Reading the Tea Leaves:Investing for 2010 and Beyond

Wednesday, April 28, 2010; 8:00 AM - 9:15 AM

Moderator:Maria Bartiromo, Anchor, CNBC's “Closing Bell With Maria Bartiromo”

Speakers:Nick Calamos, President of Investments and Co-Chief Investment Officer,

Calamos InvestmentsCalamos InvestmentsPatrik Edsparr, Global CEO, Citadel Securities

Thomas Joyce, Chairman and CEO, Knight Capital Group Inc.Meredith Whitney, CEO, Meredith Whitney Advisory Group LLC

1

Nick P. Calamos’s Slides

2

Tracking a normal recovery

FIGURE 1: S&P 500 FALL/RISE OF 1970s, 1980s, 2001 & FIGURE 2: ISM MANUFACTURING FALL/RISE OF 1970s, & , , &2007 RECESSIONS

,1980s, 2001 & 2007 RECESSIONS

3

Tracking a normal recovery, continued

FIGURE 3: CREDIT SPREADS FOR HIGH GRADE AND FIGURE 4: G7 EXPORTS FALL/RISE OF 1970s, 1980s, HIGH YIELD CORPORATE BONDS

, ,2001 & 2007 RECESSIONS

4

Not tracking a normal recovery

FIGURE 5: TOTAL NONFARM PAYROLL FALL/RISE OF FIGURE 6: REAL DOMESTIC INVESTMENT FALL/RISE OF 1970s, 1980s, 2001 & 2007 RECESSIONS 1970s, 1980s, 2001 & 2007 RECESSIONS

5

The “New” Misery Index

FIGURE 7: MISERY INDEX— “NEW” VS. “OLD”

6

High debt levels indicate this is not a normal recession

FIGURE 8: GENERAL GOVERNMENT DEBT, ADVANCED FIGURE 9: U.S. HOUSEHOLD DEBT AS A % OF NOMINAL ECONOMIES AS A % OF GDP GDP

7

Historical collapse in velocity of money further indication this recession is different

FIGURE 10: RATIO OF GDP TO MONETARY BASE(VELOCITY OF MONEY)

8

A high debt level increases vulnerability to rate changes and event risk

Sources: Non-Financial Debt from Federal Reserve, Flow of Funds Report.. GDP data from BEA, Govt Bond Yields from FactSet.

9

Expanding government results in lower wealth creation

FIGURE 12: FEDERAL GOVERNMENT EXPENDITURES AS A % OF GDPAND S&P 500 INDEX ADJUSTED FOR INFLATION

10

“Short-term Bullish; Long-term Scared”

FIGURE 13: U.S. CORPORATE PROFITS AND U.S. LABOR PRODUCTIVITY

FIGURE 14: EUROZONE LABOR PRODUCTIVITYLABOR PRODUCTIVITY

11

Calamos focusing on companies with global revenue sources

FIGURE 15: MARKET BOTTOM TO NOW– RUSSELL 3000® INDEX AND INTERNATIONAL REVENUE SEGMENT RETURNS

12

Additional Slides

13

U.S. Consumer Confidence IndexConfidence improves slowly

160Index (1985 =100)

40

60

80

100

120

140

160

Conference Board's Consumer Confidence Index

14

0

20

Jan 2000

2001 2002 2003 2004 2005 2006 2007 2008 2009 Mar 2010

Source: Bloomberg.

U.S. small business optimism index

110Small business optimism Index(1986=100)

90

95

100

105

110

15

80

85

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010Source: the National Federation of Independent Business.

Forecasts of positive U.S. real GDP growth rates

Real GDP growth (%) (Quarterly percentage change, seasonally adjusted at an annual rate)

2.1

-0.7

1.5

-2.7-0.7

2.2

5.9

3.0 3.0 2.8 2.9 2.9 3.0 3.2 3.9

6-4-202468

( yp g g y j )

Composite forecasts

16

Note: Composite forecasts are average forecasts of 27 private organizations. Sources: U.S. Bureau of Economic Analysis; Bloomberg.

