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22-May-09 INGLORIOUS DOLLAR

Long weekend in most European countries, and coming in NY and UK which will be closed on Monday / Denmark closed today
The key event of the day is the sharp drop of the dollar (1.3955 EUR/USD intraday high this morning). This move started recently
when Brazil and China said they would avoid the dollar for their bilateral trade. In addition to that, an increase in oil price (up to $62 /bbl
yesterday) helped the dollar decrease. Meanwhile, gold surged to $952 /oz. Yesterday evening, minutes of the FOMC (28-29 April)
weighed on the dollar as well by revising down real GDP forecast for 2009 to -1.3 %/-2.0 % vs. -0.5 % to -1.3 % expected in January. The
fact that the FOMC expects +2.0 %/+3.0 % in 2010 and +3.5 %/+4.8 % in 2011 was not taken into account. The dollar also fell for a fifth
day versus the euro after Bill Gross, the co-chief investment officer of Pacific Investment Management Co., said the U.S. will “eventually”
lose its AAA rating. The yen strengthened to a nine-week high versus the dollar after Japan’s Finance Minister said the government won’t
intervene in the currency market and the Bank of Japan raised its economic assessment. The Bank of Japan raised its view of the
economy for the first time in almost three years on signs that a record contraction in the first quarter represented the worst of the
recession. “Economic conditions have been deteriorating, but exports and production are beginning to level out,” the bank said. Previously
it said the world’s second-largest economy had “deteriorated significantly.” The central bank also decided to accept foreign currency-
denominated sovereign bonds as collateral to make it easier for lenders to get cash.
Information received since the FOMC met in March indicates that the economy has continued to contract, though the pace of
contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing
job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back
on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly
reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee
continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces
will contribute to a gradual resumption of sustainable economic growth in a context of price stability. In light of increasing economic slack
here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could
persist for a time below rates that best foster economic growth and price stability in the longer term. The Committee will maintain the
target range for the federal funds rate at 0.0% to 0.25 % and anticipates that economic conditions are likely to warrant exceptionally low
levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing
markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of
agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy
up to $300 billion of Treasury securities by autumn.
The other key event was S&P’s decision to downgrade its outlook for the U.K. from stable to negative. This decision did not weigh
on the pound. Sterling’s recovery so far this year has been driven by at least three factors. First, relative interest rate differentials have
ceased to act against the pound. During the second half of last year, aggressive interest rate cuts from the Bank of England helped to
drive the UK currency down. But implied overnight interest rates in the UK are now actually slightly higher than in the US on a one-year
horizon and are broadly similar to the their level in the euro-zone. Second, a rebound in risk appetite since March has been accompanied
by a significant recovery in the share prices of financial institutions around the globe. This has benefited the pound disproportionately
given the relative importance of the financial services sector to the UK economy. Third, for all the grim news on the UK economy, it has
become increasingly clear that things are just as bad elsewhere. For example, consensus expectations for real GDP growth in 2009 have
persistently shifted in favour of the UK relative to the euro-zone since the beginning of the year. As for 2010, output growth of just 0.3% is
currently expected in both regions.
Equity markets consolidated yesterday, while Treasury bond markets went down on deficit concerns. The U.S. 10-year Treasury
rate raised 15 bp to 3.34 %.
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 61,6 1,3920 94,16 3,34 3,37 -3,11 -2,89 0,19 -1,32 -1,61 -2,34 -3,07 -1,21 -2,56 -1,68 -1,89 -1,54 US
Perf 1d % -0,10 0,21 0,27 -2,05 bp -6,3 bp -3,60 -3,07 -0,58 -1,21 -2,15 -2,44 -3,27 -1,25 -3,32 -1,91 -2,20 -1,83 Europe
ECONOMIC DATA with impact
UK GDP revised (8.30 GMT) –1.9% exp
Long weekend coming in the US and UK closed on Monday / Denmark closed today
POSITIVE IMPACTS
TOTAL-GDF : Areva would have sold its stakes in Total and in GDF Suez (WSJ)
BSYB and Channel 4 are discussing a merger of their advertising sales teams to deliver multi-million pound savings (The Times)
BARCLAYS is focusing on selling its entire fund-management division, rather than just its iShares unit (FT)
TELECOM ITALIA : A shareholder with a 5% stake, is pushing for a merger with TELEFONICA (Corriere)
PEUGEOT (Minor) : Faurecia said its rights issue has been successful with a subscription rate of 95.9% / PSA limited its participation to
the issue to its share ownership, which will remain at 70.85%
VIVENDI : Prime Minister's Office agreed with Maroc Telecom for a MAD 10.5bn (around €1bn) investment in Marocco
NEGATIVE IMPACTS
BRITISH AIRWAYS : FY revenue £8.99bn (9.06bn exp) / Operating loss £220m (-193m exp) / Unable to pay dividend / Said that
recovery is likely to take longer than expected / Decided not to issue any new guidance
AIR FRANCE’s pilots trade unions, the largest one at AF, issued a national strike notice for the period between July 10 and Aug. 3
CABLE & WIRELESS : As guessed, the CEO of C&W, has sold 3.5 m shares in the company for around £5.5 m (The Times)
GLAXOSMITHKLINE is battling the U.S. Internal Revenue Service over a potential $1.9 bn in back taxes, interest and penalties (WSJ)
CONTINENTAL : Lender banks may wind up with a large stake in a combination of Continental & Schaeffler (FTD) / The banks basically
control Schaeffler, which owes €12 bn, & Schaeffler has a 90% stake in Continental
th
FIAT : Magna International is the favored bidder for Opel (FT Deutschland) / Separately, Opel may get a 4 bid from Chinese carmaker…
PORSCHE : KfW, the German government's development bank, has rejected Porsche's request for a loan worth more than €300 m (FT)
ALCATEL… : China's Huawei Technologies took the No. 3 position in the mobile network gear market in the Q1, doubling its market
share from a year ago and bypassing Alcatel-Lucent / Ericsson expanded its lead as Nokia Siemens Networks lost market share

