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19-Feb-09 THE WRESTLER

One day after Obama officially signed “The American Recovery and Reinvestment Plan” into law ($787bn, see our Tuesday’s mail
for more details), the Treasury and Obama’s Administration introduced a new plan for homeowner in dire straits called “Homeowner
Affordability and Stability Plan”. This new plan is not funded by the “Tarp” or the “Financial Stability Plan” but is an extension of the
2008 Housing and Economic Recovery Act which was roughly the launch of the nationalization of Fannie Mae and Freddie Mac.
Considering that millions of responsible families who make their monthly payments and fulfil their obligations have seen their property
values fall, and are now unable to refinance at lower mortgage rates, that millions of workers have lost their jobs or had their hours cut
back and are now struggling to stay current on their mortgage payments-with nearly 6 million households facing possible foreclosure
(10 000 per day currently), and that neighbourhoods are struggling as each foreclosed home reduces nearby property values by as much
as 9 %, the “Homeowner Affordability and Stability Plan” will help up to 7 to 9 million families restructure or refinance their mortgage
to avoid foreclosure. The key components of the plan are: 1) refinancing for up to 4 to 5 million responsible home owners to make their
mortgages more affordable 2) a $75bn homeowner stability initiative to reach up to 3 to 4 million at-risk homeowners 3) supporting low
mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac and in monolines. Treasury is increasing its preferred Stock
Purchase Agreements to $200bn each from their original level of $100bn each. To ensure that Fannie Mae and Freddie Mac can continue
to provide assistance in addressing problems in the housing market, Treasury will also be increasing the size of the GSE’s retained
mortgage portfolios allowed under the agreements-by $50bn to $900bn- along with corresponding increases in the allowable debt
outstanding.
In a speech at the National Press Club yesterday, Ben Bernanke “the wrestler” talked about the Fed’s policies and its balance
sheet: the three sets of policy tools--lending to financial institutions, providing liquidity directly to key credit markets, and buying
longer-term securities--each represents a use of the asset side of the Fed's balance sheet. Specifically, loans that the Fed extends--
either to financial institutions, through the discount window and related facilities, or to other borrowers in programs like commercial paper
facility--are recorded as assets on the Fed’s balance sheet, as are securities acquired in the open market, such as the GSE securities
purchased by the Fed. The Fed's assets also include about $500 billion of Treasury securities. About 5 percent of the Fed’s balance
sheet, or $100 billion, consists of assets acquired in the government interventions to prevent the failures of Bear Stearns and AIG. The
liability side of the Fed’s balance sheet is relatively simple, consisting primarily of currency issuance (Federal Reserve notes) and
reserves held by the banking system on deposit with the Federal Reserve. The various credit-related policies all act to increase the size of
both the asset and liability sides of the Fed’s balance sheet. For example, the purchase of $1 billion of GSE securities, paid for by
crediting the deposit account of the seller's bank at the Fed, increases the Fed's balance sheet by $1 billion, with the acquired securities
appearing as an asset, and the seller's bank's deposit at the Fed being the offsetting liability. The quantitative impact of the Fed’s credit
actions on the balance sheet has been large; its size has nearly doubled over the past year, to just under $2 trillion.
The minutes of January’s US FOMC meeting confirm hints made that the Committee thinks that establishing a more effective
inflation target is a better way to fight the war against deflation than the purchase of Treasuries. The new long-term projections
(for 5-6 years ahead) released alongside the minutes effectively establish an inflation target of between 1.7% to 2.0% on the PCE
deflator. That might be equivalent to around 2.2% to 2.5% on the CPI measure. The minutes provided the surest sign yet that the FOMC
is concerned about deflation. They said “there is a risk of a protracted period of excessively low inflation” and a few members “even saw
some risk of deflation”. The Committee discussed, but dismissed, the idea of establishing a target for the growth of the monetary base or
M2. The CPI YoY in January released tomorrow (13.30 GMT) may have turned negative (-0.1 %) for the first time since 1955…
Neither the U.S. housing starts (-16.8 % in January) nor the industrial production (-1.8 % MoM in January, -10.0 % YoY) could trigger a
rally of equities yesterday. In addition to that the FOMC’s central tendency for GDP growth in 2009 has been revised down to -0.5 %/-1.3
% vs. -0.2 %/+1.1 % in October with unemployment rate between 8.5 % and 8.8 % (vs. 7.1 %/7.6 % in October). But the FOMC upgraded
its projection for GDP growth in 2010 to 2.5 % to 3.3 % vs. 2.3 %/3.2 % in October. The widely spread conviction that growth will
sharply rebound in 2010 in a “V” shape scenario may explain equities’ resilience yesterday.
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 34,7 1,2581 93,47 2,75 2,99 -0,67 -0,37 -0,07 -0,12 0,26 -1,15 -0,47 -1,37 0,48 -0,10 -0,18 0,04 US
Perf 1d % 0,17 0,41 0,34 -0,72 bp 1,9 bp 0,19 0,35 -0,42 0,07 1,31 -0,03 0,36 -0,47 2,08 0,35 0,68 0,38 Europe
ECONOMIC DATA with impact
PPI – 13;30 GMT - Exp 0.3% / Ex Food & Energy exp 0.1%
Jobless Claims - 13.30 GMT – exp 620K
Leading Indicators - 15.00 GMT – exp 0.0%
Philadelphia Fed - 15.00 GMT – exp –25.00
POSITIVE IMPACTS
PPR : FY sales €20.20bn (20.07bn exp) / Operating €1.72bn (1.68bn exp) / Dividend €3.30 (-4% vs 2007) / No guidance for 2009 but
said said it would intensify measures to boost its competitiveness
TECHNIP : Q4 revenue €1.91bn (1.79bn exp) / Operating €183m (163m exp) / Dividend €1.20, unch./ Sees FY09 revenue between
€6.1-6.4bn (6.2bn exp) / Sees subsea 2009 operating margin between 16-18%
AXA : FY rev. €91.2bn (€94.2bn e) / Operating €4.04bn (€3.75bn e) / Underlying L&S €1.51bn / Underlying P&C €2.39bn / Dividend
€0.4 (€0.7 exp) / Will ask AGM on April 30, the authorization to issue preferred shares to increase its financial flexibility if necessary
POSTBANK : Q4 NII €738m (€571m exp) / Risk Provisions €104m (€108m exp) / Trading Loss €406m (€ -161m exp) / Tier1 ratio 7.4% /
FY net loss €821m (-845m exp) / Still sees after-tax ROE at 13-15% mid term
NESTLE : FY sales SFR110 Bn (110.5bn exp) / Ebit SFR15.7Bn (15.5bn exp) / Org. growth 8.3% (8.2 exp)/ Dividend SFR 1.40 (1.32
exp) / Does not need to take action, decision regarding stake in l’Oreal in April … / 2009 org. growth at least approaching 5%
SCHNEIDER : FY sales €18.31bn (18.26bn exp) / Ebita €2.75bn (2.65bn exp) / Dividend €3.45 (3.30 last year) / Repeated little visibility
for sales trend in 2009 but reiterated its 12% 2009 BITA margin, based on a worst-case scenario of a 5-15% drop in org. growth
XSTRATA : Big UK investors are considering whether to vote against plans by Xstrata to conduct a rights issue and buy the Prodeco coal
mining business in Colombia from Glencore, its biggest shareholder (The Guardian)
ACCIONA has reached an agreement to sell its 25% stake in Endesa to Enel following months of negotiations and differences over the
price and the conditions of the deal (Cinco Dias)
INFINEON : The Qimonda works council urged Angela Merkel to help save the insolvent memory chipmaker
NEGATIVE IMPACTS
BNP : Q4 rev. €4.85bn (€4.95bn e) / Net Loss €1.37bn, in line / Cost of Risk - €2.55bn (-1.8bn e) / CIB loss €2.07bn / Div. €1, with
possibility to pay it in share (3.35 last year) / Tier1 7.8% to go up to 8.4% with latest French govt aid / “Well positioned for 2009”…
SAP : Business by Design is running into difficulty and its market launch may be delayed (Handelblatt)
ROCHE may increase the size of a planned bond sale to $15 bn or more in a 6-part bond sale to finance its $42 bn offer for Genentech
 WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

