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6-May-09 BERNANKE ON THE HILL

Yesterday, Ben Bernanke’s testimony before the Joint Economic Committee drew a brighter picture of the economic outlook:
“We continue to expect economic activity to bottom out, then to turn up later this year. Key elements of this forecast are our assessments
that the housing market is beginning to stabilize and that the sharp inventory liquidation that has been in progress will slow over the next
few quarters. Final demand should also be supported by fiscal and monetary stimulus. An important caveat is that our forecast assumes
continuing gradual repair of the financial system; a relapse in financial conditions would be a significant drag on economic activity and
could cause the incipient recovery to stall”.
The recent data suggest that the pace of contraction may be slowing, and they include some tentative signs that final demand,
especially demand by households, may be stabilizing. Consumer spending, which dropped sharply in the second half of last year, grew in
the first quarter. In coming months, households' spending power will be boosted by the fiscal stimulus program, and there was some
improvement in consumer sentiment. The housing market, which has been in decline for three years, has also shown some signs of
bottoming. Sales of existing homes have been fairly stable since late last year, and sales of new homes have firmed a bit recently.
The rebound in the ISM non-manufacturing index in April was very similar to the improvement already reported in the corresponding
manufacturing index for last month. The headline non-manufacturing index recovered to a six-month high of 43.7, from 42.2. That
recovery was led by a sharp rise in the new orders index to a six-month high of 47.0, from 38.8. There was also a rebound in the
employment index to 37.0 in April, from 32.3, although all that rebound did was reverse most of the slump the month before.
The combination of a broad rally in equity prices and a sizable reduction in risk spreads in corporate debt markets reflects a
somewhat more optimistic view of the corporate sector on the part of investors, and perhaps some decrease in risk aversion. Bond
issuance by nonfinancial firms has been relatively strong recently. Equity markets worldwide are benefiting from further signs that the
worst is over for the global economy and from hopes that there will be no nasty surprises in the results of stress tests for US banks (to be
formally announced tomorrow). As bond yields are rising from historically low levels (10-year U.S. Treasury rate at 3.16 %) and
commodity prices are rebounding (WTI well above $50 /bbl) some are seeing this as a sign of reflation while others are concerned that
this is the start of an inflationary nightmare… Anyway, global interest rates are historically low, quantitative easing is very aggressive and
fiscal stimulus is excessive. In these conditions, the value of the stress tests conducted on the 19 largest US banks may be trustworthy.
Under the baseline scenario, it is assumed that GDP growth averages -2.0% this year but rebounds to +2.1% in 2010. The unemployment
rate averages 8.4% this year and 8.8% in 2010. Under the so-called adverse scenario, GDP falls by 3.3% this year before expanding by a
muted 0.5% in 2010. With growth remaining lacklustre, the unemployment rate averages 8.9% this year and 10.3% in 2010. House prices
fall by 22% this year and a further 7% in 2010.
But additional injections of new capital will therefore be required. Some of that capital could be raised from the private sector, either
through the issuance of new equity or by selling parts of the business. The Treasury will also need to invest more of the TARP funds. The
Treasury still has more than $100bn available.
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 53,9 1,3271 98,22 3,16 3,21 -1,08 -1,37 -1,40 0,75 -0,52 -0,15 -0,05 -0,25 -1,33 -0,38 -0,54 -0,19 US
Perf 1d % -0,39 -0,44 0,60 0,2 bp -3,2 bp -1,03 0,69 0,08 0,63 -0,90 0,24 -0,39 -0,02 -1,43 0,03 -0,71 0,03 Europe
ECONOMIC DATA with impact
