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29-Apr-09

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It was before the Swine Flu came up to the forefront (another story such as the SRAS or the Bird Flu?): the BARRON’S told us (04/27) that after the worst stretch for stocks in decades, America’s money managers were bullish. The latest “Big Money Poll” shows that 60 % of respondents call themselves “bullish” (54 %) or “very bullish” (13 %) about stock market’s prospects through the end of 2009. 20 % are “neutral” and 13 % “bearish”. Bulls see the DJIA at 8,676, the S&P 500 at 906 and the Nasdaq at 1,684 at the end of 2009. Bears see them at 7,300, 756 and 1,444. Going forward (end of 2010), bulls see the DJIA at 9,488, the S&P 500 at 1,003 and the Nasdaq at 1841. Bears see them at 7,596, 782 and 1,476. More than 40 % of bulls predict the DJIA will reach or breach 10,000 by the middle of next year. Among reasons for this optimistic outlook is the mountain of cash on the sidelines, ready and able to fuel a continuation of the th powerful rally that began on March 9 . A record $3.8trn is invested in money-market mutual funds, equal to 43 % of the stock market’s $8.69trn capitalization as of March 31st. 89 % of the time when the liquidity reserve balance exceeded 10.8 % of total market capitalization; the market returned an average of 9.9 % per annum. Corporate earnings will start improving as soon as Q4 2009, with analysts predicting a “V shape scenario” and an increase of 140 % of earnings per share for the last quarter of this year…Also high dividend yields and low returns on money-market funds could draw more investors into stocks. And equity valuations are at multiyear lows. The market’s median capitalization weighted P/E is at 13.29 (S&P 500). The April Conference Board’s consumer confidence index soared to 39.2 in April vs. 26.9 in March (although at an extremely low level by historical standards), in a move that is particularly noteworthy as this is usually one on the first indicators to improve ahead of a recovery. The index is supported by a 20 % rise in stock markets and signs that the economy is contracting at a much more moderate pace. There was a huge jump in the expectations index (from 30.2 to 49.5) while the current condition index rose more modestly (21.9 to 23.7). Confidence has now been above its trough for 2 months. Today is the end of the two-day FOMC meeting (20.15 GMT). As there won’t be any surprise in the final statement about the Fed Funds rate target (which will be held in the 0.00/0.25 % range) and given the recent stagnation in the size of the monetary base and the patchy success in reducing borrowing costs, the Fed could announce plans for more long-term asset purchases, particularly Treasury securities. The Fed is already committed to buying $1,250bn of mortgage-backed securities (TALF), which is equivalent to 25 % of the $4,965bn outstanding stock of these securities. In contrast, the $300bn of Treasury securities the Fed has committed to buying is equivalent to only 4 % of the almost $7,000bn of Federal government debt held by the public. The Fed could also opt to widen the mix of long-term assets it is purchasing, only by taking more risk on to its balance sheet (Corporate bonds, privately issued ABS…). Avoiding a deflationary spiral will probably require an even more aggressive policy of quantitative easing. But any widening of the monetary stimulus now increases the risk that inflation could eventually raise out of control if the Fed doesn’t drain the excess liquidity quickly enough when economic conditions improve. Yesterday, the US 10-year Treasury rate went above 3.00 %... The advanced US Q1 GDP figures will also be released today (14.30 GMT). They will probably show the economy contracted at a slower annualized pace than in Q3 2008 (-4.0 % vs. -6.3 %?). The Q4 decline was principally due to a sharp fall in consumption, whereas the monthly spending figures indicate that consumption actually increased slightly in Q1. Households benefited from some boosts to income, such as the 5 % plus cost-of-living adjustment in social security benefits and higher tax rebates. Similarly, net trade was a drag in Q4, but likely provided a big boost to GDP in the latest figures. This reflects the fact that although the rates of decline for imports and exports are similar, in terms of levels, imports are much bigger than exports. The positive contribution from consumption and net external trade should be offset by the decrease in investment and inventories. Yesterday, US equities consolidated ahead of the GDP data release and the FOMC’s statement. But equity markets appear to be very resilient (which offer some good buying opportunities) as they are facing the looming threat of a pandemic due to the swine flu (some economists say it could affect the global GDP by -1.00 %) and the WSJ reported that in the wake of the “stress tests”, Bank of America (8.63 %) and Citigroup (-5.86 %) may need to raise their capital levels by billions of dollar. Japanese markets are closed today for Showa Public Holiday, while other Asian markets were upbeat.
WTI Last Perf 1d % 49,7 1,03 €/$ 1,3204 0,42 $/¥ 96,81 -0,38 10 yr US 3,02 1,32 bp 10 yr Euro 3,14 -2 bp Basic -1,18 -1,03 Energy Financ Health 0,38 0,69 -1,16 0,08 0,33 0,63 Tech -0,63 -0,90 Tel 1,14 0,24 Indus Utilities -0,89 -0,39 0,19 -0,02 SOX -1,65 -1,43 S&P NAS DOW Close US Europe

