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					                                          Americas Morning Summary
                                          September 13, 2010



The Goldman Sachs Group, Inc.
                                          Focus Items
This document contains comments
related to the following stocks:           Americas: Retail: Retail Conference preview: constructive setup; key themes
                                                                                                                                                                               1
                                           reviewed
Accenture Plc (ACN)                        AutoZone Inc. (AZO) Sell: A juggernaut, but fully priced; downgrade to Sell,
                                                                                                                                                                               2
Acme Packet, Inc. (APKT)                   sector-relative call
Adobe Systems Inc. (ADBE)
ADTRAN, Inc. (ADTN)                        CarMax Inc. (KMX): Upgrade to Neutral on Better Gross Profit/Car Outlook,
                                                                                                                                                                               3
AeroVironment, Inc. (AVAV)                 Valuation
Akamai Technologies, Inc. (AKAM)           Nike, Inc. (NKE): Expect strong 1Q11 results, underscored by a favorable set up                                                     4
Alliance Data Systems Corp. (ADS)
Altera Corp. (ALTR)                        Cummins Inc. (CMI) Buy: Accelerating new product sales to drive next leg of
Amdocs Limited (DOX)                                                                                                                                                           5
                                           upside; CL Buy
Aruba Networks, Inc. (ARUN)
Autodesk Inc. (ADSK)                       3M Company (MMM): Remove from Conviction Buy List; maintain Buy                                                                     6
Automatic Data Processing Inc.
                                           United States: Banks: Capital clarity drives leveragable value?                                                                     7
(ADP)
AutoZone Inc. (AZO)                        Americas: Technology: Software: The Weekly Catalyst: Monthly SaaS update,
BMC Software, Inc. (BMC)                                                                                                                                                       8
                                           Taleo World, ORCL 1Q
Broadcom Corporation (BRCM)
Broadsoft, Inc. (BSFT)
Brocade Communications Systems            Key Data Changes
(BRCD)
CA, Inc. (CA)                             Investment List Additions
Calix, Inc. (CALX)                         Company                                          Ticker                          Investment List Additions
CarMax Inc. (KMX)
                                           AutoZone Inc.                                    AZO                                 Americas Sell List
Check Point Software Tech. (CHKP)
Cisco Systems, Inc. (CSCO)                 Cummins Inc.                                      CMI                         Americas Conviction Buy List
Citrix Systems Inc. (CTXS)
Cognizant Technology Solutions            Investment List Removals
(CTSH)                                                                                                                      Investment List Removals
                                           Company                                          Ticker
CommVault Systems, Inc. (CVLT)
Computer Sciences Corp. (CSC)              CarMax Inc.                                      KMX                                 Americas Sell List
Concur Technologies, Inc. (CNQR)           3M Company                                       MMM                          Americas Conviction Buy List
Corning Inc. (GLW)
Cummins Inc. (CMI)                        Initiations
Enterprise GP Holdings L.P. (EPE)                                                            Rating/
                                           Company                         Ticker                            Price Target      Current Year          Next Year    Fiscal y/e
ExlService Holdings, Inc. (EXLS)                                                          Coverage view
F5 Networks, Inc. (FFIV)                   RightNow Technologies, Inc.     RNOW               N/A               $21.00               $0.21            $0.46         Dec
Fidelity National Information Svcs.
(FIS)                                     Rating and price target changes
Fiserv, Inc. (FISV)                                                                Rating/
                                                                                                             Price Target                             Estimates
Garmin Ltd. (GRMN)                                                              Coverage view
Genpact Ltd. (G)                           Company                       Ticker  New     Old           New        Old       % chg     Current Year Next Year Fiscal y/e
Global Payments Inc. (GPN)                 Adobe Systems Inc.            ADBE       B/A      unch    ↑ $39.00   $35.00      11.4%            $1.52       $1.83       Nov
Heartland Payment Systems, Inc.
                                           AeroVironment, Inc.           AVAV       N/C      unch    ↓ $22.00   $23.00      (4.3%)           $0.90       $1.15        Apr
(HPY)
For further product information,
contact:

New York Investment Research
(212) 902-1000
                                           The Goldman Sachs Group, Inc. does and seeks to do business with companies covered in its research
Analysts employed by non-US                reports. As a result, investors should be aware that the firm may have a conflict of interest that could
affiliates are not registered/qualified    affect the objectivity of this report. Investors should consider this report as only a single factor in making
as research analysts with FINRA in         their investment decision. For Reg AC certification, see the end of the text. Other important disclosures
the U.S.                                   follow the Reg AC certification, or go to www.gs.com/research/hedge.html. This report is intended for
                                           distribution to GS institutional clients only.
Global Investment Research
Hewitt Associates, Inc. (HEW)        Akamai Technologies, Inc.        AKAM     B/A       unch     ↑ $60.00    $49.00      22.4%         $1.06           $1.33        Dec
Higher One Holdings, Inc. (ONE)
Infinera Corp. (INFN)                Alliance Data Systems Corp.      ADS      N/N       unch     ↑ $64.00    $63.00       1.6%         $4.33           $5.44        Dec
Intel Corp. (INTC)                   Autodesk Inc.                    ADSK     N/A       unch     ↑ $34.00    $31.00       9.7%         $1.05           $1.30        Jan
Intuit, Inc. (INTU)
                                     AutoZone Inc.                    AZO      ↓ S/N     N/N      ↑ $213.00 $211.00        0.9%        $14.71           $16.25       Aug
Juniper Networks, Inc. (JNPR)
Lender Processing Services, Inc.     BMC Software, Inc.               BMC      N/A       unch     ↑ $44.00    $41.00       7.3%         $2.52           $2.83        Mar
(LPS)                                CarMax Inc.                      KMX      ↑ N/N     S/N      ↑ $24.00    $21.00      14.3%         $1.49           $1.51        Feb
Limelight Networks, Inc. (LLNW)
lululemon athletica inc. (LULU)      Check Point Software Tech.       CHKP     N/A       unch     ↑ $37.00    $35.00       5.7%         $2.16           $2.27        Dec
Mastercard Inc. (MA)                 Citrix Systems Inc.              CTXS     N/A       unch     ↑ $60.00    $49.00      22.4%         $1.46           $1.78        Dec
McAfee, Inc. (MFE)
                                     Cognizant Technology Solutions   CTSH     N/A       unch     ↑ $68.00    $61.00      11.5%         $2.26           $2.54        Dec
Microsoft Corp. (MSFT)
Motorola, Inc. (MOT)                 CommVault Systems, Inc.          CVLT     N/A       unch     ↑ $27.00    $20.50      31.7%         $0.50           $0.66        Mar
Motricity, Inc. (MOTR)               Concur Technologies, Inc.        CNQR     N/A       unch     ↑ $52.00    $43.00      20.9%         $0.42           $0.53        Sep
Navistar International Corp. (NAV)
Netgear, Inc. (NTGR)                 Cummins Inc.                     CMI      B/N       unch     ↑ $104.00   $97.00       7.2%         $5.12           $7.25        Dec
NetSuite Inc. (N)                    Enterprise GP Holdings L.P.      EPE      N/N       unch     ↑ $62.00    $56.00      10.7%         $1.88           $2.25        Dec
Nike, Inc. (NKE)
                                     Fiserv, Inc.                     FISV     N/A       unch     ↑ $54.00    $52.00       3.8%         $4.00           $4.36        Dec
Northern Trust Corp. (NTRS)
Nuance Communications, Inc.          Global Payments Inc.             GPN      N/N       unch     ↓ $45.00    $46.00      (2.2%)        $2.74           $3.02        May
(NUAN)                               Intuit, Inc.                     INTU     N/A       unch     ↑ $47.00    $41.00      14.6%         $1.99           $2.31         Jul
Nvidia Corp. (NVDA)
Oracle Corp. (ORCL)                  Limelight Networks, Inc.         LLNW     N/A       unch      ↑ $5.00     $4.50      11.1%        ($0.13)          ($0.15)      Dec
Paychex, Inc. (PAYX)                 Navistar International Corp.     NAV      N/N       unch     ↓ $49.00    $55.00      (10.9%)       $3.17           $4.85        Oct
Pitney Bowes Inc. (PBI)
                                     NetSuite Inc.                     N       N/A       unch     ↑ $21.00    $17.00      23.5%        ($0.41)          ($0.28)      Dec
QUALCOMM, Inc. (QCOM)
Quest Software, Inc. (QSFT)          Oracle Corp.                     ORCL     B/A       unch     ↑ $30.00    $27.00      11.1%         $1.87           $2.09        May
Red Hat, Inc. (RHT)                  Paychex, Inc.                    PAYX     S/N       unch     ↓ $24.00    $26.00      (7.7%)        $1.35           $1.42        May
Research In Motion Ltd. (RIM.TO)
Research In Motion Ltd. (RIMM)       Pitney Bowes Inc.                 PBI     S/A       unch     ↓ $20.00    $21.00      (4.8%)        $2.11           $2.19        Dec
RightNow Technologies, Inc.          Quest Software, Inc.             QSFT     S/A       unch     ↑ $22.00    $18.50      18.9%         $1.26           $1.40        Dec
(RNOW)
                                     Red Hat, Inc.                    RHT      N/A       unch     ↑ $33.00    $27.50      20.0%         $0.56           $0.68        Feb
Riverbed Technology, Inc. (RVBD)
salesforce.com, Inc. (CRM)           RightNow Technologies, Inc.      RNOW     N/A           --    $21.00        --         --          $0.21           $0.46        Dec
Sapient (SAPE)                       salesforce.com, Inc.             CRM      B/A       unch     ↑ $128.00 $117.00        9.4%         $0.66           $1.01        Jan
SolarWinds, Inc. (SWI)
Solera Holdings, Inc. (SLH)          SolarWinds, Inc.                 SWI      N/A       unch     ↑ $18.50    $16.50      12.1%         $0.59           $0.71        Dec
SuccessFactors, Inc. (SFSF)          Solera Holdings, Inc.            SLH      N/N       unch     ↑ $43.00    $40.00       7.5%         $1.47           $1.74        Jun
Symantec Corp. (SYMC)
                                     SuccessFactors, Inc.             SFSF     B/A       unch     ↑ $29.00    $26.00      11.5%        ($0.19)          ($0.03)      Dec
Syniverse Technologies, Inc. (SVR)
Taleo Corporation (TLEO)             Symantec Corp.                   SYMC     N/A       unch     ↑ $16.00    $15.00       6.7%         $1.17           $1.40        Mar
Tellabs, Inc. (TLAB)                 Taleo Corporation                TLEO     B/A       unch     ↑ $32.00    $30.00       6.7%         $0.41           $0.64        Dec
3M Company (MMM)
TIBCO Software Inc. (TIBX)           TIBCO Software Inc.              TIBX     N/A       unch     ↑ $17.00    $14.00      21.4%         $0.57           $0.67        Nov
Total System Services, Inc. (TSS)    VeriSign, Inc.                   VRSN     S/A       unch     ↑ $29.00    $24.00      20.8%         $0.93           $1.21        Dec
VeriSign, Inc. (VRSN)
Visa Inc. (V)                        VMware, Inc.                     VMW      B/A       unch     ↑ $105.00   $88.00      19.3%         $0.85           $1.35        Dec
VMware, Inc. (VMW)                   Western Union Co.                WU       N/N       unch     ↑ $19.00    $18.50       2.7%         $1.34           $1.41        Dec
Western Union Co. (WU)
WNS (Holdings) Ltd. (WNS)            Estimate changes
Wright Express Corp. (WXS)                                                                                 Current Year                       Next Year
                                                                                  Rating/                                                                          Fiscal y/e
XILINX Corp. (XLNX)                  Company                          Ticker   Coverage view         New       Old     % chg         New         Old      % chg
                                     Accenture Plc                    ACN              B/A         ↑ $2.65    $2.62       0.9%      ↑ $3.01     $2.88     4.4%       Aug
                                     AeroVironment, Inc.              AVAV             N/C         ↓ $0.90    $1.05    (14.4%)      ↓ $1.15     $1.20     (4.2%)     Apr
                                     Alliance Data Systems Corp.      ADS              N/N         ↓ $4.33    $4.34    (0.2%)       ↑ $5.44     $5.42     0.4%       Dec
                                     Amdocs Limited                   DOX              B/A         ↑ $2.09    $2.08       0.3%      ↑ $2.31     $2.30     0.6%       Sep
                                     Automatic Data Processing Inc.   ADP              N/N         ↑ $2.45    $2.44       0.1%       $2.66       unch       --       Jun
                                     CarMax Inc.                      KMX              N/N         ↑ $1.49    $1.48       0.6%      ↑ $1.51     $1.46     3.8%       Feb
                                     Cognizant Technology Solutions   CTSH             N/A          $2.26     unch         --       ↓ $2.54     $2.55     (0.2%)     Dec
                                     Computer Sciences Corp.          CSC              N/A         ↓ $5.18    $5.19    (0.2%)       ↓ $5.39     $5.40     (0.2%)     Mar
Cummins Inc.                    CMI      B/N      ↑ $5.12   $5.10      0.5%     ↑ $7.25   $6.65   9.0%     Dec
ExlService Holdings, Inc.      EXLS      N/A       $0.66     unch       --      ↓ $0.73   $0.75   (1.7%)   Dec
Genpact Ltd.                     G       N/A      ↑ $0.67   $0.64      4.5%     ↑ $0.83   $0.81   2.3%     Dec
Global Payments Inc.            GPN      N/N      ↑ $2.74   $2.71      0.9%     ↑ $3.02   $2.99   0.9%     May
lululemon athletica inc.       LULU      B/N      ↑ $1.25   $1.23      1.3%      $1.58    unch      --     Jan
Mastercard Inc.                 MA       B/N      ↓ $13.42 $13.44     (0.2%)    ↓ $15.80 $15.81 (0.1%)     Dec
Navistar International Corp.    NAV      N/N      ↓ $3.17   $3.87     (17.9%)   ↓ $4.85   $5.35   (9.3%)   Oct
Pitney Bowes Inc.               PBI      S/A      ↓ $2.11   $2.12     (0.2%)    ↑ $2.19   $2.18   0.2%     Dec
Research In Motion Ltd.        RIM.TO    S/N      ↓ $5.42   $5.43       --      ↓ $5.06   $5.11   (1.0%)   Feb
Research In Motion Ltd.        RIMM      S/N      ↓ $5.42   $5.43       --      ↓ $5.06   $5.11   (1.0%)   Feb
RightNow Technologies, Inc.    RNOW      N/A       $0.21      --        --       $0.46     --       --     Dec
Solera Holdings, Inc.           SLH      N/N      ↓ $1.47   $1.55     (4.9%)    ↓ $1.74   $1.83   (5.2%)   Jun
Visa Inc.                        V       B/N      ↑ $3.86   $3.85       --      ↑ $4.78   $4.76   0.3%     Sep
WNS (Holdings) Ltd.            WNS       S/A      ↑ $0.03   ($0.00)    NM       ↑ $0.13   $0.11   21.0%    Mar


