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17-Apr-09 IMPATIENCE
Nice session yesterday, with a market not even waiting for the last two big earnings releases of the week GE and Citigroup out today.
Once again macro data kept showing signs of improvement. After the erratic 17% m/m jump in the number of US housing starts in
February, starts were always likely to fall back in March. The good news is that the 10.8% drop, from 572k to 510k, leaves starts above
January’s trough of 488k. What’s more, the recent volatility has been concentrated in multi-family starts. The larger and more stable
single family starts figures have been broadly stable for the past three months. This adds to the number of housing indicators that may
have found a floor : the others being the NAHB index of homebuilding activity, new home sales, existing home sales and mortgage
applications. That said, all these indicators are still at incredibly low levels. Housing starts remain 77% below their peak and 66% below
their 50-year average. So even if housing activity has passed its nadir, it is still very, very weak. But this improvement is crucial as to the
recovery scenario, housing prices collapse being the reason for all this mess.
Meanwhile, the fall in number of initial jobless claims to 610k last week from 663k the week before is the second drop in a row.
Nonetheless, it is still consistent with the monthly payrolls figures falling by over 600k per month. But it will be worth watching carefully,
as according to both bear and bull strategists, employment can not improve before a while ... Jobless claims are closely watched,
because they are the most timely indications we have of turning points. Robert Gordon, an economist at Northwestern University who
studies business cycles and has a seat on the committee that rules on the beginnings and ends of recessions, has found that the four-
week average of new claims usually peaks about a month before recessions end. The problem, of course, is that we don't know jobless
claims have peaked until after the fact.
Even in England things are showing signs of improvement. March’s British Retail Consortium figures join the recent string of
economic indicators showing some sort of improvement. The BRC’s measure of annual growth of like-for-like sales values remained in
negative territory in March at -1.2%. Nonetheless, this was an improvement on February’s -1.8% rate and was rather stronger than the -
2% to -3% rates seen towards the end of last year. As the Chart shows, the survey points to a rebound in the annual growth rate of the
official sales measure in March. The CBI Distributive Trades Survey already released was rather gloomier, with its reported sales
balance falling from -25 to -44 in March. However, the BRC survey is generally considered to give a more comprehensive picture, given
that, unlike the CBI survey, it covers the whole of the month. The BRC also suggested that the much better weather this March
compared to March 2008 may have temporarily boosted sales. However, this often just prompts a shift in the type of spending. Indeed,
the more optimistic interpretation is that the recent increase in disposable income, reflecting falling mortgage interest payments and
inflation, is feeding through to the high street. The measure of nominal income available for discretionary spending has recently been
rising at an annual rate of around 6%. " If retail sales continue to surprise on the upside, we will reconsider our view" from the own words
of some very bearish economists .
The Fund manager survey is telling you why some further rise will be in the pipe. Indeed, the April FMS marks something of
watershed revealing a major crack in sector rotation, both globally and in Europe, as capitulation on banks has sparked a significant shift
