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26-May-09 ALL TOGETHER

Back to work, at last every market will be open today. Existing Home sales tomorrow and New home, Durable orders, Jobless Claims
as well as the Opec meeting on Thursday will be the focus this week. While some (including us) are arguing that the end of the recession
is in sight, including the Fed when forecasting a slow economic growth for H2, others are convinced that the "bailout-bubble" is about to
burst. The latest initial unemployment claims report supports the argument that the pace of layoffs has slowed. The bigger issue is that
the pace of hiring isn't picking up. True, but it will take some time to bring employment back to a steady growth level, reminding that this is
a lagging indicator.
There is a confusion between Great Depression, which seems to be avoided, recession , in which we clearly were invited, and slow
pick up in demand coming, in term of equity valuation and market impact. Growth coming, if any, has a price which to us is worth more
than the current equity indices levels, especially as fund managers are still very underweight equity. Then in the future, yes consumers
will clearly be doing more to save money. The kicker is that they may be forced into saving less than they would like in coming years as
taxes seem likely to go up to combat the growing deficit. That would leave less disposable income to save and would force many
consumers into the seat of spending to need as opposed to want. The economy is certain to grow again in due time (H2 in the US), and
the pace of that recovery will depend heavily on the consumer who has a newfound appreciation for the need to save money and who
accounted for 71% of real GDP in 2008. The stimulus and the overall combination of low yield and cheaper oil prices environment should
be a boost mid term to growth, in addition to the continuing increasing equity level as well as the banking system back on track. As such,
Fed's forecast remains realistic with its 2-3% growth in 2010 and 3.5-4% in 2011, which market players do not seem to trust seen the
levels and more focusing on the half empty glass scenario.
Same old story, we will be looking at the coming data which should somehow reflect some economic recovery and the
"unexpected news such the GM bail out as well as the announcement anytime from Goldman, JP, Amex and bank of America that they
are repaying the government for the TARP loan. This week’s releases are likely to provide further evidence that housing market activity
has found a floor, at a very low level but has found a floor. The surge in affordability and signs that the market is stabilizing will mean that
both the number of existing and new home sales increased in April, reversing the small falls in March (data due Tomorrow and Thursday
respectively). The Conference Board’s measure of consumer confidence (Today) for May is likely to follow the path of the University of
Michigan’s measure by recording its third increase in as many months. The rebound in equity prices will be the main factor behind an
increase from 39.2 in April to around 43.0.
China is reminding us how efficient their stimulus proves to be. Chinese auto sales have proved to be a relative bright spot so far
this year, even as the rest of global automobile industry struggles to cope with tough economic conditions (GM ...). Backed by government
incentives, automobile sales in mainland China could continue to post strong growth in coming months, setting the stage for auto industry
shares to outperform, according to analysts. China's State Council said last week that the government will implement a five-fold increase
to the subsidy it gives consumers trading in their old vehicles for new ones, raising it to five billion Yuan ($732 million) from the one billion
Yuan announced previously. The move, which comes on top of a January reduction in the vehicle purchase tax for small cars, is expected
to boost replacement demand. "While other major markets shrink in size, China is seeing the largest growth in the auto market. We
believe the Chinese auto sector's fundamentals are improving" said a BNP analyst in a recent report. China has become the n°2
worldwide economy, which growth should remain strong until 2011 given the other stimuli which consist on building an equivalent to Hong
Kong and NY every year, and initiate a decent health care program.
Two third of Q2 soon behind us, and time passing by is curing things in harmony with the equity rebound (time is a great healer).
Opening down once more yesterday in a very low trading activity, same as on the previous Monday, the indices recovered to end up
positive probably driven by fund managers flows catching any weakness opportunity to minor their underweight equity positions.
Up today, gap down closed, new highs coming
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 61,0 1,3979 94,70 3,44 3,60 - - - - - - - - - - - - US

