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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 10year 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 $34 billion in 5-year notes garnered a lackluster reception. This morning at 6.30 GMT S&P 500 IDX JN9 was down –0.56%.
WTI Last Perf 1d % 53,7 0,60 €/$ 1,3590 0,47 $/¥ 98,14 0,60 10 yr US 2,75 1,27 bp 10 yr Euro 3,13 -1,6 bp Basic 3,81 3,24 Energy Financ Health 1,02 0,65 1,41 -0,01 1,53 0,47 Tech 4,05 2,92 Tel 1,34 -0,34 Indus Utilities 4,98 3,55 1,72 0,36 SOX 5,91 4,37 S&P 2,33 1,29 NAS DOW 3,80 2,54 2,26 1,24 Close US 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 Wendel / DSM (€ 0.80) Portugla Telekom AGM / Philips AGM Porsche / Banco Popolare ASML (€0.20) / Philips Electronics (€0.70) / DSM (€0.80) 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 / Today Monday Tuesday

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

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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.

Time

Country

Indicator

ECONOMIC DATA
Period

GE forecasts

Consensus

Previous

23.30 GMT Japan 23.30 GMT Japan 23.50 GMT Japan 7.45 GMT France 9.30 GMT United Kingdom 10.00 GMT Euro zone 12.30 GMT United-States 12.30 GMT United-States 12.30 GMT United-States 14.00 GMT United-States

National consumer price National consumer price core (ex food and energy) Retail trade GDP ( final) GDP ( final) Industrial new orders Personal income Personal spending Personal spending core (ex food and energy) University of Michigan confidence (final)

february february february 4th quarter - 1,2 %, - 1 % YoY 4th quarter January february +0% february + 0,4 % february March

-0,1% YoY 0,0%, -0,2% YoY -0,6%,-3,3% YoY -1,2%,-1,0% YoY -1,5%,-1,9%YoY -5,6%,-28,4% YoY -0,1% 0,2% 0,2%,+1,6% YoY 56,8

0,0% YoY 0,0%, -0,2% YoY -0,1%,-2,4% YoY -1,2%,-1,0% YoY -1,5%,-1,9%YoY -5,2%,-22,3% YoY +0,4% 0,6% 0,1%,+1,6% YoY 56,6

Inde x e s
DJIA S&P 500 Nas daq CA C 40 DA X Eur os tox x 50 DJ 600 FTSE 100 Nikkei Shanghai Comp Sens ex ( India) MICEX ( Rus s ia)

P rice
7924,6 832,9 1587,0 2892,1 4259,4 2157,0 179,1 3925,2 8627,0 2377,7 9952,5 849,5

% 5 D a ys
7,11% 6,26% 6,98% 4,14% 5,34% 5,76% 4,27% 2,92% 9,26% 4,24% 11,14% 8,23% 5,28%

Ytd
- 9,71% - 7,79% 0,63% - 10,13% - 11,45% - 11,88% - 9,70% - 11,48% - 2,63% 30,59% 3,16% 37,13% 13,42%

Forex
EUR/USD EUR/JPY USD/JPY

Price
1,3571 133,13 98,09

% 5 Days
-0,07% -2,17% -2,22%

Ytd
-2,86% 4,86% 7,63%

Oil
Brent $/b

Price
52,2

% 5 Days
4,32%

Ytd
24,90%

Gold
Gold $/oz

Price
934,2

% 5 Days
-1,88%

Ytd
5,92%

Rates
Central Banks* Overnight 3 Months

USA
0,25 0,10

Euro
1,50 0,80

Japan
0,90 0,90

Bov es pa ( Bras il) 42588,7

0,14 0,71 0,25 10 Y ears** 2,74 3,13 1,33 *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
V in e : im lie vo IX d x p d latilityo th S& 5 0 n e P 0
8 5 8 0 7 5 7 0 6 5 6 0 5 5 5 0 4 5 4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 27 3 0 7 /0 /2 0

SPARKLING WATER
6 5 ,5 5 4 ,5 4 3 ,5 3 2 ,5 2 1 ,5 1

$L o -3 M n (In rb n R te ib r - o th te a k a )

2 /0 /2 07 790

2 /0 /2 0 7 3 08

2 /0 0 8 7 9/2 0

2 /03 0 9 7 /2 0

2 /0 /2 0 7 3 07

2 /0 /2 0 7 9 07

2 /0 /2 0 7 3 08

2 /0 /2 0 7 9 08

2 /0 /2 0 7 3 09

Source : Bloomberg

Source : Bloomberg
1,2 1 0,8 0,6 0,4 0,2 0 -0,2 -0,4 -0,6 -0,8

5,5 5,25 5 4,75 4,5 4,25 4 3,75 3,5 3,25 3 2,75 2,5 2,25 2
2 /0 /2 0 7 3 07

U itedState : 1 - ar T ryyield n s 0 ye reasu

1 - T rysp U - rozo e 0 year reasu read SA Eu n

2 /0 /2 0 7 9 07

2 /0 0 8 7 3/2 0

2 /0 /2 0 7 9 08

-1 7 3/2 7 2 /03 0 9 2 /0 00 7 /2 0

27 /2 07 /09 0

2 /0 00 7 3/2 8

2 /20 7/09 08

27 /2 09 /03 0

Source : Bloomberg
10 5 10 4 10 3 10 2 10 1 10 0 9 0 8 0 7 0 6 0 5 0 4 0 3 0 27 3/2 7 /0 00 2 /0 /2 0 7 9 07 2 3/2 08 7/0 0 2 /0 /20 8 79 0 27 /2 9 /03 00

Source : Bloomberg

O : B n ($ ) il re t /b

1,65 1,6 1,55 1,5 1,45 1,4 1,35 1,3 1,25 1,2
27/03 007 /2

Fo : Eu vsD llar (EU /U ) rex ro o R SD

2 /20 7/09 07

27 3/200 /0 8

27 /2 8 /09 00

27/03 09 /20

Source : Bloomberg

Source : Bloomberg