out of defensives into cyclical. Investors remain underweight equities (net 17% vs 42%), underweight risk (a reading of 35 is still below
long term average), underweight Europe (-29%) and underweight cyclical . The apocalyptic fear factor may have fallen but there is no
evidence of bullish euphoria and as such there is scope to see markets move higher, and meaning adding cyclical exposure would be a
good idea. Asset allocators cut equity underweight to 17% from 41%, trimming bond overweight to 9% and reducing cash over weights to
net 24% - the lowest level since late-2007. Telecoms, Healthcare and Technology with almost all cyclical still very underweight. With
Food&Bev, P, H&H and Utilities seen as the 3 most overvalued sectors there is still scope for further rotation and further performance.
Alcoa, Juniper, Goldman, Johnson, Intel, JP and now Google happened to release decent earnings, certainly not reflecting the
valo levels in which the heavy deleveraging process from hedge funds in the last few quarters sent equity indices, which in itself added to
the already tough environment where confidence was lost and economy on stand-by. As to the bad earnings from Nokia, it was very much
picturing our inventory debate when saying “destocking has reached bottom in most markets”, meaning once demand is picking up the
output will get a boost that most investors might be underestimating. This improving background should be enough to prevent equity
indices from falling back to March levels, making the current rally a start of a long and lasting bullish process ending the 9 years of bear
market which started in March 2000.
And to those who keep on finding it is rising too fast, we would remind that this is the drop which happened much too fast. The
market took one month and a week to climb 552 points from 1765 to 2320 on the Eurostoxx cash from March 9th to yesterday’s high April
16th, but just as an example lost 441 points between the 2608 highs of January 6th and the 2167 lows of January 23ed !
Should not break though 2358 on the cash eurostoxx before mid week given the heavy earning releases coming on Monday
(Morgan Stanley, BOA, Halliburton, IBM, Texas) and Tuesday Caterpillar, Amex, Coca, Dupont, United Tech, Yahoo! etc
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 49,7 1,3092 99,48 2,82 3,18 0,81 0,52 0,79 0,41 3,30 1,23 3,19 0,43 3,36 1,55 2,68 1,19 US
Perf 1d % 0,04 -0,71 -0,20 -0,91 bp 3,4 bp -1,04 -0,89 -1,52 -0,53 1,15 0,21 1,01 0,07 0,63 -0,06 0,56 -0,31 Europe
ECONOMIC DATA with impact
GE & Citi before market open
Bernanke (14h gmt) & Kansas City Fed President (12h30 gmt) speaking at financial services conference
Michigan Index (14h gmt) expected 58.5 from 57.3 / minor
POSITIVE IMPACTS
ASTRAZENECA : A US court granted a temporary restraining order that bars Apotex from selling a generic version of Pulmicort (asthma)
EADS’ CEO said he would be open to splitting a $35 bn U.S. defense contract for refueling tankers with Boeing (NY Times) / Separately,
Airbus' plant in the Chinese city of Tianjin received orders for 284 A320 planes (official Xinhua News Agency)
NOBEL BIOCARE said it had won a German court ruling in a patent infringement case brought by Materialise Dental
VOLKSWAGEN may have passed Toyota as the world's top selling automaker in the Q1 (reuters report)
BARCLAYS stepped up efforts to persuade investors that the UK bank is in robust health, saying it has benefited from the financial
industry’s strong start to the year (FT interview)
COMMERZBANK : Eurohypo, the commercial property lender owned by Commerzbank, said news reports stating that it is owed $2.6Bn
by bankrupt General Growth Properties are “incorrect.”
BANKINTER would pay RBS €426m in cash for the half of the Spanish unit of Direct Line Insurance it does not already own