Other Headlines
Commodities
Energy Weekly: The turning of the tide                                                                            9

Credit Strategy
The Credit Line: Assessing the tradeoff between rate risk and credit risk                                        10

Options Research
United States: Options Research: The Buzz: Using options to fine-tune equity exposure in
                                                                                                                 11
uncertain times

Consumer Cyclicals
lululemon athletica inc. (LULU): 2Q reinforces near-term momentum, long-term growth story; Buy                   12

Energy
Americas: Energy: Oil: Trading update: Range-bound heading into "shoulder months"                                13

Financial Services
Northern Trust Corp. (NTRS): Capital opportunities, core businesses help offset rate headwinds                   14

Industrials
AeroVironment, Inc. (AVAV): Near-term uncertainty persists after F1Q results; maintain Neutral                   15
Navistar International Corp. (NAV): Reducing estimates on weaker Engine margins; maintain
                                                                                                                 16
Neutral

Technology
Americas: Communications Technology: GS CommTech Weekly: RIMM (Sell) preview and short
                                                                                                                 17
interest update
Americas: Technology: Semiconductors: GS US SEMI Weekly: IDF Preview, Comms takeaways
                                                                                                                 18
from IBC/IFA
RightNow Technologies, Inc. (RNOW): Initiating Neutral; Positive underlying trends, business in
                                                                                                                 19
transition
Americas: Technology: IT Services: Intact enterprise spend and volume activity expected to
                                                                                                                 20
support selected IT Services names
Americas: Technology: Software: Rolling price targets forward as we near year's end; reiterate                   21
Attractive coverage view

Utilities
Americas: Utilities: Diversified: Pipeline & MLP Essentials: NGL inventories explain recent prices   22

Other
Latin America Weekly Kickstart: Bearish on September, bullish by December                            23

Reports Published
Americas Morning Summary                                                                                                                 September 13, 2010




Focus Items

Americas: Retail: Retail Conference preview: constructive setup; key themes reviewed                                                                     1

                                            Matthew J. Fassler (New York): matt.fassler@gs.com, (212) 902-6740
                                            Goldman Sachs & Co.
                                            Adrianne Shapira (New York): adrianne.shapira@gs.com, (212) 357-4174
                                            Goldman Sachs & Co.
                                            Michelle Tan, CFA (New York): michelle.tan@gs.com, (212) 902-3099
                                            Goldman Sachs & Co.

                                            Conference and backdrop suggest constructive outlook for retail stocks
                                            * Presenting retailers typically outperform during the GS Retail Conference. Since 2006, shares of broadlines,
                                            specialty and hardlines retailers outperformed on the day management teams presented at our conference.
                                            * Encouraging BTS commentary. We expect favorable back-to-school sales commentary, as a warm August
                                            likely led to some pent up demand heading into September. Early Sept. is 9% cooler than Aug. vs only 5%
                                            last year and we believe sales are off to a relatively strong start MTD. We also expect commentary on benign
                                            BTS promos to aid office superstore stocks.
                                            * Expect constructive comments on capital allocation. Each year at our conference, we ask presenters
                                            questions regarding their outlook for the macro environment, expected direction of margins, and views on
                                            capital allocation. This year, we look for subdued commentary around macro and margin expectations, while
                                            on capital allocation, we expect to hear a preference for share buybacks and dividend hikes, in contrast with
                                            the historical tilt toward new store expansion, as high-return opportunities dwindle in the current low growth
                                            environment.
                                            * On the macro front, the relationship between consumption growth and production growth swung sharply in
                                            favor of production over the last year, a dynamic that peaked in 2Q10 and is now poised to favor retail once
                                            again. Our economists’ forecasts suggest that as GDP growth slows, growth in PCE will hold up better than
                                            growth in production. This dynamic usually takes time to play out in retail share price performance, but has
                                            reached an early inflection point.
                                            * Retail sales growth has already decelerated, and essentially landed at the growth rates we are likely to see
                                            over the remainder of the year.
                                            * Our discretionary cash flow model suggests slowing growth, but growth nonetheless, rather than an outright
                                            decline in consumer spending. Similarly, our economists expect ongoing growth in PCE.
                                            Biggest risk: 1Q11 compares, margins
                                            * Retailers ultimately need to cycle the big same-store sales gains they printed in 1Q2010.
                                            * Margins are elevated, presenting some risk to 2011 forecasts.
                                            * Retailers have traded better relative to the market than they tend to trade in the 12-18 month period
                                            following the end of recessions.