U.S ADP survey (12.15 GMT) which is likely to show another big decline in private sector employment in April (-645 000 expected).
Euro-zone, retail sales probably increased modestly in March (+0.1 % MoM, -2.6 % YoY expected) relative to February (09.00 GMT).
Spanish retail sales fell by 0.8% MoM, but the downturn there has been sharper than elsewhere. In contrast, French consumer spending
on manufactured goods rose by a healthy 1.1%.
POSITIVE IMPACTS
AHOLD : Q1 sales €8.7 bn (8.58bn exp) / Stop&shop/giant-landover Q1 sales $5.3 bn ($5.27 bn exp) / Giant-Carlisle Q1 sales $1.5 bn
($1.49 bn exp) / Albert Heijn Q1 sales €3 bn (€2.94 bn) / Europe and the US performance remained solid
ADDECO : Q1 revenue €3.7bn (3.8bn exp) / Operating €30m (25m exp) / "Near term, sees no reversal of current conditions + sees no
clear signs of stabilization yet" / Said it is unable to stem the revenue decline as demand for temporary work services fell in key markets
CLARIANT : Q1 sales SFR1.62bn, in line / Ebit loss 68m (+10m e) but ex one-offs is in line / FCF better / Expects demand to stabilize
LAFARGE : Q1 revenue €3.63 bn, in line / Current operating €335 m (311m exp) / Sees positive impact from stimulus plan in 2010
LEGRAND : Q1 sales €901m (950m exp) but operating €125.5m (121m exp) / Confirmed 2009 margin goal
DEUTSCHE POST : Q1 revenue €11.51bn (€11.9bn exp) / Underlying EBIT €312m (€290m exp) / Says P&L was positively impacted
by close to €1.18bn from the accounting for Postbank sale / Still target €1bn in cost savings by end-2010
MUNICH RE : Q1 Gross Premium €10.37bn (€10.20bn exp) / NII €1.37bn (€1.28bn exp) / Operating €746m (€792m exp) / CR 97.3%
(97.6% exp) / Repeats no SBB program at this stage / 2009 Outlook unchanged
BNP : Q1 rev. €9.48bn (€7.5bn e) / Op. €4.13bn (€2.84bn e) but costs €5.35bn (€4.5bn e) / Risk charge €1.83bn (€1.72bn e) / Tier1
8.8% end-March (7.8% end-Dec) / Said unlikely that ROE to get back to 2006/2007 levels / Sees more writedowns / Webcast 1300 UKT
SOC GEN : The new chairman is expected to be chosen Today from a short-list of 3 to 4 candidates
BBVA expects the LatAm economy to be amongst the first to recover from the crisis
PORSCHE-VOW : The Piech & Porsche families are set to meet Today to resolve the debt issue at Porsche & how to combine with VW
CARPHONE WAREHOUSE hopes to finalize the purchase of Tiscali's U.K. assets this week (The Times ) / Both companies are working
towards a deadline of Thursday to sign the deal, although negotiations could continue over the weekend
DELHAIZE : Q1 sales €5.09bn, in line / Ebit €247m (239m exp) / U.S. comparable store sales growth 2% (1.6% exp) / Belgian
comparable store sales growth 1.7% (1.4% exp) / Repeats 2009 forecasts
CARLSBERG : Q1 sales DK11.8bn (11.7bn exp) / Operating DK 788m (785m exp) / Repeated guidance
TOTAL : Q1 Operating €3.62bn (3.47bn exp) / Oil & gas output 2.322m boepd (2.33m exp) / Can maintain dividend policy
BAE SYSTEMS : Trading for the period has been consistent with management expectations
SAGE : H1 revenue £748.4m (725m exp) / Adjusted pre-tax profit £159.3 m (152m exp) / Interim dividend raised to 2.50 p (+3%)
NEXT : H1 retail like for like sales -2.3 (-7% exp) / Expect the Q2 will be weaker than Q1
BATS sees strong revenue growth in Q1 / Good start to 2009 and is continuing to build on the success achievd in 2008.
BMW : Q1 sales €11.5bn (10.8bn exp) / Ebit loss 55m (-73m exp) / FCF +€220m / Impossible to give forecast
NEGATIVE IMPACTS
FERROVIAL : Q1 Ebitda €522m (525m exp) / Net loss €105m (-80m exp) hit by a loss in value of hedging instruments / Order backlog
-11.1% to €8.1 bn at end March from a year earlier, while its service contract backlog gained 1.8% to €10.2 bn / Net debt €21.9bn
HOLCIM : Q1 sales SFR4.52bn (4.65bn exp) / Operating SFR343m (455m exp) / Repeated 2009 will be tough / Won’t give guidance
SWISSCOM : Q1 revenue SFR2.92bn (2.94bn exp) / Ebitda SFR1.13bn (1.14bn exp) / 2009 outlook unch. despite tough situation
HENKEL : Q1 sales €3.26bn (3.32bn exp) / Adj. Operating €235m (327m exp) / Sees tough situation to persist through 2009
 WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