GOOGLE : Q1 rev. $4.07bn, in line / EPS $5.16 (4.96 e) / Paid clicks +17% / Sees Q2-Q3 slower coz of seasonality / Android going well
NEGATIVE IMPACTS
ZURICH FI. will buy AIG car-insurance firms 21st Century Insurance and Agency Auto for $1.5 bn cash + $400 m in notes backed by
Zurich Insurance Co (deal immediately relutive) / It will then sell ordinary shares to raise $1.1 bn to help meet increased capital needs to
support the acquisition / Note that Zurich warned that Q1 earnings will be hit by write-downs but in line with Q4
 WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

17-Apr-09 IMPATIENCE
ACCOR : Q1 revenue €1.62bn (1.71bn exp), -5.8% LFL / Announced deeper cuts to its renovation budge / CFO said he has not seen
any improvement at the start of April & the Q2 would likely be on a par with the Q1
CARREFOUR : Q1 sales 22.7bn (22.98bn exp) / French sales €9.6bn (9.7bn exp) but due to promotions / Spain, Brazil & China
disappointing / LFL sales -4% (3.1% exp) / Hard discount LFL sales -8% / Repeats environment remains tough / Still long way to go…
ADP’s passenger traffic fell 9.8% in March from the same month a year earlier, reflecting the overall weakness of air travel
TOTAL : As exp, the board of UTS Energy recommended its shareholders to reject the revised unsolicited offer from Total
SIEMENS sees long wait for an economic recovery in its markets (Industry unit chief) + expects the impact of the German government's
stimulus plan to affect Siemens only from 2010
UNICREDIT had its credit ratings cut by Fitch coz of its “exposure to emerging markets in Europe” + the impact of the eco. slowdown

BIOGEN : Q1 revenue $1.04bn (1.08bn exp) / EPS $1.05 (1.00 exp) / Reaffirmed FY EPS guidance of $4 (4.05 exp) / However, sales
of its multiple sclerosis drugs, as well as its cancer drug Rituxan were disappointing…
RESULTS DIVIDENDS EVENTS
OMV / Citigroup (BMO) / General Electric (BMO) /
Today Sanofi AGM / Corio AGM / Italcementi AGM
Honeywell / Merrill Lynch / Sony Ericsson
Groupe Bruxelles Lambert / Alfa Laval / Soitec / IBM /
Monday Morgan Stanley / Bank of America / Halliburton / Texas Telecom Italia (€0.05) Rio Tinto AGM
Instruments / Eli Lily
PPR sales / Logitech / Faurecia / Tesco (BMO) / Coca-Cola
/ Manpower / Caterpillar / Merck & Co (BMO) / American Deutsche Post AGM / Mediaset AGM / Citigroup
/ Alpha Laval (SEK 2.25) / Corio (€2.64) / Henkel
Tuesday Express / British Food / AMD / DuPont / Schering-Plough AGM / Swisscom AGM / Union Fenosa AGM / Reed
(€0.53) / L'Oreal (€1.44)
(BMO) / United Tech (BMO) / Yahoo! / State Street / Elsevier AGM
Lockheed Martin
GSK / Iberdrola / Tele2 / Apple (AMC) / Boeing / AT&T BAE Systems ( GBp 9,666667) / Cadburry (GBp
Wednesday (BMO) / Mc do / Air Product and Chemicals / Alcon / eBay / 12.33333) / Deutsche Post (€0.60) / Reed Mun Re AGM
Xilinx / Wells Fargo Elsevier PLC (GBp 16,66667)
ABB / Akzo Nobel / Novartis / Saab / Sodexo / Microsoft /
Mun re (€5.50) / RWE (€4.50) / Sanofi-Aventis
Thursday Amgen / Amazon.com / Marriott Int / American Express / Danone AGM
(€2.20)
ConocoPhillips
TRADING IDEAS
Target short term 2358 cash eurostoxx and then 2608 // Nasdaq downside gap left on 1590 cash index
BUY OIL names as TOTAL (dble bottom) / ENI / BP / ROYAL DUTCH to play the economic recovery
BUY L OREAL / AXA / SIEMENS which closed their gap ready to resume their upside move
BUY AHOLD / GSZ / FTE on double bottom possibility

BUY AXA / SELL ALLIANZ // BUY BNP / SELL SOCGEN // BUY AHOLD / SELL CARREFOUR & METRO
BUY BAYER / SELL BASF // SANTANDER / SELL DBK // BUY TOTAL / SELL ENI // // BUY CAP / SELL SAP
BROKER METEOROLOGY
NOKIA ..................................RAISED TO NEUTRAL FROM UNDERWEIGHT ........................................................... BY JP MORGAN
TESCO ..................................RAISED TO BUY ................................................................................................ BY BANK OF AMERICA
SEGRO .................................RAISED TO BUY FROM NEUTRAL ................................................................... BY BANK OF AMERICA

LAND SECURITIES ..............CUT TO NEUTRAL FROM BUY ................................................................................................... BY UBS