-5.4-6.4

-10-8-6

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42007 2008 2009 2010 2011

Retail sales climbed in MarchA sign showing American consumers were beginning to spend more

400US$ billions Monthly total retail sales, seasonally adjusted

300

350

+1.6% in March

17Source: U.S. Department of Commerce.

2502000 2002 2004 2006 2008 2010

Shade area indicates recession

Households are deleveraging U.S. households need to reduce their debt to more manageable level

U.S. household debt (% of disposable personal income)

50

100

150Economists see 100% as a

sustainable level

Total household debt stood at 123% as of the end of 2009

18

01950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009

Source: Federal Reserve.

Growing personal bankruptcy filingsThe total number of bankruptcy filings = 1.47 million in 2009

800

Thousands The number of quarterly bankruptcy filings in the federal courts

200

400

600

800

Business bankruptcy filingsPersonal bankruptcy filingsTotal

19

Source: Administrative Office of the U.S. Courts.

0

200

Q1 1995 Q1 1997 Q1 1999 Q1 2001 Q1 2003 Q1 2005 Q1 2007 Q1 2009

The nation posted its large job gain in March The largest job gains since the start of the recession

400

Monthlynet employment change(thousands of workers)

-600

-400

-200

0

200

400162,000 jobs added in March

20

-1000

-800

600

Jan-2007 Jan-2008 Jan-2009 Jan-2010

Source: U.S. Bureau of Labor Statistics.

Decline in initial claims for unemployment insurance

700Thousands

6.6 million people receiving jobless b fit f J 2009

400

500

600 4.56 million(as of March 31, 2010)

benefits as of June, 2009

21Source: U.S. Bureau of Labor Statistics.

200

300

1980 1985 1990 1995 2000 2005 2010

A rise in private hiringJob losses continued in financial activities and in information

Monthlynet employment change, March 2010 (thousands of workers)

Mining and loggingProfessional and business

ConstructionManufacturing

Leisure and hospitalityTrade, transportation, utilities

Education and healthGovernment

22Source: U.S. Bureau of Labor Statistics.

-30 -20 -10 0 10 20 30 40 50

Financial activitiesInformation

Other services

Underemployment is still a concern

7 000

Thousands Part-time employment for economic reasons

2 000

3,000

4,000

5,000

6,000

7,000

Part-time due to slack work or business conditions

23Source: U.S. Bureau of Labor Statistics.

0

1,000

2,000

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Could only find part-time work

2010

Turnaround stock markets

300015,000

Nasdaq9001,800

1500

2000

2500

7,500

10,000

12,500

Nasdaq (right scale)

D J400

500

600

700

800

800

1,000

1,200

1,400

1,600 Russell 2000 (right scale)

S&P 500(left scale)

24Source: DataStream.

500

1000

5,000

,

2002 2004 2006 2008 2010

Dow Jones(left scale)

200

300

400

600

2002 2004 2006 2008 2010

Narrowing risk spread Indicative of the reduced stress in the debt markets

5Percentage points

Oct 10, 2008

2

3

4 TED Spread

BAA-AAA spread

25

Note: The TED spread is the difference between 3 month-LIBOR rates and the yield on 3 month U.S. Treasury bill.The BAA-AAA spread is the difference between the interest rates on high-grade and medium-grade corporate bonds.

Sources: Bloomberg, Federal Reserve.

0

1

Decline in market volatility

80Volatility index (VIX)VIX long term average 1990 2010 Lehman Brothers

20

30

40

50

60

70VIX long-term average,1990-2010 Lehman Brothers

collapsed (September 2008)

Dot-com bubble burst (March 2000)

Long-Term Capital Management bailout (September 1998)

26Note: VIX is the Chicago Board Options Exchange's volatility index. Source: DataStream.

0

10

20

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Frozen secondary markets

1,000

US$ billions U.S. issues of non-agency mortgage-backed securities (MBS)

400

600

800

, g g ( )

27

Source: Securities Industry and Financial Market Association, SIFMA.

0

200

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Frozen secondary markets

800US$ billions U.S. issues of asset-backed securities (ABS)

by asset type

200

400

600

Student Loans

CBOs & CLOs

Manufactured HousingHome Equity

Equipment

28Note: CBOs = Collateralized bond obligations; CLOs = Collateralized loan obligations.Source: Securities Industry and Financial Market Association, SIFMA.

