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27-Mar-09 SPARKLING WATER


Even if yesterday’s surge in U.S. equity markets was mainly sparked by techs (Hewlett-Packard +7.06 %, Intel +5.89 %, AMD +12.30 %,
th
Micron Technology +13.75 %), the mighty equity rally that started after the lows of March 9 is obviously led by banks and
th
financials. They started bottom out after Citigroup’s CEO said on March 10 that the company was profitable during the first two months
of the year and that it enjoyed the best quarter-to-date performance since Q3 07. Remember that Citigroup rose 38 % during that session.
The cyclically-adjusted P/E ratio for the U.S. financial sector (using 5-year trailing average earnings) had fallen to around 4 in early March,
far below its 15.9 average since the late 1970s. Then the latest Treasury’s plans to deal with “legacy assets” sent the financial sector on
the upside. In addition to that, late April, the Government will have completed its “stress test” of 19 major banks. Many investors consider
at least one bank – preferably more – must fail for the test to be credible and achieve its objective: imposing a stiff-enough hurdle so
banks that pass can gain trust and confidence.
Apart from banks and financials, good news comes from the housing market. We already know that existing and new home sales,
inventories and average prices are improving and look like bottoming out. And a new regulation may help the market: Mortgage lenders
would have to adhere to far tougher underwriting standards under a U.S. House bill introduced Thursday. The legislation would
require lenders and other originators of home mortgages to determine whether a borrower could reasonably repay the loan and cover any
taxes, insurance and other fees. The legislation is a tougher version of a bill to overhaul mortgage lending that passed the House in 2007
but failed to gain traction in the Senate. Proponents believe the new bill has far better prospects now that public opinion has soured on
financial institutions and the foreclosure problem has infected the broader economy. The legislation contains measures to discourage
mortgage originators from breaking rules or steering borrowers into unaffordable loans. Originators would have to retain a material portion
of the credit risk of the loan after selling it off to a mortgage servicer or other third party. The legislation directs the federal bank regulators
to decide how much credit risk must be retained, as long as it is at least 5% of the loan value. The bill would also restrict compensation to
mortgage brokers based on the interest rate and terms of the loan. Borrowers who were given fraudulent loans would have the right to
sue investors in the loans.
Equity markets received another incentive yesterday after Obama suggested struggling car makers will receive more federal aid, but
added that the money will be contingent on the sector making “some pretty drastic change” GM and Chrysler have requested $22bn
more, including $9bn for Q2. "We need to preserve a U.S. auto industry," Obama said. "I think that's important. I think it's important not
just symbolically, it's important because the auto industry is a huge employer, not just the people who work for GM or Ford or Chrysler,
but all the suppliers, all the ripple effects that are created as a consequence of our auto industry." (GM +14.05 %, Ford +6.14 %).
Treasury 1-month bill rates turned negative for the first time since December as investors sought the most easily-traded securities
to bolster balance sheets at the end of the quarter. Financial institutions earn interest on funds deposited with the Fed. At quarter end,
banks prefer to carry securities on their balance sheets instead of cash, driving demand for bills. The rate on the 1-month bill dropped to -
0.04 %, compared with +0.03 % on Wednesday. It was last negative on Dec. 26, when it reached -0.05 %. 3-month bill rates fell 4bp to
0.15 %, while 6-month bill rates fell 2 bp to 0.38 %.
Treasury prices turned higher yesterday, reversing earlier weakness, as investors bought short-term debt ahead of the Fed’s
purchases scheduled for today. The Fed said it intends to buy notes maturing in two to three years. The Fed bought $7.5 billion in 7 to 10-
year debt on Wednesday, much more than analysts expected. Yesterday, the second auction of the 7-year maturity occurred in more than
a decade, part of the government's plan to spread out its increasing debt issuance needed to finance the various economic-stimulus
spending and tax cuts. The yield on the current note was little changed at 2.35%. On Tuesday, the government received strong interest
for $40 billion in 2-year notes, though Wednesday's $34 billion in 5-year notes garnered a lackluster reception.
This morning at 6.30 GMT S&P 500 IDX JN9 was down –0.56%.
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 53,7 1,3590 98,14 2,75 3,13 3,81 1,02 1,41 1,53 4,05 1,34 4,98 1,72 5,91 2,33 3,80 2,26 US
Perf 1d % 0,60 0,47 0,60 1,27 bp -1,6 bp 3,24 0,65 -0,01 0,47 2,92 -0,34 3,55 0,36 4,37 1,29 2,54 1,24 Europe
ECONOMIC DATA with impact
Personal Income & Spending (12.30 GMT) expected –01% & +0.2% from previous +0.4 & +0.6% / the highest the better / incomes were
amazingly resilient lately, as well as spending, not really fitting with the crisis mood (lower mortgage rates ? lower oil prices ?) / minor
PCE (12.30 GMT) expected +0.2% from previous +0.1% / should once more remind that deflation is not really happening … / minor
Michigan Index (14.00 GMT) expected 56.8 from 56.6 / just a confirmation, should be revised on the upside thanks to the latest equity
rebound / minor.
POSITIVE IMPACTS
BARCLAYS 's loan book is in the final stages of an extreme stress test by the FSA (FT) / FSA will conclude the testing of the bank's
books in the next few days. There are indications Barclays doesn't need any fresh capital, the FT reported.
COMMERZBANK could divest itself of more noncore activities than previously believed (Handelsblatt)
MAN AG : BlackRock has raised its stake in MAN AG to 3.02%
SAP proposed 2008 dividend of €0.50 per share (pay-out ratio of 32%), unch. Vs last year & in line with estimates
SIEMENS maintained its outlook for 2009 “for the time being” but declined to elaborate if it will lower its outlook when it unveils Q2 results
on April 29 / However, it said that its Q2 operating of its 3 main sectors will grow in a 2-digit-percentage range, compared with the year
ago quarter / Order intake in the January to March quarter, nevertheless, is expected significantly below the prior year level
ACCIONA's acquisition of €2.9bn of renewable energy assets from ENEL-ENDESA has been approved by the energy sector regulator
GAS NATURAL : GDF SUEZ said it will subscribe in full to Gas Natural's planned capital hike to avoid dilution of its current stake (9%)

