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2-Mar-09 MARSH CHOCOLATE BAR

What a February month ending ! Friday saw the government taking a major stake in Citigroup, GE slashing its dividend, and fourth
quarter GDP readings showing the economy contracted at its sharpest rate since 1982. Those headlines led to some very choppy trading
and pushed the S&P 500 and the Dow to their lowest intraday and closing levels since 1997. The pessimistic tone was exacerbated when
Citigroup (C 1.50, -0.96) announced it is offering common shares for up to $27.5 billion in existing preferred equity. The government will
exchange a maximum of $25 billion face value of its preferred stock, which gives the government a 36% stake in the company. Reports
earlier in the week indicated the government was in talks with Citigroup, so the announcement wasn't a total surprise. However, news that
Citi is suspending dividends on common shares and its preferred shares came as a real disappointment.
The economic report this week, which contains a large number of important releases, is highlighted by Friday's release of the
February employment report. In a continuation of discouraging trends, nonfarm payrolls are expected to show 615,000 jobs were lost in
February. Additionally, retailers will report their February same-store sales Thursday. That same day the ECB might cut another 0.5% its
rates, while the MPC should follow suit along with the adoption of quantitative easing. Most economists expect a 50 basis points cut. But
the main event could well be the start of policies aimed directly at increasing the quantity of money in the economy. In a recent speech,
Mervyn King suggested that it could take the form of purchases both of government bonds (“conventional unconventional” measures) and
of corporate bonds (“unconventional unconventional” measures). But in terms of the amount of purchases, the Committee will initially
tread pretty cautiously, given the uncertainties surrounding the process.
The ECB meeting on Thursday is this week’s highlight in Europe. With the euro-zone recession deepening, the ECB is almost certain
to deliver the 50bp interest rate cut that President Trichet signalled last month. What’s more, we expect hints of further cuts to come as
concerns over rates reaching levels that are ‘too low’ are gradually overcome by the need to support the economy. But the Bank will still
be relatively vague about the scope for unconventional measures to support the economy when interest rates can fall no further. This
raises the danger that the euro-zone recession might be longer-lived than elsewhere due to lack of and reactivity and coordination in
policies response.
The Senate Banking Committee has scheduled a hearing Thursday to examine government aid to the insurer. Treasury Secretary
Geithner will be testifying the same day on the U.S. Treasury budget. AIG (AIG) is sure to be in the news this week. Media reports have
suggested the company could announce a quarterly loss in the neighbourhood of $60 billion today, although the exact date of AIG's
earnings release has not been confirmed.
The rescue process from the banks though is rather welcome, and Citi example should not be seen as a ritual. Indeed the 10%
discount from February 9th price for the price of the preferred convert, in addition to the high 9% yield for the next 7 coming years
(deadline) makes it obvious that most banks will try and refund the government before that, either on their own, or thanks to better pricing
from third party investors, increasing hope that they will remain private. This means banks will be back to normal thanks to the
government supports short term, and should somehow be private in the a longer run, which should investors happy through thanks to
dividend yields and valorisation opportunities.
Prechter forecast that a nice and strong bull rally will take place remains more than ever a reality. Indeed, whoever is familiar with
the Elliott waves counting will understand that we are at the very last bit of the downside and bear move which started in 2000 year. Only
a last little 4 and 5 waves were missing, which now the market is finalising in dropping hardly on Friday in the US (little 5) following the
previous upside move from the middle of the week (little 4). Although it is hard to define the size of such a last 5th wave, we should not be
playing this kind of last move, especially at a time when the US officials response will be as big as the market collapse if any further.
New month starting, hopefully on a more positive note, keeping in mind that the current macro news flow is reflecting the past and
