 0.03 0.23 $ 0.04 0.01 0.01

Consensus 3Q 2009 YTD Revisions Yr/Yr Growth (1)% (37) 3 (218) (20)% 17 (24)% (23) (67) (27) (19) (10)% (8) (27) (13) (2)% 20 (39)% (10)% (10) (11) (36) (4)% (79) (57)% (7)% 8 4 (20) (48) (6) (5)% (8) 7 (17)% (104) (8)% (47) (21) (4)% (44) (10) 42 (0)% NM (71)% (15) (73) (67) (37) 80 % 389 24 (10) 10 % 38 (48)% (26)% (17) (7) (49) (5)% (86) 140 % (19)% 110 18 (45) (43) (10) 7% 80 9 (47)% (101) 15 % (54) (19)

P/E (NTM) 13.6 x 13.8 15.6 NM 12.9 x 31.9 13.8 x 16.2 28.2 13.1 10.9 9.4 x 7.3 14.3 14.8 13.6 x 13.3 15.4 x 18.0 x 19.3 17.3 25.9 15.3 x 54.7 15.3 x 12.4 x 22.1 14.3 18.3 22.7 21.9 12.8 x 12.5 13.4 15.1 x 24.7 15.5 x 10.7 10.0

Consumer Staples Energy

Financials

Health Care Industrials Information Technology

$ 0.25 0.44 0.53 0.21

$ 0.31 0.52 0.50 0.21 $ 0.71 0.03 $ 0.31

Materials Utilities Thursday, November 5, 2009 Consumer Discretionary

$ 0.75 0.21 0.22 0.14 0.39 $ 0.64 0.17 0.47 $ 0.26 (0.25) $ 1.23 0.29 0.42

$ 0.75 0.21 0.39 0.22 0.16 0.37 $ 0.64 0.18 0.49 $ 0.26 (0.04) $ 1.25 0.31 0.42

Consumer Staples

Energy Financials

* Conviction List. Source: Compustat, First Call, Bloomberg and Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

7

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

S&P 500 3Q2009 Earnings Calendar – November 2-6 (cont’d)
Sector Health Care Company name Cardinal Health, Inc. CIGNA Corp. Millipore Corp. King Pharmaceuticals Quanta Services Inc. NVIDIA Corp. Teradata Corp VeriSign Inc. JDS Uniphase Corp Century Telephone MetroPCS Communications Dynegy Inc. EOG Resources Leucadia National Corp. Edison Int'l Ticker
CAH CI MIL KG PWR NVDA TDC VRSN JDSU CTL PCS DYN EOG LUK EIX

Rating Buy Buy* NC Neutral Buy Neutral NC Neutral NC Neutral Neutral NC Buy NC Neutral

YTD Return 18 % 71 33 (3) 10 % 56 % 96 22 59 30 % (56) 3% 30 % 19 % 3%

Mkt Cap ($ bil) $ 10 8 4 3 $5 $7 5 4 1 $ 10 2 $1 $ 22 $4 $ 10

GS $ 0.42 0.99 0.29 $ 0.20 $ 0.08 0.33 $ 0.84 0.08

3Q 2009 EPS Consensus Std. Dev. $ 0.43 1.03 0.93 0.27 $ 0.21 $ 0.10 0.29 0.32 0.02 $ 0.81 0.09 $ 0.02 $ 0.03 0.04 0.03 0.03 $ 0.01 $ 0.02 0.02 0.01 0.01 $ 0.02 0.02 $ 0.02 $ 0.08

Consensus 3Q 2009 YTD Revisions Yr/Yr Growth (51)% 4 1 21 (35)% (41)% (13) (11) (87) 2% (51) (79)% (51)% NM (42)% 16 0 (18) (28)% (50)% (19) 28 (82) (1)% (31) (50)% (72)%

P/E (NTM) 14.2 x 7.1 17.0 10.6 26.8 x 27.9 x 22.8 17.0 30.5 10.0 x 11.2 NM 30.0 x NM

Industrials Information Technology

Telecommunication Services Utilities Friday, November 6, 2009 Energy Financials Utilities * Conviction List.

$ 0.77

$ 0.66

$ 1.12

$ 1.04

$ 0.06

(25)%

(29)%

9.9 x

Source: Compustat, First Call, Bloomberg and Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

8

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

S&P 500 Performance
Exhibit 9: S&P 500 sector performance over the last week
as of October 29, 2009
Telecom Services Consumer Staples Information Tech Health Care S&P 500 Energy Cons Discretionary Utilities Financials Industrials Materials (5.4)
(6.0) (5.0) (4.0) (3.0) (2.0) (1.0) 0.0 1.0

Exhibit 10: S&P 500 price return and daily trading volume LTM
as of October 29, 2009

0.7 (0.3)
S&P 500 Price Level

1,650 1,550 1,450 1,350 1,250 1,150 1,050 950 850 750 650 29-Oct-07 29-Oct-08 29-Dec-07 29-Dec-08 29-Feb-08 29-Aug-08 28-Feb-09 29-Jun-08 29-Jun-09 29-Aug-09 29-Oct-09 29-Apr-08 29-Apr-09

9

S&P 500 daily price level (lhs)

8 Shares traded (billions) 7 6 5 4 3 2

(1.4) (1.9)

(2.4)
(2.9) (3.0) (3.2) (3.8) (3.9)

S&P 500 daily trading volume (rhs)

1 0

1-week Total Return (%)
Source: FactSet and Goldman Sachs Global ECS Research.

Source: FactSet and Goldman Sachs Global ECS Research.

Exhibit 11: S&P 500 sector performance over time
as of October 29, 2009
Total Return Percentage Change (%) 1-Week Information Tech Materials Cons Discretionary Financials Energy Industrials Consumer Staples Health Care Utilities Telecom Services S&P 500 (1)% (5) (3) (4) (3) (4) (0) (2) (3) 1 (2)% 1-Month 2% (2) (0) (2) 6 (3) 3 (1) (2) (2) 1% 3-Month 10 % 10 11 18 15 13 8 2 1 (0) 10 % 6-Month 28 % 24 21 36 22 22 22 19 15 4 23 % YTD 49 % 36 30 20 15 13 13 9 3 (0) 20 % 12-Month 38 % 26 32 4 17 11 14 12 7 7 18 %

Exhibit 12: BEST and WORST performing S&P 500 STOCKS BY SECTOR
as of October 29, 2009
BEST STOCKS Return (%) Sector Cons Discr Consumer Staples Energy Financials Health Care Industrials Info Tech Materials Telecom Services Utilities S&P 500 Ticker AMZN TSN COG TROW CVH NOC MSFT BMS VZ STR AMZN 1-week 31 % 6 3 4 12 1 6 2 4 (0) 31 % YTD 139 % 51 59 47 41 15 48 17 (6) 30 139 % Ticker GT AVP SII CBG THC FSLR WFR AKS S DYN GT WORST STOCKS Return (%) 1-week (27)% (9) (14) (17) (10) (19) (18) (13) (9) (13) (27)% YTD 118 % 39 29 162 377 (8) (11) 83 69 3 118 %

Source: FactSet and Goldman Sachs Global ECS Research.