TSMC : Orders from Qualcomm will likely raise the utilization rate of TSMC 12-inch wafer plants to 80% in the Q2 (Commercial Times) /
Qualcomm is increasing orders to meet better-than-exp. sales of phones in Europe, the US and from emerging markets
NEGATIVE IMPACTS
AIR FRANCE warned it expects an operating loss of about €200 m for its fiscal year ending March 31, blaming shrinking passenger traffic
and cargo activity and a financial hit from its fuel hedging / Just a month ago, it indicated it would achieve an operating profit…
UBS : The U.S. Internal Revenue Service announced new steps aimed at getting taxpayers hiding money in offshore accounts to pay up,
promising not to file criminal charges for those who voluntarily fess up to hiding money overseas
BANCA MONTE DEI PASCHI DI SIENA : 2008 net profit €953m, in line / Dividend €0.013 (0.02 exp) / Will seek to issue €1.9bn (€2bn
exp.) in state-backed bonds / Tier1 7.1% post govt bond / Good indications in first 2 months / Result Presentation at 0930 UKT
BNP (expected) plans to hold an EGM to authorize the issue of preferred shares to the French government.
VEOLIA : Moody's changed to negative from stable the outlook on the A3 senior unsecured ratings to reflect the sharp slowdown
currently being experienced in the waste services market
RWE : A German court rejected RWE’s motion to extend the life of its Biblis A and Brunsbuettel nuclear reactors by shifting production.
WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

27-Mar-09 SPARKLING WATER


ACCENTURE : Q2 revenue $5.27 bn ($5.53 bn exp.) / EPS of $0.63 ($0.62 exp) but issued downside guidance for Q3 = Sees Q3
revenue of $5.1-5.3bn ($5.77 bn exp.) / Sees FY EPS of $2.60-2.67 ($2.79 exp.) / Possible Read-across CAP GEM…
RESULTS DIVIDENDS EVENTS
Today Wendel / DSM (€ 0.80) Portugla Telekom AGM / Philips AGM
Monday Porsche / Banco Popolare ASML (€0.20) / Philips Electronics (€0.70) / DSM (€0.80)
Tuesday Fortis / Marks & Spencer sales / Neopost / Maurel & Prom
Adobe AGM / Volvo AGM / Stora Enso AGM /
Wednesday US car sales
TeliaSonera AGM / FedEx investor meeting
Thursday RIM / Monsanto Volvo (SEK 2.00) / Telia Sonera (SEK 1.80) / Nordea Bank AGM /
TRADING IDEAS
Upside gap to be closed on the Eurostoxx cash 2176/2193 for info