AutoZone Inc. (AZO) Sell: A juggernaut, but fully priced; downgrade to Sell, sector-relative call                                                        2

AZO, $217.90                                Matthew J. Fassler (New York): matt.fassler@gs.com, (212) 902-6740
Market cap                  $10,382 mn
                                            Goldman Sachs & Co.
                                            Mark-Andre Saucier-Nadeau (New York): mark-andre.saucier-nadeau@gs.com, (212) 902-3668
Target price                      $213.00
                                            Goldman Sachs & Co.
Fiscal y/e Aug            2010E    2011E    Ryan Brinkman (New York): ryan.brinkman@gs.com, (917) 343-9516
EPS ($)                   14.71     16.25   Goldman Sachs & Co.
                                            Jonathan Baucom (New York): jonathan.baucom@gs.com, (212) 934-4213
P/E                       14.8X    13.4X
                                            Goldman Sachs & Co.
                      *
EPS Quarter/Interim        5.40      4.43

Investment Lists
                                            Source of opportunity
                      Americas Sell List    We are downgrading AZO shares to Sell from Neutral. This is a sector-relative call, and reflects our view that
Coverage view                     Neutral   the firm’s outstanding performance has been fairly priced by the market; that EBIT margin opportunity is
                                            limited from here; and that any upside to estimates will not drive a breakout in the shares following recent
*Current and a year ago
                                            sharp outperformance. The company remains one of the best companies we cover, with the highest financial
                                            returns and its aggressive buyback program. We inch our 12-month target price up to $213 from $211, but




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                  September 13, 2010



                                           maintain our earnings estimates.
                                           Catalyst
                                           We expect this call to play out through subdued reactions to solid numbers. AZO reports August quarter
                                           results on September 21; we expect a solid showing, with some potential upside to our 4% same-store
                                           forecast and our EPS estimate of $5.40 (essentially in line with consensus of $5.42), based on strong recent
                                           sales from peers. This quarter should mark the first sequential deceleration in same-store trends, which we
                                           expect will continue through fiscal 2011.
                                           Valuation
                                           We see modest downside to our $213 12-month price target, derived through a blend of risk / reward analysis
                                           on EV/EBITDA and DCF valuation. The slight tick up in our price target reflects a resetting of our base-case
                                           valuation assumption to reflect a modest increase in the market multiple.
                                           Key risks
                                           A sharp downturn that would drive defensive outperformance; AZO is aggressively repurchasing stock.
                                           Impact on related securities
                                           Within auto parts, we see better stories and better value in AAP and ORLY.



CarMax Inc. (KMX): Upgrade to Neutral on Better Gross Profit/Car Outlook, Valuation                                                                       3

KMX, $22.39                                Ryan Brinkman (New York): ryan.brinkman@gs.com, (917) 343-9516
Market cap                  $5,009 mn
                                           Goldman Sachs & Co.
                                           Matthew J. Fassler (New York): matt.fassler@gs.com, (212) 902-6740
Target price                     $24.00
                                           Goldman Sachs & Co.
Fiscal y/e Feb         2011E     2012E     Mark-Andre Saucier-Nadeau (New York): mark-andre.saucier-nadeau@gs.com, (212) 902-3668
EPS ($)                   1.49     1.51    Goldman Sachs & Co.
                                           Robert Higginbotham, CFA (New York): robert.higginbotham@gs.com, (212) 902-4611
P/E                    15.0X      14.8X
                                           Goldman Sachs & Co.
EPS Quarter/Interim*      0.42     0.46    Jonathan Baucom (New York): jonathan.baucom@gs.com, (212) 934-4213
Investment Lists                           Goldman Sachs & Co.
                                 Neutral

Coverage view                    Neutral   What happened
*Current and a year ago
                                           We upgrade KMX to Neutral from Sell; the higher used car profitability evident in recent results now appears
                                           more sustainable, even if used car prices fade, removing the dominant risk driving our Sell rating. We expect
                                           savings from reconditioning and appraisal lane sourcing to offset the impact to margins of moderate declines
                                           in used car prices; we are raising estimates as a result. Since we added KMX to the Sell list on January 21,
                                           2010, the shares are flat vs. the S&P -2.5% and the RLX +4.8%. Over 12-months KMX shares are +23.9%
                                           vs. the S&P +6.3% and the RLX +13.4%. With this note Ryan Brinkman assumes primary coverage of
                                           CarMax.
                                           Current view
                                           We raise our earnings estimates on an improved outlook for reconditioning cost and appraisal sourcing
                                           savings. 2010 goes to $1.49 from $1.48 (consensus is at $1.44), 2011 goes to $1.51 from $1.46 (and Street
                                           at $1.53), and 2012 goes to $1.72 from $1.60 (vs. the mean at $1.75).
                                           To the extent used car profitability appears sustainable, higher profits from credit are unlikely to reverse, the
                                           business model remains unique, and the firm retains optionality for significant store growth, we see less risk
                                           to forecasts and valuation, and believe a Neutral rating is more appropriate. As a result, we raise our target to
                                           $24 from $21. We rate KMX Neutral (rather than Buy) because margins remain elevated, a dynamic which
                                           constrains earnings growth relative to our sector over the near-term.
                                           Our 12-month target suggests 7% upside from current levels and is based on a 75% Relative P/E risk/reward
                                           approach and 25% on DCF analysis (a change from our previous methodology utilizing normalized earnings
                                           given that we now believe per car profitability is structurally higher).
                                           Key upside risks include greater investor willingness to look through growth related expenses as the firm re-
                                           ramps expansion. Key downside risks include the possibility of used car prices falling sharply from current
                                           historically high levels and higher CAF funding costs.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                  September 13, 2010




Nike, Inc. (NKE): Expect strong 1Q11 results, underscored by a favorable set up                                                                           4

NKE, $73.75                                 Michelle Tan, CFA (New York): michelle.tan@gs.com, (212) 902-3099
Market cap                  $36,093 mn
                                            Goldman Sachs & Co.
                                            Nicole Shevins (New York): nicole.shevins@gs.com, (212) 902-9884
Target price                       $85.00
                                            Goldman Sachs & Co.
Fiscal y/e May            2011E    2012E

EPS ($)                    4.40      5.00   What's changed
P/E                       16.8X    14.7X    NKE reports 1Q11 EPS on 9/23. Our $1.10 estimate is above FC at $1.00.
EPS Quarter/Interim
                      *
                           1.10      1.04   Implications
                                            We expect a strong 1Q based on a combination of (1) accelerating sales trends: FX-neutral futures orders
Investment Lists
                                            accelerated to +10% last quarter vs. +6% the prior quarter; (2) still-strong gross margin: though gains will
                    Americas Buy List       moderate, we still see upside to last year, as NKE is going up against discounting in 1Q10 with very lean
          Americas Conviction Buy List
                                            inventories (down 13%); NKE also last guided near the lows in the euro ($1.22), though hedging considerably
Coverage view                     Neutral   mutes the impact; and (3) strong futures growth (GS estimate: 8%-9%): though we could see some
*Current and a year ago                     moderation in futures after the World Cup, we expect still strong growth this quarter, driven by broader
                                            inventory rebuilding at retail following strong spring sell-through. While most retailers have seen sales
                                            decelerate, many wholesalers have indicated accelerating 2H order trends.
                                            Importantly, from a stock perspective, we believe the setup is also very favorable as, typical of NKE’s history,
                                            4Q10 set a low bar coming into 1Q11. NKE historically beats 4Q by a much slimmer margin (a median of
                                            1.7% over the past decade vs. 6.5% for the average quarter) and issues conservative guidance. While this
                                            pressures the stock (NKE shares have sold off 70% of the time on 4Q), it creates a positive set up for the
                                            following quarter. In fact, over the past decade 1Q has been NKE’s consistently best quarter from an EPS
                                            beat/stock reaction perspective, with a median beat of 8.5% and the stock up 80% of the time. Given an in-
                                            line 4Q10 that drove a 4% sell-off in the stock, we believe shares are positioned to react well to a strong
                                            1Q11.
                                            Valuation
                                            Our estimates and six-month, multiple-based price target of $85 are unchanged.
                                            Key risks
                                            Weakening of demand trends in calendar 2011; sharp dollar strengthening.



Cummins Inc. (CMI) Buy: Accelerating new product sales to drive next leg of upside; CL Buy                                                                5

CMI, $81.92                                 Jerry Revich, CFA (New York): jerry.revich@gs.com, (212) 902-4116
Market cap                  $16,163 mn
                                            Goldman Sachs & Co.
Target price                      $104.00
                                            Source of opportunity
Fiscal y/e Dec            2010E    2011E
                                            We add CMI to the Americas CL Buy List with 27% upside to our new $104 price target as we believe CMI is
EPS ($)                    5.12      7.25   positioned to benefit from (1) rising global engine regulations driving $1 bn of new product sales in 2011-12,
P/E                       16.0X    11.3X    (2) a recovery in N America truck demand and upside to market share assumptions, (3) rising fixed
                      *
                                            investment in Asia and Latin America, and (4) strong cash generation driving capacity to buy back $2 bn of
EPS Quarter/Interim        1.48      0.56
                                            stock in 2H2010-2012. We see 5-15% upside to 2010-12 consensus driven by new product sales with 10%
Investment Lists                            multiple expansion potential beyond our price target driven by higher cycle over cycle free cash conversion
                    Americas Buy List       and returns.
          Americas Conviction Buy List      Catalyst
Coverage view                     Neutral   We see 5-15% upside to 2010-12 consensus on stronger China fixed investment, accelerating Components
*Current and a year ago
                                            new product sales, and greater share on Daimler’s US truck platform. Accordingly, we raise our 2010-12 EPS
                                            by an average of 6% to $5.12/ $7.25/ $8.65.
                                            (1) Sharp 40% growth in Components segment sales in 2011 driven by new products in off-highway & US
                                            truck, well ahead of consensus of +20%.
                                            (2) Stronger US truck share to reinforce estimate upside and CMI’s product cycle. Consensus and guidance
                                            assume 20% market share on Daimler’s truck platform vs. realized 36% share in June and 25% in July.
                                            (3) More resilient China truck and construction engine demand driven by strong fixed investment, with upside
                                            to our estimates if western China stimulus and 5-year construction equipment plans are passed.
                                            (4) Potential for an expanded buyback program with ~$1 bn FCF/ year.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                September 13, 2010



                                           Valuation
                                           On higher estimates, we raise our 12-month price target to $104 from $97 based on 7.8x 2011 EV/EBITDA.
                                           CMI trades at 6.2X 2011 EV/EBITDA and 11.3X P/E, discounts of 14%/18% to Machinery peers vs. in-line
                                           historically.
                                           Key risks
                                           Components margin execution, delayed power generation recovery.