6-May-09 BERNANKE ON THE HILL

DNBNOR : Q1 NII NK5.63bn (6.05bn exp) / Loan Losses NK1.6bn (-2.34bn exp) / says Q1 was hit by relatively large Writedowns in
Baltic region & cost cutting program on track / aims to increase capital adequacy in future
STOREBRAND : Q1 Loss NK733m (-164m exp) / Life Insu loss NK655m (-169m exp) / Says in Satisfactory financial position at end Q1
BHP said it will fall slightly short of previous guidance for iron ore production in 2009 after a number of accidents disrupted operations
MAN said its offices were searched by public prosecutors on suspicion of briber / Authorities suspect that between 2002 and 2005 hidden
commission of several million euros were paid…
GDF Suez : Brazilian prosecutors filed a complaint arguing GSZ's hydroelectric project isn't complying with environmental regulations
RESULTS DIVIDENDS EVENTS
Total / Gas Natural / L'Oreal sales / Adecco / BMW / BNP
Paribas / Ahold /Carlsberg / Holcim / Italcementi / Lafarge / Antofagasta ($ 0.48 +0.056) / Baloise (CHF
E.On AGM / Renault AGM / Lafarge AGM / Amgen
Today Rhodia / Tenaris / Clariant / Delhaize / Deutsche Post / 4.50) / GDF Suez (€0.80+0.60) / Kingfisher (GBp
AGM / ABB AGM
Prudential / Mun Re / JC Decaux sales / BAE Systems / 3,777778)
Henkel / Swisscom / Cisco
Soc Gen / Swiss Re / Altana / Ciment Français / Italcementi /
Adidas AGM / Google AGM / Hochtief AGM / Old
Thursday Deutsche Telekom / Unilever / Diageo / General Motors / Axa (€0.40) / E.On (€1.50) / Technip (€1.20)
Mutual AGM / Fugro AGM
VeriSign / Toyota
Adidas (€0.50) / HeidelbergCement (€0.12) /
Friday OMV / Puma / Repsol / Havas sales / Mc Do sales Hochtief (€1.40) / Lanxess (€0.50) / Scania (SEK Alcoa sales
2.50) / Yara (NOK 0.40)
Monday Lonmin / NEC / TUI / Maroc Tel / Microsoft Centrica AGM / Tele2 AGM
Baloise / Abertis / Enel / EDF / Intercontiental Hotels /
Tuesday
Mediaset / Mediobanca / Deutsche Boerse
TRADING IDEAS
BUY OIL names as TOTAL / ENI / BP / ROYAL DUTCH on eco recovery
BUY FRANCE TEL / DTE / TEF / TOTAL / ENI / BP / ROYAL DUTCH on eco recovery
BUY NESTLE / L OREAL / VIVENDI on reversal Head & Shoulder possibility
BUY GLAXO / DANONE / UNILEVER looking good & BUY AHOLD / GSZ on double bottom possibility / BUY ROCHE on island reversal