BANK-UNITED Financial, the largest lender based in Florida, was shut down by banking regulators & sold to a group of PE firms. Likely
to cost $4.9bn for FDIC according to report
GM : The U.S. Treasury Department has no plans to push GM into a bankruptcy filing next week and the outcome of the automaker's
restructuring efforts may not be known until a June 1 deadline (Reuter source) denying a Washington Post report
LDK SOLAR : Q1 revenues $283.3m ( $240m exp.) / EPS $-0.21 (vs $-0.08 exp) / / Gross margin 1.7%
 WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

22-May-09 INGLORIOUS DOLLAR

RESULTS DIVIDENDS EVENTS
Today Aegis / British Airways / Campbell Soup Arcelor Mittal ($0,1875) / Vinci (€1.10) / Michelin (€1.00) Aegis AGM / China Petroleum AGM / HSBC AGM
Monday Gazprom
France Telecom AGM / Atos Origin AGM / Suez
Tuesday Aveva Telekom Austria (€0.75)
Env AGM
Salzgitter AGM / Mc Do AGM / EADS AGM /
Adecco ( CHF 1.50) / Credit Agricole (€0.45) / Deutsche Bank
Wednesday Ubisoft / Suedzucker Industrial conf at Credit Suisse / Exxon Mobil /
(€0.50) / Soc Gen (€1.20) / Thales (€1.05)
Energy, Utilities and Power conf at Deutsche Bank
Cap Gemini investor day / ADP AGM / Time
Thursday Ahold / / Man Group / Costco / Dell / Heinz Casino (€1.00) / Salzgitter (€1.40) Warner AGM / Safran AGM / Delhaize AGM / Man
Group analyst meeting / Home depot
TRADING IDEAS
BUY MUNICH RE / EON / SANOFI / GLAXO / DANONE to play eco recovery
BUY EDF / FTE / DTE looking good