0

200

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

Credit Cards

Auto

U.S. bond issuanceStarted to increase since 2009

180Total issuance (US$ billions)

406080

100120140160180

High yieldInvestment grade

29

020

Jan 2008

Mar May Jul Sep Nov Jan 2009

Mar May Jul Sep Nov Jan 2010

Mar

Source: Securities Industry and Financial Markets Association.

U.S. fiscal position is in a free fall

400Federal surplus [+] or deficit [-], fiscal yearUS$ billions

-1,000-800-600-400-200

0200

30Source: The Office of Management and Budget, White House.

-1,600-1,400-1,200

,

1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Shade area indicates recession

President Obama's budget will generate nearly $10 trillion in budget deficits over the next 10 yearsFederal Budget (US$ billions)

US$9.761 trillion total deficit from 2011 to 2020

-1,000

-800-600-400-200

0( $ )

31Source: Congressional Budget Office (CBO).

-1,600-1,400-1,200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Actual CBO's estimate of federal budget for fiscal year 2011

U.S. national debt will reach 90% of GDP in the next decade

100% of GDP Federal debt held by public

30405060708090

201063% of GDP, or$9.2 trillion

202090% of GDP, or$20.3 trillion

32Source: Congressional Budget Office (CBO).

01020

1980 1985 1990 1995 2000 2005 2010 2015 2020

CBO's estimate

World economic recoveryReal GDP growth rates, 1980-2014

10Real GDP (% change, year-to-year)

Emerging andProjected

-2

0

2

4

6

8 World

Advanced economies

Emerging and developing economies

33

-6

-4

1980 1985 1990 1995 2000 2005 2010

economies

2014

2009 and 2010 Global equity marketsEmerging markets were the clear winners in 2009

YTD (as of April 20, 2010)

-0.4%

3.7%

5.6%

1.4%

5.8%

7.4%

MSCI Europe

MSCI World

S&P 500 Index

MSCI EAFE

MSCI Pacific

MSCI Japan

34

Source: DataStream.

3.8%

-2 0 2 4 6 8 10

MSCI EM index

Index return (%) in US$

2010 global equity markets Japan and U.S. lead; Europe lags in 2010

110December2009 = 100 Japan and U.S. have

been the leader in 2010

90

95

100

105MSCI Japan

S&P 500 Index

MSCI EM

MSCI EAFE

MSCI EUROPE

been the leader in 2010.

Spain, Portugal and

35

Source: DataStream.

85

90

Dec-09 Jan-10 Feb-10 Mar-10 Apr-10

Spain, Portugal and Greece continue to weigh on European performance

Unemployment rate in Eurozone on the rise

10.5Unemployment rate, percent (seasonally adjusted)

8 0

8.5

9.0

9.5

10.0

36

7.0

7.5

8.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Sources: Eurostat, Bloomberg.

Global economic forecastsEmerging market economies will lead the world growth

8 08.59

% Real GDP growth forecasts by key countries/regions (average 2010-2014)

1 42.1

3.94.6 4.8 4.9

8.0

2345678

(average 2010 2014)

37Source: Economist Intelligence Unit.

1.4 1.1

012

Western Europe

Japan United States

Latin America

MENA Brazil Asia India China

Change in the world economic power China and India become larger in the world economy

Real GDP (PPP dollars), share of world total20091991

United States20%

China12%

Rest of the world

47%

2009United States22%

China4%

Japan

Rest of the world

48%

1991

38Sources: International Monetary Fund, The Milken Institute.

Japan6%

India5%Germany

4%

U.K.3%

France3%

Japan9%

India3%

Germany6%

U.K.4%

France4%

Global stock market capitalization (% world total)China almost surpassed Japan in stock market capitalization

United

April, 20101991United States;

31%

Rest of the

world; 39%

United States34%

United Kingdom

9%

France3%

Canada2%

Rest of the

world19%

39

Japan; 8%

China; 7%

United Kingdom

7%

France; 4%

Canada; 4%

Source: Bloomberg.

Japan33%

China0%

9%