STORA ENSO ......................CUT TO SELL FROM NEUTRAL ................................................................................................. BY UBS
ORASCOM TELECOM..........CUT TO NEUTRAL FROM BUY ................................................................................................... BY UBS
BANCO BILBAO ...................CUT TO SELL ............................................................................................................................... BY UBS
BBVA ....................................CUT TO SELL FROM NEUTRAL ................................................................................................. BY UBS
HAMMERSON ......................CUT TO NEUTRAL FROM BUY ................................................................................................... BY UBS
TELECINCO .........................CUT TO NEUTRAL FROM BUY ........................................................................... BY GOLDMAN SACHS
NEXANS .......................CUT TO HOLD FROM BUY ......................................................................................BY SOCIETE GENERALE

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO

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17-Apr-09 IMPATIENCE

CHART OF THE DAY

Eurostat Industrial Production Eurozone Industry Ex Construction % (YoY)
Since 2005

175

155

135

115

95

75

55

35

15

-5

-25
2005 2006 2007 2008 2009

Source : Eurostat

In negative territory since May 2008, European industrial production which is declining at a much fastest pace since December 2008
dropped the most on record at -18.4% in March confirming that the manufacturing sector is still contracting very deeply. It is important to
bear in mind that industry account for 20% of the GDP in the euro area versus 13% in the United-States.

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
0.50 GMT Japan Tertiary industry index February -0,8% MoM 0,4% MoM
6.00 GMT Japan Consumer confidence March 30,0 27,6
10.00 GMT Euro area Trade balance sa February - € 4,9 billion - € 5,5 billion
10.00 GMT Euro area Construction output February 1,3%,-9,1% YoY
15.00 GMT United-States University of Michigan consumer confidence (preliminary) April 58,5 57,3
17.30 GMT United-States Bernanke speaks at Fed conference in Washington

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

DJIA 8125,4 3,72% - 7,42% EUR/USD 1,3101 -0,70% -6,27%
S&P 500 865,3 4,88% - 4,20% EUR/JPY 130,26 1,52% 2,69%
Nas daq 1670,4 5,02% 5,92% USD/JPY 99,43 0,82% 8,84%
CA C 40 3038,2 4,71% - 5,59% Oil Price % 5 Days Ytd
DA X 4609,5 6,64% - 4,17% Brent $/b 51,9 0,02% 24,31%
Eur os tox x 50 2300,5 6,28% - 6,01% Gold Price % 5 Days Ytd
DJ 600 193,8 5,78% - 2,29% Gold $/oz 874,5 -0,84% -0,88%
FTSE 100 4053,0 3,23% - 8,60% Rates USA Euro Japan
Nikkei 8884,8 - 1,80% 0,29% Central Banks* 0,25 1,25 0,09
Shanghai Comp 2524,3 6,49% 38,64% Overnight 0,10 0,98 0,09
Sens ex ( India) 11253,6 3,92% 16,65% 3 Months 0,13 0,75 0,20
MICEX ( Rus s ia) 917,1 - 0,61% 48,03% 10 Y ears** 2,83 3,18 1,45
Bov es pa ( Bras il) 46024,8 4,17% 22,57% *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

17-Apr-09 IMPATIENCE

ECONOMIC DATA PREVIEW

Watch in the United-States the preliminary release of the University of Michigan survey of consumer confidence sentiment for April
due at 15.00 GMT, expecting to slightly increase despite the rise of unemployment.

