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15-Apr-09 BULL MARKET CONSO


Enigma, or should we rather say no longer one. Most bear strategists still can not understand the strength of the average hourly
earnings growth despite the sharp jump in the employment report. Indeed, a look back at history shows that in all but one of the 18
recessions since World War I, earnings growth fell fairly sharply. Even though employers have rushed to reduce costs by cutting
headcounts and hours worked, they have continued to remunerate their remaining employees rather well. The 0.2% monthly rise in hourly
average earnings in March meant that the average worker saw their pay increase by a fairly decent 3.4% over the past year. Looking at
the past shows that, more often than not, earnings growth falls during recessions. It also shows that during the recessions in the early
1920s, the 1930s and the mid-1940s, earnings growth turned negative. Earnings growth did not fall during the recession at the start of the
1980s. This was due to the high rates of inflation at the time, which meant that real earnings growth fell sharply.
With inflation having been high at the beginning of this recession, this may suggest that the current recession is more like the
early 1980s recession than any of the others. The upshot being that we might not be in such a deflation crisis. Or should we say the
sharp falling economic activity, being just temporary (4 months following the Lehman bankruptcy) thanks to the worldwide stimuli, will not
be long enough to reverse the strong inflation pace we were living with since a few years, hurting households purchasing power, which
higher energy prices and rising rates killed further more. As such, the low yield environment, combined to the low inventory level should
lead to a boost of economic activity which combined to the huge money printed will trigger some inflation very similar to the 80’s. No
deflation, but some lower inflation, which unfortunately will just be temporary. Still time to borrow with fix rates.
The vicious circle might be considered as turning to a virtuous one now. It’s been now one month that equity markets are up in their
“bear not so bear” trend anymore, 7 months since the Lehman fall and the acceleration of the stimuli aiming at avoiding a 29 crisis revival.
Fund managers are cash overweight, waiting for more macro and micro confirmation. The economic heart attack required an emergency
rescue, and it seems the intensive care period that followed is soon coming to an end. The economy might not be back to a 5% growth
immediately like in the past, but I did attend a heart transplant man running the NY marathon with success, in a reasonably good time.
A month ago, the message from both the equity and credit market was clear enough: we were heading into a massive
depression and anyone with debt would find themselves unable to roll-over that debt. Thus, equity would become worthless and debt
would become equity. Against this dismal backdrop, the debate was mostly centred on why the US government was taking so long to
nationalize the nation’s biggest lenders. Since the March 7th lows, the banks have rebounded sharply following the suspension of mark to
market rules, and feeling secured by the huge Obama measures. More encouragingly, the Libor rates are making post-Lehman new lows
and are now back within one historical standard deviation and given the US$360 trillion of outstanding loans that are priced against Libor
around the world, this contraction should have an important impact on our economies. Clearly, the markets are now moving away from
pricing in a massive deflationary bust. Not only Wells Fargo, but now Goldman is telling you that it will pay its employees what they feel
right, and choose to pay the TARP back, which is a strong message of confidence. Banks back on track should boost the credit activity
