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Tuesday, February 16, 2010

Merck & Co. (MRK) – announces earnings of $0.79 vs estimates of $0.78. MRK recently completed the
$41 billion purchase of Schering-Plough, which helped increase revenue 67% in Q4 to $10.1 billion.

• Greece Update - Greek government bonds fell after Finance Minister George Papaconstantinou said
his country is in a “terrible mess” and compared fixing the nation’s deficit to changing “the course of the
Titanic”. Papaconstantinou said his country’s public sector “is out of control” as unions planned more
strikes (Greek customs officials walked off the job Tuesday for a three-day strike to protest government
austerity measures). The European Finance Ministers meeting commenced Mon and continues through
Tues and will probably spend a lot of time discussing Greece although they aren’t expected to make
specific announcements on precise aid mechanisms and procedures

Yield on 5 Year Sovereign for Hellenic Republic Government Bond

When bonds fall, then the yield goes up and that makes it more expensive for the government to borrow.
Perhaps Europe needs to employ the old IMF trick and make any bailout contingent upon fiscal austerity
measures being implemented.

• Former TSY Sec Paulson criticizes Obama’s proposed bank reforms - In an interview with The Sunday
Times, Paulson said that the plans to stop banks from betting their own capital on the financial markets
would “not solve the problem” or prevent a future crisis. He also said that the world needed big banks
to kick-start the global economy. London Times
• Democrats to push Republicans to go on record against key bills; The idea is to make Republicans
either vote for a series of more modest bills identified as popular with the public or explain to
constituents this fall why they opposed them. Reid’s stripped down jobs bill, unveiled last week, was
the first step in this direction. Washington Post
• US eco #s impacted by snow - Huge snowstorms will have an impact on February economic reports,
reducing payrolls by about 150,000. Auto sales, core retail sales, and housing starts are also likely to be
depressed. Much of the lost activity will be made up in coming weeks; effect on 1Q09 real GDP likely to
be small. Mellman
• Economic outlook - On net, we are confident that the broad thrust of this year’s policy stance will
remain highly accommodative and limit the contagion of market stresses emanating from Greece.
Beyond this year, there is still little clarity or confidence that policymakers can engineer a smooth path
toward normalized stances. Kasman
• Wall Street helped Greece to mask its debt problems – article in the NYT – the article alleges that
Wall St banks helped the Greek government to accumulate billions in debt and hide it beyond the view
of Brussels, allowing the country to appear to be in compliance w/deficit rules. One such deal in
particular was structured by Goldman. NYT
• German poll against providing aid to Greece - A majority of Germans want debt-ridden Greece to be
thrown out of the euro zone if necessary and more than two-thirds oppose handing Athens billions of
euros in credit – Reuters – If the German people are against a bailout, then that probably means Angela
Merkel, with declining popularity doesn’t have the political capital to pull off a bailout. And if Germany
won’t bail them out, who else would be willing? Pretty much every other country has problems of their
own.