Nicholas Colas (Chief Market Strategist): 212.448.6095 | ncolas@convergex.com Beth Reed: 212.448.6096 | breed@convergex.com Sarah Millar: 212.448.6085 | smillar@convergex.

com

Stocks erased earlier losses Wednesday to edge higher in choppy trading, with the Dow logging another record high as well as its first 9-day win streak since 1996 and the S&P 500 zeroing in on its all-time closing high (S&P 500 +0.13%, Dow +0.04%, Nasdaq +0.09%). On the economic front, retail sales jumped 1.1% in February, following a revised 0.2% gain the prior month and topping expectations for a gain of 0.5%. Meanwhile, import prices rose 1.1% last month, versus estimates for +0.5%, thanks to a higher-than-expected increase in gasoline prices. Business inventories climbed 1.0% in January for the biggest gain in 18 months and well ahead of projections for +0.4%. And lastly, mortgage applications declined 4.7% last week as interest rates spiked 11 bps.

Morning Markets Briefing

Market Commentary: March 14th, 2013 A snapshot of the markets through the lens of ConvergEx.
This presentation is not intended for retail customers.

Stuff Managements Have Told Me

Summary: Meetings between public company managements and investors are the bedrock of the fundamental investment process. The reason for that, however, is often lost in translation. rter or new products. Seriously the reason that management meetings are useful is because, over time, managements let down their guards and act like regular people. And in those moments, truth about character, about wisdom, about judgment comes rolling out. Today we offer up a personal highlight reel of examples from +20 years of management meetings. Management meetings are the coin of the realm on Wall Street. Most surveys of institutional investors put about 60% of the commission spend on the Street soundly in a bucket dedicated for brokers which pair up clients (investors) with the C-level executives of public companies. At first blush, this might look like the oldboys-and-girls network at play big money cracking open a bottle of the good stuff to get tips from chief executives. In reality, regulations regarding what management can say are stiff ind So why bother with the meetings at all? Some investors think they are better than most at reading body language or tone of voice in response to a tough question. financial results or some questionable sushi at lunchtime. Yes, there is a bit of self-perpetuation in the management meeting process these days. If I saw 130 company ssure to see more and more companies. . I have been an analyst for coming up on 25 years now, and I shudder to think of the number of times I have broken stale bread and rubber chicken with a Chief Executive Officer or other corporate operating head. But the lesson behind all those

Market Commentary Pages 1-3, Equities/Conferences & Earnings Page 4, Fixed Income Page 5, Exchange-Traded Funds/Indexes Page 6, International Markets Page78, Recommended Online Readings Page 8
2011 ConvergEx Execution Solutions LLC. May not be redistributed without express permission. All rights reserved.

11

Nicholas Colas (Chief Market Strategist): 212.448.6095 | ncolas@convergex.com Beth Reed: 212.448.6096 | breed@convergex.com Sarah Millar: 212.448.6085 | smillar@convergex.com

meetings is pretty straightforward: the more times you meet someone, the more you learn about them as people. Are the honest with themselves? With others? Do they encourage information flow, both good and bad? Those are questions that matter intensely to the investment process. To highlight why I think this is the fulcrum point of the analytical process, I spent a few minutes over the weekend jotting down the tag lines of some of the more memorable things that managements have told me over the years. Those stories follow here. #1 You may not know the name Romano Artioli, but at one point in the 1990s he owned personally two of the most stories brands in automotive history: Bugatti, which he resurrected, and Lotus, which he purchased. I visited him at his new headquarters outside Milan in early 1995 as he considered an IPO for his company. The building, which doubled as the assembly plant for the EB 110 supercar, was brand new and beautiful. The entire office staff male and female He asked me if I knew the secret to what men want. I r hat men may want those things, but suppliers oes allow you to stay in business. #2 General Motors has, in my opinion, had only one good Chief Financial Officer in the decades I have known the company. He sits in that spot right now. The prior ones spent more time doing financial engineering than the actual company engineers spent designing At a dinner with one of these bean counters in the 1990s, I tried to push the topic of why the industry could never seem to e arn its cost of capital in anything it touched. Not in selling cars, not in financing cars, not anything. He got short tempered at about the 7th