19-Feb-09 THE WRESTLER

MAN AG : FY sales €14.9bn ( €14.8bn exp) / Operating €1.73bn, in line / Dividend €2 (as exp) / Order Intake €1.96bn (€2.3bn exp) /
Sees more or less stable revenue in 2009
SWISS RE : S&P cut the reinsurer's LT counterparty rating to A+ from AA- because of its larger-than-anticipated capital depletion in 2008
/ Final results = FY Net loss SFR 864m (-1bn est.) / Div SFR 0.1 / FY ROE -3.4% / To issue up to 180m shr but no right issue / Tgt 2009
95% combined ratio / Sees improving outlook for life/non life ops / Wants to free up cap from non core ops
HYPO REAL ESTATE needs up to €20 bn in further state guarantees in the coming weeks (FAZ)
FRESENIUS : FY sales €12.34bn (12.26bn exp) / Adj. Ebit €1.73bn (1.69bn exp) / Dividend €0.70 (0.74 exp) / 2009 outlook positive
RDSA will discuss further cooperation with Gazprom on energy projects in Russia's Far East (CEO)
TF1 : FY Operating €177m (190m exp) / Plans €60m of cost cuts / Dividend €0.47 (0.55 exp) / Sees 9% decline in 2009 conso. sales
SOLVAY : Q4 rev €2.27bn (2.18bn e) / EBIT ex-items €125m (178m e) / Final div. of €1.733 / Mkt condition still tough at start of 2009