BUY DAIMLER / SELL RENAULT // BUY BAYER / SELL BASF // BUY AIR FRANCE / SELL LUFTHANSA // BUY NOVARTIS / SELL SANOFI
BROKER METEOROLOGY
BASF ......................................... RAISED TO NEUTRAL FROM REDUCE ........................................................................ BY NOMURA
UBS ............................................ RAISED TO HOLD FROM SELL ..............................................................................................BY ING
ROYAL BANK OF SCOTLAND . RAISED TO HOLD FROM SELL ...............................................................................................BY ING
BARCLAYS ............................... RAISED TO HOLD FROM SELL ..............................................................................................BY ING
METRO ...................................... RAISED TO OVERWEIGHT FROM NEUTRAL ......................................................... BY JPMORGAN
HSBC ......................................... RAISED TO NEUTRAL FROM UNDERWEIGHT ....................................................... BY JPMORGAN
HOME RETAIL .......................... RAISED TO TO BUY FROM HOLD ........................................................................................ BY UBS
INFINEON .................................. RAISED TO BUY ............................................................................................................. BY MERRILL

ALSTOM .................................... CUT TO HOLD FROM BUY ............................................................................. BY DEUTSCHE BANK

EON ........................................... CUT TO HOLD ........................................................................................................................ BY RBS
ARCELORMITTAL ..................... CUT TO SELL FROM HOLD ....................................................................................... BY CITIGROUP
SWISS LIFE ............................... CUT TO NEUTRAL FROM OVERWEIGHT ............................................................... BY JPMORGAN
KLEPIERRE .............................. CUT TO NEUTRAL FROM OVERWEIGHT .......................................................................... BY HSBC

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO

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6-May-09 BERNANKE ON THE HILL

CHART OF THE DAY

Eurostat Producer Price Index Eurozone Industry Ex construction (% ,YoY)
Since 2000

10

-2

-4
200 0 20 01 200 2 20 03 2 004 20 05 2 006 20 07 2 008

Source : Eurostat

After reaching a peak in July 2008 at 8.9% when the barrel was at $147, European’s producer price are in a continuous drop trend since
then to reach -3.1% YoY in March their lowest level since February 1987. As a matter of fact the euro area is now getting closer and
closer to a deflation situation increasing the pressure on the European Central Bank to significantly cut its leading rate next Thursday.

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
8.50 GMT France PMI Services ( final) April 46,2 46,2
8.55 GMT Germany PMI Services ( final) April 43,5 43,5
9.00 GMT Euro area PMI Services ( final) April 43,1 43,1
9.00 GMT Euro area PMI composite (final) April 40,5 40,5
9.30 GMT United Kingdom PMI Services April 46,3 45,5
9.30 GMT United Kingdom Official Reserves (Changes) April $ 422 million
10.00 GMT Euro area Retail sales March 0,1%,-2,6%YoY -0,6%,-4,0%YoY
12.00 GMT United States MBA Mortgage applications May 1 -18,1%
12.30 GMT United States Challenger job cuts April 180,7%YoY
13.15 GMT United States ADP employment change April -645 000 -742 000

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

DJIA 8410,7 4,93% - 4,17% EUR/USD 1,3270 0,03% -4,99%
S&P 500 903,8 5,72% 0,06% EUR/JPY 130,34 -0,62% 2,84%
Nas daq 1754,1 4,85% 11,23% USD/JPY 98,22 -0,59% 7,73%
CA C 40 3225,0 4,44% 0,22% Oil Price % 5 Days Ytd
DA X 4853,0 3,39% 0,89% Brent $/b 53,9 12,52% 29,09%
Eur os tox x 50 2407,6 4,72% - 1,64% Gold Price % 5 Days Ytd
DJ 600 205,1 4,88% 3,38% Gold $/oz 903,1 0,55% 2,37%
FTSE 100 4336,9 4,24% - 2,19% Rates USA Euro Japan
Nikkei CLOSED CLOSED CLOSED Central Banks* 0,25 1,25 0,10
Shanghai Comp 2588,4 6,74% 42,16% Overnight 0,15 0,55 0,10
Sens ex ( India) 12072,1 7,08% 25,14% 3 Months 0,19 0,71 0,20
MICEX ( Rus s ia) 957,1 6,15% 54,48% 10 Y ears** 3,16 3,21 1,41
Bov es pa ( Bras il) 50669,8 10,59% 34,94% *US: Fed Funds; Jap: Overnight; Euro: Ref i
** Euro: German Bund rate So urc e : B lo o m berg
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6-May-09 BERNANKE ON THE HILL