But then I got realized

this must be how he treats his own staff. And I quickly came to the conclusion that no one, ever, was going to bring this guy bad news. I

#3 The first dot com bubb of companies, from Oracle to the ill-fated Commerce One, tried to sign up General Motors as an anchor tenant in their online marketplaces. At the time, GM spent over $100 billion annually on purchases of everything from steel for its cars to pharmaceuticals for its retirees. Getting them on an easpiring B2B company in the book. At one corporate event in Detroit I saw loudly and fairly publicly at Ray Lane, the then-president of Oracle. For those of you person Oracle founder Larry Ellison would -commerce business, there he was just taking

it. I was dumbfounded. After the argument blew over, I approached the GM purchasing guy and asked what all the fuss was about. They had value, just like all these crazy Valley startups and entrenched tech billionaires. In the end, of course, they were trees.
2

Nicholas Colas (Chief Market Strategist): 212.448.6095 | ncolas@convergex.com Beth Reed: 212.448.6096 | breed@convergex.com Sarah Millar: 212.448.6085 | smillar@convergex.com

#4 Lest you think every management team in the auto industry had their heads in the clouds or submerged underground let me finish with a story about Jerry York, the former CFO of Chrysler. Back in 1991, the company was teetering on the brink of bankruptcy as the first Gulf War led to helping to sell an equity offering to fund the final tooling of the first Grand Cherokee. No equity raise, no stamping dies. No dies, no cars. No cars, no Chrysler. When Jerry finally walked in an hour late to brief us, he shoved the door open, glared at us, and said We stared ry before, but my impression was of someone who just wanted to get on with whatever job was at hand. Yes, his company was in trouble, but he knew he needed to level with the capital markets and with us if he wanted a chance at survival. The bottom line is that meeting managements is a critical part of the due diligence process for any fundamental investor. Between the earnings forecast and the actual results sit only two things: time and management. Time is uniform; management quality is not. loudly

Nicholas Colas (Chief Market Strategist): 212.448.6095 | ncolas@convergex.com Beth Reed: 212.448.6096 | breed@convergex.com Sarah Millar: 212.448.6085 | smillar@convergex.com

U.S. EQUITIES
In company news, Netflix surged to lead the S&P 500 gainers after the company unveiled a new feature that allows users to connect their accounts to Facebook, al media advertisements. Apple faltered after the release of a report showing shipments of tablets running nd raised its price target to $48 from $41. And among earnings, Express tumbled after delivering a full-year outlook that widely missed Wall Street forecasts. Important Earnings Today ARO: $0.22 BKE: $1.25 NTI: $1.44 ULTA: $0.98 Source: Bloomberg Important Conferences/Corporate Meetings Today: Barclays Healthcare Conference Chicago, IL Citi Latin America Conference New York, NY UBS Global Consumer Conference Boston, MA

S&P Futures
One Day (High ): 1551.00; Low 1542.25):

Prior Day SPX (High

1556.39; Low

1548.25; Close

1554.51):

Three Day (High

1551.50; Low

1540.50):

Source: Thomson Financial

Three Day (High 872.50; Low 832.75):

75):

al

Source: Thomson Reuters

Nicholas Colas (Chief Market Strategist): 212.448.6095 | ncolas@convergex.com Beth Reed: 212.448.6096 | breed@convergex.com Sarah Millar: 212.448.6085 | smillar@convergex.com

FIXED INCOME
Treasuries erased losses as 10-year note yields near 11-month highs boosted demand at the government -year note auction. The notes drew a yield of 2.029%, compared with a forecast of 2.057%, while the bid-to-cover came in at 3.19, versus an average of 2.92 at the past 10 offerings. Benchmark yields were little changed Wednesday afternoon at 2.02% after earlier increasing to 2.05%. The yield reached an 11-month high of 2.08% in March 8.

Jobless Claims (8:30am EST): 350,000 Producer Price Index (8:30am ES)T: 0.6% o Less food & energy: 0.2% Current Account (8:30am EST): $-111.9 B Bloomberg Consumer Comfort Index (9:45am EST) EIA Natural Gas Report (10:0am EST)

Source: Bloomberg

Nicholas Colas (Chief Market Strategist): 212.448.6095 | ncolas@convergex.com Beth Reed: 212.448.6096 | breed@convergex.com Sarah Millar: 212.448.6085 | smillar@convergex.com

ETF Desk 212.468.8405 | ETF@convergex.com

Affiliate, ConvergEx Execution Solutions LLC. Member FINRA/SIPC.