Source: FactSet and Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

9

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

S&P 500 Performance (cont’d)
Exhibit 13: TOP 10 performing SUB-SECTORS over the last week
as of October 29, 2009
Internet Retail Managed Health Care Systems Software Home Furnishings Household Products Integrated Telecommunication Services Packaged Foods & Meats Household Appliances Computer & Electronics Retail Hypermarkets & Super Centers
(5)

Exhibit 14: BOTTOM 10 performing SUB-SECTORS over the last week
as of October 29, 2009

26 3 3 2 1 1 1 0 0 (0)
0 5 10 15 20 1-week Total Return (%) 25 30

Consumer Electronics Health Care Facilities Human Resource & Employment Services Building Products Homebuilding Casinos & Gaming Education Services Photographic Products Real Estate Services Tires & Rubber (27)
(30) (25)

(10) (10) (10) (10) (11) (12) (16) (17) (17)

(20) (15) (10) (5) 1-week Total Return (%)

0

Source: FactSet and Goldman Sachs Global ECS Research.

Source: FactSet and Goldman Sachs Global ECS Research.

Exhibit 15: TOP 10 performing S&P 500 STOCKS over the last week
as of October 29, 2009
Return (%) Company Name Amazon.com Coventry Health Care RadioShack Corp Microsoft Corp. Tyson Foods Akamai Technologies Inc. O'Reilly Automotive Symantec Corp. Motorola Inc. Harris Corp. S&P 500 Average
Source: FactSet and Goldman Sachs Global ECS Research.

Exhibit 16: BOTTOM 10 performing S&P 500 STOCKS over the last week
as of October 29, 2009
Return (%) Company Name Goodyear Tire & Rubber Apollo Group Gannett Co. First Solar Inc. New York Times Cl. A MEMC Electronic Materials Cb Richard Ellis Group Inc Eastman Kodak Advanced Micro Devices KeyCorp S&P 500 Average
Source: FactSet and Goldman Sachs Global ECS Research.

Ticker AMZN CVH RSH MSFT TSN AKAM ORLY SYMC MOT HRS

Sector Cons Discr Health Care Cons Discr Info Tech Consumer Staples Info Tech Cons Discr Info Tech Info Tech Info Tech

1-week 31 12 12 6 6 6 5 5 5 5 (4)

YTD 139 41 45 48 51 51 23 31 97 20 34

Ticker GT APOL GCI FSLR NYT WFR CBG EK AMD KEY

Sector Cons Discr Cons Discr Cons Discr Industrials Cons Discr Info Tech Financials Cons Discr Info Tech Financials

1-week (27) (22) (21) (19) (18) (18) (17) (17) (15) (15) (4)

YTD 118 (24) 42 (8) 20 (11) 162 (47) 128 (33) 34

Goldman Sachs Global Economics, Commodities and Strategy Research

10

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Earnings and Sales
Exhibit 17: EARNINGS GROWTH: S&P 500 bottom-up consensus estimates
as of October 29, 2009

Exhibit 18: SALES GROWTH: S&P 500 bottom-up consensus estimates
as of October 29, 2009

2009E Earnings Growth 1QA Consumer Discretionary S&P 500 Health Care Information Technology Utilities Consumer Staples Telecom Services Materials Industrials Energy Financials S&P 500 (ex-Financials) (86) (39) 7 (35) (4) (10) (9) (76) (40) (96) NM (43) 2QE 61 (19) 1 (21) 1 (1) (16) (64) (37) (68) NM (27) 3QE 113 (3) 5 3 (2) (6) (11) (37) (44) (73) NM (28) 4QE NM NM 20 126 14 25 2 NM (18) 56 NM 66

Annual 2009E 69 14 8 5 1 1 (9) (19) (35) (67) NM (18) 2010E 51 36 8 32 11 9 7 71 11 86 158 26

2009E Sales Growth 1QA Health Care Telecom Services Consumer Staples Information Technology Industrials S&P 500 Consumer Discretionary Materials Energy 3 1 (4) (15) (11) (17) (22) (29) (42) 2QE 2 1 (5) (17) (17) (21) (26) (31) (46) 3QE 0 2 (2) (11) (18) (18) (21) (25) (41) 4QE 3 3 4 2 (9) (2) (14) (0) 0

Annual 2009E 2 2 (2) (10) (14) (15) (21) (22) (35) 2010E 5 1 5 8 2 8 1 12 29

Note: Analysis excludes Financials and Utilities.

Source: FactSet and Goldman Sachs Global ECS Research.

Source: FactSet and Goldman Sachs Global ECS Research.

Exhibit 19: TOP-DOWN vs. BOTTOM-UP: Goldman Sachs vs. Consensus
as of October 29, 2009
Contribution to EPS
GS Top-Down EPS 2009E Consumer Discretionary Utilities Consumer Staples Health Care Telecom Services Information Technology Industrials Materials Energy S&P 500 ex-Financials Financials Operating EPS S&P 500 Operating EPS + Provisions & Writedowns S&P 500 EPS ex-P&W $3 3 8 10 2 8 6 1 7 50 2 $52 17 69 2010E $5 3 9 11 3 10 7 2 13 61 14 $75 6 81 Bottom-up 2009E 2010E $4 3 8 11 2 10 6 1 5 52 4 $56 NA NA $6 3 9 12 2 13 7 2 10 66 11 $77 NA NA

Exhibit 20: REVISIONS: S&P 500 consensus EPS revisions
as of October 29, 2009
21 S&P 500 Consensus EPS ($) 2009 S&P 500 EPS by Quarter 19 17

Annual earnings growth rates
GS Top-Down 2009E 35 % 1 0 (2) (2) (15) (35) (47) (55) (22) NM 5% (46) (15) 2010E 40 % 10 5 10 3 20 2 110 80 23 NM 45 % (66) 18 Bottom-Up 2009E 69 % 1 1 8 (9) 5 (35) (19) (67) (18) NM 14 % NA NA 2010E 51 % 11 9 8 7 32 11 71 86 26 158 36 % NA NA

4QE $17 3QE $15

15 13 11 2-May 2-Aug 2-Feb 2-Apr 2-Jun 2-Jan 2-Jul 2-Sep 2-Mar

2Q $14

Source: FactSet and Goldman Sachs Global ECS Research.

Note: General Motors was removed from the S&P 500 index on June 2, 2009. Source: FactSet and Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

2-Oct

11

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Valuation
Exhibit 21: Aggregate valuation metrics for S&P 500 and sectors
bottom-up consensus valuation, as of October 29, 2009

Exhibit 22: Standard deviation vs. 10-year history (Z-Score)
bottom-up consensus valuation, as of October 29, 2009
EV/ EV/ Price/ Sales EBITDA Book S&P 500 Health Care Consumer Staples Telecommunication Services Information Technology Utilities Consumer Discretionary Industrials Energy Financials Materials (0.9) (1.8) 0.3 (1.2) (0.1) NM 1.8 0.7 0.5 NM 1.9 (2.4) (0.8) 1.9 0.9 (0.1) 1.2 2.1 1.7 (0.3) NM 6.1 (1.1) (1.0) (0.8) 0.3 0.6 0.4 1.7 0.8 (0.3) (1.1) 1.5 FCF Yield (1.0) (1.8) (0.3) (1.0) (0.7) NM (1.0) 0.2 1.5 NM 1.0 P/E (0.5) (2.4) (1.8) (1.1) (1.2) (0.0) (0.1) 1.7 1.9 2.4 1.9 PEG Ratio 2.4 (1.6) (2.8) (0.1) (1.2) (0.1) (0.1) 1.0 2.1 1.7 1.1 Median Z-Score (0.9) (1.7) (0.6) (0.5) (0.4) 0.2 0.8 0.9 1.0 1.7 1.7

