Conference Call 11/27/06

US Economy Last Week Black Friday – beginning of holiday shopping season – Preliminary reports – up 6% from 2005 – Not always a reliable forecast for entire season Wal-Mart – same store sales down 0.1% November 2005  November 2006 – First decline since 1996 US Dollar – fell 2% vs Euro last week (highest level in 19 months) – Fell 1.5% vs Yen – Currency traders believe that Fed will cut interest rates and ECB will raise rates

Markets last week Major indices were mixed – REITs were up because of Blackstone $20B offer for Equity Office Properties – Dell’s earnings rose 12% for 3Q – Copper stocks rose because of buyout offer for Phelps Dodge Best performing sectors of 3Q – Materials (+10.48%) – Information Technology (+9.04%) – Consumer Discretionary (+8.34%) Historically these sectors outperform after Fed cuts interest rates – Suggests investors are ahead of Fed in this business cycle

Economic Cycle Economy still slowing – Retail sales sluggish last 3 months and housing industry’s weakness could continue for few quarters Still believes we’re in Ease Off Health Care, Financial, Utilities and Consumer Staples have historically outperformed as economy weakens Generally there is a sharp correction before plunge