Perf 1d % -0,46 -0,27 0,15 -1,14 bp 5,7 bp - - - - - - - - - - - - Europe
ECONOMIC DATA with impact
S&P CaseShiller index (13.00 GMT ) will reveal that prices fell further in the first quarter, though probably at a slower rate / interesting
Consumer Confidence (14.00 GMT) should be rebounding such as previous confidence survey thanks to the equity indices rebound /
minor
POSITIVE IMPACTS
ACCIONA : Turkish airport handling company Celebi mandated Citigroup to oversee the financing & acquisition process of ground-
services companies owned by Acciona
STANDARD CHARTERED : Temasek increased its stake to 19.11% from 18.81% after receiving a stock dividend
RIO TINTO’s Chairman will visit Canberra this week amid growing speculation that the $19.5bn deal with Chinalco has been scrapped
(Daily Tel.) / Separately, Rio Tinto has agreed a 33% cut in contract fine iron ore prices with Nippon Steel
TELECOM SECTOR : India's Bharti Airtel and South Africa's MTN have revived merger talks to create a $61 bn telecoms giant / With
200 m users, a combined entity would be the 3rd biggest based on subscribers, behind China Mobile and Vodafone, although annual
sales of $20 bn would be dwarfed by both, with China Mobile at $60 bn and Vodafone at $65 bn
CREDIT AGRICOLE may seek a delay in the implementation of Italian antitrust conditions for its stake in INTESA = Under 2006 antitrust
rules, ACA had to cut its stake in ISP to below 5% by the start 2008 & to <2% this year / ACA has a 5.82% stake in ISP
JULIUS BAER said it agreed to buy Italy’s Alpha SIM, which has about €400m in assets under management.
NEGATIVE IMPACTS
DANONE plans to raise about €3 bn by selling shares to existing shareholders to reduce net debt / It confirmed its FY earnings targets
VODAFONE would have lost a tax avoidance case in the UK which could cost it £2.2bn (WSJ) / Voda can still appeal the decision
METRO - ARCANDOR : 2 meetings scheduled for this week between CEOs & CFOs have been cancelled (FTD)…
PORSCHE would be in talks with the Bank of Tokyo for a €750m loan + is seeking help from the Govt of Baden-Wurttemberg (Telegraph)
Porsche would be in danger of losing some of its profit on VOW’s options coz it may not have the money to exercise them…
INFINEON : China's Shandong province told the German state of Saxony that it and Chinese IT company Inspur are not interested in
taking over completely Infineon's chipmaker Qimonda (Saechsische Zeitung)
FIAT : Germany will decide on a bidder for Opel by the middle of the week, after holding a final round of talks with Fiat, Magna & RHJ /
Fiat may offer a merger instead of a takeover with Opel to win the backing of the German Govt
DEXIA Chief said loan margins were too low (Handelsblatt)
AVIVA : National Australia Bank, Westpac Banking, AXA Asia Pacific & AMP have submitted bids for Aviva's Australian life assurance
business (FT) / The business is expected to fetch below the estimated $778m sale price
RBS & LLOYDS have told the govt they may miss lending targets set as a condition for receiving more state support (Sunday Telegraph)
 WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