ECONOMIC DATA PREVIEW

Watch in the United-States the ADP employment change for April due at 13.15 GMT expected to decrease but to remained at a high
level around -645 000.

Watch in the Euro area the retail sales for March due at 10.00 GMT expected to remained in negative territory at -0.1% but to drop at
a slower pace than the previous month (-0.6%in February). Watch as well the PMI services due at 09.00 GMT expected to remained
stable around 43.0 /JB

by sector
ECONOMY
UNITED-STATES : ISM SERVICES IMPROVED IN APRIL
After dropping regularly since January , the U.S. ISM non manufacturing a gauge of the activity in the service rose from 40.8 in march to
43.7 in April (forecast 42.2). if we look to the breakdown we can say that the recovery was led by a sharp rise in the new orders index to
a six -month high of 47.0 from 38.8, there is as well a rebound in the employment index to 37.0 in April from 38.8. It is important to
remind that services are representing 70% of the U.S. economy in order to put in perspective this improvement. Nevertheless this data
remained under the level of 50 revealing that there is still a contraction of the activity in the service sector. After the rise of the ISM
manufacturing reaching its highest level since September 2008 this encouraging data is showing us that the bottom should have been
reached in the United-States and the economic contraction should ease.

EURO ZONE : PRODUCER PRICE INDEX DROPPED THE MOST IN 22 YEARS

After reaching a peak in July 2008 at 8.9% when the barrel was at $147, European’s producer price are in a continuous drop trend since
then to reach -3.1% YoY in March their lowest level since February 1987. This decline is mainly due to the drop of energy prices from a
year ago. Indeed producer price excluding energy dropped of 1.7% only. If we look to the breakdown of the headline figure by sector
prices fell as follow: energy -7.3%, intermediate goods -4.1%, consumer goods -1.2%. On the other hand capital goods rose 1.5% from
a year ago. European companies are lowering prices and eliminating jobs to face the global economic downturn hitting the global
demand. As a matter of fact the euro area is now getting closer and closer to a deflation situation in which the offer is way above the
demand generating a rise of unemployment and of bankruptcies. This situation is increasing the pressure on the European Central Bank
to significantly cut its leading rate next Thursday./JB
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6-May-09 BERNANKE ON THE HILL

VIX index : implied volatility on the S&P 500 $ Libor - 3-Month (Interbank Rate)
6
85
80
5,5
75 5
70
65 4,5
60 4
55
50 3,5
45 3
40
35 2,5
30 2
25
20 1,5
15
1
10
5 0,5
07/05/2007 07/11/2007 07/05/2008 07/11/2008 07/05/2009 07/05/2007 07/11/2007 07/05/2008 07/11/2008 07/05/2009
Source : Bloomberg Source : Bloomberg

United States : 10-year Treasury yield 10-year Treasury spread USA-Euro zone
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
07/05/2007 07/11/2007 07/05/2008 07/11/2008 07/05/2009 07/05/2007 07/11/2007 07/05/2008 07/11/2008 07/05/2009
Source : Bloomberg Source : Bloomberg

Oil : Brent ($/b) Forex : Euro vs 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
07/05/2007 07/11/2007 07/05/2008 07/11/2008 07/05/2009 07/05/2007 07/11/2007 07/05/2008 07/11/2008 07/05/2009
Source : Bloomberg Source : Bloomberg