3M Company (MMM): Remove from Conviction Buy List; maintain Buy                                                                                         6

MMM, $83.94                                Terry Darling (New York): terry.darling@gs.com, (212) 357-0379
Market cap                 $59,860 mn
                                           Goldman Sachs & Co.
                                           Adam Samuelson (New York): adam.samuelson@gs.com, (212) 902-6764
Target price                     $104.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E      2011E    Eddie Szeto, CFA (New York): eddie.szeto@gs.com, (212) 357-3320
EPS ($)                   5.85      6.40   Goldman Sachs & Co.
                                           Ankit Rastogi (Bangalore): ankit.rastogi@gs.com, (212) 934-6798
P/E                    14.4X      13.1X
                                           Goldman Sachs India SPL
EPS Quarter/Interim*      1.55      1.37

Investment Lists
                                           What happened
                   Americas Buy List       We remove 3M from the Americas Conviction List as we prefer Cummins (CMI), where we see better near-
Coverage view                Attractive    term catalysts (GS is 11% above consensus for 2011) and risk/ reward. We remain Buy-rated on 3M with
                                           24% upside to our $104 12-month target (16.3x 2011 P/E). We continue to believe 3M is positioned to
*Current and a year ago
                                           exceed consensus EPS estimates on re-invigorated organic revenue growth resulting from new products,
                                           share gains and above-average emerging market penetration as well as its strong balance sheet. Since
                                           being added to the Americas Conviction List on January 5, 3M is +1.7% vs. S&P -2.4% and LTM +12.8% vs.
                                           S&P +6.3%.
                                           Current view
                                           We maintain our Buy rating on 3M:
                                           1. We believe 3M remains positioned to beat 3Q consensus EPS (GS $1.55 vs. consensus $1.51), reinforced
                                           by recent company commentary that strong performance continued in July and August. Negative sentiment
                                           on consumer electronics exposure appears over-done, in our view.
                                           2. We remain above consensus in 2011 at $6.40 EPS, though the gap has narrowed, and believe
                                           reinvigorated organic growth from improved new product vitality and emerging market penetration points to
                                           upside to our 7% organic revenue assumption, which should offset pension headwinds.
                                           3. Recent acquisitions signal increased aggressiveness deploying the most under-levered balance sheet in
                                           our coverage (22% balance sheet optionality). Although 3M has indicated nominal GAAP EPS dilution in
                                           2011 from pending acquisitions, strategic fit, valuation and long-term growth and return potential appear
                                           solid. Moreover, the company retains significant capacity for additional acquisitions and/ or buy-backs.
                                           Valuation: 3M is trading at 14.4x/13.1x 2010/11 P/E, -7% / +2% to MI peers.
                                           Risks: Pricing / raw materials, Asian competition, M&A execution.
                                           See our separate note detailing our upgrade of Cummins.



United States: Banks: Capital clarity drives leveragable value?                                                                                         7

                                           Richard Ramsden (New York): richard.ramsden@gs.com, (212) 357-9981
                                           Goldman Sachs & Co.
                                           Christopher M. Neczypor (New York): christopher.neczypor@gs.com, (212) 357-8512
                                           Goldman Sachs & Co.
                                           Soumil Zaveri (New York): soumil.zaveri@gs.com, (212) 902-8484
                                           Goldman Sachs & Co.

                                           New Basel rules appear in line to positive
                                           Relative to market expectations, the new Basel standards appear in line with to favorable on both level (Tier 1
                                           common of 7%) and timing (full implementation 2019). However, question marks remain over the size and
                                           form of the systemic capital charge, the practical implementation of the 2.5% countercyclical buffer as well as




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                         September 13, 2010



                                 the need to comply with all future Basel III deductions to reinstate dividends and buybacks. To date, the
                                 market has shown a reluctance to pay for excess capital, as there is no obvious way of quantifying it. We see
                                 this announcement as important, as it allows quantification and hence valuation of excess capital, even if
                                 redeployment is not imminent.
                                 Capital clarity, but not certainty
                                 The new rules will act as a catalyst for well capitalized banks to request approval for buybacks and dividends.
                                 However, the FEDs criteria for increased leverage is still unclear, given (1) the uncertainty over the size of the
                                 systemic risk charge (2) the impact of Basel 2.5/3.
                                 Excess capital = upside to consensus EPS
                                 Large banks are forecasted to generate $170 bn of Tier 1 common through 2012 including our impact of
                                 Basel 2.5 and 3.0. In the absence of buybacks, capital ratios would increase from 8.6% today to 11.7% which
                                 translates into about 40% tangible book value growth. Building in the impact of Basel 2.5/3.0, the majority of
                                 large-cap banks appear well positioned. In theory, this gives banks room for EPS accretion through share
                                 repurchases over the coming two years. In a blue sky scenario, where all excess capital is redeployed into
                                 buybacks, consensus estimates would have to be revised upwards by 15%-20% through 2012.
                                 We continue to favor JPM & C
                                 Our analysis suggests that JPM will have 2012 excess capital equal to 25% of its current market cap followed
                                 by C (23%) and BAC (10%). We continue to favor JPMorgan, Citigroup, and Bank of America, given their
                                 attractive valuation and strong capital generation potential.



Americas: Technology: Software: The Weekly Catalyst: Monthly SaaS update, Taleo World, ORCL 1Q                                                   8

                                 Sarah Friar (San Francisco): sarah.friar@gs.com, (415) 249-7436
                                 Goldman Sachs & Co.
                                 Derek R. Bingham (San Francisco): derek.bingham@gs.com, (415) 249-7435
                                 Goldman Sachs & Co.
                                 Stephanie Withers, CFA (San Francisco): stephanie.withers@gs.com, (415) 249-7470
                                 Goldman Sachs & Co.
                                 Ventsi Stoichev (San Francisco): ventsi.stoichev@gs.com, (415) 249-7440
                                 Goldman Sachs & Co.
                                 Gonzalo Cavenaghi (San Francisco): gonzalo.cavenaghi@gs.com, (415) 249-7438
                                 Goldman Sachs & Co.
                                 Geo John (Bangalore): geo.john@gs.com, (212) 934-6386
                                 Goldman Sachs India SPL

                                 Taleo (TLEO, Buy): User event and analyst day a positive catalyst
                                 We expect Taleo’s annual user event and analyst day, beginning Monday in Chicago (analyst day is
                                 Tuesday), to set an upbeat tone. We highlight five key topics. (1) New analytics products: We expect the
                                 launch of an enterprise analytics product, which we expect can be a competitive differentiator for Taleo, given
                                 the company’s robust database of applicant and employee information. (2) Learn.com acquisition: The deal
                                 will not yet be closed, we expect the company to highlight Learn.com functionality to its user base at the
                                 event. We’ll be interested to learn more about the go-to market strategy and up-sell opportunity in this new
                                 module. (3) Up-sell in action: The up-sell opportunity is a core to our bullish view on the stock, and we expect
                                 to see the up-sell of performance & talent management in action at the user event. (4) CFO transition:
                                 Current CFO, Katy Murray, will transition by October-end and Taleo has narrowed its field for her
                                 replacement. Though we do not expect an announcement at the event, we do expect a smooth transition
                                 upon her departure. (5) Update on the environment: We expect management will continue to sound
                                 constructive on the market backdrop for SaaS applications, particularly performance & talent management.
                                 We do not expect 2011 guidance given CFO transition.
                                 RightNow Technologies (RNOW): Initiating with a Neutral
                                 We initiate coverage of RightNow, the next in our SaaS coverage with a $21, 12-month price target. This
                                 brings the SaaS companies under our coverage to 6, with $25 bn+ in market cap combined. Our full report is
                                 “Initiating Neutral: Positive underlying trends business in transition.”
                                 SaaS datapoints: SMB mixed; macro pointers for Concur choppy
                                 Datapoints in SMB (a key constituency for SaaS vendors) remain mixed, with payroll reports still pointing to
                                 sluggishness, but Tech Data citing strength in its July quarter report. We expect more clarity with the August
                                 NFIB reading, likely out this week. In Concur corner, Payroll data continues to look stable, but not improving,




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                      September 13, 2010



                                 while travel spend is rebounding.
                                 Oracle (ORCL, CL-Buy): Expect in-line 1Q, OpenWorld next catalyst
                                 We expect in-line results for Oracle’s least seasonally important FY1Q. We remain buyers, as we believe that
                                 near-term product launches and continued operational improvements of the Sun business, aided by the Mark
                                 Hurd hiring, should provide upside to estimates.


