Quarterly Market Update

Fourth Quarter 2011

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  Quarterly Capital Markets Review and Outlook

  We remain cautiously optimistic on our outlook for 2012 with GDP growth in the U.S. forecasted to improve to an estimated 2.5%. Continued improvements also expected in the areas of unemployment nonfarm payroll numbers in 2012. Globally, all eyes will continue to be on the European situation as it continues to unfold. Read more >

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  Economic Outlook

  While economic growth looks to improve modestly in the U.S. for 2012, there will continue to be overhang from Europe as the Eurozone continues to find solutions for their economic woes. Read more >

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  Equity Outlook

  Broad equity markets posted strong gains for the first trimester, however, the remainder of the year continued its volatility. Equity valuations combined with continued cash on the balance sheet and consistent reports of corporate earnings, equity markets may offer a favorable opportunity. Read more >

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  Fixed Income Outlook

  The bond market was set to be surprised on the political front in the fourth quarter, but even with the failure of the Super Committee and the failure of the American Jobs Act, bond investors held steady as the results were already built into the bond prices. Read more >

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  Feature: Do Structural reforms in Emerging Markets Mean Good Stock Market Returns?

  This article provides an analysis of how and what structural reforms have taken place in emerging markets from a historical perspective, and their potential impact on stock prices as it relates to today’s events and happenings within these markets. Read more >

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  Q&A

  Chief Investment Officer, John Sawyer, CFA, looks at the differences between the 2008 credit crisis and the events that impacted global financial markets in 2011. Mr. Sawyer examines how the current focus on European issues has detracted from the fundamentals of the U.S. economy which is experiencing modest, although certainly non-recessionary, growth. He anticipates a continued drag on U.S. equities until the European sovereign debt crisis is resolved. Read more >

BBVA Compass is the trade name for Compass Bank, which is a member of the BBVA Group. Securities products are NOT deposits, are NOT FDIC insured, and are NOT bank guaranteed. May LOSE value, are NOT insured by any federal government agency.

This material contains forward looking statements and projections. There are no guarantees that these results will be achieved.

Investing involves risk including the potential loss of principal. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

Indexes are unmanaged and investors are not able to invest directly into any index.

International investing involves special risks not present with U.S. investments due to factors such as increased volatility, currency fluctuation, and differences in auditing and other financial standards. These risks can be accentuated in emerging markets.

Investments in stocks of small companies involve additional risks. Smaller companies typically have a higher risk of failure, and are not as well established as larger blue-chip companies. Historically, smaller-company stocks have experienced a greater degree of market volatility than the overall market average.

Equity investments tend to be volatile and do not involve the guarantees associated with holding a bond to maturity.

In general, the bond market is volatile as prices rise when interest rates fall and vice versa. This effect is usually pronounced for longer-term securities. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

The investor should note that vehicles that invest in lower-rated debt securities (commonly referred to as junk bonds) involve additional risks because of the lower credit quality of the securities in the portfolio. The investor should be aware of the possible higher level of volatility, and increased risk of default.

Municipal bond offerings are subject to availability and change in price. If sold prior to maturity, municipal bonds may be subject to market and interest risk. An issuer may default on payment of the principal or interest of a bond. Bond values will decline as interest rates rise. Depending upon the municipal bond offered, alternative minimum tax and state/local taxes could apply.

The price of commodities is subject to substantial price fluctuations of short periods of time and may be affected by unpredictable international monetary and political policies. The market for commodities is widely unregulated and concentrated investing may lead to higher price volatility.

Investments in real estate have various risks including possible lack of liquidity and devaluation based on adverse economic and regulatory changes.

Other Sources: Bloomberg; California.gov; Russell.com; First page index returns are calculated on a total return basis using the following indexes: S&P 500 (SPX), MSCI World (MXWO), MSCI Emerging Markets (MXEF), Bloomberg 7-10 Year U.S. Treasury Index (USG4TR), Morningstar U.S. Agency Bond TR Index (MSBIUATR), Municipal Bond Buyer 40 Index (BBMIRNEW), Credit Suisse High Yield Index (CSHY), MSCI U.S. REIT Index (RMZ Index).