The Round Up is a comprehensive daily note produced by the RBS Warrants team providing an overview of market movements along with quality ideas for warrant traders and investors. This material has not been reviewed by Egoli.

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Global Market Action	Scoreboard, Commentary
Aussie Market Action	SPI Comment, Events & Dividends
SUN (SUNKZL)	MINI Investment Buy - The outlook is bright
TLS (TLSKZD)	MINI Trading Buy - RBS trading buy
NUF (NUFKZB)	Strategy - Reporting season hot spot stocks

United States Commentary

Even more so than usual, the market and investor sentiment remains extremely sensitive to eco data points and last nights jobs data was less than ideal. All 3 US majors closed on their lows and the S&P500 back down thru the closely watched 900 level. The sell off was broad based but growth proxies and resource plays were the hardest hit.

Eco - Non Farm Payrolls well shy of expectations, June's fall of 467K significantly worse than consensus at -365K. Unemployment Rate 9.5% vs 9.6%, Initial Jobless 614K vs 615K expected, Continuing Claims 6702K vs 6740K and Factory Orders For May +1.2% vs +0.9% expected.

Resource - Alcoa down nearly 5% and the Dow's worst performer. Reporting July 8 and signalling the start of 2Q reporting season, the nights eco data clearly hurt investor confidence and served as a reminder that more often than not, the largest US aluminium producer has a habit of disappointing.

Growth Proxies - With questions being asked of growth, the bellwether proxies were the biggest drag on the Dow. Caterpillar gave back more than 4%, Dupont down 4%, United Tech 3.9% lower, Boeing 3.2%, IBM lost 3% and together the group accounting for around a third of the Dow's losses.

Oils - Following the drop from crude, Chevron and Exxon fell 3.2% and 3% respectively, stripping 31pts from the leaderboard, so together with the above mentioned growth plays, accounted for 50% of the falls.

United Kingdom & Europe Commentary

The FTSE closed down 2.5% or 106pts after poor US jobs data dampened prospects for a smooth recovery in the world's largest economy. The FTSE Eurofirst 300 fell 2.6%, the DAX slumped 3.8% and the CAC was 3.1% lower.

UK Banks - The sector was generally lower with Lloyds off 3.4%, RBS was 3.8% lower, HSBC fell 1.8% but Barclays outperformed only losing 0.4% ahead of an index re-weighting which will see demand from index funds.

Euro Banks - Credit Agricole, off 1.4%, outperformed after a broker upgrade but elsewhere banks fell steeply. Commerzbank sank 6.5% after stellar gains the previous day, Banco Santander was off 3.7% and SocGen was 3.5% lower.

Media - WPP, off 7%, led the London market sharply lower on Thursday after a broker argued that 2009 may not be the trough year for earnings. In a preview of results season, the broker was "overwhelmingly cautious" on the advertising sector and cut WPP to "sell".

Eco - Jean-Claude Trichet, ECB president, urged banks to live "up to their responsibilities" in reviving credit flows. He declared the ECB was happy with last week’s results of its first injection of unlimited one-year liquidity, which saw it pumping €442.2bn into the eurozone banking system. The ECB made clear official interest rates could remain at the current record low for a protracted period.

Eco - Unemployment in the 16 countries that use the euro spiked to a ten-year high in May. The seasonally adjusted unemployment rate for the euro zone in May stood at 9.5%, up from April's 9.3% and hitting its highest level since May 1999.

Auto - German carmakers fell sharply after reporting that sales were continuing to plummet in the important US market. VW sank 7.8%, Porsche was off 3.9%, BMW fell 3.4% and in France Renault dropped 4.8% and Peugeot ended down 5.4%.

Resources Commentary

Miners - The poor US payroll data saw metal prices weaker as investors worried about global growth. BHP fell 4.7%, Rio dropped 5.7%, Xstrata sank 4.2%, Vedanta was off 1.9% and Antofagasta ended down 4.2%.

Energy - Oil fell sharply as the crude price was also heavily affected by waning investor confidence. BP dropped 1.9%, Shell was 3.3% lower, BG Group fell 3% but Repsol YPF was up 0.1% after reports its receiving offers for its Argentinean arm YPF from Chinese bidders.

SPI Commentary

The SPI traded down 1pt or 0.03% to 3860. Open at 3866 with a high of 3883 and a low of 3842. Volume 21,288. Overnight the SPI traded down 82pts to 3779..

Upcoming Economic Events 

Monday
Tuesday	AUS - HIA new home sales, RBA private sector credit US - S&P/CS composite 20, Chicago PMI
Wednesday	AUS - AIG/PWC manufacturing PMI, nominal retail sales, building approvals US - TCB consumer confidence, Milwaukee NAPM, ADP employment report
Thursday	AUS - Trade balance US - Construction spending, vehicle sales, non-farm payrolls, average hourly earnings, unemployment rate
Friday	AUS - AIG/CBA services PSI US - Factory orders, Independence day holiday

*Dates are indicative only and may change

Upcoming Dividends

ExDivDate	Security	Description	Div (c)	Yield	Frk(%)	PayDate

MINI Investment Buy:

Suncorp Metway (SUNKZL) – The outlook is bright

RBS have re-initiated coverage on SUN with a buy recommendation and a $7.35 target price. The stock is also showing a strong technical set up for a breakout of $6.75 which would be the entry signal. The SUN investment case continues to be dominated by the market’s focus on its banking operations. RBS Research believe the best outcome for SUN shareholders would be a full divestment of its banking operations. The stock is trending up and looks like good value at current levels. Buy SUNKZL




