Credit Suisse-US Equity Strategy D. Cliggott

! We are now in the tenth quarter of the current corporate profit expansion in the United States. In human terms, the current

profit cycle has hit "middle age". In the United States, life expectancy is now just about eighty years. Since 1949, the

average US profit cycle's life has averaged just shy of fourteen quarters. So to complete the analogy: The current profit

cycle is now the rough equivalent of a fifty-seven year old human being in America -- still pretty healthy, but not as strong or

energetic as it was a while back.

! Our base case is the current profit expansion is likely to be of "average" duration and that the level of profits peak in the

middle of 2012. Our S&P 500 operating EPS estimate is $94.00 for this year and $95.00 for calendar 2012.

! To an uncomfortable extent, overall demand growth in this cycle has been dependent upon the Federal government. If the

Federal budget deficit is cut sharply in 2012, EPS would likely come in far below our $95.00 estimate. That definitely

wouldn't be the end of the world, but it would likely be the end of the current cyclical bull market in US equities.

! As we watch and wait to see what unfolds on the shores of the Potomac River in the next few months, we think a classic

defensive sector positioning in US equities still makes the most sense.