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Conference Call

Conference Call. March 19, 2007. The Economy. In Feb, CPI firmed to a 0.4 % increase Above consensus forecast for 0.3% increase Core CPI slowed to a 0.2% increase in Feb YOY, the overall CPI is 2.4% Energy prices pushed up overall CPI. The Economy. Retail sales in Feb came in soft

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Conference Call

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  1. Conference Call March 19, 2007

  2. The Economy • In Feb, CPI firmed to a 0.4 % increase • Above consensus forecast for 0.3% increase • Core CPI slowed to a 0.2% increase in Feb • YOY, the overall CPI is 2.4% • Energy prices pushed up overall CPI

  3. The Economy • Retail sales in Feb came in soft • Retail sales nudged up 0.1% in Feb, following no change in Jan • Below consensus forecast of 0.3% • Retail sales were mixed in February • YOY, overall retail sales in Feb were up 3.2%, from 2.2% in Jan

  4. The Economy • University of Michigan’s consumer sentiment index for March was 88.8 down a sharp 2.5 percentage points • Under consensus and lowest since September • The dollar remained down Friday as investors ignored dollar-positive U.S. data and started to reassess their outlook for the U.S. economy.

  5. The Markets • Report data supported expectations that the Federal Reserve will hold official interest rates steady when it meets next week and also maintain its tightening bias • Investors look to decisions from two major central banks next week -- the Fed and the Bank of Japan • The market will be listening for an acknowledgement from the Fed that the U.S. housing slowdown may in fact not have bottomed quite yet

  6. The Markets • The Dow Jones Industrial Average fell 49.27 to 12110.41 • It slid 1.4% on the week, and is down 2.8% year to date • On Wednesday, the Dow dipped below 12000 for the first time since Nov. 6 • The S&P 500 lost 5.33 to 1386.95, and has fallen three of the past four weeks. It is off 2.2% on the year • The Nasdaq Composite Index declined 6.04 to 2372.66, ending the week 0.6% lower; it is now down 1.8% on the year.

  7. QInsight Thoughts • QInsight’s business cycle modelin PLUNGE • Financial, Financial Services, Basic Materials, Consumer discretionary, and Consumer Staples have historically led during Plunge • QInsight is concerned investors are expecting the Fed to reduce short-term rates earlier than economic data or Fed statements indicate is likely

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