Exchange-Traded Funds/Indexes
Prior Day Peformance of Largest ETFs by Assets
Name Ticker Category Prior Day Return Sector Ticker 1-Day Perf

S&P 500 Sector ETFs

YTD Perf Sector Ticker 1-Day Perf YTD Perf

SPDRs SPDR Gold Shares iShares MSCI Emerging Markets Index iShares MSCI EAFE Index iShares S&P 500 Index Emerging Markets PowerShares QQQ Barclays TIPS Bond Fund Total Stock Market ETF iBoxx Investment Grade Corporate Bond Fund

SPY GLD EEM EFA IVV VWO QQQ TIP VTI LQD

Large Blend N/A Diversified Emerging Mkts Foreign Large Blend Large Blend Emerging Markets Large Growth Fixed Income Large Blend Fixed Income

-0.22% 0.78% -1.14% -0.50% -0.24% -0.57% -0.10% -0.01% -0.14% 0.09%

Energy Health Industrials Utilities Consumer Staples

XLE XLV XLI XLU XLP

0.11% 0.45% -0.57% -0.26% -0.10%

10.78% 12.76% 10.08% 8.71% 10.66%

Telecomm Technology Consumer Discretionary Financials Materials

IYZ XLK XLY XLF XLB

0.45% -0.36% -0.28% -0.54% 0.08%

0.37% 4.85% 10.88% 11.53% 6.13%

Currency

Ticker 1-Day Perf

YTD Perf

Currency

Ticker 1-Day Perf

YTD Perf

Prior Day Top Volume ETFs

Name Ticker Category Shares Traded

Australian Dollar British Pound Sterling Canadian Dollar Euro Japanese Yen

FXA FXB FXC FXE FXY

0.51% -0.10% 0.03% -0.03% 0.30%

-0.83% -8.34% -3.23% -1.31% -9.66%

Mexican Peso Swedish Krona Swiss Franc USD Index Bearish USD Index Bullish

FXM FXS FXF UDN UUP

0.00% 0.57% 0.09% 0.08% -0.04%

0.00% 2.23% -3.44% -3.60% 3.16%

SPDR S&P 500 iPath S&P 500 VIX ST Futures ETN iShares MSCI Emerging Markets Index PowerShares QQQ iShares FTSE China 25 Index Fund VelocityShares Daily Inverse VIX ST ETN iShares Russell 2000 Index Market Vectors Gold Miners ETF Vanguard FTSE Emerging Markets ETF VelocityShares Daily 2x VIX ST ETN

SPY Large Blend VXX Volatility EEM Diversified Emerging Mkts A0MN1YLarge Growth FXI China Region XIV Volatility IWM Small Blend GDX Equity Precious Metals VWO Diversified Emerging Mkts TVIX Volatility

91,754,391 56,643,406 48,448,337 26,904,574 21,949,330 21,038,636 19,078,162 18,755,588 13,347,543 11,185,853

VIX ETNs
Name Ticker 1-Day Perf YTD Perf Bonds

Fixed Income ETFs

Ticker 1-Day Perf YTD Perf

iPath S&P 500 VIX Short-Term Futures ETN iPath S&P 500 VIX Mid-Term Futures ETN

VXX

1.54%

-33.83%

VXZ

0.37%

-23.01%

Aggregate Investment Grade High Yield 1-3 Year Treasuries 7-10 Year Treasuries 20+ Year Treasuries

AGG LQD HYG SHY IEF TLT

0.18% 0.20% -0.04% 0.02% 0.27% 0.72%

-0.90% -1.56% 0.71% 0.01% -1.40% -4.53%

Prior Day Top Performers

Name Ticker Category Shares Traded

Additional ETFs
ETF Ticker 1-Day Perf YTD Perf ETF Ticker 1-Day Perf YTD Perf

iPath Global Carbon ETN Direxion Daily Gold Miners Bull 3X Shrs ELEMENTS CS Global Warming ETN Direxion Daily China Bear 3X Shares WisdomTree Global Real Return Global X Gold Explorers ETF Market Vectors Junior Gold Miners ETF FactorShares 2X: Oil Bull/S&P500 Bear ProShares UltraShort FTSE China 25 C-Tracks Citi Volatility Index TR ETN