-0,27 -0,33 -0,10 0,03 -0,71 0,03

ECONOMIC DATA with impact
In the US, watch the Fed Policy Announcement (20.15 GMT) and the advanced Q1GDP data which could be better than expected (-4.0 % ann. vs. -4.7 % expected, and -6.3 % in Q4 08) due to positive contributions of consumption and net external trade.* In the eurozone, M3 Money Supply (10.00 GMT) may have contracted again in March (+5.7 % vs. +5.9 %) and the economic sentiment may have improved, at +66.0 vs. 64.6 (11.00 GMT).

POSITIVE IMPACTS
MICHELIN : Q1 sales €3.5 bn (3.44bn exp) / Said group is well on track to meet its objective of generating positive FCF in 2009 PUBLICIS : Q1 revenue €1.075 bn (1.06bn exp) / Org. Growth -4.4% (-5.1% exp) / Expects Q2 to be "even worse" than Q1 for global advertising market but Publicis should outperform the market SANOFI : Q1 € 7.11 bn (7.05bn e) / Operating €2.90bn (2.64bn e) / Confirmed FY EPS target / But stopped development of 14 drugs of which 4 in phase III, incl. saredutant / Sees 3 possible blockbusters in pipeline, dengue vaccine / Not discussing M&A, partnerships SIEMENS : Q2 sales €18.95bn (18.86bn exp) / Operating €1.84bn (1.61bn exp) with industry operating €671m (€700m e), energy €818m (660m exp) & healthcare €355m (320m exp) / Q2 order intake €20.86bn (20.15bn exp) / As exp, cut FY guidance = Sees FY operating above FY08 (€6.6bn) vs 8-8.5bn previously 6.9bn for consensus) ROYAL DUTCH : Q1 revenue $58.2bn (53.8bn exp) / PTP $5.73bn (2.57bn exp) / CCS earnings $3.3bn (2.55bn exp) / Production 3.396m boepd (3.369m exp) / Q1 dividend 42c SANTANDER : Q1 revenue €9.45bn (€8.9bn exp) / NII €6.23bn (€5.69bn exp) / Operating Profit €5.37bn (€4.8bn exp) / Bad loans ratio 2.49 End-March from 2.04% End-2008 / Core capital ratio 7.3% from 6.1% Year earlier / Webcast 9:00 UKT SOCIETE GENERALE : Chairman Daniel Bouton will resign NATIXIS will name Laurent Mignon from Oddo & Cie as its new CEO (Le Figaro) / FIAT : Chrysler's biggest lenders and the U.S. government reached a breakthrough framework deal to cut the automakers' debt by $6.9 bn, but bankruptcy still looms as a strong possibility to complete restructuring. SEMI CONDUCTORS : Taiwan Semiconductor Manufacturing revised its forecast for the global semiconductor industry's revenue this year, to a smaller 20% decline from its previous forecast of a 30% fall (Economic Daily News) NOVOZYMES : Q1 sales DK2.13bn (2.12bn e) / Operating DK 403m (397m e) / Ups FY op pft margin target but cut FY sales outlook HOME RETAIL : FY PTP £327.7m (£320mln exp) / FY adj EPS 25.9p (25.1p exp) / FY dividend held at 14.7p in line