Other Headlines
Commodities

Energy Weekly: The turning of the tide                                                                                                           9

                                 David Greely (New York): david.greely@gs.com, (212) 902-2850
                                 Goldman Sachs & Co.
                                 Stefan Wieler, CFA (London): stefan.wieler@gs.com, +44(20)7051-5119
                                 Goldman Sachs International

                                 US market remains awash in oil, but recent data suggests that the tide is turning
                                 As the US market returned from the Labor Day holiday, the market was greeted by a spate of reports
                                 confirming that world oil market conditions are far more constructive than conditions in the US oil market
                                 suggest. Heading into the Fall of 2010, these reports give us increased confidence that the tide will soon be
                                 turning in the US oil market, and we continue to expect WTI crude oil prices to move into an $85-95/bbl
                                 trading range.
                                 IEA report shows that the draw on floating storage continued in August, with world oil demand
                                 exceeding supply
                                 The world oil market has been in a seasonally-adjusted deficit of over 600 thousand b/d since May, allowing
                                 world oil inventories to draw counter-seasonally. This draw has been driven by strong world oil demand,
                                 which grew by 2.4 million b/d year-over-year in August.
                                 China data shows strong rebound in both industrial production and implied oil demand
                                 Chinese implied oil demand grew by 950 thousand b/d yoy in August, after having contracted by 165
                                 thousand b/d yoy in July. This rebound was likely driven in part by the rebound in Chinese industrial
                                 production growth to 13.9%, and lends increased confidence to the sustainability of Chinese oil demand
                                 growth going forward.
                                 US data shows inventory build slowing as imports decline, but strong US production presents a
                                 downside risk to our 2011 WTI crude oil price forecast
                                 The build in US total petroleum inventories came to a virtual halt last week as US imports fell by 794
                                 thousand b/d. We expect US imports will slacken as floating storage has discharged, but stronger-than-
                                 anticipated US crude oil production presents a downside risk to our 2011 WTI price forecast.



Credit Strategy

The Credit Line: Assessing the tradeoff between rate risk and credit risk                                                                    10

                                 Charles P. Himmelberg (New York): charles.himmelberg@gs.com, (917) 343-3218
                                 Goldman Sachs & Co.
                                 Alberto Gallo, CFA (New York): alberto.gallo@gs.com, (917) 343-3214
                                 Goldman Sachs & Co.
                                 Lotfi Karoui (New York): lotfi.karoui@gs.com, (917) 343-1548
                                 Goldman Sachs & Co.
                                 Annie Chu (New York): annie.chu@gs.com, (212) 357-5522
                                 Goldman Sachs & Co.

                                 Rate risk and credit risk vary inversely
                                 Corporate bond yields are as low today as they have been since the 1960s, thanks mainly to the rally in




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                       September 13, 2010



                                 rates. But the weaker macro conditions that drive Treasury yields lower also tended to push credit spreads
                                 wider, causing HY bonds to rally less. This logic explains why 10y Treasury yields and corporate spreads
                                 usually move in opposite directions, whereas the correlation between Treasury and corporate yields can be
                                 positive or negative, depending on the macro sensitivity of spreads. We estimate that bonds with a spread of
                                 200-400 bp currently occupy the “inflection region” where moves in 10y Treasuries and corporate spreads
                                 tend to offset 1-for-1. This range happens to overlap portions of our two favorite candidates for further spread
                                 tightening (IG financials and BB-rated bonds). For some investors, this may provide an additional “built-in
                                 rates hedge” rationale for owning these bonds.
                                 Post-summer CDS themes: How much have our views priced?
                                 Our analysis of global CDS markets over the last few months reveals the following: (1) in the US, the CDS
                                 market has moved a decent way toward pricing in our cautious view on growth, but we remain positioned
                                 defensively via our short IG consumer cyclical vs. CDX IG; (2) our cautious view on US growth risk is visible
                                 in HY decompression, and we continue to favor BBs; (3) within the Eurozone, credits from peripheral
                                 countries have underperformed and will likely continue to struggle, whereas Germany has outperformed. This
                                 pattern should continue as the divergence in the strength and speed of the Eurozone recovery persists.
                                 Our long iTraxx senior financials vs. short main hits stop loss
                                 After initially outperforming in the wake of the European stress tests, our long iTraxx senior financials vs.
                                 short iTraxx main hit its stop loss on Wednesday at a potential loss of 80 bp. We are shifting to tactically
                                 neutral on European systemic risk pending developments in Ireland.



Options Research

United States: Options Research: The Buzz: Using options to fine-tune equity exposure in uncertain times                                      11

                                 Krag Gregory, Ph.D. (New York): krag.gregory@gs.com, (212) 357-3770
                                 Goldman Sachs & Co.
                                 David Park (New York): david.j.park@gs.com, (212) 357-6538
                                 Goldman Sachs & Co.
                                 Maria Grant, CFA (New York): maria.grant@gs.com, (212) 855-0070
                                 Goldman Sachs & Co.
                                 John Marshall (New York): john.marshall@gs.com, (212) 902-6848
                                 Goldman Sachs & Co.

                                 Use options to fine-tune equity exposure
                                 Bond market outperformance and generally weak equity markets have pushed many investors underweight
                                 equity. An uncertain macro environment has kept some from rebalancing. Other investors are actively looking
                                 to position more defensively given macro headwinds. We recommend using attractively-priced options,
                                 specifically risk reversals (long call, short put) on benchmark indices to tactically manage exposures. These
                                 strategies have lower betas to the market and less downside exposure vs. long futures.
                                 Risk reversals mark well vs. long futures
                                 SPX 1y 90%/104.2% risk reversals perform well versus futures prior to expiration. For example, 6m prior to
                                 expiration, under no vol shift the outperformance on a 10% down move is 2-3x the underperformance on a
                                 10% up move. While parallel volatility shifts do not impact the mark significantly, skew shifts can; however,
                                 we estimate it would take a 10% market decline, volatility up 20 points, and skew doubling for the risk
                                 reversals to lose as much as futures on the downside at trade inception.
                                 Risk reversals are pricing at their most attractive levels in a decade
                                 S&P 500 1y risk reversals are pricing at their most attractive levels in a decade due to a low rate environment
                                 and put-call skew near record highs. Over the past decade, selling a 1y 10% OTM SPX put would have only
                                 funded a 10% OTM call on average. Currently, the same put fully funds a 4.2% OTM call, providing an
                                 additional 5.8% upside at expiration.
                                 Three strategies for three investor types
                                 While the proper strategy will vary based upon portfolio positioning and desired beta, three attractive
                                 strategies include:
                                 Equity beta with downside cushion: Sell SPX 1y 90% puts and buy 104.2% calls. Max outperformance of
                                 10% versus long equities on the downside.
                                 Enhance a moderate return view: Sell SPX 90% put to fund 1.5x 100%/109.6% call spreads for levered
                                 exposure in a 0 to 9.6% range with max upside of 14.4%.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                 September 13, 2010



                                           Wider downside cushion under reasonable scenarios: Sell a 1y SPX 95% put with a 82% knock-in to fund a
                                           2% OTM call.



Consumer Cyclicals

lululemon athletica inc. (LULU): 2Q reinforces near-term momentum, long-term growth story; Buy                                                          12

LULU, $35.85                               Michelle Tan, CFA (New York): michelle.tan@gs.com, (212) 902-3099
Market cap                  $2,479 mn
                                           Goldman Sachs & Co.
                                           Nicole Shevins (New York): nicole.shevins@gs.com, (212) 902-9884
Target price                     $46.00
                                           Goldman Sachs & Co.
Fiscal y/e Jan         2011E     2012E

EPS ($)                   1.25     1.58    What's changed
P/E                    28.8X      22.8X    LULU’s 2Q EPS doubled vs. LY to $0.30, above GS/Consensus of $0.26/0.24 and guidance of $0.21-0.23.
                                           Upside to our number primarily came from comp sales (+31% vs. GS estimate +25%) and related leverage.
EPS Quarter/Interim*      0.25     0.20
                                           Inventory of +43% remains below 2Q sales trend of +56% and more closely aligned with 3Q expected sales.
Investment Lists                           Management guided 3Q comps up high teens and 3Q EPS to $0.22-0.24, in line with consensus $0.23. For
                   Americas Buy List       FY2010, LULU raised guidance to $1.18-1.22 from $1.05-1.10, above consensus of $1.15.
Coverage view                    Neutral   Implications
                                           LULU’s results reinforce our confidence in LULU's near-term momentum and substantial growth potential.
*Current and a year ago
                                           (1) Comp sales gains continue to dramatically outpace industry peers as new customers in newer markets
                                           discover the brand. We see this growing awareness as a more sustainable driver that should allow LULU to
                                           continue to see productivity gains in its stores despite a moderate sector growth backdrop and tough
                                           compares.
                                           (2) Showrooms opened in 1H designed to test and pre-seed new markets are all performing above plan,
                                           validating demand for the brand in new regions and giving mgmt the confidence to open 20-25 stores next
                                           year (up from 12 this year).
                                           (3) LULU is reinvesting in much needed basic, season-less inventory, which should reduce significant out-of-
                                           stocks and drive sales, particularly in the severely constrained online channel.
                                           Valuation
                                           On strong sales, we raise our above-consensus 2010E EPS to $1.25 from $1.23. Our 2011/12E EPS and 6-
                                           month $46 P/E-based target are unchanged.
                                           Key risks
                                           Multiple premium vs. sector; slower productivity ramp than we anticipate.



Energy

Americas: Energy: Oil: Trading update: Range-bound heading into "shoulder months"                                                                       13

                                           Arjun N. Murti (New York): arjun.murti@gs.com, (212) 357-0931
                                           Goldman Sachs & Co.
                                           Joe Citarrella (New York): joe.citarrella@gs.com, (212) 902-6787
                                           Goldman Sachs & Co.