From a low in March 2009, SUN has formed an uptrend and is testing resistance around $6.75 where it gapped down in
February and has found resistance ever since. A breakout to the upside of $6.75 would be a bullish sign and would be a
good entry signal

- RBS has re-initiated SUN with a buy recommendation and $7.35 target price
- SUN has announced it has accepted offers to repurchase A$405m of subordinated debt across various issues for cA$310m. This has resulted in a non-recurring after-tax profit of cA$67m in FY09F. SUN's banking and insurance capital ratios remain ahead of internal and minimum regulatory requirements.
- SUN has appointed a new CEO, Patrick Snowball. Snowball has a strong insurance background from 19 years at Aviva UK. This removes some uncertainty for SUN

Buy SUNKZL

Security	ExPrc	Stop Loss	CP	ConvFac	Delta	Description
SUNKZL	392.77	433	Long	1	1	MINI Long
SUNKZM	455.38	501	Long	1	1	MINI Long
SUNKZP	1097.43	987	Short	1	1	MINI Short
SUNKZQ	895.83	846	Short	1	1	MINI Short

MINI Trading Buy:

Telstra Corporation (TLSKZD) – RBS Short term trading buy

RBS currently have a short term trading buy on Telstra for the period through to Telstra's FY09 result due on 13 August. We consider the high-water mark of regulatory risk has been reached, and the trading case now rests on the relative reliability of FY09F earnings and dividend of 14cps, which offers a 9% yield. The recent pullback provides a good entry opportunity with the stock having made a higher low in May/June. Indicative close range is $3.55-3.62. Buy TLSKZD

Relative reliability of FY09 earnings and dividend
RBS Research expect Telstra’s 2H09 to show good wireless broadband growth and erosion to ULL to have slowed in 2H09, although the recessionary impact on revenue has probably increased in 2H09 on 1H09. Some incremental positive surprise may be in Next IP data product revenue, which appears to have held up well in the business and enterprise segment. We estimate 2H09 revenue growth is running below 3%, which would bring in annual growth at the low end of the 3-4% guidance range. Expect costs to remain relatively high in 2H09 due partly to transformation issues, but sufficiently under control to allow the company to deliver the low end of its target EBIT growth of 3- 5%. The cost issues are already expected by the market and so delivery of EBIT within guidance would be a net positive.

RBS Minis over TLS

Security	ExPrc	Stop Loss	CP	ConvFac	Delta	Description
TLSKZC	257.31		Long	1	1	MINI Long
TLSKZD	285.54		Long	1	1	MINI Long
TLSKZP	428.75		Short	1	1	MINI Short
TLSKZQ	398.37		Short	1	1	MINI Short

RBS Warrants over TLS

Security	ExDate	ExPrc	CP	ConvFac	Delta	Description
TLSIZM	03-Dec-09	250	Call	1	0	Rolling Instalment
TLSIZQ	14-Jun-10	250	Call	1	0	Rolling Instalment
TLSIZR	14-Jun-10	225	Call	1	0	Rolling Instalment
TLSIZW	03-Dec-09	250	Call	1	0	Rolling Instalment
TLSIZY	03-Dec-09	345	Call	1	0	Rolling Instalment
TLSIZZ	03-Dec-09	300	Call	1	0	Rolling Instalment
TLSJZA	30-Jul-09	350	Call	1	0	HOT Instalment
TLSJZB	29-Oct-09	250	Call	1	0	HOT Instalment
TLSSZX	04-Feb-19	191.7	Call	1	1	Self Funding Instalment

MINI Trading Update:

Nufarm (NUFKZB) – Structurally sound

NUF has been sold off aggressively since releasing a profit downgrade in June. However the trading challenges look more seasonal than structural and a return to normal trading conditions in FY10 should see the fundamentals turn positive. The stock looks to be forming a technical bottom. RBS target price is $13.50 with a buy recommendation. Play NUF through NUFKZB



We believe NUF has presented a trading opportunity with more positive price action over the past 2 trading sessions. The stock traded down sharply with increased volume on Wednesday and then managed to bounce back before close similar to the move in December 2008 where the stock found a bottom.

Earnings guidance cut 15%
- The late rush in 4Q sales that NUF needed to meet its long standing FY09 guidance has not emerged to the extent expected
- Guidance has been cut 15% as a result

Pressures look seasonal not structural
- 2008 was a year of very strong demand, supply shortages, excessive inventory build and sharply higher selling prices
- FY09 has been impacted by an unwillingness to build inventory; a late start to the planting season in the US and far more competitive markets
- Pricing should become more rational as high-cost inventory is cleared and more normal buying patterns return.
- RBS Research have a buy on NUF with a target price of $13.50

RBS MINI’s over NUF

Security	ExPrc	Stop Loss	CP	ConvFac	Delta	Description
NUFKZB	690.32	794	Long	1	1	MINI Long

 

For Further Information on RBS Warrants and Structured Products please do not hesitate to contact us!
Robbie Taylor	Ben Smoker
(02) 8259 2018	(02) 8259 2085
robbie.taylor@rbs.com	ben.smoker@rbs.com
http://www.rbs.com.au/warrants
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