rse. Stability is measured using a model based on return on equity, earnings growth, financial leverage and beta. Source: Investment Strategy Group, Empirical Research Partners. po Exhibit 64: Spain 5-Year Credit Default Swap and Relative Equity Performance The dramatic reduction in Spanish default risks suggests equity v

-2 25% “4 2.0% 6 < 0 -8 1.5% 10 1.0% -12 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 1954 1967 1981 1995 2008 Source: DepartmentofLabor, BLS, Empirical Research Partners. Source: CBO, BEA, OMB, J.P. Morgan Private Bank. ' Our chief economist Michael Vaknin has analyzed the various seasonal adjustments that the Bureau

on. Attractive valuations for US large cap growth stocks Percent g% 7 70, 70 Nominal free cash yield Post-dividend free cash flow margin Source: Empirical Research Partners Q2 earnings season in the US is off to a good start. Nearly 30% of the S&P has reported, and results have generally been positive. Earnings are beat

ctive valuations for US large cap growth stocks Post-dividend free cash flow margin ‘71 ‘74 ‘77 '80 '83 ‘86 '89 '92 '95 '98 ‘01 '04 ‘07 '10 Source: Empirical Research Partners. Michael Cembalest Chief Investment Officer CBO Congressional Budget Office OMB Office of Management and Budget EFSF European Financial Stability F

2005 2007 2000 2011 Lennar KBHome Toll Hovnanian OR Horton NVR Pultegroup Source: Corporate Reports. Empinaal Research Partners. Source: BuildFax, Empirical Research Partners Has the data really been that good? I heard better US economic data has a lot to do with the weather. Parts of the US experienced the warmest March

6.4 4 | 20% 29 10% 27 2.5 0% 2.3 -10% °” Lennar KBHome Toll Hovnanian DR Horton NVR Pultegroup 2001 2008 2008 200% e008 ann .. Source: BuildFax. Empirical Research Partners. Source: Corporate Reports. Empirical Research Partners. Has the data really been that good? I heard better US economic data has a lot to do with th

nd 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 benefits as a percentage Total increase in pre-tax margins of revenue Source: Corporate reports, Empirical Research Partners. Past performance is not indicative of future results. Source: Standard & Poor's, Empirical Research Partners. Last week's train wreck of a labor rep