HPQ : Q4 Revenue $28.8bn ($31.9bn exp) / EPS $0.93 (In line) / Sees adjusted Q1 EPS from $0.84 to $0.85 ($0.89 exp) & revenue to a
range of $27.4bn to $27.7bn ($30.95bn exp)
RESULTS DIVIDENDS EVENTS
Saint Gobain / Schneider / BAE Systems / PPR / BNP / Cadbury / AXA / Eramet /
Today Fresenius / Deutsche Postbank / Continental / Man AG / Shire / Reed Elsevier / Swiss BNP Dividend declaration
Re
Arcelor Mittal ($0.1875) / Goldman
Lafarge / Anglo American / Allied Irish Bank / Belgacom / Endesa / Gecina / Campbell
Friday Sachs ($0.466667) / Johnson &
Soup / GM :
Johnson ($0.46)
Monday ACS / Maroc Telecom ST Micro ($0.09)
Tuesday Akzo Nobel / Corio / Deutsche Boerse / Theolia / OZ Minerals / Heinz / Home Depot / Novartis AGM
Accor / CNP / Vallourec / Heinkel / ASM International / OMV / Telekom Austria / BHP Biliton ($0.455556) / Reckitt
Wednesday Apple AGM
Cadbury Benckiser (GBp 53,3333)
TRADING IDEAS
BUY BANKS as BNP / SOCGEN / DT BOERSE / CREDIT AGRICOLE on support level & bank sector recovery
BUY AIR FRANCE to play oil prices drop and business starting back on H2 thanks to stimuli plans
BUY DANONE / ROCHE / AIR LIQUIDE on double bottom possibility
BUY CARREFOUR / on reversal Head & Shoulder possibility
BROKER METEOROLOGY
SANOFI .........................................................RAISED TO NEUTRAL ........................................................................... BY JP MORGAN

BOUYGUES .................................................CUT TO UNDERWEIGHT ........................................................... BY MORGAN STANLEY

SAP ...............................................................RATED NEW NEUTRAL ..................................................................................... BY HSBC
CENTRICA ....................................................CUT TO UNDERWEIGHT FROM NEUTRAL .......................................... BY JP MORGAN

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO

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19-Feb-09 THE WRESTLER

CHART OF THE DAY
US Housing starts
since 1959

2400

1900

1400

900

400
59 64 69 74 79 84 89 94 99 04 09

Source : US Department of Commerce

The sharp rise of the unemployment add to the credit crunch are humping the real estate market which is still on a lasting down trend
in the United-States. Indeed housing starts plunged 17% to 466 000 in January ( forecast 529 000) , which represent the deepest
slump since the great depression and building permits plunged as well to record low at 521 000 in January ( forecast 525 000).As
foreclosure are reaching as well high record builders are fighting a very sharp lake of demand and are trying to sell with much
difficulties the units they have constructed. The rebound of mortgage applications in the U.S. OF 45.7% last week is mainly due to
surge in refinancing and will not overshadow the gloomy and lasting real estate situation which will more likely generate an
intervention from the Obama administration.

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
09.00 GMT Italy Trade balance ( total) December € - 10,1 billion € - 10,7 billion
09.30 GMT United Kingdom Public sector net borrowing January £ -7,0 billion £ 14,9 billion
09.30 GMT United Kingdom M4 money supply ( préliminairy) January 1,2%,+15,7% YoY 1,4%,+16,1% YoY
13.30 GMT United States Producer price index January 0,3%, - 2,5% YoY 0,3%, - 2,4% YoY -1,9%, -0,9% YoY
13.30 GMT United States Producer price index ( ex food and energy) January 0,1%,+3,8% YoY 0,1%,+3,8% YoY 0,2%,+4,3% YoY
13.30 GMT United States Initial jobless claims 14 th February 620 000 623 000
13.30 GMT United States Continuing claims 7 th February 4 831 000 4 810 000
15.00 GMT United States Conférence Board leading indicators January 0,1% 0,3%
15.00 GMT United States Philadelphia Fed index February -25 -24,3