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29-Apr-09

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NEGATIVE IMPACTS

ARCELORMITTAL : Q1 revenue $15.1bn (17.5bn exp) / Ebitda $0.9bn (1bn exp) / Net loss $1.1bn (-594m exp) / Net debt $26.7bn, in line / Continues temporary production cuts / Sees Q2 EBITDA of $1.2-$1.5 bn (1.8bn exp) / Sees modest pick-up in Q2 SAP : Q1 software & software-related services revenues €1.74 bn (1.84bn exp) / Licence rev. €418m (500m e) / Operating €332m (406m exp) / Won’t provide specific revenue outlook but sees difficult Q2 / Sees FY 2009 non-GAAP op. margin between 24.5% - 25.5% FRANCE TEL : Q1 revenue €12.68bn (12.73bn exp) / Ebitda €4.3bn (4.4bn exp) / Confirmed FY organic FCF target of €8bn BAYER : Q1 revenue €7.9bn (8.06bn exp) / Ebitda €1.70bn (1.79bn exp) / Sees goal of limiting the decline in group EBITDA before special items to 5% to be increasingly demanding SUEZ ENVIRONNEMENT : Q1 Revenues €2.83bn ( €2.845bn exp) / EBITDA €436m (€456m exp) / Net Debt remains stable / Pursues 2009 objectifs / 09 goals to require accelerated cost cuts NORSK HYDRO : Q1 revenue NK16.85bn (17.29bn exp) / Operating loss NK 493m (-549m exp) / Does not see any short or mid-term upturn in markets / Outlook for European extrusion market weak, lower demand CEMEX : Q1 revenue $3.7bn (3.87bn exp) impacted by unfavorable forex + continued weakness in the US, Spain & the UK / Cement & aggregate volume lower than exp. / But operating $326m (268m e) thx to better costs cuts / Disappointing FCF at -$34m (+$90m e)
RESULTS DIVIDENDS EVENTS ArcelorMittal / royal Dutsch Shell / Sanofi-Aventis / SAP / Siemens / Bayer / Continental AG / Volkswagen / France Aegis (GBp 1.711111) / Akzo Nobel (€1.40 ) / Telecom / Geberit / Nordea Bk / Norsk Hydro / ST Micro Fortis EGM / Allianz AGM Nestlé (CHF 1.40) / Sandvik (SEK 3.15) (after US close) / General Dynamics / American Electric Power / Time Warner AstraZeneca / BASF / BG group / B Sky B / Cap Gemini / Technip / Scor / Dassault Systemes / Lufhansa / Edison / Allianz (€3.50) / Credit Suisse ( CHF 0.10) / AXA AGM / Deutsche Tel AGM / BASF AGM Ferrovial / Novo Nordisk / Kellogg / Motorola / Safeway / Danone (€1.20) / Ahold (€0.18) Eastman Kodak / International Paper Chevron Santander (€0,25737) / BASF (€1,95) / Beirsdorf (€0,70 + 0,20) / Carrefour (€1.08) / Deutsche Tel Acerinox / Alcatel Lucent / TNT Stress Test Results (€0.78) / Inditex (€0.55) / Lagardere (€1.30) / Schneider Electric (€3.45) ArcelorMittal / royal Dutsch Shell / Sanofi-Aventis / SAP / Siemens / Bayer / Continental AG / Volkswagen / France Aegis (GBp 1.711111) / Akzo Nobel (€1.40 ) / Fortis EGM / Allianz AGM Telecom / Geberit / Nordea Bk / Norsk Hydro / ST Micro Nestlé (CHF 1.40) / Sandvik (SEK 3.15) (after US close) / General Dynamics / American Electric Power / Time Warner