should be obviously ugly, but get better next month and in May, which the market might be playing anytime, fitting with Prechter chartist
view. Keep in mind that corporate have been liquiditating their stocks, bringing inventory level on its very low (reason for the awful GDP
data), meaning any growth stabilisation will be enough to make output working back again.
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 43,6 1,2582 97,50 2,99 3,11 -0,59 -2,88 -5,73 -4,07 -0,15 -0,68 -2,15 -1,42 -1,23 -2,36 -0,98 -1,66 US
Perf 1d % -2,27 -0,69 0,13 -2,4 bp -1,6 bp -0,24 -1,84 -3,48 -2,30 0,14 -0,43 -1,21 -1,47 -1,05 -1,38 -0,42 -0,86 Europe
ECONOMIC DATA with impact
February French car registration numbers (11h gmt)
Personal Income & Spending (13h30 gmt) / minor
ISM Manufacturing (15h gmt) expected 34 from previous 35.6 / would be nice not to fall too much as it was showing some signs of
stabilization lately / interesting
Construction Spending (15h gmt) / should be down / minor at this stage
Boston Fed President Rosengren (16h30 gmt) speaks on the credit crisis and financial regulation
Richmond Fed President Lacker (17h45 gmt) speaks on government lending and monetary policy
POSITIVE IMPACTS
AHOLD :Q4 Sales €6.6bn (6.5e)/ Q4 EBIT €365M (310e) / Q4 Net €285M (224.5e) / Annual DIV €0.18 (0.2e) / Biz well prepared to
respond to the effects of recession / No margin f’cast for 2009
VIVENDI: FY Sales €25.39bn (25.52e)/ Q4 Sales €7.62bn (7.75e) / FY EBITDA 4.953BN (4.922e)/ Q4 EBITDA €1.11bn (1.05e) / FY
Adj net €2.73bn (2.70e) /Q4 Adl net €656M (610e) / DIV 1.4 (in line)/ Sees Op pft growing strongly in 09
BNP : The Belgian state and the bank agreed to extend their takeover accord that was due to expire Feb. 28 until March 6
DEUTSCHE BANK denied a media (Sonntag) report that J. Ackermann would become the next board chairman of UBS
RBS: Australian & New Zealand Banking Gp is preparing to bid for the Asian ops. of RBS possibly for as much as $3bn (Chineese press)
OLD MUTUAL plans to sell its 53% stake in South Africa’s Nedbank (market value~$3.5bn ) (the Observer)
DEUTSCHE BOERSE is continually evaluating ways to boost its value, including regular contacts with possible bourse partners such as
NYSE Euronext (chief executive told Euro am Sonntag).
EURO BANKS : French President N. Sarkozy said Euro Union leaders reached an agreement on how to deal with
the so-called toxic assets . EU plan to support the European banking system was “still working and made it possible to face all the
challenges.” France pumped a total of €10.5 bn into the 6 largest banks in December (without gaining equity stakes or board
representation). In a 2nd round of funding this year, the gov has offered a further €10.5 bn (either through buying pfd shrs or debt.)
ITALIAN BANKS : Only 1 Italian bank applied for a government-sanctioned plan for recapitalization (Berlusconi)
UNICREDIT could ask for €1.5-2bn, and for double that from Austrian authorities for its Bank Austria unit. (Il Messaggero newspaper)
GENERALI would cash in €600-700Mif it sold its 50%t stake in Intesa Vita to ISP / "If on the other hand we had to buy it we would have
to invest €2 bn "(Decision March20 ) (CEO in La Repubblica) / Separatly CEO says believes conditions shd be there to pay a DIV
GAZ DE FRANCE : Gazprom is in talks with GSZ to have it join the group that will build the Nord Stream gas pipeline, Gazprom also
wants GSZ to take part in the South Stream pipeline (La Tribune citing Gazprom Deputy Chairman)
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ENI : hopes to start operations in Iraq in the coming months, showing renewed confidence in contract competitions there (CEO)
VOLKSWAGEN : will cut all 16,500 temporary jobs in global operations as the recession and tight credit sap purchases. (Spiegel)
VESTAS WIND - ABB : Obama administration is planning to increase funding for alternative energy development, with Energy Secretary
expressing his intention to distribute half of a proposed $37 bn clean-energy project budget this year (+tive Vestas & ABB ,Barron’s)
UNION FENOSA is having its renewable unit, Enel Union Fenosa Renovables, valued in the anticipation that ENEL might be preparing an
offer to buy EUFER (Expansion) / Eufer is a 50-50 venture between Fenosa & Enel.Eufer may be worth over €1.4bn, the paper adds.
GREEN ENERGY : The U.K.'s six biggest utility companies aren't investing enough in renewable energy projects for the country to meet
its 2020 EU climate change targets (The Observer)
SACYR / REPSOL: Russian President spoke in positive terms about LUKOIL's proposal to buy a stake in REPSOL ahead of a state visit
to Spain where the issue may be discussed
BT is exploring a merger between its BT Vision television unit and Channel 4,(the SundayTelegraph)