EV/ EV/ Price/ FCF PEG NTM Sales EBITDA Book Yield Ratio P/E S&P 500 1.4x 8.1x 2.3x 5.8 % 1.5x 14.7x Materials 1.5 15.8 2.7 4.4 1.9 17.7 Consumer Discretionary 1.2 7.6 2.3 7.5 1.5 17.0 Information Technology 2.3 10.8 4.0 6.5 1.3 16.2 Industrials 1.8 11.4 2.5 7.8 1.5 15.9 Financials NM NM 1.2 NM 1.5 15.4 Energy 1.1 5.2 2.1 NM 2.5 14.5 Consumer Staples 1.2 9.0 3.5 6.4 1.4 14.1 Telecommunication Services 1.7 5.3 1.7 13.9 2.6 13.6 Utilities NM 7.2 1.5 NM 2.1 11.9 Health Care 1.2 7.7 2.8 8.1 1.3 11.4
Source: Compustat, First Call via FactSet, and Goldman Sachs Global ECS Research.

Source: Compustat, First Call via FactSet, and Goldman Sachs Global ECS Research.

Exhibit 23: Historical NTM P/E and LTM P/B values for the S&P 500
aggregate bottom-up consensus valuation, as of October 29, 2009
30 25 20 15 10 5 0 1/76

Exhibit 24: Top stocks by fastest 2009 earnings growth and lowest NTM P/E
by sector, as of October 29, 2009
GROWTH Fastest EPS Growth (%) Ticker 2009E 2010E CBS AVP MRO BAC THC RHI ERTS MWV PCS PPL (70) (17) (71) 27 NM (87) NM (24) 29 (13) 67 28 93 98 88 95 83 65 70 88 VALUE Lowest P/E (x) NTM Rel to SPX 6.8 8.4 8.9 2.8 6.7 9.5 7.8 8.9 10.0 9.4 0.5 0.6 0.6 0.2 0.5 0.6 0.5 0.6 0.7 0.6

NTM P/E (x)

P/E

14.7 10-yr rolling avg

Sector Cons Discr Consumer Staples Energy Financials Health Care Industrials

Ticker GCI SVU COP MBI HUM LMT WDC OI CTL PPL

1/79

1/82

1/85

1/88

1/91

1/94

1/97

1/00

1/03

1/06

1/09

6 5 4 3 2 1 0 1/76

LTM P/B (x)

P/B

2.3

Info Tech Materials Telecom Services Utilities

10-yr rolling avg 1/79 1/82 1/85 1/88 1/91 1/94 1/97 1/00 1/03 1/06 1/09

Source: Compustat, FactSet, and Goldman Sachs Global ECS Research.

Source: Compustat, FactSet, and Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

12

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

S&P 500 Factor Performance
Exhibit 25: S&P 500 factor return ranking for the week ended October 29, 2009 (a)
Last Week Spread (%) Last Growth Metrics Sales Growth EBITDA Growth EPS Growth GROWTH Value Metrics P/B EV/DACF EV/EBITDA VALUATION P/div P/E EV/FCF Profitability Metrics PROFITABILITY ROCE CROCI ROE Other Metrics
(c) (b) (b) (b)

Performance Spread of Top Quintile Less Bottom Quintile (%) Last Five Trading Days 23-Oct 0.2 (0.2) (0.0) (0.0) 26-Oct (0.4) (1.0) (1.1) (1.1) 27-Oct (0.5) (0.4) (0.7) (0.5) 28-Oct (2.2) (2.1) (2.2) (2.2) 29-Oct 0.7 0.7 0.9 0.6 Last Month 2.9 0.9 (0.4) 1.2 Last Quarter 6.0 5.2 4.5 3.2
4

(6)

(4)

(2)

0

2

Week (2.2) (3.0) (3.1) (3.1)

1.4 0.9 (0.3) (0.5) (1.4) (1.7) (1.7)

0.9 1.2 0.8 0.7 (0.4) 0.3 (0.0)

0.7 (0.1) (0.2) (0.5) 0.0 (0.3) (1.4)

(0.3) (0.7) (0.9) (1.0) (0.8) (1.6) (0.0)

1.1 0.6 (0.1) (0.5) (1.4) (0.8) (1.1)

(1.1) (0.1) 0.0 0.8 1.1 0.7 0.8

2.1 (2.1) (1.2) (0.6) (0.5) 0.7 (1.3)

(0.7) (1.6) 1.9 3.3 2.9 7.1 1.1

3.6 3.2 2.3 2.3

1.2 1.1 1.0 0.5

1.3 1.1 1.1 0.8

0.8 0.6 0.3 1.1

2.0 1.7 1.4 1.8

(1.8) (1.4) (1.4) (2.0)

4.9 3.7 4.5 2.7

(1.4) (2.1) 0.3 (5.2)

Short Interest Level Equity Capitalization

(5.0) 3.7

(1.1) 0.8

(0.9) 0.6

(1.8) 1.0

(2.6) 2.2

1.4 (0.8)

(6.3) 4.9

3.4 (0.7)

(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 to determine the stocks percentile ranking within the region's 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 year's estimate over current year's 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.

Goldman Sachs Global Economics, Commodities and Strategy Research

13

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Style and Size
Exhibit 26: Total return by style and size over time
as of October 29, 2009

Exhibit 27: Total return by SECTOR for S&P 500 vs. Russell 2000
as of October 29, 2009
Weight (%) Sector Telecom Services Cons Discretionary Energy Information Tech Health Care Consumer Staples Industrials Materials SP500 R2000 3 9 12 19 12 12 10 3 4 15 100 1 14 5 19 14 3 16 4 3 20 100 1-Week (% Return) SP500 1 (3) (3) (1) (2) (0) (4) (5) (3) (4) (2) R2000 ∆ (bps) (6) (8) (8) (5) (6) (2) (6) (6) (3) (3) (5) 661 503 480 385 382 215 190 89 (38) (70) 295 YTD (% Return) SP500 (0) 30 15 49 9 13 13 36 3 20 20 R2000 ∆ (bps) 11 50 32 46 11 16 6 43 0 (7) 18 (1,141) (1,999) (1,653) 268 (193) (312) 725 (629) 303 2,626 277

Total Return Percentage Change (%) 1-Week Large Cap vs. Small Cap S&P 500 Russell 2000 Large vs. Small (bps) Growth vs. Value Russell 1000 Growth Russell 1000 Value Growth vs. Value (bps) (2) (3) 87 1 (0) 139 8 12 (361) 22 25 (222) 28 15 1,326 (2) (5) 295 1 (5) 551 10 6 375 23 19 453 20 18 277 1-Month 3-Month 6-Month YTD

Utilities Financials Index

Source: FactSet and Goldman Sachs Global ECS Research.

Source: FactSet and Goldman Sachs Global ECS Research.

