Epstein Secrets

, PMI’s and consumer confidence pointing to a solid Q4 to follow. That quarter is currently tracking at 3.6% according to the Atlanta Fed. Chart 13: Eurozone PMI’s have picked up of late... Chart 14: US Consumer Confidence now at post-GFC highs 60.0 120 100 59.0 80 50.0 60 40 45.0 ———US Consumer Confidence

ex/depreciation - 2yma pushed 2y fwd (RS, %) Source: BofA Merrill Lynch Global Research, Datastream, IBES Source: BofA Merrill Lynch Global Research, Factset Margin upside, capex discipline and FX tailwind provide additional support. Third, profit margins in Europe are not elevated: in the bottom third of

n for investors as we enter a busy year for European politics (see table opposite} is whether the populism train will gather pace or terminate at the Eurozone. Italy risks elevated, but risks two way and banks the bigger issue Although Italy goes to the polls this year, it is worthwhile starting with this

36 UBS Economy The successful formation of a Greek government after the June 17 elections has reduced the risk of an imminent Greek exit from the Eurozone. However, the Euro debt crisis persists, and further reform and consolidation efforts in Spain and Italy are needed. In the US, economic data weakene

et revisions, in %; MSCI Europe) 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% Jun.05 Jun.06 Jun.07 Jun.0&8 Jun.09 Jun.10 Jun.11 Jun.12 Source: FactSet, UBS CIO, as of 27 June 2012 Note: Past performance is no indication for future returns. 21 Please see important disclaimer and disclosures at the

ncipal. Bonds exchanged at par will carry low coupons (4.25% effective), while bonds with higher coupons will be exchanged at a 20% discount Source: Eurozone draft proposal July 21, 2011, IF press release July 21, 2011 In addition to execution risk in Greece, we are left with 3 other concerns. The current

ions (1925) 1991) transtfar union 1998 20000 anne 2004 2006 2008 anid Source: Carl-Ludwig Holtirerich, Hallelnstitute for Economic Research, Source: Factset, MSCL Zentrum fur Europaische Politik (Freiburg), J.P. Morgan Private Bank. Bottom line. At atime when European equities are trading close to 2009

incipal. Bonds exchanged at par will carry low coupons (4.25% effective), while bonds with higher coupons will be exchanged at a 20% discount Source: Eurozone draft proposal July 21, 2011, IIF press release July 21, 2011 In addition to execution risk in Greece, we are left with 3 other concerns. First, whi

tions (1929) 1991) transfer union 1998 2000 2002 9004 2006 2008 2010 Source: Carl-Ludwig Holtfrerich, Halle Institute for Economic Research, Source: Factset, MSC. Zentrum fur Europaische Politik (Freiburg), J.P. Morgan Private Bank. Bottom line. At a time when European equities are trading close to 2009