BUY ROCHE / MUNICH RE / L OREAL / EON / ACCOR / AIR FRANCE / LAFARGE on reversal Head & Shoulder
BUY NESTLE / UNILEVER / PERNOD / THYSSEN / ARCELOR on double bottom possibility
BUY NOKIA / BBVA / BNP / AXA / DPW to play gap closure above soon
SELL DBK to play double top possibility & SELL SAP seems toppish for now

BUY PFIZER / SELL SCHERING // BUY BNP / SELL DBK // BUY MUNICH RE / SELL ALLIANZ
BUY LINDE / SELL AIR LIQUIDE // BUY FTE / SELL TEF

BROKER METEOROLOGY
VALLOUREC ......................... RAISED TO BUY ............................................................................................... BY BANK OF AMERICA
SCHNEIDER........................... RAISED TO BUY FROM NEUTRAL .................................................................... BY GOLDMAN SACHS
BMW ....................................... RAISED TO BUY FROM HOLD............................................................................................BY SOC GEN
EUROPEAN AUTO SAHRES. RAISED TO OVERWEIGHT ................................................................................................BY SOC GEN
ATLANTIA ............................. ADDED TO MOST PREFERED LIST .......................................................................................... BY UBS

TELE2 .................................... CUT TO NEUTRAL FROM BUY .................................................................................................. BY UBS


SANDVIK ............................... CUT TO SELL FROM NEUTRAL ........................................................................ BY GOLDMAN SACHS
TECHNIP ................................ CUT TO NEUTRAL FROM BUY ....................................................................... BY BANK OF AMERCIA
NEXANS ................................ CUT TO SELL FROM NEUTRAL ........................................................................ BY GOLDMAN SACHS

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO


WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

27-Mar-09 SPARKLING WATER


CHART OF THE DAY
US continuing jobless claims
since 2006

5500

5000

4500

4000

3500

3000

2500

2000
jan v -06 ju il-06 jan v -07 ju il-07 jan v -08 ju il-08 jan v -09

Source: Department of Labor

After reaching their highest level during their last release American continuing claims rose to a new record at 5.56 million (the total
benefit rolls jumped 122 000 in the week ended March 14th) confirming the difficulty of finding a job for unemployed Americans. This is
not a real surprise as despite the gloomy economic fundamentals representing roughly 60% of the lay off, companies are in a fear state
of mind which could explained the 40 % remaining. Meaning that Companies could adjust significantly this trend when the economy will
start recovering mid 2009.

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
23.30 GMT Japan National consumer price february -0,1% YoY 0,0% YoY
23.30 GMT Japan National consumer price core (ex food and energy) february 0,0%, -0,2% YoY 0,0%, -0,2% YoY
23.50 GMT Japan Retail trade february -0,6%,-3,3% YoY -0,1%,-2,4% YoY
7.45 GMT France GDP ( final) 4th quarter - 1,2 %, - 1 % YoY -1,2%,-1,0% YoY -1,2%,-1,0% YoY
9.30 GMT United Kingdom GDP ( final) 4th quarter -1,5%,-1,9%YoY -1,5%,-1,9%YoY
10.00 GMT Euro zone Industrial new orders January -5,6%,-28,4% YoY -5,2%,-22,3% YoY
12.30 GMT United-States Personal income february +0% -0,1% +0,4%
12.30 GMT United-States Personal spending february + 0,4 % 0,2% 0,6%
12.30 GMT United-States Personal spending core (ex food and energy) february 0,2%,+1,6% YoY 0,1%,+1,6% YoY
14.00 GMT United-States University of Michigan confidence (final) March 56,8 56,6