GRN NUGT GWO YANG RRF GLDX GDXJ FOL FXP CVOL

Commodities Miscellaneous Trading-Leveraged Equity Miscellaneous Sector Trading-Inverse Equity World Bond Equity Precious Metals Equity Precious Metals Trading-Miscellaneous Trading-Inverse Equity Volatility

8.54% 7.59% 5.50% 4.97% 4.66% 3.89% 3.62% 3.62% 3.57% 3.48%

Gold Silver Natural Gas

GLD SLV UNG

0.78% 0.64% -0.25%

-4.83% -3.98% 5.77%

Crude Oil EAFE Index Emerging Markets SPDRs

USO EFA EEM SPY

0.67% -0.50% -1.14% -0.22%

-0.33% 4.22% -2.16% 9.32%

Major Index Changes: None ETFs in the News: Leveraged ETFs: An Endangered Species? - http://www.fool.com/investing/etf/2013/03/13/leveraged-etfs-an-endangered-species.aspx
6

Nicholas Colas (Chief Market Strategist): 212.448.6095 | ncolas@convergex.com Beth Reed: 212.448.6096 | breed@convergex.com Sarah Millar: 212.448.6085 | smillar@convergex.com

International Market Summary

Asian Markets
Asian stocks ended lower for a second day on Wednesday as investors continued to book profits on concerns that the recent rally is headed for a swift correction (Nikkei 0.61%, Hang Seng -1.46%, ASX -0.50%). Mainland Chinese shares lost -0.99% as poor corporate earnings dampened investor sentiment, pushing Hong Kong shares down as well. The Nikkei dropped for a second day as a pause in the yen s downward trend weighed on the index, and exporters sold off. Losses were limited, however, by expectations of aggressive monetary easing when a new BOJ governor takes over next month. KOSPI rose +0.32% as the won gained back some ground against the yen, though gains were limited as investors await an interest rate decision due out Thursday.

European Markets
European shares closed slightly lower but off their lows for the day as US data helped recoup losses, after retail sales data pointed to continuing recovery across the Atlantic (FTSE -0.45%, DAX +0.06%, CAC -0.1%). However, Italy closed down -1.7% following weak demand at its bond auction, the first since Fitch s sovereign debt downgrade. Economic data in the EU, however, was generally worse than forecast, with French non-farm payrolls falling -0.3% over last quarter, and CPI rising 0.3%. Industrial production for the region as a whole dropped -0.4%, well below estimates of a -0.1% fall.

Australian shares finished lower as financials faltered for a second day, after both UBS and Deutsche Bank stated that the sector was overpriced. The index is still up 22% since last year. dropped -1.03%.

Important Economic Indicators/Events (with Consensus estimates):

Japan Industrial Production (12:30am EST): 1.0% India WPI (2:30am EST): 6.59% Singapore Unemployment Rate (10:00pm EST): 1.8%

Important Economic Indicators/Events (with Consensus estimates):

Spain Retail Sales (4:00am EST): -11.2% y/y Netherlands Retail Sales (4:30am EST) Trade Balance (4:30am EST) Ireland CPI (7:00am EST) Eurozone ECB Monthly Report (5:00am EST) Employment Change (6:00am EST): -0.1% q/q

Nicholas Colas (Chief Market Strategist): 212.448.6095 | ncolas@convergex.com Beth Reed: 212.448.6096 | breed@convergex.com Sarah Millar: 212.448.6085 | smillar@convergex.com

Additional Reading (Online Blog and News Stories)