Exhibit 28: GROWTH vs. VALUE relative performance over time
Russell 1000 Growth vs. Russell 1000 Value, as of October 29, 2009
105 100 95 90 85 80 75 70 Mar-07 Mar-08 May-07 May-08 Mar-09 May-09 Nov-07 Nov-08 Jan-07 Jan-08 Jan-09 Jul-07 Jul-08 Sep-07 Sep-08 Jul-09 Sep-09 Growth outperforming Value outperforming

Exhibit 29: LARGE CAP vs. SMALL CAP relative performance over time
S&P 500 vs. Russell 2000, as of October 29, 2009
115 S&P 500 outperforming 110 105 100 95 Russell 2000 outperforming 90 May-07 May-08 May-09 Mar-07 Mar-08 Nov-07 Nov-08 Mar-09 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Sep-07 Sep-08 Jul-09 Sep-09

Source: FactSet and Goldman Sachs Global ECS Research.

Source: FactSet and Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

14

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Global Equity Market and Mutual Fund Performance
Exhibit 30: GLOBAL EQUITY MARKET performance over the past week
as of October 29, 2009
UK (FTSE 100) U.S. (S&P 500) Spain (IBEX 35) Europe (DJ Stoxx 600) Korea (KOSPI) Japan (Nikkei) France (CAC 40) China (MSCI China) Brazil (Bovespa) Germany (Dax) Australia (ASX 200) Mexico (Bolsa) (7) (7) (6) (5) (4) (3) (2) % Weekly price change (1) 0

Exhibit 31: US EQUITY MUTUAL FUND performance vs. benchmark
as of October 29, 2009
Avg. Total Return (%) Lipper Indices Large-Cap Core Funds Benchmark: S&P 500 Out / (Underperformance) (bps) Large-Cap Growth Funds Benchmark: Russell 1000 Growth Out / (Underperformance) (bps) Large-Cap Value Funds Benchmark: Russell 1000 Value Out / (Underperformance) (bps) Small-Cap Core Funds Benchmark: Russell 2000 Out / (Underperformance) (bps) 1-week (2.8) (2.4) (35) (3.0) (2.3) (75) (2.6) (3.1) 52 (5.0) (5.4) 39 YTD 22.3 20.4 188 29.9 28.4 151 19.5 15.1 439 25.7 17.7 806 0.7 8.2 30 91 0.5 5.6 30 221 1.0 9.0 30 227 0.9 Stdev 1-Week YTD 6.9 No. of Funds 29 AUM $ bil NA

(1) (2) (2) (3) (3) (4) (4) (4) (4) (4) (6)

Source: FactSet and Goldman Sachs Global ECS Research.

Source: Lipper, FactSet and Goldman Sachs Economics Global ECS Research.

Exhibit 32: GLOBAL EQUITY MARKET performance over time
as of October 29, 2009
1-Week Brazil (Bovespa) Australia (ASX 200) China (MSCI China) Korea (KOSPI) Mexico (Bolsa) Spain (IBEX 35) UK (FTSE 100) Europe (DJ Stoxx 600) Germany (Dax) France (CAC 40) U.S. (S&P 500) Japan (Nikkei) Average (4) (6) (4) (3) (7) (2) (1) (3) (4) (4) (2) (4) (4) Price Return (%) USD 1-Month 3-Month 2009 YTD 7 1 3 (7) 2 0 3 1 (0) (1) 1 (3) 1 29 23 3 8 11 15 14 16 12 16 9 2 13 128 61 55 49 38 35 33 30 24 23 18 11 42 2008 (55) (53) (51) (56) (40) (42) (50) (48) (43) (46) (38) (29) (46)

Exhibit 33: International and other MUTUAL FUND performance
as of October 29, 2009
Avg. Total Return (%) Lipper Indices International Equity Global Funds International Funds European Funds Emerging Market Funds Real Estate and Natural Resources Real Estate Natural Resource Fixed Income General U.S. Government Funds Index A Rated Bond Funds Index BBB Rated Funds Index (0) (0) (0) 4 13 17 0.2 0.3 0.5 5.3 8.1 10.9 29 30 29 NA NA NA (3) (6) 17 39 0.9 0.7 10.0 8.9 30 10 27 7 (3) (4) (4) (4) 26 32 38 66 1.2 0.8 0.7 0.6 9.4 10.8 23.7 8.7 30 30 10 29 170 322 19 NA 1-week YTD Stdev 1-week YTD No. of Funds AUM $ bil

Source: FactSet and Goldman Sachs Global ECS Research.

Source: Lipper, FactSet and Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

15

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

ETF Analysis: Composition, Valuation, Growth, and Ownership
Exhibit 34: Selected ETF analysis for the week ended October 29, 2009 (a)(b)
ETF Description
Market Cap $ mil 69,002 2,297 16,195 1,138 784 505 464 2,280 5,547 732 1,591 413 2,271 7,112 886 203 188 2,727 543 3,838 1,938 381 612 1,915 428 3,815 222 747 310 467 1,692 5,098 767 287 2,344

Composition
No. of Stocks 500 100 100 78 25 18 63 41 40 52 124 33 16 79 24 26 24 74 50 97 53 27 17 59 20 85 45 18 41 32 30 31 23 27 35 Top Stocks as % of ETF 1 5 10 4 6 16 8 5 20 2 16 20 3 8 4 16 12 9 11 7 9 3 10 14 5 25 12 11 11 9 23 10 19 12 14 5 14 9 12 18 35 29 23 57 10 47 49 16 30 17 55 42 39 42 35 26 14 28 42 22 74 33 43 41 38 69 40 49 48 44 26 49 34 20 31 48 47 44 82 18 66 64 30 45 33 84 56 60 65 59 42 27 44 60 41 94 49 69 65 57 89 60 70 69 68 49 73 56

Performance (%)
Price Change 1 Wk YTD (2) (2) (3) (3) (7) 0 (0) (0) (3) (8) (5) (5) (6) (4) (6) (4) (5) (3) (1) (3) (2) (5) (2) (4) (6) (1) (6) (4) (3) (3) (5) (7) (7) (7) (3)
(a)

Valuation
Valuation P/E P/B Div NTM LTM Yield 15 14 18 17 NM 16 17 14 15 NM 16 19 14 15 NM 15 11 12 58 12 11 NM 11 16 35 16 24 19 17 22 18 24 20 21 12 2.1 2.3 3.5 1.9 1.4 2.6 2.0 3.1 2.0 1.7 2.0 1.8 2.0 1.2 0.9 1.4 0.9 1.7 0.9 1.6 2.7 4.4 3.1 2.3 1.7 3.1 2.5 2.9 3.2 1.5 2.3 2.4 1.7 1.6 1.5 2.0 2.2 0.6 1.6 1.3 1.6 1.0 3.0 1.8 0.5 1.5 1.0 0.6 1.2 1.0 0.9 1.9 4.6 2.2 4.0 2.0 0.0 3.2 2.4 2.0 1.6 1.4 2.0 0.3 4.5 1.9 0.5 1.2 1.6 4.5

Growth (%)
Sales Growth 2009 2010 (12) (14) (1) (9) (24) 1 (5) 0 (37) 7 (32) (40) (15) NM NM NM NM NM NM NM 4 9 4 (11) (22) (4) (16) (16) (2) (0) (23) 15 (33) (44) NM 8 10 10 4 3 5 4 4 25 35 26 25 2 NM NM NM NM NM NM NM 6 14 10 3 4 5 17 15 6 3 10 19 14 23 NM Earnings Growth 2009 2010 (1) (1) (1) 5 NM (2) (2) 3 (58) NM (54) (62) (32) NM NM NM (37) (20) NM (24) 1 NM (2) (31) (88) (2) (70) (43) 1 NM (55) 66 (93) (91) (4) 25 22 21 34 NM 11 18 8 43 NM 43 54 (7) 73 NM 200 242 (2) NM (3) 9 NM 9 12 486 20 365 150 14 34 73 41 NM 484 7