Today

Thursday Friday Monday

Today

TRADING IDEAS
BUY NESTLE / L OREAL / VIVENDI / PERNOD on reversal Head & Shoulder possibility & BUY ROCHE on island reversal possibility BUY Cars ahead of RENAULT results today (1445 London time) & BUY OIL names as TOTAL / ENI / BP / ROYAL DUTCH to play the eco recovery BUY DANONE / UNILEVER looking good & BUY KPN / AHOLD / GSZ on double bottom possibility BUY SIEMENS / SELL ALSTOM // BUY L OREAL / SELL CARREFOUR // BUY MUNICH RE / SELL AXA // BUY AHOLD / SELL METRO // BUY BNP / SELL SOCGEN

BROKER METEOROLOGY
VERBUND A..........................RAISED TO BUY .................................................................................................................. BY MERRILL MUNICH RE ..........................RAISED TO OVERWEIGHT FROM NEUTRAL ................................................................ BY JPMORGAN YARA ....................................RAISED TO BUY .................................................................................................................. BY MERRILL VESTAS ................................RAISED TO NEUTRAL.......................................................................................................... BY MERRILL ANTENA 3 ............................RAISED TO NEUTRAL FROM SELL ............................................................................................ BY UBS SCHNEIDER ELECTRIC ......CUT TO NEUTRAL FROM BUY ........................................................................... BY GOLDMAN SACHS SANDVIK...............................CUT TO UNDERPERFORM .................................................................................................. BY MERRILL DEUTSCHE BANK ................CUT TO FROM NEUTRAL ....................................................................................... BY CREDIT SUISSE² VESTAS ................................CUT TO NEUTRAL FROM SELL .................................................................................................. BY UBS ABERTIS ..............................CUT TO UNDERWEIGHT FROM NEUTRAL .............................................................................. BY HSBC

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29-Apr-09

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CHART OF THE DAY
Conference Board Consumer Confidence Since 2000

160 140 120 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 20 06 2007 2008 2009

Source : Conference Board The Conference Board Consumer Confidence index rose more than forecast by most in more than three years (November 2005) to 39,2 in April after 26,9 in March while the consensus expected 29,9.

Tim e

Country

Indicator

ECONOMIC DATA
Period

GE forecasts

Consensus

Previous

9.00 GM T 10.00 GM T 10.00 GM T 13.30 GM T 13.30 GM T 13.30 GM T 19.15 GM T

Euro area Euro area Euro area United States United States United States United States

Euro zone M 3 Economic confidence Consumer confidence GDP QoQ(annualized) advanced Personal consumption Personal consumption core FOM Rate Decision C

M arch April 66 April 1st quarter -2%QoQ 1st quarter 1st quarter April 29 th 0,25 %

5,7%YoY 65,6 -33 -4,7%QoQ 0,9% 1,0%QoQ 0,13%

5,9%YoY 64,6 -34 -6,3%QoQ -4,3% 0,9%QoQ 0,25%

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
8017,0 855,2 1673,8 3051,0 4607,4 2280,5 193,6 4096,4 8493,8 2449,8 11145,9 887,5

% 5 D a ys
0,64% 0,62% 1,83% 3,10% 2,35% 2,24% 2,13% 2,86% - 2,50% - 5,30% 0,95% 1,17% 3,12%

Ytd
- 8,65% - 5,32% 6,14% - 5,19% - 4,22% - 6,83% - 2,41% - 7,62% - 4,13% 34,54% 15,53% 43,25% 22,03%

Forex
EUR/USD EUR/JPY USD/JPY

Price
1,3200 127,78 96,81

% 5 Days
1,55% -0,24% 1,28%

Ytd
-5,47% 0,85% 6,34%

Oil
Brent $/b

Price
48,6

% 5 Days
-1,00%

Ytd
16,04%

Gold
Gold $/oz

Price
893,7

% 5 Days
0,45%

Ytd
1,32%

Rates
Central Banks* Overnight 3 Months

USA
0,25 0,05

Euro
1,25 0,33

Japan
0,10 0,10

Bov es pa ( Bras il) 45821,4

0,12 0,71 0,20 10 Y ears** 3,02 3,14 1,42 *US: Fed Funds; Jap: Overnight; Euro: Ref i ** Euro: German Bund rate
So urc e : B lo o m berg