AIG may get as much as $30bn in new capital and have debts to the U.S. forgiven in the firm’s third bailout (Source) / AIG agreed to give
stakes in its two biggest international life insurance divisions to the govt to erase some of the Co’s approximately $37bn in debt
NEGATIVE IMPACTS
TELECOM ITALIA – MEDIASET : -A merger between the 2 Co’s would be “difficult to bring about” and wouldrun into antitrust problems
(TIT CEO in Il Sole 24 Ore)
KPN : The Dutch gov plans to distribute new frequencies for wireless Internet and telephony to at least s6 operators through an auction
next year to allow more newcomers to compete with KPN, Vodafone & Deutsche Telekom
GERMAN CARS : Toyota. may raise its market share in Germany this year because sales are boosted by state premiums to buyers of
low-emission vehicles and new models (FTD)
SYNGENTA: is interested in buying Dow Chemical Co.’s agricultural-sciences unit if it’s put up for sale (no amount disclosed)
UBS: It’s “impossible” to know when the bank will return to profitability Margins at the private banking division will “fall sharply” and
the bank is planning to shed most of its structured-products business (CEO told Finanz & Wirtschaft) / CEO says currently no reason to
sell any part of business / CEO says capital base must be strengthened but hopes that will not have to raise more capital
LLOYDS may have to revise its bonus structure to receive gov insurance for more than £250bn of assets (Sunday Telegraph)
HSBC to raise £12.5 bn selling shrs/ 5 for 12 at 254p / Fully underwritten / Sees core Equity Tier 1 ration 8.5% / & Tier 1 ratio 9.8% /
DIV $0.64 including 0.10 fourth interim div / FY Pretax $9.3bn (13.1e)
EADS : Germany may soon decide to abandon the Airbus A400M military transporter plane because of delays (Der Spiegel )
ENEL is considering a capital increase as an option to reduce debt, after its takeover of Endesa. The company didn't disclose how much
Enel could try to raise in a potential capital increase. Its net debt stood at €50bn at the end of 2008 (Reuters)
RESULTS DIVIDENDS EVENTS
Vivendi / HSBC / Havas sales / Ahold / Aguas de Barcelona / Allied Irish Morgan Stanley tech conf /
Today
Banks / Vallehermoso Deutsche Bank Telecom conf
US car sales / Vinci / Bayer / Bouygues (AMC) / Mun Re / Standard
Tuesday Xstrata rights Issue (2 per 1) TMT conf at Chevreux
Chartered / Beiersdorf / Xilinx
British Land rights Issue 2 per 3 / Diageo (GBp
Credit Agricole/ Adecco / Adidas / France Tel / Suez Environnement /
Wednesday 15.4444) / Thomas Cook (GBp 7,222222) / Bank of
Arkema / Scor / Swisscom / Holcim / Old Mutual / BAE Systems
America ($0.01) / Pepsi ($0.425)
British Airways investor / France
Thursday Carrefour / Casino / Essilor / GDF Suez / Aviva / Salzitter Nike ($0.25) /
Tel investor day
Friday Fugro / Belgacom / Italcementi / Veolia Environnement / WPP / Fugro
TRADING IDEAS
BUY Eurostoxx, CAC and Dax to play double bottom / sell the Bund very toppish
BUY the dollar to play US will manage a recovery sooner than Europe
BUY AEGON / DAIMLER / AIR FRANCE / METRO / L OREAL / VEOLIA on double bottom possibility
BUY ALLIANZ / CARREFOUR on reversal Head & Shoulder possibility

BUY ST GOBAIN / SELL LAFARGE // BUY TOTAL / SELL ENI // BUY SIEMENS / SELL ALSTOM
BROKER METEOROLOGY

REPSOL .......................................RAISED TO BUY FROM NEUTRAL ....................................................................................... BY UBS