. Watch in the Euro area the release of trade balance due at 10.00 GMT. Despite the sharp drop of exportations due to the global
economic downturn reducing the demand for European goods abroad, the European trade deficit is expected to narrow as
importations should decline even more sharply /JB

ECONOMY
UNITED-STATES : INITIAL JOBLESS CLAIMS DECLINED AND CONTINUING CLAIMS ROSE TO AN HISTORICAL HIGH LAST WEEK
Unexpectedly fewer Americans filed claims for jobless benefits last week, indeed initial jobless claims decreased by 53 000 to 610 000
in the week end April 11 for the second week in a row. This improvement could be seen as a good new to help stabilizing consumer
spending and support economic recovery. Meanwhile the number of people collecting for benefits jumped to a record 6.02 million last
week showing that companies are reluctant to hire in such a gloomy economic environment. Indeed in addition to the contraction of the
activity humping hiring there is a global fear state of mind disconnected from the economic fundamentals. This explained as well the
very high level of jobs destructions around 650 000 each month.

UNITED-STATES : HOUSING START FELL AND BUILDING PERMITS DROPPED TO RECORD LOW IN MARCH
After seven month of decline in a row from July 2008 housing starts rebounded of 17% and building permits rose as well of 9.0% in
February. Unfortunately this rebound did not last and housing starts dropped from 572 000 in February to 510 000 in March (still above
the 488 000 of January) as well as building permits dropping from 564 000 to 513 000. A glut of unsold properties is pulling prices down
across the U.S. prompting builders to scale back projects. About housing starts the recent volatility has been concentrated in multi family
starts and on the other hand the single starts family data have been broadly stable for the past three months. The weak data of March
housing starts are following the recent housing bad indicators as the NAHB index of homebuilding activity , new home sales, existing
home sales and mortgage applications showing that housing activity remained extremely weak.

EURO AREA : INFLATION SLOWS TO THE LOWEST ON RECORD (YOY) IN MARCH INCREASING THE RISK OF DEFLATION
Inflation in the Euro area which reached its highest level on record in July 2008 at 4.0% declined every months since then due to the
sharp drop of energy and commodity prices. Nevertheless after reaching its lowest level in January at 1.1% European ‘s inflation slightly
increased in February 2009 at 1.2% as energy prices slightly rose. As expected this small rebound did not make a trend and inflation
declined again in March to reached 0.6% (YoY) its lowest rate since the data were first compiled in 1996. If we look to the breakdown we
see the following price drop : Energy -8.1%, transport -4.3%, communication -1.8%. The core CPI fell from 1.7% in March 2008 to 1.5%
in March 2009 confirming that part of the price decline is due to the drop of energy price. On the other hand the euro area consumer
price was as well led down by the sharp downturn of the activity as global offer is way above global demand, the adjustment is made by
prices. This figures clearly showed than the euro area is getting closer to a deflation situation which should put more pressure on the
European Central Bank to cut its main rate on May 7 th.

EURO AREA : INDUSTRIAL PRODUCTION PLUNGE THE MOST ON RECORD IN FEBRUARY

In negative territory since May 2008, European industrial production which is felling more and more sharply since December 2008
dropped the most on record at -18.4% in March confirming that the manufacturing sector is still contracting very deeply. Nevertheless
this drop was expected (forecast -18.0%) as Europe domestic demand is very weak and as the global economic downturn hitting the
main economic partners of the euro area are humping exportations. As recession will deepen in the coming months this drop of
industrial production should last till the recovery expected not before the fourth quarter of 2009. It is important to bear in mind that
industry account for 20% of the GDP in the euro area versus 13% in the United-States./JB
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17-Apr-09 IMPATIENCE
VIXindex: impliedvolatility ontheS&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
17/04/2007 17/10/2007 17/04/2008 17/10/2008 17/04/2009 17/04/2007 17/10/2007 17/04/2008 17/10/2008 17/04/2009
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
17/04/2007 17/10/2007 17/04/2008 17/10/2008 17/04/2009 17/04/2007 17/10/2007 17/04/2008 17/10/2008 17/04/2009
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
17/04/2007 17/10/2007 17/04/2008 17/10/2008 17/04/2009 17/04/2007 17/10/2007 17/04/2008 17/10/2008 17/04/2009
Source : Bloomberg Source : Bloomberg