which will be supportive for the economic growth.
Obama cooled down the current optimism yesterday when saying the hard times are not over for the American economy. “By no
means are we out of the woods just yet”, he said, “but from where we stand, for he very first time, we are beginning to see glimmers of
hope”. In what the White House is billing as a major address on the economy at Georgetown University, Obama said his economic
policies are designed to help the economy recover now and build a stronger economy for the long haul, one that isn't built on quick profits,
too much debt, and stagnant wages. He said the economy must be built on rock, not sand. Precisely the reason why he threw some cold
water on a market rebounding so fast. Problem being that the drop has been even faster when playing the 29 crisis revival, with a heavy
deleverage weighting on indices. As to Bernanke, he noted "tentative signs that the sharp decline in economic activity may be slowing,"
pointing to home sales, home building and consumer spending. "A levelling out of economic activity is the first step toward recovery."
Intel after close losing 4% when releasing better earnings is very much reflecting the consolidation mood of a new bull trend
that have started early March, as always on Tuesdays. Take opportunity of the drop to go shopping, which fund managers will do
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 49,3 1,3259 98,44 2,76 3,20 -1,86 -0,55 -7,32 -0,35 -0,95 -2,40 -1,76 -1,32 -0,24 -2,01 -1,67 -1,71 US
Perf 1d % -2,21 -0,01 0,54 -2,01 bp -5,8 bp -0,38 0,37 -2,60 -0,04 -0,63 -1,91 -0,43 -0,68 -0,42 -0,82 -0,93 -0,83 Europe
ECONOMIC DATA with impact
Mortgage Applications (11h gmt) / sharply up lately thanks to lower rates / the higher the better / minor as weekly data
CPI (12h30 gmt) expected 0.1% from previous 0.4% // ex food & energy 0.1% from 0.2% / the falls in gasoline prices,households’energy
bills and food prices will drag the headline lower. But there is no evidence that the deflationary pressures seen in energy prices are
spreading to other areas / interesting although minor this week seen the heavy macro and micro calendar
Empire Manufacturing index (12h30 gmt) expected –35 from previous –38.2 / minor, improving but still very low
Industrial Production (13h15 gmt) expected –0.9% from previous –1.5% / not as bad as in previous month thanks to recent modest
increases in car production and a likely rebound in energy output / minor as too many data this week
Crude Inventories (14h30 gmt)
NAHB housing index (17h gmt) expected 10 from previous 9 / still low level but increasing lendings and lower mortgage rates might
spark a rebound in the housing sector which the NAHB should picture anytime soon / minor today
Fed’s Beige Book (18h gmt) / too many comments lately to make the beige book bring anything new at this stage
POSITIVE IMPACTS
DANONE and wadia group agreed to end their existing JV relationships in India / Danone sold its 50% interest in ABI Holdings to Wadia
EDF received approval from Chinese authorities to buy a 35% stake in a JV to operate 2 units of a supercritical coal-burning power plant
SACYR, FCC and FERROVIAL are preparing their bids on a €3.3-bn contract to build a new Lisbon airport (Cinco Dias)
FIAT : Chrysler's first-lien lenders are preparing a counter-offer for the U.S. Treasury that might include equity in a Chrysler-Fiat alliance
and some cash in exchange for abandoning their claim to some $7 bn in debt (Reuters)
ROCHE said that Arthur Levinson, Genentech's CEO, would stay on as chair of a new Genentech board
AIR FRANCE plans to eliminate 3K jobs through 2011(No straight firing but will not filling posts created through retirements (La Tribune)
GERMAN BANKS : The German govt will decide next week whether to set up a "bad bank" (Fin. Ministry spokeswoman)