                                           Oil stuck in a tight trading band for past 15 months
                                           Both spot ($68-$82/bbl) and long-dated ($82-$95/bbl) WTI crude oil prices have been stuck in a relatively
                                           tight trading range since July 2009. While we believe global oil demand has grown in excess of non-OPEC
                                           supply this year, the gap has been narrower than we expected due to better non-OPEC supply, and OPEC
                                           spare capacity is essentially unchanged since mid-2009. Relative to our respective base-case 4Q2010 and
                                           FY2011 WTI oil forecasts of $90/bbl and $100/bbl, risk increasingly appears skewed to the downside, given
                                           the uncertain economic environment and the now higher starting point for oil inventories and OPEC spare
                                           capacity. However, our analysis continues to show a likely return to “demand rationing” pricing within the next
                                           few years—if not 2011 then most likely in 2012. We also continue to believe that, with global oil demand
                                           growing in excess of non-OPEC supply, our long-standing “slow grind higher” call likely remains the best




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                  September 13, 2010



                                           descriptor of our oil market expectations for 2010/2011, with a deeper global economic slowdown the key
                                           downside risk.
                                           Key oil sector investment themes heading into “shoulder months”
                                           Given the uncertain economic environment and the fact that we are entering the traditionally choppy fall
                                           “shoulder months” period, we remain selective across the broad energy sector. Key integrated oil sector
                                           investment themes include (1) preference for visible production/ resource growth, with an emphasis on
                                           companies exposed to Canada’s oil sands, Brazil, onshore North America unconventional resource, or
                                           international growth (CNQ, OGX, OXY favorites); (2) getting credit for North America unconventional
                                           resource expansion strategies (MUR favorite); (3) “shrink to grow” restructuring can drive higher valuations
                                           (MUR favorite);
                                           (4) respecting expected trading ranges in an environment where global GDP growth is slowing but “double
                                           dip” recession is avoided; and
                                           (5) preference for upstream over downstream-exposed companies.
                                           Integrated oils discounting low $70s/bbl WTI
                                           We estimate the integrated oil sector is discounting a low $70s/bbl WTI oil price. Relative to our
                                           “low/mid/high” trading ranges that use a $65/$85/ $105 per bbl WTI band, longer-term (12 months and
                                           beyond) risk/reward looks favorable though shorter-term (3 months or less) risk/reward appears more
                                           balanced, as investors may be less willing to fully discount $85/bbl in an uncertain economic environment.



Financial Services

Northern Trust Corp. (NTRS): Capital opportunities, core businesses help offset rate headwinds                                                            14

NTRS, $47.70                               Richard Ramsden (New York): richard.ramsden@gs.com, (212) 357-9981
Market cap                 $11,528 mn
                                           Goldman Sachs & Co.
                                           Alexander Blostein, CFA (New York): alexander.blostein@gs.com, (212) 357-9976
Target price                     $57.00
                                           Goldman Sachs & Co.
Fiscal y/e Dec         2010E     2011E

EPS ($)                   2.98     3.65    What's changed
P/E                    16.0X      13.1X    We held an investor visit with NTRS management. Our takeaways follow.
                                           (1) Capital – solid and building: NTRS’s Tier 1 common of 13.2% is the best in the group. We see small-scale
EPS Quarter/Interim*      0.74     0.77
                                           M&A (new geographies and products) and buybacks as the most likely course for capital deployment, as
Investment Lists                           early as next year. Redeploying capital generated through 2011into buybacks could add about 5% to our
                    Americas Buy List      2011E EPS, keeping Tier 1 at 2Q level. (2) Business pipelines are robust: C&IS is benefiting from
          Americas Conviction Buy List     globalization and increasing breadth of client needs (outsourcing, middle office, etc), partially reflective of a
Coverage view                    Neutral   sharper focus on cost efficiency and higher standards in the investment community. In PFS, macro
                                           uncertainty is a headwind to client reallocations into riskier strategies, pressuring fees, although new
*Current and a year ago
                                           business momentum is robust. Lastly, we see good prospects for NTRS asset management business
                                           highlighted by increased traction with consultants and more cross-selling in PFS.
                                           (3) Low rates – big headwind: the low rate environment remains a big headwind to earnings, with 3Q likely to
                                           show continued pressure in NIM and money market fee waivers. That said, given the short-term nature of
                                           NTRS’s securities book, most of the NIM deterioration is likely already in the run-rate. Further, management
                                           sees room to slow spending to protect pre-tax margins if rates do not improve by the end of 2011.
                                           Implications
                                           Overall, we walked away optimistic about NTRS core business prospects, while capital redeployment through
                                           M&A and/or buybacks should offset uncertain macro and rate-related headwinds.
                                           Valuation
                                           Our 12-month, P/E-based price target is $57.
                                           Key risks
                                           Prolonged low rate environment, market deterioration.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                  September 13, 2010



Industrials

AeroVironment, Inc. (AVAV): Near-term uncertainty persists after F1Q results; maintain Neutral                                                           15

AVAV, $22.09                                 Noah Poponak, CFA (New York): noah.poponak@gs.com, (212) 357-0954
Market cap                    $486.3 mn
                                             Goldman Sachs & Co.
                                             Chun-Yai Wang (New York): chun-yai.wang@gs.com, (212) 902-9610
Target price                       $22.00
                                             Goldman Sachs & Co.
Fiscal y/e Apr            2011E    2012E     Alexandria Carroll (New York): alexandria.carroll@gs.com, (212) 902-7894
EPS ($)                    0.90      1.15    Goldman Sachs & Co.
P/E                       24.5X     19.2X

EPS Quarter/Interim
                      *
                          (0.16)    (0.17)
                                             What's changed
                                             AVAV reported in-line F1Q11 operating results but guided down the full year on higher R&D and continued to
Investment Lists                             see significant order delays.
                                   Neutral   F1Q11 EPS of ($0.16) compared to GS of ($0.20) and consensus at ($0.23). The F1Q beat was driven by
Coverage view                  Cautious      tax, as absolute operating income was slightly below our expectation. Full-year revenue growth guidance of
                                             10%-15% was reiterated. However, full-year operating margin guidance was reduced to 10%-12% from 12%-
*Current and a year ago
                                             14% due to higher-than-expected R&D spending. 200 bp of EBIT margin equates to roughly $0.15-$0.20 of
                                             EPS for AVAV. We lower our FY2011/FY2012/ FY2013 EPS estimates to $0.90/$1.15/$1.25 from
                                             $1.05/$1.20/$1.30 to reflect near-term timing delays associated with UAS product deliveries and higher
                                             operating expenses. We lower our 12-month price target to $22 from $23 as a result.
                                             Implications
                                             Long-term growth drivers remain favorable for AVAV, including the secular penetration of unmanned, the
                                             market potential of electric vehicles, and the numerous potential new products. Management highlighted an
                                             expectation to hit all targeted milestones on development programs this year. However, near-term uncertainty
                                             remains significant, as seen in F1Q results, as the company needs to maintain R&D at an elevated level, at
                                             the same time that orders from the government are sliding and contracts on new programs remain elusive.
                                             Specifically, Raven orders that had been expected for August have been pushed to November due to delays
                                             in government procurement decisions.
                                             Valuation
                                             Our price target is derived from our discounted mid-cycle methodology.
                                             Key risks
                                             Upside risks include order flow on large programs + takeout potential. Downside risks include exposure to the
                                             operating tempo + execution risks.




Navistar International Corp. (NAV): Reducing estimates on weaker Engine margins; maintain Neutral                                                        16

NAV, $42.65                                  Jerry Revich, CFA (New York): jerry.revich@gs.com, (212) 902-4116
Market cap                    $3,079 mn
                                             Goldman Sachs & Co.
Target price                       $49.00
                                             What's changed
Fiscal y/e Oct            2010E    2011E
                                             We reduce our 2010-12 EPS to $3.17/ $4.85/ $5.90 from $3.87/ $5.35/ $6.50 due primarily to a reduced
EPS ($)                    3.17      4.85    outlook for Engine & Parts margins, partly offset by improved cost control in Truck. NAV 3QFY10 results
P/E                       13.4X      8.8X    revealed:
                                             (1) Accelerating commercial parts demand as sales were 7% ahead of our estimates and up 18% yoy due to
EPS Quarter/Interim*       0.66      1.99
                                             improved freight volumes.
Investment Lists                             (2) Weaker core US Engine margins (excluding MWM and Blue Diamond Parts), which lost $80 mn-plus by
                                   Neutral   our estimates, due to under-absorption ahead of the 2010 product production ramp.
                                             (3) Stronger cost control in Commercial Truck where NAV delivered ~33% incremental margins by our
Coverage view                      Neutral
                                             estimates, excluding the impact of high margin Military sales in the quarter. However, supply chain
*Current and a year ago                      constraints contributed to delayed new product shipments.
                                             (4) Visibility on Military aftermarket demand remains low as inventory destocking continues and Dash
                                             upgrades have been shifted into 2011.
                                             (5) Stronger financial services profits (+28% vs. GS) driven by wider net interest margins and improved credit
                                             performance.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                     September 13, 2010



                                 Implications
                                 We maintain our Neutral rating as we are constructive on the US truck cycle but see a balanced risk-reward
                                 around NAV’s Engine cost structure and 15-liter engine development program. We continue to prefer CMI
                                 (Conviction Buy) where our estimates are well ahead of consensus, stringent global emissions standards are
                                 driving rising new product sales, and we see greater room for multiple expansion.
                                 Valuation
                                 We reduce our 12-month price target to $49 (from $55) based on 6X 2011E EV-EBITDA, a 23% target
                                 discount to CMI and 22% to Machinery peers. NAV trades at 5.6x 2011E EV/EBITDA, -10% to CMI and -24%
                                 to Machinery.
                                 Key risks
                                 Upside: stronger truck recovery; Downside: 2010 engine execution.