Ownership
Short Interest Days 1.8 1.4 1.8 2.8 3.0 1.9 2.8 2.3 1.6 3.0 1.7 1.5 1.9 1.2 0.8 1.2 1.1 3.1 7.2 3.2 2.8 2.8 3.8 2.2 2.3 1.5 2.3 1.9 1.8 2.5 1.7 1.3 1.6 1.7 2.6 Median Hedge Fund (c) Own (%) 2.9 1.9 3.4 3.8 4.0 2.9 6.2 2.3 3.1 3.0 3.9 4.9 4.1 3.0 2.7 2.8 3.7 3.0 2.4 2.9 2.9 10.7 2.4 2.1 4.3 3.5 3.9 3.2 3.2 4.5 2.6 3.4 3.6 2.0 2.1

Sector / sub-sector S&P 500 S&P 100 Nasdaq-100 Consumer Discretionary Homebuilders Retail Retail Consumer Staples Energy Clean Energy Natural Resources Oil & Gas E&P Oil Services Financials Banks Broker-Dealers Insurance Real Estate Regional Banks REITs Health Care Biotech Pharmaceuticals Industrials Transportation Information Technology Semiconductors Semiconductors Software Telecom Services Materials Gold Miners Metals & Mining Steel Utilities

Index SPX OEX NDX IXY SPHOME IRH SPSIRETR IXR IXE ECO SPGSSINR SPSIOP OXH IXM BKX DJSINV KIX DJUSRE KRX RMZ IXV SPSIBI IPH IXI TRAN IXT SPGSTISM XSH SPGSTISO DJSTELT IXB GDM SPSIMM STEEL IXU

ETF SPY OEF QQQQ XLY XHB RTH XRT XLP XLE PBW IGE XOP OIH XLF KBE IAI KIE IYR KRE VNQ XLV XBI PPH XLI IYT XLK IGW SMH IGV IYZ XLB GDX XME SLX XLU

18 15 41 28 19 23 22 10 20 18 32 36 65 18 0 44 27 11 (26) 9 7 (11) 0 12 5 37 47 41 38 7 34 30 60 78 (1)

(a) Performance of the underlying index. (b) Valuation, growth and ownership metrics are bottom-up aggregations of consensus forecasts, except where noted. (c) Hedge Fund ownership data based on 2Q 2009 13-f filings. Source: Compustat, First Call, Lionshare via FactSet, IDC, and Goldman Sachs Global ECS Research. See our Goldman Sachs ETF Bloomberg page <GETFG> or contact the desk at 1-888-ETF-DESK for more information.

Goldman Sachs Global Economics, Commodities and Strategy Research

16

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Fund Flows
Exhibit 35: Domestic equity mutual fund flows, 4-week moving average
week ended October 29, 2009

Exhibit 36: Weekly mutual fund flows and assets tracked by AMG
week ended October 29, 2009; excluding ETFs
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 U.S. Equity Int'l Equity Global Equity Income Gold & Nat Res Money Market All Bonds 1,525 1,118 300 107 71 23 2,975 747 15 (1) (1) 0 0 (0) 0 (21) 10 0 1 0 1 0 (0) 0 (18) 5 0 0.1 % 0.0 0.3 0.1 (0.0) 0.6 (0.6) 0.6 1.3 (1) (1) 17 3 (3) 4 (3) 33 6

10.0 8.0 6.0 4.0 $ billions 2.0 0.0 (2.0) (4.0) (6.0) (8.0) (10.0) Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Domestic Equities, 4-week moving avg

Govt Treasury

Source: AMG and Goldman Sachs Global ECS Research.

Source: AMG and Goldman Sachs Global ECS Research.

Exhibit 37: Average daily TRADING TURNOVER over the last week
by sector, as of October 29, 2009
Materials Financials Cons Discr Info Tech S&P 500 Industrials Energy Health Care Telecom Services Utilities Cons Staples 0.0 0.5 0.6 1.0 1.5 % Daily Avg Trading Turnover 2.0 2.5 0.9 0.9 0.9 1.1 1.0 1.3 1.2 1.7 1.7 2.0

Exhibit 38: Top ten S&P 500 STOCKS by daily average trading turnover
as of October 29, 2009
Avg Daily Company American Int'l. Group United States Steel Corp. AK Steel E*Trade Financial Corp. Genworth Financial Inc. KB Home Goodyear Tire & Rubber Massey Energy Co. RadioShack Corp Ciena Corp. S&P 500 Average Ticker Sector AIG X AKS ETFC GNW KBH GT MEE RSH CIEN Financials Materials Materials Financials Financials Consumer Discretionary Consumer Discretionary Energy Consumer Discretionary Information Technology Trading Turnover (%) 17.8 11.5 11.1 7.9 7.7 7.5 7.4 7.3 7.1 7.0 1.7 1-Week Total Return (%) (13) (12) (13) (7) (8) (9) (27) (7) 12 (9) (4)

Daily average trading turnover = daily avg trading value / avg market cap (over the past 5 trading days). Source: FactSet and Goldman Sachs Global ECS Research.

Daily average trading turnover = daily avg trading value / avg market cap (over the past 5 trading days). Source: FactSet and Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

17

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Risk and Dispersion
Exhibit 39: Goldman Sachs Risk Barometer
Index is number of standard deviations from the average * 100
400 300 200 100 0 (100) (200) (300) 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

Exhibit 40: VIX Volatility Index
as of October 29, 2009
90
81

29-Oct-09
Risk Aversion Increasing

All time high on 20-Nov-08

75 60 45 30
25

Risk Aversion Decreasing

15
29-Oct-09

0 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
1,700 1,300 1,100 900 700 500 300

Note: metrics included are implied option volatility (S&P 500 and Nasdaq 100), normalized skew, high yield credit spreads, credit derivative swap spreads, mutual fund net flows, and cash levels. Source: Goldman Sachs Research.

Source: Goldman Sachs Global ECS Research.

Exhibit 41: S&P 500 stock and sector average correlation
as of October 29, 2009
1.0

Exhibit 42: Credit Default Swaps, 5-Year On-the-run Spreads
as of October 29, 2009
300

Investment Grade CDX (bps)

0.9 0.8 Average Correlation 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Dec-89 Dec-90 Dec-91

Average sector correlation
0.72

250 200 150 100 50 0

CDX (HY) (rhs) 1,500 High Yield CDX (bps)

0.37

CDX (IG) (lhs)

100 (100)

Average stock correlation
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

Apr-08

Aug-08

Apr-09

Aug-09

Oct-07

Oct-08

Feb-08

Dec-07

Feb-09

Jun-08

Source: Goldman Sachs Global ECS Research.