Inde x e s P rice % 5 D a ys Ytd Forex Price % 5 Days Ytd


DJIA 7924,6 7,11% - 9,71% EUR/USD 1,3571 -0,07% -2,86%
S&P 500 832,9 6,26% - 7,79% EUR/JPY 133,13 -2,17% 4,86%
Nas daq 1587,0 6,98% 0,63% USD/JPY 98,09 -2,22% 7,63%
CA C 40 2892,1 4,14% - 10,13% Oil Price % 5 Days Ytd
DA X 4259,4 5,34% - 11,45% Brent $/b 52,2 4,32% 24,90%
Eur os tox x 50 2157,0 5,76% - 11,88% Gold Price % 5 Days Ytd
DJ 600 179,1 4,27% - 9,70% Gold $/oz 934,2 -1,88% 5,92%
FTSE 100 3925,2 2,92% - 11,48% Rates USA Euro Japan
Nikkei 8627,0 9,26% - 2,63% Central Banks* 0,25 1,50 0,90
Shanghai Comp 2377,7 4,24% 30,59% Overnight 0,10 0,80 0,90
Sens ex ( India) 9952,5 11,14% 3,16% 3 Months 0,14 0,71 0,25
MICEX ( Rus s ia) 849,5 8,23% 37,13% 10 Y ears** 2,74 3,13 1,33
Bov es pa ( Bras il) 42588,7 5,28% 13,42% *US: Fed Funds; Jap: Overnight; Euro: Ref i
** Euro: German Bund rate So urc e : B lo o m berg
WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

27-Mar-09 SPARKLING WATER


ECONOMIC DATA PREVIEW
Watch in the United-States the release of the personal income and of the personal spending for February due at 12.30 GMT. U.S.
Personal income should not increase nor decrease at 0.0% mainly due to the rise of unemployment and to the credit crunch. And
American personal spending will rise in February led by the price increase (0.4%) and by the resistance of the retail sales .

Keep an eye in France on the final release of the GDP due 7.45 GMT which will confirm the sharp drop of French economy at the
fourth quarter ./JB

ECONOMY

UNITED-STATES : THE ECONOMY CONTRACTED THE MOST SINCE 1982 AT THE FOURTH QUARTER OF 2008
The final release of the U.S. GDP for the fourth quarter ( annualised) at -6.3% confirmed the preliminary release of -6.2% and the
sharp drop of the American economy. Indeed the credit crunch, the slump of the real estate and the car sector crisis impacted very
negatively the American economy, increasing the unemployment ,cutting household consumption ( -4.3% at the fourth quarter, the
lowest level since 1980) and humping companies investments. Nevertheless the drop of the interest rates, the fell of energy prices
and the Obama plan will have a positive impact on the economy at the second semester. Consequently the U.S. GDP should turn
positive at the second half of 2009.

UNITED-STATES : CONTINUING CLAIMS INCREASED TO RECORD 5.56 MILLION


After reaching their highest level during their last release American continuing claims rose to a new record at 5.56 million confirming
the difficulty of finding a job for unemployed Americans. Meanwhile initial jobless claims (reflecting weekly firing) rose to 652 000 in
line with the forecast. This is not a real surprise as despite the gloomy economic fundamentals representing roughly 60% of the lay off
companies are in a fear state of mind which could explained the 40 % remaining. Meaning that companies which are presently over
laying off could adjust significantly this trend when the economy will start to recover at the middle of 2009. /JB
WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

27-Mar-09 SPARKLING WATER


VIXindex: impliedvolatilityontheS&P500 $Libor-3-Month(InterbankRate)
6
85
80 5,5
75
5
70
65 4,5
60
55 4
50
3,5
45
40 3
35
30 2,5
25
20 2
15 1,5
10
5 1
27/03/2007 27/09/2007 27/03/2008 27/09/2008 27/03/2009 27/03/2007 27/09/2007 27/03/2008 27/09/2008 27/03/2009
Source : Bloomberg Source : Bloomberg

UnitedStates: 10-year Treasuryyield 10-year TreasuryspreadUSA-Eurozone


5,5 1,2
5,25 1
5
0,8
4,75
0,6
4,5
4,25 0,4
4 0,2
3,75
0
3,5
3,25 -0,2
3 -0,4
2,75
-0,6
2,5
2,25 -0,8

2 -1
27/03/2007 27/09/2007 27/03/2008 27/09/2008 27/03/2009 27/03/2007 27/09/2007 27/03/2008 27/09/2008 27/03/2009
Source : Bloomberg Source : Bloomberg

Oil : Brent ($/b) Forex: EurovsDollar (EUR/USD)


150 1,65
140
1,6
130
1,55
120
110 1,5
100
1,45
90
1,4
80
70 1,35
60
1,3
50
40
1,25

30 1,2
27/03/2007 27/09/2007 27/03/2008 27/09/2008 27/03/2009 27/03/2007 27/09/2007 27/03/2008 27/09/2008 27/03/2009
Source : Bloomberg Source : Bloomberg