INTEL : Q1 revenue $7.14bn (7.06bn exp) / EPS $0.11 (0.03 exp) / GM 45.6% (43.5% exp) / Said that the worst was over for the PC
market + sees Q2 revenue approx. flat to Q1 but added that economic uncertainty ruled out a clear revenue forecast.
NEGATIVE IMPACTS
H&M : March same-store sales -3% (-0.2% exp)
UBS announced it will report a loss of almost CHF2 bn in Q109 due to CHF3.9 bn losses on illiquid assets but expects to have a tier 1
capital ratio of roughly 10% at the end of March 2009 / Wealth management recorded a net outflow of around CHF 23 bn / Plans cost
savings by the end of 2010 of approx. CHF 3.5 to 4 bn compared to 2008 / Will cut 8700 jobs by 2010 (11%)
WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

15-Apr-09 BULL MARKET CONSO


SOC GEN : Moody’s cut Societe Generale financial strength rating to C+ from B- & affirmed LT debt rating
CAP GEM-SAP : Infosys Q4 EPS slightly better than exp. but FY10 EPS guidance disappointed / Infosys, TCS & Wipro down around 4%
ASML : Q1 sales €184m (189m exp) / GM 6.7% / Net loss €117m (111m exp) / End Q1 backlog €853m (736m exp) / Q1 total machine
bookings 8 units (in line) / Sees Q2 sales €210-230m (245m exp) with GM at around 9% with signs of a pick-up in tech purchases
RIO TINTO : Q1 aluminium output fell 6% / Rio also produced 2% less alumina, 15% less iron ore but 33% more refined copper in the Q1
versus the same period a year ago / Separately, Rio Tinto Finance, sold $3.5 bn of notes in 2 parts
SYNGENTA : Q1 sales $3.6bn (3.8bn e) / Crop protection sales in line / Seed a touch below exp. / Confirmed FY EPS gwth guidance
FRAPORT said Frankfurt airport passenger traffic fell 9.2% in March, while cargo dropped by 21.2%
PERNOD RICARD : 9M sales €5.56bn / Confirms net profit guidance / Launches Today €1.04bn rights issue / 3 new shrs for 17
existing / Subscription price @ €26.7 / End of subscription : April 29
RESULTS DIVIDENDS EVENTS
Klepierre (€1.25) / Julius Baer (CHF 0.50) /
Smith & Nephew ($0,090222) / Sulzer (CHF UBS AGM (8.00 GMT) / Rio Tinto AGM / Anglo
Today LVMH sales / Abbott
2.80) / Tullow Oil (GBp 4,444444) / Legal & American AGM / Ciment Français AGM
General (GBp 2,277778)
Danone sales / Carrefour sales / Roche sales /
Accor sales / Atos Origin sales / Silzer order Groupe Bruxelles Lambert (€2.30) / Lonza ( CHF L'Oreal AGM 8.00 GMT / BP AGM / Texas
Thursday
intake / Nokia 10.00 GMT / OMV / Google (AMC) 1.75) Instruments AGM
/ JP Morgan (BMO) / Coca Cola Co / Pfizer
OMV / Citigroup (BMO) / General Electric (BMO)
Friday Sanofi AGM / Corio AGM / Italcementi AGM
/ Honeywell / Merrill Lynch / Sony Ericsson
Groupe Bruxelles Lambert / Alfa Laval / Soitec /
Monday IBM / Morgan Stanley / Bank of America / Telecom Italia (€0.05) Rio Tinto AGM
Halliburton / Texas Instruments / Eli Lily
PPR sales / Logitech / Faurecia / Tesco (BMO) /
Coca-Cola / Manpower / Caterpillar / Merck & Co Deutsche Post AGM / Mediaset AGM / Citigroup
/ Alpha Laval (SEK 2.25) / Corio (€2.64) / Henkel
Tuesday (BMO) / American Express / British Food / AMD / AGM / Swisscom AGM / Union Fenosa AGM / Reed
(€0.53) / L'Oreal (€1.44)
DuPont / Schering-Plough (BMO) / United Tech Elsevier AGM
(BMO) / Yahoo! / State Street / Lockheed Martin
TRADING IDEAS
Target short term 2358 cash eurostoxx // Nasdaq downside gap left on 1616/1595 cash index (Intel tonight)
SELL ACCOR ahead of sales tomorrow
BUY OIL names as TOTAL (dble bottom) / ENI / BP / ROYAL DUTCH to play the economic recovery
BUY L OREAL / AXA / AEGON / SIEMENS / DANONE (sales tomorrow) which just closed their gap ready to resume their upside move
BUY AHOLD / GSZ / FTE on double bottom possibility

BUY AHOLD / SELL CARREFOUR & METRO // BUY CAP / SELL SAP // BUY BAYER / SELL BASF // SANTANDER / SELL DBK // BUY PFIZER /
SELL BRISTOL // BUY TOTAL / SELL ENI // BUY AEGON / SELL ALLIANZ
BROKER METEOROLOGY
RENAULT.....................................RAISED TO BUY FROM HOLD ............................................................................................. BY RBS
EADS ............................................RAISED TO HOLD FROM SELL ................................................................................ BY CITIGROUP
SYNGENTA .................................RAISED TO BUY FROM NEUTRAL ...................................................................................... BY UBS