BUY ERICSSON / SELL NOKIA // BUY MUNICH RE / SELL AXA // BUY AHOLD / SELL METRO // BUY IBERDROLA / SELL VEOLIA // BUY EON /
SELL RWE
BROKER METEOROLOGY
SANDVIK.................................... RAISED TO HOLD FROM SELL ............................................................................................. BY RBS
RIO TINTO.................................. RAISED TO NEUTRAL FROM SELL............................................................... BY GOLDMAN SACHS
NORSK HYDRO ......................... RAISED TO NEUTRAL FROM SELL .............................................................. BY GODLMAN SACHS
BOLIDEN.................................... RAISED TO NEUTRAL FROM SELL .............................................................. BY GOLDMAN SACHS
ANGLO AMERICAN................... RAISED RO BUY FROM NEUTRAL................................................................ BY GOLDMAN SACHS
HEINEKEN ................................. RAISED TO NEUTRAL FROM UNDERWEIGHT....................................................... BY JP MORGAN
DIAGEO...................................... RAISED TO NEUTRAL FROM UNDERWEIGHT....................................................... BY JP MORGAN

L’OREAL .................................... DOWNGRADED TO UNERWEIGHT FROM OVERWEIGHT................................................. BY HSBC

ANGLO AMERICAN................... CUT TO NEUTRAL ...............................................................................................BY CREDIT SUISSE
HENKEL ..................................... DOWNGRADED TO UNDERWEIGHT FROM OVER ............................................................ BY HSBC
BSKYB ....................................... CUT TO UNDERPERFORM FROM NEUTRAL ....................................................BY CREDIT SUISSE
SAB MILLER .............................. CUT TO NEUTRAL FROM OVERWEIGHT ............................................................... BY JP MORGAN
CABLE & WIRELESS ................ CUT TO NEUTRAL FROM OVERWEIGHT ............................................................... BY JP MORGAN
PERNOD RICARD...................... CUT TO UNDERWEIGHT FROM EQUAL ..................................................... BY MORGAN STANLEY
DIAGEO...................................... CUT TO EQUALWEIGHT FROM OVER ........................................................ BY MORGAN STANLEY

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO

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22-May-09 INGLORIOUS DOLLAR

CHART OF THE DAY
Eurozone Manufacturing PMI Markit Survey
Since 2006

60

55

50

45

40

35

30

2006 2007 2008 2009

Source : Markit

The Euro area PMI manufacturing index improved in March and April and increased again in May to reach 40.5. Nevertheless this
encouraging PMI data remained under the level of fifty showing that there is still a contraction of the activity. Meanwhile its shows that
after slumping at the first quarter 2009 the euro zone GDP should contract at a slower pace at the second quarter.

Time Country Indicator Period GEforecasts Consensus Previous

Japan BoJ target rate May 22 0,10% 0,10%
6.00 GMT Japan Leading index (final) March 76,9
6.00 GMT Japan Coincident index (final) March 84,9
9.00 GMT Italy Retail sales March -0,2%,-0,9%YoY -0,7%,-3,1%YoY
9.30 GMT United Kingdom GDP(preliminary) First quarter -1,9%,-4,1%YoY -1,9%,-4,1%YoY
19.00 GMT United-States Ben Bernanke speaks at Boston College lawschool

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

DJIA 8292,1 - 0,30% - 5,52% EUR/USD 1,3924 3,12% -0,39%
S&P 500 888,3 - 0,45% - 1,65% EUR/JPY 131,08 -1,96% 3,28%
Nas daq 1695,3 0,41% 7,50% USD/JPY 94,14 1,15% 3,71%
CA C 40 3217,4 2,68% - 0,02% Oil Price % 5 Days Ytd
DA X 4900,7 3,42% 1,88% Brent $/b 59,7 8,32% 43,13%
Eur os tox x 50 2423,7 3,55% - 0,98% Gold Price % 5 Days Ytd
DJ 600 207,6 3,25% 4,64% Gold $/oz 951,6 2,17% 7,94%
FTSE 100 4345,5 - 0,22% - 2,00% Rates USA Euro Japan
Nikkei 9200,8 1,87% 3,85% Central Banks* 0,25 1,00 0,10
Shanghai Comp 2592,2 - 1,08% 42,37% Overnight 0,15 0,90 0,10
Sens ex ( India) 13763,4 15,70% 42,67% 3 Months 0,17 0,71 0,20
MICEX ( Rus s ia) 1034,4 3,43% 66,96% 10 Y ears** 3,35 3,37 1,45
Bov es pa ( Bras il) 50087,3 1,30% 33,39% *US: Fed Funds; Jap: Overnight; Euro: Ref i
** Euro: German Bund rate So urc e : B lo o m berg
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22-May-09 INGLORIOUS DOLLAR