Source: Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

Dec-08

Jun-09

Oct-09

18

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Goldman Sachs Recommendations and Forecasts
Exhibit 43: Goldman Sachs Recommended Sector Weightings
as of October 29, 2009
Sector Weightings Total Return YTD 15 % 36 20 49 13 3 30 (0) 9 13 20 % Underweight Neutral Goldman Sachs Recommended Sector Weightings Current S&P 500 Weight 12 % 3 GS Overweight / Underweight 300 bp 200 200 100 100 0 0 (200) (300) (400) 0 bp GS Alpha YTD (0)bp (1) 13 (0) 1 13 (14) 14 (17) (14) (6)bp

Exhibit 44: Goldman Sachs US Economics quarterly GDP forecasts
as of October 29, 2009

US GDP Growth (qoq annualized %)

4.0 % 2.0 % 0.0 % (2.0)% (4.0)% (6.0)% (8.0)% Q1A Q2A Q3A Q4E Q1E Q2E Q3E Q4E
(6.4) (0.7) 3.0 3.5 2.0 2.0

Sectors Energy Materials Financials Information Technology Industrials Utilities Consumer Discretionary Telecom Services Health Care Consumer Staples S&P 500

1.5

1.5

Overweight

15 19 10 4 9 3 12 12 100 %

2009
Source: Goldman Sachs Global ECS Research. (a) Sector weightings last rebalanced 20-July-09. Source: Goldman Sachs Global ECS Research.

2010

Exhibit 45: Goldman Sachs COMMODITY and CURRENCY forecasts
as of October 29, 2009

Exhibit 46: Goldman Sachs US Economics forecasts
as of October 29, 2009

Forecasts units Energy WTI Crude Oil NYMEX Nat. Gas RBOB Gasoline Industrial Metals LME Copper London Gold London Silver Currencies Euro / US Dollar US Dollar / Yen Sterling / US Dollar EUR/$ $/¥ £/$ 1.48 91.4 1.66 1.55 98.0 1.85 1.55 98.0 1.85 1.35 105.0 1.61 $/mt $/troy oz $/troy oz 6665 1046 16.33 6970 960 15.60 7000 960 15.50 7400 960 16.00 $/bbl $/mmBtu $/gal 79.87 5.06 2.02 85.00 6.50 2.14 87.50 7.00 2.34 94.00 7.70 2.36 Current 3m 6m 12m

Real GDP Consumer Spending Total Fixed Investment Business Fixed Investment Residential Investment Federal Government Spending Exports of Goods and Services Imports of Goods and Services Core CPI Unemployment Rate Fed Funds Rate 2-year Treasury Rate 10-year Treasury Rate
Source: Goldman Sachs Global ECS Research.

2008A 0.4% (0.2) (5.1) 1.6 (22.9) 7.7 5.4 (3.2) 2.3 5.8 0.2 1.0 2.3

% Annual Change 2009E (2.5)% (0.6) (19.0) (18.5) (20.7) 6.0 (11.0) (15.3) 1.7 9.2 0.2 1.3 3.1

2010E 2.0% 1.0 (2.4) (6.0) 10.6 6.9 7.1 3.6 0.6 10.3 0.2 1.6 3.0

Source: Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

19

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Goldman Sachs Strategy Baskets1
U.S. Portfolio Strategy baskets are designed to provide portfolio managers with vehicles to monitor and implement thematic views in the U.S. equity markets. Our baskets may be found on Bloomberg by typing <GSSU5>. The Bloomberg page provides realtime basket performance and current basket constituents.

To obtain access to our baskets on Bloomberg, please contact your Goldman Sachs salesperson.
Exhibit 47: Strategy basket summary performance and valuation data
as of October 29, 2009
Bloomberg Ticker Macroeconomic Baskets International Sales US Sales Western Europe Sales BRICs Sales Strong Balance Sheet Weak Balance Sheet Robust Profit Margins Fragile Profit Margins High Op Leverage Low Op Leverage Hedge Fund Baskets High HF Concentration Low HF Concentration Hedge Fund VIP Valuation Baskets GARP Use of Cash Baskets Dividend Growth Invest for Growth S&P 500 S&P 500 Average GSTHDIVG GSTHINVG (2)% (4) (2)% (2) 1% (3) 1% 1 20 % 20 11 % 14x 18 15x 17 6.2x 4.7 2.3x 3.4 3.4 % 1.5 2.0 % 1.8 GSTHGARP (2)% 1% 33 % 18x 4.4x 0.8 % GSTHHFHI GSTHHFSL GSTHHVIP (9)% (3) (2) (7)% (2) 1 65 % 14 33 16x 19 17 3.4x 2.8 4.7 0.9 % 2.9 1.3 GSTHINTL GSTHAINT GSTHWEUR GSTHBRIC GSTHSBAL GSTHWBAL GSTHRMAR GSTHFMAR GSTHOPHI GSTHOPLO (4)% (3) (5) (6) (2) (5) (3) (5) (4) (4) (0)% 1 (3) (3) 2 (3) (2) (2) 2 (0) 37 % 15 41 47 32 58 23 30 18x 17 16 18 21 20 16 21 24 16 4.4x 3.3 3.7 4.0 5.9 3.2 5.7 2.9 4.5 5.3 1.8 % 1.8 0.9 1.1 1.1 1.9 1.4 0.8 1.4 2.0 Total Return % 1 wk 1 mo YTD P/E NTM P/B LTM Div Yld (%)

Exhibit 48: Strategy basket total return performance over the last week
as of October 29, 2009
Dividend Growth <GSTHDIVG> Strong B/S <GSTHSBAL> GARP <GSTHGARP> Hedge Fund VIP <GSTHHVIP> S&P 500 US Sales <GSTHAINT> Low HF Conc <GSTHHFSL> Robust Profit Margins <GSTHRMAR> Low Operating Leverage <GSTHOPLO> Invest for Growth <GSTHINVG> High Operating Leverage <GSTHOPHI> Int'l Sales <GSTHINTL> Fragile Profit Margins <GSTHFMAR> Western Europe Sales <GSTHWEUR> Weak B/S <GSTHWBAL> BRIC Sales <GSTHBRIC> High HF Conc <GSTHHFHI>

(2) (2) (2) (2) (2) (3) (3) (3) (4) (4) (4) (4) (5) (5) (5) (6) (9)
(8) (6) (4) (2) 0

(10)

Last Week % Total Return
Source: Bloomberg and Goldman Sachs Global ECS Research. Source: Bloomberg and Goldman Sachs Global ECS Research.

1

The ability to trade these baskets will depend upon market conditions, including liquidity and borrow constraints at the time of trade.

