Epstein Secrets

FX is ELMI+ in $. 16 2.0% Jan-11 Mar-11 May-11 Jul-11 Oct-11 Dec-11 S&P 500 Sector Performance Utilities 14.8% Consumer Staples 10.5% Health Care 10.2% Consumer Discretionary 4.4% Energy 2.8% Information Technology 1.3% Telecommunication Services 0.8% S&P 500 0.0% Industrials -2.9%

Performance Utilities 14.8% Consumer Staples 10.5% Health Care 10.2% Consumer Discretionary 4.4% Energy 2.8% Information Technology 1.3% Telecommunication Services 0.8% S&P 500 0.0% Industrials -2.9% Materials -11.6% Financials -18.4% S&P 500 YTD Market Return Distribution Source: Bloomberg, through 1

.2% 1.4% Energy 100.0% 40 70% 26% 20.9% -57.0% 30% 65% 1.3% -36.6% Financials 100.0% 87 52% 34% -1.2% 9.2% 28% 43% 0.0% -0.1% Health Care 97.0% 52 79% 10% 7.5% 14.3% 62% 31% 0.6% 8.6% Industrials 913.7% 63 68% 21% 3.8% 1.8% 17% 67% -1.2% -4.7% Information Technolog

formation Technology 95.1% 66 68% 16% 6.4% 8.1% 39% 24% 0.6% 1.2% Materials 100.0% 28 46% 46% -2.1% -16.6% 14% 75% -5.1% -13.3% Telecommunication Services 100.0% 5 80% 20% 3.5% 15.3% 40% 20% -2.1% 12.3% Utilities 100.0% 29 52% 38% 0.3% -2.0% 21% 72% -4.6% -2.0% San* AS(S. Omesase

6 013US8RTE (Reasonable PE Tech) • -10.1% Telecommunication Services 2.0% Consumer 8.6% Consumer Staples 3.7% Consumer Discretionary 12.5% Health Care 4.8% Consumer Staples 3.7% Information Technology 8.2% Dividend Growth 4.9% Domestic tyclicals 5.9% Financials 1.1% Consumer Discretionar

5% Energy Equipment & Services -11.6% Defensives 3.0% Information Technology 8.2% Utilities -6.116 013US8RTE (Reasonable PE Tech) • -10.1% Telecommunication Services 2.0% Consumer 8.6% Consumer Staples 3.7% Consumer Discretionary 12.5% Health Care 4.8% Consumer Staples 3.7% Information Technology 8.2%

estimate of $118. 10 blended EPS y/y growth is 2.3% for S&P, 10.0% ex Energy, and 8.2% ex Energy and Financials. 10 EPS y/y growth is strongest at Health Care (18.0%), followed by Financials (16.7%), Tech (9.8%), Cons Disc (7.3%), and Industrials (5.6%). All other sectors have low single digit EPS growth

onsumer Staples 96.0% Energy 100.0% Financials 100.0% Health Caro 95.8% Industrials 99.4% Information Technology 99.1% Materials 100.0% Telecommunication Services 100.0% Utilities 100.0% Sows MSS Owns'sSink 487 402 446 422 8ot,S$STtiti EPS (% of of cal % beat % miss EPS surprise I%) EPS W./ rid

-4.6% DBUSBRTE (Reasonable PE Tech) -6.0% Telecommunication Services 6.1% Consumer 4.8% Consumer Staples 2.3% Consumer Discretionary 6.8% Health Care 10.1% Consumer Staples 2.3% Information Technology 5.4% Dividend Growth 3.5% Domestic Cyclicals 3.6% Financials 1.2% Consumer Discretiona

als 5.3% Energy Equipment & Services 3.8% Defensives 5.6% Information Technology 5.4% Utilities -4.6% DBUSBRTE (Reasonable PE Tech) -6.0% Telecommunication Services 6.1% Consumer 4.8% Consumer Staples 2.3% Consumer Discretionary 6.8% Health Care 10.1% Consumer Staples 2.3% Information Technology 5.4%

tax of overseas earnings of US firms’ subsidiaries at reduced rates. Non-Financials in the S&P hold at least $1.2tn in overseas cash (mostly Tech and Health Care). If half was used for buybacks, this could add 3% ($4) to S&P 500 EPS. A redux of 2004 where companies used 80% of cash for buybacks may be less lik

rgy 3.9 34 3.9 3.4 Health Care 18.7 16.4 18.7 16.4 Industrials 12.7 11.1 12.7 11.1 Information Technology 64.7 56.6 26.0 22.1 Materials 24 2.1 24 2.1 Telecommunication Services 0.1 0.1 0.1 0.1 Utilities 0.2 0.2 0.2 0.2 S&P 500 ex. Financials & Real Estate 117.0 102.4 78.3 68.5 S&P 500 GAAP EPS impact ($9) ($8) Source: FactS