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

For e x P rice % 5 D a ys Ytd
DJIA 7555,6 -4,02% -13,91%
EUR/USD 1,2591 - 2,11% - 9,89%
S&P 500 788,4 -4,57% -12,71% EUR/JPY 117,78 - 0,73% - 7,02%
Nas daq 1468,0 -3,65% -6,92% USD/JPY 93,55 - 2,83% 3,14%
CA C 40 2874,1 -5,08% -10,69% O il P rice % 5 D a ys Ytd
DA X 4205,0 -7,18% -12,58% Br ent $/b 39,2 - 11,72% - 6,18%
Euros tox x 50 2118,5 -6,59% -13,45% Gold P rice % 5 D a ys Ytd
DJ 600 183,4 -4,98% -7,57% Gold $/oz 977,5 3,24% 10,82%
FTSE 100 4006,8 -5,09% -9,64% Ra te s U SA E u ro Ja p a n
Nikkei 7557,7 -5,17% -14,70% Centr al Banks * 0,25 2,00 0,10
Shanghai Comp 2225,6 -2,25% 22,23% Ov er night 0,25 1,00 0,10
Sens ex (India) 9022,1 -6,25% -6,48% 3 Months 0,30 0,98 0,24
MICEX (Rus s ia) 628,0 -13,59% 1,36% 10 Y ear s ** 2,74 2,99 1,27
Bov es pa (Bras il) 39674,4 -2,87% 5,66% *US: Fed Funds ; Jap: Ov er night; Eur o: Ref i
** Eur o: Ger man Bund r ate S o u rc e : B lo o m b e rg
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19-Feb-09 THE WRESTLER

Economic data preview

Watch in the United-States the release of the producer price index for January due at 13.30 GMT, expected to slightly increase since last
month as oil prices stop felling but it will still decline from a year ago, on the other hand the producer price index core ( excluding food and
energy) will still increase from last month and from a year ago , watch as well the release of the initial jobless claims and the continuing
claims this week both expected to increase as recession is deepening in the United-States and in all major industrialized countries
generating wild fears from companies which are sharply cutting jobs ./JB

ate

ECONOMY

UNITED-STATES : HOUSING STARTS AND BUILDING PERMITS DROPPED TO RECORD LOW IN JANUARY
The sharp rise of the unemployment add to the credit crunch are humping the real estate market which is still on a lasting down trend in
the United-States. Indeed housing starts plunged 17% to 466 000 in January ( forecast 529 000) , which represent the deepest slump
since the great depression and building permits plunged as well to record low at 521 000 in January ( forecast 525 000).As foreclosure are
reaching as well high record builders are fighting a very sharp lake of demand and are trying to sell with much difficulties the units they
have constructed. The rebound of mortgage applications in the U.S. OF 45.7% last week is mainly due to surge in refinancing and will not
overshadow the gloomy and lasting real estate situation which will more likely generate an intervention from the Obama administration.

UNITED -STATES : INDUSTRIAL PRODUCTION FELL IN JANUARY

Industrial production fell of 1.8% in January from -2.4% in December which is slightly more than expected ( forecast -1.5%). If we look into
the breakdown this drop is mainly led by a 23.4% decline in motor and vehicle part , on the other hand computer and electronic sector
which drop 3.8% in December only fell 1.7% in January showing a decrease not as bad as expected. This drop of industrial production is
not a surprise as the manufacturing ISM was very low in January ( 35.6),as the domestic demand is weak due to the credit crunch and as
the car sector is still sharply hit by deep crisis. Nevertheless it is important to bear in mind to put in perspective these bleak figures that the
car sector represent only 3.5%of the U.S. GDP and the industry sector represent only 13% of the U.S. GDP. /JB
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19-Feb-09 THE WRESTLER

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
55 4
50
3,5
45
40 3
35
30 2,5
25
20 2
15 1,5
10
5 1
20/02/07 20/08/07 20/02/08 20/08/08 20/02/09 19/02/07 19/08/07 19/02/08 19/08/08 19/02/09

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
19/02/07 19/08/07 19/02/08 19/08/08 19/02/09 19/02/07 19/08/07 19/02/08 19/08/08 19/02/09
Source : Bloomberg Source : Bloomberg

Oil : Brent ($/b) Forex : Euro vs Dollar (EUR/USD)

150 1,65
140
1,6
130
120
1,55

110 1,5
100
1,45
90
80
1,4

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

30 1,2
19/02/07 19/08/07 19/02/08 19/08/08 19/02/09 19/02/07 19/08/07 19/02/08 19/08/08 19/02/09

Source : Bloomberg Source : Bloomberg