26-May-09 ALL TOGETHER

NORILSK NICKEL cut its 2009 nickel output forecast to between 285K and 300K tonnes, from an earlier estimate of 290K to 305K t
ANGLO IRISH BANK : Local media said ANGL will need €3.5bn in state capital to cover its H1 loan loss provisions / But the Irish govt is
not rushing into a decision on whether to inject capital into the bank
RBS : ABN said Q1 loss after tax is €886m / Said it is well funded & capitalized at March 31
RESULTS DIVIDENDS EVENTS
Today Aveva Telekom Austria (€0.75) France Telecom AGM / Atos Origin AGM / Suez Env AGM
Salzgitter AGM / Mc Do AGM / EADS AGM / Industrial conf at
Adecco ( CHF 1.50) / Credit Agricole (€0.45) / Deutsche
Credit Suisse / Exxon Mobil AGM / Energy, Utilities and Power
Wednesday Cimpor cimentos / Ubisoft / Suedzucker Bank (€0.50) / Soc Gen (€1.20) / Thales (€1.05) / Marks
conf at Deutsche Bank / Legal & General AGM / EDF Energies
& Spencer (GBp 10,55556)
nouvelles AGM
Cap Gemini investor day / ADP AGM / Time Warner AGM /
Ahold / / Man Group / Costco / Dell /
Thursday Casino (€2.53) + Mercialys 1 per 8 / Salzgitter (€1.40) Safran AGM / Delhaize AGM / Man Group analyst meeting /
Heinz
Home depot AGM / United Utilities analyst meeting
Ackermans & van Haaren (€1.39) / Nexans (€2.00) / Suez
Friday Arcandor
Env (€0.65)
Monday Delhaize (€1.48) / Legrand (€0.70) / Dutsche Land : End of short selling ban
TRADING IDEAS
BUY ALLIANZ / MUNICH RE / EON / BAYER / SANOFI / DANONE to play eco recovery
BUY VIVENDI / NOKIA / FTE / DTE / TOTAL / GSZ / EDF looking good

BUY GLAXO / SELL ASTRAZENCA // BUY LINDE / SELL BASF // BUY DTE / SELL TEF // BUY ERICSSON / SELL NOKIA // BUY MUNICH RE / SELL
AXA // BUY AHOLD / SELL METRO // BUY IBERDROLA / SELL VEOLIA
BROKER METEOROLOGY
PORTUGAL TELECOM ............. RAISED TO NEUTRAL FROM SELL ...................................................................................... BY UBS
SOCIETE GENERALE .............. RAISED TO NEUTRAL FROM REDUCE ........................................................................ BY NOMURA
DEUTSCHE BANK .................... RAISED TO BUY FROM REDUCE ................................................................................. BY NOMURA

BANK OF IRELAND .................. CUT TO REDUCE FROM NEUTRAL............................................................................... BY NOMURA

UBS ........................................... CUT TO REDUCE FROM NEUTRAL .............................................................................. BY NOMURA
CABLE & WIRELESS ............... CUT TO UNDERPERFORM .................................................................................BY CREDIT SUISSE
MEDIOBANCA .......................... REMOVED FROM MOST PREFERED ........................................................................... BY MERRILL

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO

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26-May-09 ALL TOGETHER

CHART OF THE DAY
IFO Pan Germany Business Climate
Since 2003

115

110

105

100

95

90

85

80
2003 2004 2005 2006 2007 2008 2009

Source : IFO Institute

After reaching an historical low at 82.2 in March the IFO index of German’s business confidence rose for the second consecutive month
to reach 84.2 in May (forecast 85.0). It is important to notice that the IFO business climate improvement trend could reverse in June if
the high level of the euro last longer.

Time Country Indicator Period GE forecasts Consensus Previous

26-29 may United Kingdom Nat'wide house prices index April -0,9%,-13,7%YoY -0,4%,-15,0%YoY
7.00 GMT Germany Gross Domestic Product (final) 1st quarter -3,8%QoQ -3,8%QoQ
7.45 GMT France Consumer Spending April - 0,9 %, + 0,7%YoY -0,3%,+1,2%YoY 1,1%,+0,6%YoY
9.00 GMT Euro area Current account March - € 8,1 bn
10.00 GMT Euro area Industrial neworders March 0,8%,-30,6%YoY -0,6%,-34,5%YoY
14.00 GMT United-States S&P/CS Composite- 20 YoY Mars -18,40%YoY -18,63%YoY
14.00 GMT United-States S&P/CS Case -Shiller US HPI 1st quarter -18,7%YoY -18,2%YoY
15.00 GMT United-States Conference Board consumer confidence May 43 42,8 39,2
15.00 GMT United-States Richmond Fed manufacturing index May -6 -9
15.30 GMT United-States Dallas Fed Manufacturing activity May -22,1% -31,6%
22.00 GMT United-States ABC consumer confidence May 24 -45