SAP .............................................RAISED TO BUY FROM HOLD .......................................................................BY DEUTSCHE BANK
YELL ............................................RAISED TO NEUTAL FROM SELL ........................................................................................ BY UBS
BOLIDEN .....................................RAISED TO EQUALWEIGHT .......................................................................BY MORGAN STANLEY

ERSTE BANK...............................CUT TO SELL FROM HOLD .................................................................................................. BY S&P

GAMESA .....................................CUT TO HOLD FROM BUY .................................................................................................... BY S&P

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO

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2-Mar-09 MARSH CHOCOLATE BAR

CHART OF THE DAY
GDP QoQ (Annualized)
since 1980

10

-2

-4

-6

-8
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

Source : Bloomberg
The preliminary release of the U.S. Gross Domestic Product at the fourth quarter revealed the sharpest shrank since 1982 at 6.2 %
(prior -3.8%). Indeed the credit crunch add to the rise of unemployment is humping consumer spending (71% of the GDP) forcing
companies to cut very sharply inventories and investments, and the global economic downturn is cutting the demand for American
goods abroad generating a sank in exports. Indeed if we look into the breakdown this slumped is mainly due to inventories which are
now estimated to have added 0.2% to GDP, compared to 1.3% initially.

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
02 to 06 March Japan Official reserve assets January $ 1011,0 milliards
08.45 GMT Italy PMI Manufacturing February 35,3 36,1
08.50 GMT France PMI Manufacturing (final) February 35,4 35,4 35,4
08.55 GMT Germany PMI Manufacturing (final) February 32,2 32,2 32,2
09.00 GMT Euro area PMI Manufacturing (final) February 33,6 33,6 33,6
10.30 GMT United Kingdom PMI Manufacturing February 35,0 35,8
10.30 GMT United Kingdom Net consumer credit January £ 0,5 billion £ 0,3 billion
10.00 GMT Euro area Consumer price index (final) February 1,1 % YoY 1,1% YoY 1,1% YoY
11.00 GMT Italy Annual GDP Dec 31 -0,9% 1,5%
13.30 GMT United States Personal income January -0,3% -0,2% -0,2%
13.30 GMT United States Personal spending January 0,3% 0,4% -1,0%
13.30 GMT United States Personal spending defator January 0,5% YoY 0,6% YoY
02 to 06 March United States Mortgage delinquencies 4 th quarter 6,99%
15.00 GMT United States ISM Manufacturing February 35 34,0 35,6
15.00 GMT United States ISM prices paid February 34 29,0
15.00 GMT United States Construction spending January -1,5% MoM -1,4% MoM

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

DJIA 7062,9 - 4,06% - 19,52% EUR/USD 1,2597 -0,73% -9,81%
S&P 500 735,1 - 4,49% - 18,62% EUR/JPY 122,74 -2,23% -3,14%
Nas daq 1377,8 - 4,37% - 12,63% USD/JPY 97,44 -2,96% 7,03%
CA C 40 2702,5 - 1,74% - 16,02% Oil Price % 5 Days Ytd
DA X 3843,7 - 4,26% - 20,09% Brent $/b 45,0 12,90% 7,73%
Eur os tox x 50 1976,2 - 1,76% - 19,26% Gold Price % 5 Days Ytd
DJ 600 172,9 - 2,12% - 12,82% Gold $/oz 952,6 -3,95% 8,00%
FTSE 100 3830,1 - 1,40% - 13,62% Rates USA Euro Japan
Nikkei 7280,2 2,12% - 17,83% Central Banks* 0,25 2,00 0,09
Shanghai Comp 2090,5 - 7,90% 14,81% Overnight 0,20 1,20 0,09
Sens ex ( India) 8674,2 - 1,67% - 10,09% 3 Months 0,22 0,90 0,26
MICEX ( Rus s ia) 666,1 3,02% 7,51% 10 Y ears** 2,99 3,11 1,31
Bov es pa ( Bras il) 38183,3 - 3,76% 1,69% *US: Fed Funds; Jap: Overnight; Euro: Ref i
** Euro: German Bund rate So urc e : B lo o m berg
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2-Mar-09 MARSH CHOCOLATE BAR

Economic data preview

Watch in the United-States the release of the preliminary release of the personal income and of the personal spending for January due at
13.30 GMT. The Americans personal income are expected to decline led down by the sharp rise of unemployment and U.S. personal
spending are expected to increase as prices stop dropping in the United-States. Watch as well the release of the ISM manufacturing due
at 15.00 GMT expected to remains stable even if the barrel price stopped dropping but led by the fell of interest rate and by the Obama
plan.