IBERDROLA RENOVABLES.......CUT TO NEUTRAL ................................................................................................................ BY UBS


NORILSK NICKEL .......................CUT TO NEUTRAL ....................................................................................... BY BANK OF AMERICA
YARA INTERNATIONAL..............CUT TO SELL FROM NEUTRAL ........................................................................................... BY UBS
UNIBAIL RODAMCO ..................CU TO NEUTRAL FROM BUY .............................................................................................. BY UBS
RWE .............................................CUT TO SELL FROM NEUTRAL ................................................................... BY GOLDMAN SACHS
ARKEMA ......................................CUT TO NEUTRAL FROM BUY .................................................................. BY BANK OF AMERICA
SKF AB.........................................CUT TO SELL FROM HOLD ................................................................................................. BY RBS
SODEXO ......................................RATED NEW OVERWEIGHT ..................................................................................... BY BARCLAYS
INTERCONTINENTAL .................RATED NEW EQUAL WEIGHT ................................................................................. BY BARCLAYS
ACCOR.........................................RATED NEW UNDERWEIGHT .................................................................................. BY BARCLAYS
THOMAS COOK...........................RATED NEW OVERWEIGHT ..................................................................................... BY BARCLAYS

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO


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

15-Apr-09 BULL MARKET CONSO

CHART OF THE DAY


US Manufacturing & Trade inventories (MoM)
Since 2006

1,5

0,5

-0,5

-1

-1,5

-2
2006 2007 2008 2009

Source :US Census bureau

Business inventories are declining since September 2008 and reached their lowest level in December at -1.6%. As a consequence of
the weak sales and of the credit crunch humping consumer spending the business inventories dropped of 1.3% in February as in
January

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
0.01 GMT United Kingdom RICS house price balance March -77% -78%
5.30 GMT Japan Industrial production (final) February -9,4%,-38,4% YoY
5.30 GMT Japan Capacity utilization (final) February -12,9% MoM
9.30 GMT United Kingdom DCLG house prices February -11,5 % YoY
12.00 GMT United States MBA mortgage applications April 9 th 4,7%
13.30 GMT United States Consumer price index March 0,1%,-0,1% YoY 0,4%,+0,2% YoY
13.30 GMT United States Consumer price index core ( ex food and energy) March 0,1%,+1,7% YoY 0,2%,+1,8% YoY
13.30 GMT United States Empire Manufacturing April -35,00 -38,23
14.15 GMT United States Industrial production March -0,5% -0,9% -1,5%
14.15 GMT United States Capacity utilization March 70% 69,6% 70,2%
15-21 April United States Wholesale prices March -6,0% YoY
18.00 GMT United States NAHB housing market index April 10 9

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


DJIA 7920,2 - 0,61% - 9,76% EUR/USD 1,3249 -0,26% -5,18%
S&P 500 841,5 0,80% - 6,84% EUR/JPY 130,46 1,55% 2,87%
Nas daq 1625,7 1,19% 3,09% USD/JPY 98,47 1,31% 7,95%
CA C 40 3000,2 1,43% - 6,77% Oil Price % 5 Days Ytd
DA X 4557,0 3,92% - 5,26% Brent $/b 51,8 -2,56% 23,99%
Eur os tox x 50 2278,7 3,68% - 6,90% Gold Price % 5 Days Ytd
DJ 600 191,0 2,75% - 3,71% Gold $/oz 892,2 1,31% 1,13%
FTSE 100 3989,0 - 0,92% - 10,04% Rates USA Euro Japan
Nikkei 8761,0 0,11% - 1,11% Central Banks* 0,25 1,25 0,09
Shanghai Comp 2499,0 3,62% 37,25% Overnight 0,10 0,80 0,09
Sens ex ( India) 10987,4 10,76% 13,89% 3 Months 0,17 0,73 0,20
MICEX ( Rus s ia) 918,6 8,93% 48,28% 10 Y ears** 2,77 3,20 1,44
Bov es pa ( Bras il) 45418,2 2,83% 20,95% *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