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

DJIA 8277,3 0,21% - 5,69% EUR/USD 1,3976 2,54% 0,04%
S&P 500 887,0 0,53% - 1,80% EUR/JPY 132,34 -1,13% 4,23%
Nas daq 1692,0 0,76% 7,29% USD/JPY 94,69 1,38% 4,25%
CA C 40 3236,2 0,57% 0,57% Oil Price % 5 Days Ytd
DA X 4918,5 1,37% 2,25% Brent $/b 58,9 1,82% 40,92%
Eur os tox x 50 2440,2 1,13% - 0,30% Gold Price % 5 Days Ytd
DJ 600 207,4 - 0,01% 4,54% Gold $/oz 954,2 3,18% 8,21%
FTSE 100 4365,3 0,57% - 1,55% Rates USA Euro Japan
Nikkei 9275,8 3,41% 4,70% Central Banks* 0,25 1,00 0,11
Shanghai Comp 2606,8 - 1,59% 43,17% Overnight 0,15 1,35 0,11
Sens ex ( India) 13900,7 - 2,60% 44,09% 3 Months 0,17 0,75 0,20
MICEX ( Rus s ia) 1051,0 3,76% 69,64% 10 Y ears** 3,44 3,60 1,46
Bov es pa ( Bras il) 50816,2 - 1,26% 35,33% *US: Fed Funds; Jap: Overnight; Euro: Ref i
** Euro: German Bund rate So urc e : B lo o m berg
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26-May-09 ALL TOGETHER

ECONOMIC DATA PREVIEW
Watch in the United-States the release of the Conference Board consumer confidence for the may due at 15.00 GMT, expected to
increase for a second consecutive month lead by the drop of consumer prices and by the effects of the low interest rates. The
upcoming Obama’s revival plan will as well impact positively the consumer confidence.
Watch in France the release of the Consumer spending for the April due at 7.45 GMT, expected to decline as sales are now over in
France and as unemployment is rising. Nevertheless from a year ago consumer spending are expected to rise. France is one of the
rare industrialized country with the United-States to have its consumer spending increasing from a year ago.

Economy
GERMANY : IFO BUSINESS CLIMATE ROSE AGAIN IN MAY
After reaching an historical low at 82.2 in March the IFO index of German’s business confidence rose for the second consecutive month
to reach 84.2 in May (forecast 85.0). Despite the fact that Germany’s economy is very dependant of exports which are strongly affected
by the global economic downturn, it seems that after falling of 3.8% at the first quarter that the economy reached a bottom. Additionally
the cuts of interest rates add to the government stimulus package are impacting positively on industrial confidence. Latest German’s
PMI manufacturing improved in May even if it remained under the level of 50 showing that the contraction is still here but the activity is
contracting at as lower pace. Meanwhile IFO expectations rose from 83.9 in April to 85.9 in May underlining that economic outlook
confidence is getting better. On the other hand and quite logically IFO current expectations dropped from 83.6 in April to 82.5 in May. It
is important to notice that the IFO business climate improvement trend could reverse in June if the high level of the euro last longer./JB
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26-May-09 ALL TOGETHER

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
29/05/2007 29/11/2007 29/05/2008 29/11/2008 29/05/2009 28/05/2007 28/11/2007 28/05/2008 28/11/2008 28/05/2009
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
28/05/2007 28/11/2007 28/05/2008 28/11/2008 28/05/2009 28/05/2007 28/11/2007 28/05/2008 28/11/2008 28/05/2009
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
28/05/2007 28/11/2007 28/05/2008 28/11/2008 28/05/2009 28/05/2007 28/11/2007 28/05/2008 28/11/2008 28/05/2009
Source : Bloomberg Source : Bloomberg