ECONOMIC DATA PREVIEW
No economic data due in the United-States

Watch in United Kingdom the preliminary release of the GPD for the first quarter due at 9.30 GMT, expected to confirm the sharp
drop of the advanced release as the United Kingdom economy being mainly based on finances is strongly hit by the crisis.
Nevertheless being out of the euro area remained a substantial advantage for the United-Kingdom economy./JB

ECONOMY
UNITED-STATES : INITIAL JOBLESS CLAIMS DECLINED BUT CONTINUING CLAIMS REACHED A NEW HISTORICAL HIGH
After rising from 605 000 to 643 000 May 8th initial jobless claims decreased last week to reach 631 000. confirming the improvement of
the labour market as showed by the decline of the jobs destructions showed by the last employment report. It seems that U.S.
companies which were over laying off in comparison to the real contraction of the activity are slowly putting themselves together to get
back to a more realistic economic behaviour. Nevertheless continuing claims reached again a new historical high May 9 th proving that
that US companies are frizzing hiring process on still existing fears about the economic outlook.

UNITED-STATES : CONFERENCE BOARD LEADING INDICATORS ROSE IN APRIL

The Conference Board Leading Economic Index for the U.S. rose sharply in April to by 1% (forecast 0,8%), the first increase in seven
months. It must be noticed that for the first time in one and half years strengths among its components exceeded weaknesses. Stock
prices, the interest rate spread, consumer expectations, initial unemployment claims, the average workweek, and supplier deliveries all
contributing positively to the index this month offsetting the negative contribution from real money supply and building permits. This
increase of the Conference Board leading indicator is another sign of the progressive recovery of the U.S. economy.

EURO AREA : EUROPEAN MANUFACTURING AND SERVICES IMPROVED IN MAY

After reaching a lowest at 33.5 in March the PMI manufacturing index for the Euro area improved in March and April and increased
again in May to reach 40.5. Looking at the breakdown the new order index rose significantly for a third consecutive month as well as the
export orders index suggesting that the worst of the global trade slump may already be over. If we look to the detail by countries we see
improvements of the PMI manufacturing index in France and Germany. Meanwhile with a lower inflation and interest rates to have much
an impact on household spending, the PMI services improved for the third consecutive month but to a lesser extend. Looking to the
breakdown we see a significant increase of the business expectations. PMI manufacturing index rose as well in France and in Germany.
These encouraging PMI data remained under the level of fifty showing that there is still a contraction of the activity but let us think on the
other hand that the GDP will contract at a slower pace at the second quarter after slumping at the first quarter 2009./JB
 WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

22-May-09 INGLORIOUS DOLLAR

VIX index : implied volatility on the S&P 500 $Libor -3-Month(InterbankRate)
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
22/05/2007 22/11/2007 22/05/2008 22/11/2008 22/05/2009 22/05/2007 22/11/2007 22/05/2008 22/11/2008 22/05/2009
Source : Bloomberg Source : Bloomberg

UnitedStates : 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
22/05/2007 22/11/2007 22/05/2008 22/11/2008 22/05/2009 22/05/2007 22/11/2007 22/05/2008 22/11/2008 22/05/2009
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
80
1,4

70 1,35
60
1,3
50
40
1,25

30 1,2
22/05/2007 22/11/2007 22/05/2008 22/11/2008 22/05/2009 22/05/2007 22/11/2007 22/05/2008 22/11/2008 22/05/2009
Source : Bloomberg Source : Bloomberg