ZeroHedge Guess Which Country The IMF Forecasts Will Grow The Most In 2016 - http://www.zerohedge.com/news/2013-03-13/guess-which-country-imf-forecasts-will-growmost-2016 Guest Post: Net Worth Vs. Net Value - http://www.zerohedge.com/news/2013-03-13/guest-post-net-worth-vs-net-value Guest Post: NFIB: "No Sign Of A Surge In Confidence" - http://www.zerohedge.com/news/2013-03-13/guest-post-nfib-no-sign-surge-confidence If History Is Any Lesson - Naaah! - http://www.zerohedge.com/news/2013-03-13/if-history-any-lesson-naaah Guest P - http://www.zerohedge.com/news/2013-03-12/guest-post-china%E2%80%99s-militarydevelopment-beyond-numbers Bitcoin 'Glitch' Sparks 23% Flash Crash - http://www.zerohedge.com/news/2013-03-12/bitcoin-glitch-sparks-23-flash-crash The Big Picture Is Insider Selling A Concern? (No) - http://www.ritholtz.com/blog/2013/03/is-insider-selling-a-concern-no/ The Truth About Market Timing - http://www.ritholtz.com/blog/2013/03/the-truth-about-market-timing/ Discuss: Is Anything Cheap? - http://www.ritholtz.com/blog/2013/03/discuss-is-anything-cheap/ Bespoke Investment Group Dow and S&P 500 Correlation - http://www.bespokeinvest.com/thinkbig/2013/3/13/dow-and-sp-500-correlation.html Calculated Risk FHFA: Over 1 Million HARP Refinances in 2012 - http://www.calculatedriskblog.com/2013/03/fhfa-over-1-million-harp-refinances-in.html Zillow forecasts Case-Shiller House Price index to increase 8.0% Year-over-year for January - http://www.calculatedriskblog.com/2013/03/zillow-forecasts-caseshiller-house.html The Conscience of a Liberal Night of the Living Alesina - http://krugman.blogs.nytimes.com/2013/03/13/night-of-the-living-alesina/ The Eurobeatings Will Continue - http://krugman.blogs.nytimes.com/2013/03/12/the-eurobeatings-will-continue/ Economist s View 'When Will It Be 'Crunch Time' for U.S. Debt Accumulation?' - http://economistsview.typepad.com/economistsview/2013/03/when-will-it-be-crunch-time-for-usdebt-accumulation.html Huge Flight of Rich after French Tax Hikes? Nope. - http://economistsview.typepad.com/economistsview/2013/03/-huge-flight-of-rich-after-french-tax-hikesnope.html

Nicholas Colas (Chief Market Strategist): 212.448.6095 | ncolas@convergex.com Beth Reed: 212.448.6096 | breed@convergex.com Sarah Millar: 212.448.6085 | smillar@convergex.com

GENERAL DISCLOSURES
This presentation discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions. It is provided for general informational purposes only and should not be relied on for any other purpose. It is not, and is not intended to be, research, a recommendation or investment advice, as it does not constitute substantive research or analysis, nor an offer to sell or the solicitation of offers to buy any product or service in any jurisdiction. It does not take into account the particular investment objectives, restrictions, tax and financial situations or other needs of any specific client or potential client. In addition, the information is not intended to provide sufficient basis on which to make an investment decision. Please consult with your financial and other advisors before buying or selling any securities or other assets. This presentation is for qualified investors and NOT for retail investors. Please be advised that options carry a high level of risk and are not suitable for all investors. To receive a copy of the Options Disclosure Document please contact the ConvergEx Compliance Department at (800) 367-8998. The opinions and information herein are current only as of the date appearing on the cover. ConvergEx has no obligation to provide any updates or changes to such opinions or information. The economic and market assumptions and forecasts are subject to high levels of uncertainty that may affect actual performance. Such assumptions and forecasts may prove untrue or inaccurate and should be viewed as merely representative of a broad range of possibilities. They are subject to significant revision and may change materially as market, economic, political and other conditions change. Past performance is not indicative of future results, which may vary significantly. The value of investments and the income derived from investments can go down as well as up. Future returns are not guaranteed, and a loss of principal may occur. The information and statements provided herein do not provide any assurance or guarantee as to returns that may be realized from investments in any securities or other assets. This material does not purport to contain all of the information that an interested party may desire and, in fact, provides only a limited view of a particular market. The opinions expressed in this presentation are those of various authors, and do not necessarily represent the opinions of ConvergEx or its affiliates. This material has been prepared by ConvergEx and is not a product, nor does it express the views, of other departments or divisions of ConvergEx Group, LLC and its affiliates.