Technology

Americas: Communications Technology: GS CommTech Weekly: RIMM (Sell) preview and short interest                                             17
update

                                 Simona Jankowski, CFA (San Francisco): simona.jankowski@gs.com, (415) 249-7467
                                 Goldman Sachs & Co.
                                 Thomas D. Lee (New York): thomas.d.lee@gs.com, (212) 902-2066
                                 Goldman Sachs & Co.
                                 Amanda O'Brien (San Francisco): amanda.obrien@gs.com, (415) 249-7467
                                 Goldman Sachs & Co.
                                 Erin Riley (San Francisco): erin.riley@gs.com, (415) 249-7453
                                 Goldman Sachs & Co.
                                 Mukul Garg (Bangalore): mukul.garg@gs.com, (212) 934-9960
                                 Goldman Sachs India SPL

                                 Weekly stock performance
                                 Our median stock was down 1% last week, underperforming the S&P 500 and the Nasdaq, both flat. Our
                                 strongest performer was INFN, up 5%, while our weakest was GLW, down 4%.
                                 RIM (RIMM, Sell): Expect in-line quarter but weak guidance
                                 We expect RIM to report in-line results for F2Q (Aug.) with sales/EPS of $4.52 bn/$1.35 on better-than-
                                 expected ASPs but slightly lower units, as our checks suggest an improved mix-shift in the quarter due to the
                                 discontinuation of several lower priced SKUs at a number of US carriers. While our estimates assume healthy
                                 channel fill of the recently launched BlackBerry Torch at AT&T, our checks indicated only tepid sell-through
                                 and, thus, we do not see meaningful upside from this device. We are tweaking our estimates for RIM to
                                 FY11/FY12/FY13 EPS to $5.42/$5.06/$5.04 from $5.43/$5.11/$5.09 based on increased smartphone
                                 competition and our lower unit forecast for RIM. We also see risk to Nov. quarter consensus estimates of
                                 $4.85 bn/$1.40 vs. GS at $4.75 bn/$1.34 primarily from accelerating demand for Android devices.
                                 Short Interest up; benign setup into RIMM’s quarter, so sharp pull-back unlikely
                                 Short interest for CommTech was up 9.2% in the second half of August and was up 13.6% for the month. Our
                                 median stock was 5.1% short. Short interest increased the most for GLW, up 25.7% (to 1.6% of shares), and
                                 CSCO, up 25.6% (to 0.9% of shares). Short interest fell the most for FFIV, down 13.2% (to 6.0% of shares),
                                 and ARUN, down 12.3% (to 16.8% of shares). Our most shorted stocks are ARUN (16.8% of shares) and
                                 NTGR (10.6% of shares).
                                 We also note that short interest for RIMM was up 10.0%, to 5.6% of shares. Given the stock’s sharp recent
                                 underperformance and higher short interest levels heading into the print, we do not expect a significant sell-
                                 off after the quarter.
                                 Valuation
                                 The median CommTech forward P/E was 16.4X last week, suggesting a 14% discount to its 1-year average
                                 of 19.2X. This compares to the S&P500’s 14.6X. Relative valuation was at 1.2X the S&P, below the 1-year
                                 average of 1.3X




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                      September 13, 2010




Americas: Technology: Semiconductors: GS US SEMI Weekly: IDF Preview, Comms takeaways from                                                   18
IBC/IFA

                                 James Covello (New York): james.covello@gs.com, (212) 902-1918
                                 Goldman Sachs & Co.
                                 James Schneider, Ph.D. (New York): james.schneider@gs.com, (917) 343-3149
                                 Goldman Sachs & Co.
                                 Kate Kotlarsky (New York): kate.kotlarsky@gs.com, (212) 357-7956
                                 Goldman Sachs & Co.
                                 Ian Eigenbrod (New York): ian.eigenbrod@gs.com, (212) 902-0695
                                 Goldman Sachs & Co.
                                 Mark Delaney (New York): mark.delaney@gs.com, (212) 357-0535
                                 Goldman Sachs & Co.

                                 Expect Intel to focus on Sandy Bridge and Atom opportunity at IDF
                                 We will be attending Intel’s annual developer forum in San Francisco this week. We expect the focus of the
                                 event to be on: (1) Intel’s next architecture - Sandy Bridge - that will ramp in 1H2011, (2) Intel’s Atom
                                 strategy, particularly in handsets/embedded, with incremental detail about the implications of its recently
                                 announced acquisitions (McAfee and Infineon’s wireless business), and (3) Intel’s software strategy, with an
                                 emphasis on security and its importance in the embedded market.
                                 IBC: Set-top share dynamics stable, Intel still a long-term threat
                                 We see few changes in set-top box market share over the next 12 months for incumbents Broadcom and
                                 STMicro, though we would note that set-top box makers such as Samsung, SagemCom, and Humax appear
                                 to be taking share with aggressive pricing in emerging markets. While we believe Intel has made good
                                 progress with customer relationships, we think it continues to struggle with technical and performance issues.
                                 On the customer side, we believe Intel is likely to begin the first operator deployments of its Canmore
                                 platform next month, with a number of telco and cable operators seriously evaluating Intel-based solutions.
                                 However, we believe further market progress by Intel is being impeded at the moment by a series of technical
                                 and cost issues. We believe that Intel’s pricing remains too high, and will need to be reduced significantly to
                                 gain additional market traction.
                                 IBC: With China 3G and first wave of LTE capex likely peaking in 2H2010, the pace of spending in
                                 India becomes critical for 2011
                                 Communications sales trends have remained extremely strong thus far in 2010 for PLDs, with sales in this
                                 segment currently running 50-60% above prior peak levels achieved in 2Q2008 driven by the ongoing China
                                 3G build-out, initial LTE deployments in the US, mobile backhaul spending, and a significant increase in TV
                                 broadcast investments. While many of these factors relate to secular trends, we also recognize the cyclical
                                 nature of telecom capex investment – and we expect a potential decline in spending in 1H2011, with the pace
                                 of spending in India being a critical swing factor.
                                 IFA: Tablets the highlight, Samsung the only viable player in 4Q
                                 Based on our checks, we think Samsung’s Galaxy Tab product (running on Android and based on
                                 Qualcomm’s Snapdragon) is likely to be the only meaningful potential competitor to Apple’s iPad in the
                                 4Q2010 timeframe.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                 September 13, 2010




RightNow Technologies, Inc. (RNOW): Initiating Neutral; Positive underlying trends, business in transition                                              19

RNOW, $18.22                                Stephanie Withers, CFA (San Francisco): stephanie.withers@gs.com, (415) 249-7470
Market cap                   $612.9 mn
                                            Goldman Sachs & Co.
                                            Sarah Friar (San Francisco): sarah.friar@gs.com, (415) 249-7436
Target price                      $21.00
                                            Goldman Sachs & Co.
Fiscal y/e Dec            2010E   2011E

EPS ($)                    0.21     0.46    Investment view
P/E                       85.2X    39.6X    We are initiating coverage of RightNow Technologies with a Neutral rating and a $21, EV/Sales, EV/Adj FCF
                      *                     and DCF-based 12-month price target. RightNow has the opportunity to leverage two powerful trends in
EPS Quarter/Interim        0.08     0.06
                                            software currently, the shift to SaaS and embrace of social functionality. We are on the sidelines, however, as
Investment Lists                            (1) we anticipate near-term headwinds from a business transition that will weigh on bookings growth in 2011
                                  Neutral   and 2012, and (2) we have concerns about the company’s ability to scale in this growing market as
Coverage view                 Attractive
                                            competition steps up from innovative start-ups, deep-pocketed incumbents, and SaaS giant salesforce.com.
                                            Core drivers of growth
*Current and a year ago
                                            We have modeled mid-teens top-line growth translating into 25%-30% earnings growth over the coming three
                                            years based on (1) the company’s land and expand strategy that upsells contact center and social products
                                            to a growing base of its core web experience customers, and (2) aggressive margin expansion targets
                                            between now and the end of 2011.
                                            Risks to the investment case
                                            Risks to the downside include government exposure (around 15%-20% of the business), macro slowing,
                                            which could put a halt to new application spending, and competition from software incumbents. Risks to the
                                            upside include M&A or unexpected acceleration in bookings growth.
                                            Valuation
                                            RightNow shares trade at 2.4X 2011E sales, in line with the stock’s historical multiple, but at a discount to
                                            SaaS peers at an average of 5.3X, and at 32.9X 2011E EV/adjusted FCF, in line with SaaS peers.
                                            Industry context
                                            We have an Attractive coverage view in software and expect spending on SaaS applications to outpace
                                            traditional on-premise by a factor of 4X-5X.



Americas: Technology: IT Services: Intact enterprise spend and volume activity expected to support                                                      20
selected IT Services names

                                            Julio C. Quinteros Jr. (San Francisco): julio.quinteros@gs.com, (415) 249-7464
                                            Goldman Sachs & Co.
                                            John T. Williams (New York): john.t.williams@gs.com, (212) 357-3948
                                            Goldman Sachs & Co.
                                            Vincent Lin (New York): vincent.lin@gs.com, (212) 934-0510
                                            Goldman Sachs & Co.
                                            Roman Leal (San Francisco): roman.leal@gs.com, (415) 249-7468
                                            Goldman Sachs & Co.
                                            Snigdha Sharma (Bangalore): snigdha.sharma@gs.com, (212) 934-5056
                                            Goldman Sachs India SPL
                                            Dennis Sevilla (San Francisco): dennis.sevilla@gs.com, (415) 249-7434
                                            Goldman Sachs & Co.