Watch in the Euro Area the final release of the consumer price index for February due at 10.00 GMT and expected to decrease
confirming the preliminary release, as commodity prices are dropping and as the global economic downturn boost prices down./JB

ate

ECONOMY
UNITED-STATES : THE GROSS DOMESTIC PRODUCT SHRANK MOST IN 27 YEARS IN THE FOURTH QUARTER
The preliminary release of the U.S. Gross Domestic Product at the fourth quarter revealed the sharpest shrank since 1982 at 6.2 % (prior -
3.8%). Indeed the credit crunch add to the rise of unemployment is humping consumer spending (71% of the GDP) forcing companies to
cut very sharply inventories and investments, and the global economic downturn is cutting the demand for American goods abroad
generating a sank in exports. Indeed if we look into the breakdown this slumped is mainly due to inventories which are now estimated to
have added 0.2% to GDP, compared to 1.3% initially, the rest of the revision is due to consumer spending which declined at the fastest
pace in almost three decades of-4.3%(prior-3.5%),exports which shrank of 23.6%(prior -19.7%) and gross private investment declining
20.8%(prior -12.3%). The recent gloomy economic data showed that a sharp contraction of the American GDP should occur at the first
quarter of 2009. Hopefully the drop of commodity and energy prices add to the decline of interest rate and the massive Obama revival plan
will necessary have a positive impact on the U.S. economy but not before six to eight months.

EURO ZONE : UNEMPLOYMENT ROSE THE MOST IN 2 YEARS AND INFLATIONS SLOWS IN FEBRUARY
European unemployment rose to 8.2% in January (forecast 8.1%) its highest level since September 2006. Europe is facing the worst
recession since the second world war as the global financial crisis is cutting household purchase power through the credit crunch,
companies are forced to cut their investment and to lay out increasing the lack of demand as a vicious circle. Unfortunately exportations
are not taking over as the global economic downturn is cutting demand for European goods abroad forcing as well companies to cut jobs.
If we look to the unemployment break down Spain is strongly hit (14.8%) as well as France(8.3%) and Germany remains under the area
average with a level of 7.3%. Unfortunately the different economic policy measures taken over the Euro area will not have a positive
impact before six to eight month, meaning that the unemployment will sharply rise in 2009 increasing the probability of a social crisis.In the
mean time final consumer price index confirmed that inflation is no more a threat in the Euro area. Indeed after reaching 4%(YoY) in July
led by a barrel at $147, inflation dropped at 1.1%(YoY) in January (prior 1.6%) as the barrel as been divided by 5 and as the global
economic activity is sharply declining reducing the demand and leading prices down. Core inflation ( excluding food and energy fell more
sharply than expected from 1.8%(YoY) to 1.6% showing than the drop is much deeper than just a decline of energy prices. The downturn
of the labour market and the deepening economic recession revealed that inflation will drop further in the coming months to reach negative
territory called to create a deflation situation. This will be the worst case for the euro area economy as to adjust a demand much lower than
the offer companies will have to cut job again increasing the deflation. Deepening recession and declining inflation are now increasing the
pressure on the European Central Bank to cut its leading rate next Thursday./JB
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2-Mar-09 MARSH CHOCOLATE BAR

VIXindex: impliedvolatilityontheS&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
02/03/2007 02/09/2007 02/03/2008 02/09/2008 02/03/2009 02/03/2007 02/09/2007 02/03/2008 02/09/2008 02/03/2009
Source : Bloomberg Source : Bloomberg

UnitedStates : 10-year Treasuryyield 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
02/03/2007 02/09/2007 02/03/2008 02/09/2008 02/03/2009 02/03/2007 02/09/2007 02/03/2008 02/09/2008 02/03/2009
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
02/03/2007 02/09/2007 02/03/2008 02/09/2008 02/03/2009 02/03/2007 02/09/2007 02/03/2008 02/09/2008 02/03/2009
Source : Bloomberg Source : Bloomberg