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29-Apr-09

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ECONOMIC DATA PREVIEW

Watch in the United-States the GDP (annualized) for the first quarter due at 13.30 GMT. At the opposite of the consensus forecast expecting a sharp drop of 5% we might have a good surprise. Indeed the good resistance of the household consumption at the first quarter and the fact that the trade deficit in volume sharply narrowed at the same period led us to anticipate of a drop of only 2% of the GDP for the first quarter(annualized). Watch as well the personal consumption for the first quarter expected to rebound from -4.3% to +1.3% led by the drop of interest rates and by the drop of inflation (-0.1% MoM and -0.4% YoY in March) despite the rise of unemployment. Watch in the euro area the economic confidence for April due at 10.00 GMT, expected to rose from 64.6 to 66 led by the drop of inflation and by the decline of interest rates./JB

ECONOMY
UNITED-STATES : CONSUMER CONFIDENCE JUMPED BY MOST IN MORE THAN 3 YEARS IN APRIL The Conference Board’s consumer confidence index climbed from 26.9 in March to 39.2 in April (forecast 29.9), this is the biggest gain since November 2005. Confidence was led by the recent 20% rise in stock markets and as economic indicators are showing that economic activity is contracting at a slower pace. If we look to the detail April’s increase was mainly due to a jump in the expectations balance from 30.2 to 49.5. This data can be considered as another sign of the upcoming recovery of the American economy as consumer spending account for around 70 % of the GDP. GERMANY : INFLATION ROSE IN APRIL After reaching a peak at 3.3% in July at a time when the barrel was at $147, German’s inflation dropped regularly since then to slightly rebound in February (as oil slightly rose) to drop again to its lowest level in March (0.5%). German’s inflation accelerated in April to reach 0.7% from a year ago (0.0% MoM) led by holiday prices. Indeed the Easter break fell in April this year inflating travel and holiday cost for their year ago level. Consequently this drop will not make a trend and German’s inflation rate will most likely turned negative in may. As in the euro area German’s inflation is getting closer and closer to a deflation situation. If we add to this threat the deepness of the recession and the rise of unemployment this is increasing the pressure on the European Central Bank to sharply cut its leading rate next week. FRANCE : CONSUMER CONFIDENCE REBOUNDED IN APRIL After reaching a low point at - 47 in July 2008 and remained at an average of -43.5 since then, French consumer confidence rose unexpectedly in April to reach -41 its best score since April 2008. Despite the rise of unemployment ( +2.7% MoM in March and +22.1% YoY) . This improvement is following the rose of 1.1% of consumer spending in March (+0.6% YoY) and the manufacturers’ confidence which climbed in April for the first time in 13 months. This increase of consumer optimism could be another sign that the worst of economic downturn may be over./JB

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29-Apr-09
V ind : im liedvolatility o theS& 5 0 IX ex p n P 0
85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 30/04/2007

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6 5 ,5 5 4 ,5 4 3 ,5 3 2 ,5 2 1 ,5 1

$Lib r -3 M n (In rb kR ) o - o th te an ate

30/10/2007

30/04/2008

30/10/2008

30/04/2009

3 /0 /2 0 0 4 07

3 /1 /2 0 0 0 07

3 /0 /2 0 0 4 08

3 /1 /2 0 0 0 08

3 /0 /2 0 0 4 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
30/04/2007

U nitedStates : 1 -year T 0 reasury yield

1 -year T 0 reasury sp U -Eurozone read SA

30/10/2007

30/04/2008

30/10/2008

30/04/2009

-1 30/04/2007

30/10/2007

30/04/2008

30/10/2008

30/04/2009

Source : Bloomberg
150 140 130 120 110 100 90 80 70 60 50 40 30 30/04/2007 30/10/2007 30/04/2008 30/10/2008 30/04/2009

Source : Bloomberg

O : Brent ($ ) il /b

1,65 1,6 1,55 1,5 1,45 1,4 1,35 1,3 1,25 1,2
30/04/2007

Forex: Eurovs D (EU /U ) ollar R SD

30/10/2007

30/04/2008

30/10/2008

30/04/2009

Source : Bloomberg

Source : Bloomberg