Goldman Sachs Global Economics, Commodities and Strategy Research

20

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

What to buy now: BRICs Sales Basket <GSTHBRIC>
Exhibit 49: Buy BRICs Sales Basket <GSTHBRIC>
as of October 29, 2009
Sales Non-US BRICs 100 % 100 96 91 92 74 82 87 91 % 51 38 % 52 68 51 44 64 43 51 % 36 99 % 78 76 70 100 24 67 76 % 24 93 % 69 83 21 77 100 NA 80 % 34 100 % 81 66 63 62 59 59 59 63 % 0 24 % 19 17 16 11 11 10 16 % 0 99 % 52 39 33 30 19 14 33 % 0 32 % 20 19 15 14 13 NA 17 % 0 Sales Non-US BRICs 55 % 57 43 35 36 32 11 36 % 4 100 % 80 63 41 52 63 % 34 100 % 100 67 50 83 % 20 71 % 65 68 % 42 81 % 9 45 % 0 100 % 13 56 % 0 68 % 25 25 % 21 12 10 6 5 4 10 % 0 69 % 58 23 23 21 23 % 0 100 % 100 67 21 83 % 0 48 % 35 42 % 0 68 % 8 38 % 0 46 % 4 25 % 0 23 % 0

Company Ticker Information Technology (20% of the Basket) Sohu.com Inc. SOHU Genpact Ltd G Marvell Technology Group Ltd. MRVL Fairchild Semiconductor Internation FCS NVIDIA Corp. NVDA Novellus Systems NVLS Cree Inc. CREE Silicon Laboratories Inc. SLAB Basket median Sector median Health Care (14% of the Basket) Mylan Laboratories MYL Pfizer, Inc. PFE Waters Corporation WAT Varian Medical Systems VAR Bristol-Myers Squibb BMY Schering-Plough SGP Illumina Inc. ILMN Basket median Sector median Consumer Staples (13% of the Basket) Central European Distribution Corp. CEDC Avon Products AVP Bunge Ltd. BG Corn Products International Inc. CPO Philip Morris Intl PM PepsiAmericas Inc. PAS Coca-Cola Co. KO Basket median Sector median Energy (13% of the Basket) Atwood Oceanics Inc. ATW Global Industries Ltd. GLBL Pride International Inc. PDE Helmerich & Payne Inc. HP Schlumberger Ltd. SLB Dresser-Rand Group Inc. DRC Seahawk Drilling Inc. HAWK Basket median Sector median

Rating Neutral Neutral Buy* NC Neutral Sell* NC NC

Buy Buy* NC NC Neutral Not Rated Neutral

NC Sell NC NC Buy Not Rated Buy

Neutral NC Neutral Neutral Buy Neutral NC

Company Ticker Rating Financials (11% of the Basket) Citigroup Inc. C Not Rated Morgan Stanley MS Neutral ProLogis PLD Sell Franklin Resources BEN Buy NC White Mountains Insurance Group LWTM Bank of New York BK Neutral Bank of America Corp. BAC Buy* Basket median Sector median Industrials (9% of the Basket) Copa Holdings S.A. (Cl A) CPA NC Expeditors Int'l EXPD NC Avery Dennison Corp. AVY NC Boeing Company BA Neutral Emerson Electric EMR Neutral Basket median Sector median Consumer Discretionary (8% of the Basket) Central European Media Enterprises CETV Neutral CTC Media Inc. CTCM Buy Las Vegas Sands Corp. LVS RS Yum! Brands, Inc YUM Buy Basket median Sector median Materials (5% of the Basket) Newmont Mining Corp. (Hldg. Co.) NEM NC Mosaic Co. MOS Neutral Basket median Sector median Utilities (4% of the Basket) AES Corp. AES NC Duke Energy DUK Neutral Basket median Sector median Telecommunication Services (3% of the Basket) NII Holdings Inc. NIHD Neutral American Tower Corporation AMT Buy Basket median Sector median GSTHBRIC median S&P 500 median

*Goldman Sachs Global Investment Research Conviction List. Source: Company 10-K filings, Compustat and Goldman Sachs Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

21

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Recent US Portfolio Strategy Publications
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 50: Recent research from US Portfolio Strategy

Latest Market Research
US Equity Views: Money Flow: myths and realities surrounding potential equity inflows US Equity Views: 3Q Earnings Preview - Focus on top-line results US Equity Views: The Multiple Mystery - At what P/E should the market trade? US Thematic Views: GARP Update Macro to Micro Shift Part II: 2H 2009 update US Equity Views: 2Q 2009 Earnings preview: Shifting focus to ex-Financials results US Equity Views: Equity Issuance: $100 billion YTD; we expect another $200 billion US Sector Views: The GM effect: EPS and valuation impact if GM exits the S&P 500 US Equity Views: Signposts point to more upbeat outlook; boosting cyclical exposure

Publication Date October 25, 2009 October 7, 2009 October 1, 2009 October 1, 2009 July 20, 2009 July 6, 2009 June 1, 2009 May 28, 2009 May 4, 2009 Publication Date October 9, 2009 September 30, 2009 August 31, 2009 August 24, 2009 August 5, 2009 Frequency Weekly Weekly Quarterly Monthly Monthly Quarterly Quarterly Timing / Recent Release Friday PM Monday AM August 5, 2009 October 2, 2009 September 18, 2009 August 24, 2009 August 19, 2009

Franchise Research
Global: Portfolio and Credit Strategy: Relative value: Credit now in-line with equity Global Dividend Swap Monitor (September 2009): How steep is still cheap? Upside to long-dated dividends Investing for Growth: Capex and R&D Hedge Fund Trend Monitor: Fund re-risking: Net long exposure rises to pre-Lehman levels S&P 500 Beige Book: 2Q earnings themes: preparation for growth and the inventory cycle

Periodical Research
US Weekly Kickstart US Tradesheet S&P 500 Beige Book US Monthly Chartbook Where to Invest Now Hedge Fund Trend Monitor Strategy Baskets
Source: Goldman Sachs Global ECS Research.

Description Five minute guide to the US equity market Two-pager on recommended trades and US market data Qualitative assessment of S&P 500 quarterly earnings reports Monthly report on where to invest in the S&P 500 Marketing presentation highlighting recent research and best trade ideas Analysis of hedge fund holdings and positioning Overview of US Portfolio Strategy thematic baskets

Goldman Sachs Global Economics, Commodities and Strategy Research

22

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Disclosures
The Equities Division of the firm has previously introduced the basket of securities discussed in this report. The Equity Analyst may have been consulted as to the composition of the basket prior to its launch. However, the views expressed in this research and its timing were not shared with the Equities Division.

Goldman Sachs Global Economics, Commodities and Strategy Research

23

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Reg AC
I, David J. Kostin, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Disclosures
Disclosures required by United States laws and regulations
See company-specific regulatory disclosures above for any of the following disclosures required as to companies referred to in this report: manager or co-manager in a pending transaction; 1% or other ownership; compensation for certain services; types of client relationships; managed/co-managed public offerings in prior periods; directorships; for equity securities, market making and/or specialist role. Goldman Sachs usually makes a market in fixed income securities of issuers discussed in this report and usually deals as a principal in these securities. The following are additional required disclosures: Ownership and material conflicts of interest: Goldman Sachs policy prohibits its analysts, professionals reporting to analysts and members of their households from owning securities of any company in the analyst's area of coverage. Analyst compensation: Analysts are paid in part based on the profitability of Goldman Sachs, which includes investment banking revenues. Analyst as officer or director: Goldman Sachs policy prohibits its analysts, persons reporting to analysts or members of their households from serving as an officer, director, advisory board member or employee of any company in the analyst's area of coverage. Non-U.S. Analysts: Non-U.S. analysts may not be associated persons of Goldman, Sachs & Co. and therefore may not be subject to NASD Rule 2711/NYSE Rules 472 restrictions on communications with subject company, public appearances and trading securities held by the analysts.