15-Apr-09 BULL MARKET CONSO

ECONOMIC DATA PREVIEW

Watch in the United-States the consumer price index for March due at 13.30 GMT. Consumer price index are expected to decrease
as the global economic downturn is reducing inflation and as energy and commodity prices are not increasing anymore. Consumer
price index excluding food an energy are expected to drop as well but at a slower pace Watch as well the release of the industrial
production and the capacity utilization for March due at 14.15 GMT. Industrial production is expected to pursue its drop trend but at a
slower pace than the previous month and capacity utilization are expected to remained flat as they most likely reached a bottom in
February./JB

ECONOMY
UNITED-STATES : PRODUCER PRICES FELL IN MARCH , CORE RATE REMAINED UNCHANGED
Prices paid to U.S. producers dropped from August to December 2008 led by the sharp drop of energy prices (-70%) and rebounded
in January (+0.8%) and February (+0.1%) 2009 led by the slight rise of energy prices. The stabilization of oil price around $ 50 a
barrel and the global economic downturn led down producer prices in March. Indeed prices fell from (0.1%,-1.3% YoY) in February to
(-1.2%,-3.5% YoY) in March. Meanwhile producer prices ex food and energy dropped from (0.2%,+4.0% YoY) in February to (
0.0%,+3.8% YoY) in March . This drop of prices paid to factories, farmers and other producer was unexpected as the economist’s
consensus ( a median estimate of 71 economists) forecast they were remained unchanged in March.

UNITED-STATES : RETAIL SALES UNEXPECTEDLY DROPPED IN MARCH


After dropping for six month in a row reaching their lowest level in October at -3.4% advance retail sales rebounded in February 2009
to reach 0.3% and 1.0% less auto both revised figures. Unexpectedly this rebound did not last and retail sales dropped at of 1.1%
and of 0.9% less auto in March despite the forecast expected a rise of 0.3% and a stabilization at 0.0% less auto. This drop of retail
sales is mainly explained by the soar a job losses and by the credit crunch humping household purchase power and personal
consumption. If we look to the breakdown autos slipped by 2.3%,furnitures and clothing were down by 1.7% and 1.8% respectively
and electronics slumped by 5.9%. The only sector to see rises were food +0.5% and health +0.4%. The rebound of the retail sales will
be mostly linked with the rebounded of the unemployment expected to improve this summer.

UNITED-STATES : BUSINESS INVENTORIES FELL FOR SIX MONTH IN A ROW IN FEBRUARY


Business inventories are declining since September 2008 and reached their lowest level in December at -1.6%. As a consequence of
the weak sales and of the credit crunch humping consumer spending the business inventories dropped of 1.3% in February as in
January. As showed by the above dropped of retail sales , the global economic downturn is increasing unemployment affecting
company sales and leading business stocks down. /JB
WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

15-Apr-09 BULL MARKET CONSO


VIXindex: impliedvolatility onthe S&P 500 $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
16/04/2007 16/10/2007 16/04/2008 16/10/2008 16/04/2007 16/10/2007 16/04/2008 16/10/2008
Source : Bloomberg Source : Bloomberg

UnitedStates : 10-year Treasury yield 10-year Treasury spreadUSA-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
16/04/2007 16/10/2007 16/04/2008 16/10/2008 16/04/2007 16/10/2007 16/04/2008 16/10/2008
Source : Bloomberg Source : Bloomberg

Oil : Brent ($/b) Forex: Eurovs Dollar (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
16/04/2007 16/10/2007 16/04/2008 16/10/2008 16/04/2007 16/10/2007 16/04/2008 16/10/2008
Source : Bloomberg Source : Bloomberg