                                            Modest changes to PTs and estimates
                                            As we move into year-end we have shifted our price target framework to CY11 based valuation vs. our
                                            previous FTM-based approach. In addition, we have fine tuned our estimates to reflect revised FX
                                            assumptions at current spot rates.
                                            Some multiple expansion expected in CY11
                                            We now see average upside of 11% across the coverage group, with our Buy-rated stocks implying 25%
                                            average upside and our Sell-rated stocks implying 4% average downside. For Consulting and Outsourcing
                                            (C&O), our price targets imply an average CY11 P/E of 14.6X (vs. current valuation of 13.1X) and average
                                            upside of 11%. For Transaction Processing, our price targets imply an average CY11 P/E of 16.0X (vs.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                      September 13, 2010



                                 current valuation of 14.7X) and average upside of 10%.
                                 FX changes have little impact on estimates
                                 We are raising our average CY11 EPS estimates by a touch (1%) for C&O stocks and have left our
                                 Transaction Processing EPS estimates unchanged. Our CY11 forecasts imply average revenue and earnings
                                 growth of 5.6% and 9.5% for C&O, and 7.5% and 13.6% for Transaction Processing.


                                 Enterprise IT spending expected to drive top Consulting and Outsourcing names
                                 Into 2H10 we expect intact fundamentals and share performance to be supported by sustained tech spending
                                 as the cycle runs its course with year-end seasonality (2010 budgets) and sustained investments in cloud,
                                 SaaS, interactive, mobility, and offshore. Our top ideas in C&O remain directly levered to these drivers and
                                 include CL Buy-rated SAPE (interactive technologies), Buy-rated ACN (applications and offshore), DOX
                                 (telco convergence), and SVR (mobile data). Neutral-rated CTSH and G are offshore beneficiaries. We are
                                 more cautious on IT and financial outsourcing.
                                 Intact volumes keep us focused on selected payments names in Transaction Processing
                                 Despite fragile investor sentiment around possible regulatory impact, we are focused on payments names
                                 given intact volumes which continue to benefit from consumer and corporate activity, international expansion,
                                 and the continued ramp of emerging payment channels. Our top ideas remain CL Buy-rated V, Buy-rated MA
                                 and WXS. We are relatively more cautious on payroll.



Americas: Technology: Software: Rolling price targets forward as we near year's end; reiterate Attractive                                    21
coverage view

                                 Sarah Friar (San Francisco): sarah.friar@gs.com, (415) 249-7436
                                 Goldman Sachs & Co.
                                 Derek R. Bingham (San Francisco): derek.bingham@gs.com, (415) 249-7435
                                 Goldman Sachs & Co.
                                 Stephanie Withers, CFA (San Francisco): stephanie.withers@gs.com, (415) 249-7470
                                 Goldman Sachs & Co.
                                 Gonzalo Cavenaghi (San Francisco): gonzalo.cavenaghi@gs.com, (415) 249-7438
                                 Goldman Sachs & Co.

                                 We are refreshing our price targets
                                 We are rolling forward our price target framework as we near year’s end. Our 12-month price targets are
                                 based on a triangulation of P/E, EV/AdjFCF/ growth multiples, and DCF, with an M&A overlay. Our price
                                 targets currently average 10% upside with 22% upside on Buy-rated stocks and 5% downside on Sell-rated
                                 stocks.
                                 We maintain our Attractive coverage view on Software; positive factors outweigh negatives at present
                                 Though we are mindful of the risk of decelerating IT spending due to broad macro concerns in CY2011, we
                                 remain positive on the software sector for 2H CY2010, given the following: (1) generally stable data points
                                 and checks from the field on enterprise spending thus far into 3Q;
                                 (2) positive fundamental and trading seasonality approaching year-end; (3) a high level of M&A activity in
                                 software; (4) reasonable valuations; and, (5) a number of secular tailwinds including the shift to Cloud, which
                                 continue to drive growth.
                                 Our ratings are aligned with our key themes
                                 Our current expectation of slowing economic growth – as opposed to an outright “double dip” recession –
                                 drives our current preference for:
                                 (1) secular growth, particularly related to the shift to Cloud Computing (Buy AKAM, CRM, SFSF, TLEO, and
                                 VMW); (2) low-multiple names with 2H positive catalysts (Buy ADBE and MSFT); and
                                 (3) names with dominant market position and strong EPS protection (ORCL, Conviction List Buy).




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                      September 13, 2010



Utilities

Americas: Utilities: Diversified: Pipeline & MLP Essentials: NGL inventories explain recent prices                                           22

                                 Theodore Durbin (New York): ted.durbin@gs.com, (212) 902-2312
                                 Goldman Sachs & Co.
                                 Michael Cerasoli, CFA (New York): michael.cerasoli@gs.com, (212) 357-1914
                                 Goldman Sachs & Co.

                                 Industry context
                                 On August 30, 2010 the Energy Information Administration (EIA) released its Petroleum Supply Monthly,
                                 which includes data on natural gas liquids (NGLs) through June 2010. Including information gleaned from the
                                 weekly propane (C3) statistics, we make the following conclusions on propane, ethane (C2), and NGL-
                                 focused infrastructure:
                                 Propane, C3 (about 30% of NGL barrel)
                                 Through August, propane inventories are tracking slightly ahead of the 5-year average, but well below 2009
                                 levels. Given the strong ethane inventory build detailed below, it is likely that petrochemical demand is
                                 responsible for the lack of a similar build in propane stocks. Either way, this year’s slower build during the
                                 injection season appears to be the primary driver of strong propane prices which are +12% since June 30th
                                 versus +5% for ethane and -2% for oil.
                                 Ethane, C2 (about 40% of NGL barrel)
                                 Conversely, ethane inventories through June appear to be well ahead of historical averages and last year.
                                 Assuming ethane production is correlated to natural gas-derived propane, production indicates that ethane
                                 inventories have also built meaningfully in July and August, exacerbating an already weak situation. This
                                 build likely explains ethane’s relative price underperformance versus propane, though spot ethane continues
                                 to perform better than spot natural gas prices that are -15% since June 30th.
                                 Conclusion
                                 The EIA reports support the theory that NGL price upside may be skewed to the heavier end of the barrel
                                 (propane, butanes) and away from ethane. We highlight that natural gas price weakness, to some extent,
                                 limits the potential for ethane rejection, as it continues to make economic sense for processors to remove
                                 ethane from the natural gas stream. Furthermore, we believe the NGL sector is in long-term, secular growth
                                 mode as price advantages allow it to increase market share both domestically and internationally. Our
                                 companies should benefit two-fold, via commodity price increases and increased demand for NGL-focused
                                 infrastructure.
                                 We raise our 12-month price target on EPE to $62 from $56 on EPD’s announced acquisition of EPE. Our
                                 earnings ests on EPE are unchanged.
                                 Risks
                                 Weaker infrastructure growth or energy prices; capital market volatility.



Other

Latin America Weekly Kickstart: Bearish on September, bullish by December                                                                    23

                                 Stephen Graham (Sao Paulo): stephen.graham@gs.com, +55(11)3371-0831
                                 Goldman Sachs Brasil Bco Múlt S.A.
                                 Andre Rezende (Sao Paulo): andre.rezende@gs.com, +55(11)3371-0766
                                 Goldman Sachs Brasil Bco Múlt S.A.

                                 Our equity view
                                 Our view on Brazilian stocks is bearish in the very short term (September/October) – as large equity
                                 placements produce index and other disruptions – but bullish in the medium term (December and 2011). By
                                 year-end we expect an investment surge now under way to assuage concerns about growth sustainability.
                                 Post-election expressions of realism about the state’s limits from Brazil’s new leadership could help even
                                 more. That would allow investors to focus instead on the rapid earnings growth visible now and the large
                                 opportunities we see in the short term for many listed Brazilian firms.
                                 Post-election pullbacks in spending are typical. Even a modest shift towards fiscal caution would be




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                      September 13, 2010



                                    particularly well received by markets this time, because the usual pre-election spending came off the back of
                                    anti-crisis government spending in 2008/2009. That had stayed in place perhaps longer than necessary
                                    considering Brazil’s quick rebound. The lengthy stimulus period raised fears of an underlying relaxation of
                                    fiscal discipline.
                                    Equity performance
                                    Last week, the MSCI Latin America lost 0.1% while the MSCI Emerging Markets gained 0.9%, both in dollars.
                                    Locally, Brazil was up 0.2% and Mexico 0.1%. Our Latin America research coverage is listed on page 10.
                                    Rates and currency
                                    The Brazilian Real gained 0.8% to 1.72/$ and the Mexican peso 0.2% to 12.92/$. On September 8, our
                                    economists revised their 3-, 6- and 12-month forecasts for USD/BRL to 1.70, 1.80 and 1.95, respectively,
                                    from 1.80, 1.85 and 1.90 previously.
                                    Valuation
                                    MSCI Brazil is trading at 9.9X next-12-month consensus earnings, with Mexico at 14.7X.
                                    LatAm Focus List
                                    Over the week (to Thursday), our Focus List gained 0.3% vs. MSCI LatAm and lost 0.5% vs. our Latin
                                    American coverage universe.



Reports Published

                                  GS US Economics Analyst:  Let’s Get Real about Household Debt Service  

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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.




Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                          September 13, 2010




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Goldman Sachs Investment Research global coverage universe
                                  Rating Distribution                                      Investment Banking Relationships
                          Buy            Hold                Sell                        Buy             Hold               Sell
Global                    31%            53%                 16%                         47%             44%               34%
As of July 1, 2010, Goldman Sachs Global Investment Research had investment ratings on 2,814 equity securities. Goldman Sachs assigns stocks as Buys
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Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                            September 13, 2010



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Goldman Sachs Global Investment Research
Americas Morning Summary                                                                                                                              September 13, 2010



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