Additional disclosures required under the laws and regulations of jurisdictions other than the United States
The following disclosures are those required by the jurisdiction indicated, except to the extent already made above pursuant to United States laws and regulations. Australia: This research, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. Canada: Goldman Sachs Canada Inc. has approved of, and agreed to take responsibility for, this research in Canada if and to the extent it relates to equity securities of Canadian issuers. Analysts may conduct site visits but are prohibited from accepting payment or reimbursement by the company of travel expenses for such visits. Hong Kong: Further information on the securities of covered companies referred to in this research may be obtained on request from Goldman Sachs (Asia) L.L.C. India: Further information on the subject company or companies referred to in this research may be obtained from Goldman Sachs (India) Securities Private Limited; Japan: See below. Korea: Further information on the subject company or companies referred to in this research may be obtained from Goldman Sachs (Asia) L.L.C., Seoul Branch. Russia: Research reports distributed in the Russian Federation are not advertising as defined in the Russian legislation, but are information and analysis not having product promotion as their main purpose and do not provide appraisal within the meaning of the Russian legislation on appraisal activity. Singapore: Further information on the covered companies referred to in this research may be obtained from Goldman Sachs (Singapore) Pte. (Company Number: 198602165W). Taiwan: This material is for reference only and must not be reprinted without permission. Investors should carefully consider their own investment risk. Investment results are the responsibility of the individual investor. United Kingdom: Persons who would be categorized as retail clients in the United Kingdom, as such term is defined in the rules of the Financial Services Authority, should read this research in conjunction with prior Goldman Sachs research on the covered companies referred to herein and should refer to the risk warnings that have been sent to them by Goldman Sachs International. A copy of these risks warnings, and a glossary of certain financial terms used in this report, are available from Goldman Sachs International on request.
European Union: Disclosure information in relation to Article 4 (1) (d) and Article 6 (2) of the European Commission Directive 2003/126/EC is available at

http://www.gs.com/client_services/global_investment_research/europeanpolicy.html which states the European Policy for Managing Conflicts of Interest in Connection with Investment Research.
Japan: Goldman Sachs Japan Co., Ltd. is a Financial Instrument Dealer under the Financial Instrument and Exchange Law, registered with the Kanto Financial Bureau

(Registration No. 69), and is a member of Japan Securities Dealers Association (JSDA) and Financial Futures Association of Japan (FFAJ). Sales and purchase of equities are subject to commission pre-determined with clients plus consumption tax. See company-specific disclosures as to any applicable disclosures required by Japanese stock exchanges, the Japanese Securities Dealers Association or the Japanese Securities Finance Company.

Ratings, coverage groups and views and related definitions
Buy (B), Neutral (N), Sell (S) -Analysts recommend stocks as Buys or Sells for inclusion on various regional Investment Lists. Being assigned a Buy or Sell on an Investment List is determined by a

stock's return potential relative to its coverage group as described below. Any stock not assigned as a Buy or a Sell on an Investment List is deemed Neutral. Each regional Investment Review Committee manages various regional Investment Lists to a global guideline of 25%-35% of stocks as Buy and 10%-15% of stocks as Sell; however, the distribution of Buys and Sells in any particular coverage group may vary as determined by the regional Investment Review Committee. Regional Conviction Buy and Sell lists represent investment recommendations focused on either the size of the potential return or the likelihood of the realization of the return.
Return potential represents the price differential between the current share price and the price target expected during the time horizon associated with the price target. Price targets are required for all covered stocks. The return potential, price target and associated time horizon are stated in each report adding or reiterating an Investment List membership.

Goldman Sachs Global Economics, Commodities and Strategy Research

24

October 30, 2009

United States: Portfolio Strategy: US Weekly Kickstart

Coverage groups and views: A list of all stocks in each coverage group is available by primary analyst, stock and coverage group at http://www.gs.com/research/hedge.html. The analyst assigns one of the following coverage views which represents the analyst's investment outlook on the coverage group relative to the group's historical fundamentals and/or valuation. Attractive (A). The investment outlook over the following 12 months is favorable relative to the coverage group's historical fundamentals and/or valuation. Neutral (N). The investment outlook over the following 12 months is neutral relative to the coverage group's historical fundamentals and/or valuation. Cautious (C). The investment outlook over the following 12 months is unfavorable relative to the coverage group's historical fundamentals and/or valuation. Not Rated (NR). The investment rating and target price have been removed pursuant to Goldman Sachs policy when Goldman Sachs is acting in an advisory capacity in a merger or strategic transaction involving this company and in certain other circumstances. Rating Suspended (RS). Goldman Sachs Research has suspended the investment rating and price target for this stock, because

there is not a sufficient fundamental basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon. Coverage Suspended (CS). Goldman Sachs has suspended coverage of this company. Not Covered (NC). Goldman Sachs does not cover this company. Not Available or Not Applicable (NA). The information is not available for display or is not applicable. Not Meaningful (NM). The information is not meaningful and is therefore excluded.

Global product; distributing entities
The Global Investment Research Division of Goldman Sachs produces and distributes research products for clients of Goldman Sachs, and pursuant to certain contractual arrangements, on a global basis. Analysts based in Goldman Sachs offices around the world produce equity research on industries and companies, and research on macroeconomics, currencies, commodities and portfolio strategy. This research is disseminated in Australia by Goldman Sachs JBWere Pty Ltd (ABN 21 006 797 897) on behalf of Goldman Sachs; in Canada by Goldman Sachs Canada Inc. regarding Canadian equities and by Goldman Sachs & Co. (all other research); in Hong Kong by Goldman Sachs (Asia) L.L.C.; in India by Goldman Sachs (India) Securities Private Ltd.; in Japan by Goldman Sachs Japan Co., Ltd.; in the Republic of Korea by Goldman Sachs (Asia) L.L.C., Seoul Branch; in New Zealand by Goldman Sachs JBWere (NZ) Limited on behalf of Goldman Sachs; in Russia by OOO Goldman Sachs; in Singapore by Goldman Sachs (Singapore) Pte. (Company Number: 198602165W); and in the United States of America by Goldman, Sachs & Co. Goldman Sachs International has approved this research in connection with its distribution in the United Kingdom and European Union.
European Union: Goldman Sachs International, authorized and regulated by the Financial Services Authority, has approved this research in connection with its distribution in the European Union and United Kingdom; Goldman, Sachs & Co. oHG, regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht, may also distribute research in Germany.

General disclosures
This research is for our clients only. Other than disclosures relating to Goldman Sachs, this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. We seek to update our research as appropriate, but various regulations may prevent us from doing so. Other than certain industry reports published on a periodic basis, the large majority of reports are published at irregular intervals as appropriate in the analyst's judgment. Goldman Sachs conducts a global full-service, integrated investment banking, investment management, and brokerage business. We have investment banking and other business relationships with a substantial percentage of the companies covered by our Global Investment Research Division. SIPC: Goldman, Sachs & Co., the United States broker dealer, is a member of SIPC (http://www.sipc.org). Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desks that reflect opinions that are contrary to the opinions expressed in this research. Our asset management area, our proprietary trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research. This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Investors should review current options disclosure documents which are available from Goldman Sachs sales representatives or at http://www.theocc.com/publications/risks/riskchap1.jsp. Transactions cost may be significant in option strategies calling for multiple purchase and sales of options such as spreads. Supporting documentation will be supplied upon request. Our research is disseminated primarily electronically, and, in some cases, in printed form. Electronic research is simultaneously available to all clients. Disclosure information is also available at http://www.gs.com/research/hedge.html or from Research Compliance, One New York Plaza, New York, NY 10004. Copyright 2009 The Goldman Sachs Group, Inc. No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of The Goldman Sachs Group, Inc.

Goldman Sachs Global Economics, Commodities and Strategy Research

25


								
To top