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16-Mar-09 WHAT IF …
Equities put in a notably stronger performance last week, which might make the so expected bottom happen at last. Key
valuation metrics are now looking attractive compared to their long-run averages. While some strategists are still finding too soon to play
equities ahead of the economic recovery more than 6 months ahead, these same strategists should not forget that this time is a very one
off with a lot of incentives sent by worldwide governments, making this crisis (maybe) not as bad, and not as long as most of them are
forecasting through their parallel with the Great depression. The Term Asset-Backed Securities Loan Facility (TALF), which could
eventually lend up to $1000bn to kick-start the asset-backed securitisation market, is due to begin later this month. Similarly, while the
Fed has pledged to purchase at least $500bn of mortgage-backed securities, it currently owns less than $100bn. And if it was not enough,
the Fed would be “prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would
be particularly effective in improving conditions in private credit markets.” Who would take the risk to miss such attractive entry levels,
whether it will be for a 100% rally or 50% or 200% ?? The deleverage process on top of that being soon achieved, with a strong possibility
that the end of March month fits with the end of such an outflow .
The main highlight this week is the two-day FOMC meeting which concludes on Wednesday. Otherwise, the key data events
include industrial production numbers today might show, once more, that economic activity has been bottoming in Q4, housing starts on
Tuesday will be glanced, and CPI on Wednesday is expected to show that the US economy narrowly avoided outright deflation for
another month . A rise of 7% m/m in gasoline prices in February will provide the main upward impact. On its own, this would be enough to
generate a 0.4% rise in the overall CPI index. Otherwise, the core consumer prices should edge up by 0.1% m/m. A 0.3% monthly rise in
the overall index would push the annual rate up from 0.0% in January to 0.1%. We will also take a look at the reports from FedEx (FDX),
General Mills (GIS), Oracle (ORCL), and Nike (NKE). And let's not forget the important quarterly option expiries due at the end of the
week both in Europe and in the US
Both the G20 and the Opec meeting this weekend did not bring much new. The Opec decided to leave the output quotas
unchanged, such as the market was playing on Friday, while the G20 statement said the G20's "key priority" is to restore lending by
tackling problems in the financial system and dealing with toxic assets. In a separate document, the G20 outlined a plan focused on
providing liquidity, injecting capital into institutions, protecting savings and deposits and strengthening bank balance sheets. The weekend
meeting aimed to lay the groundwork for a London summit of G20 leaders early next month. Geithner said he will unveil the bad loans
purchase details anytime soon. The world's largest financial institutions have urged the G20 leaders to endorse the "bad bank" approach
to dealing with the credit crisis. Under this approach, governments would buy toxic assets from banks at a price higher than the prevailing
market rates. The G20 also vows to restore lending and boost IMF funding
So, what if the economic activity bottom occurred in Q4 2008. Already the Retail sales in February declined just 0.1% versus a
consensus estimate that called for a 0.5% decline. Excluding autos, retail sales increased 0.7%. Some confidence surveys start to be
stabilizing if not slightly rebounding, and the Fed is just warming up. On the Eurostoxx, any break through 2080 area though is required to
confirm a nice bullish ride. Option expiry coming at the end of the week might lock the market within a range with long gamma players
hedging their delta whenever needed.
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 44,6 1,2913 98,09 2,90 3,06 0,64 -0,71 0,23 3,11 -0,12 0,64 -0,09 1,40 1,26 0,77 0,38 0,75 US
Perf 1d % -4,60 -0,12 -0,07 1,29 bp 5,2 bp -0,92 -1,68 -2,94 1,47 -1,29 -1,28 -1,45 0,76 -0,15 -0,75 -0,98 -0,60 Europe
ECONOMIC DATA with impact
Since today, Greek auction will be closed at 16.00 GMT.
Empire State Manufacturing Index (12.30 GMT) / minor / the higher the better
Net Long-Term TIC Flows (13.00 GMT) / minor
Industrial Production (13.15 GMT) expected -1.5% / would be a less severe decline than the falls of 2.4% and 1.8% seen in December
and January / interesting as to see whether Q1 is better than Q4
NAHB housing index (17. GMT) / still low level, the higher the better / minor at this stage
POSITIVE IMPACTS
BARCLAYS said it had a strong start to 2009 / The bank would have reached potential buyers for its fund management unit iShares, part
of Barclays Global Investors / The sale could raise £3-5bn & could help it avoid joining the UK govt’s insurance scheme for bank assets
DEUTSCHE BANK said it does not need the aid of the German state + reiterated its ROE target of 25% before taxes / Separately, DBK
received $11.8 bn out of AIG's $180 bn rescue package making it the 3rd largest company of those benefiting from the bail out
FRENCH BANKS do not need a plan to deal with their toxic assets (Bank of France Governor)
ERICSSON has won a $2bn service contract from SPRINT (Affarsvarlden)
LVMH/ PPR / RICHEMEONT : China Investment Corp. is looking for ways to invest in the luxury goods sector as some of the world's
most famous brand names consider alternative funding options (South China Morning Post)
METRO : Haniel Group is looking to replace its chairman, Eckhard Cordes, who is also CEO of Metro
ALCATEL : Reliance Communications has entered into a technical collaboration with Alcatel to build a hybrid data network for its data
business (Times of India)
ABERTIS’ main shareholders may be willing to open the company's doors to a new industrial partner (Cinco Dias)
FERROVIAL : The UK Competition Commission is exp. to reverse its decision to force BAA to sell Edinburgh airport (The Independent)
OIL : As expected, the OPEC decided to keep its production unchanged until May 28
D. BOERSE : Hedge funds TCI & Atticus have parted with a large share of their holdings in DB1 / Separately, D. Boerse CEO said a
large merger with, for example, the Intercontinental Exchange is a "relevant option" worth thinking about (WirtschaftsWoche)
ENEL will boost the free-float of Endesa's capital when conditions in the financial markets are more favorable (Corriere della Sera)
SWEDBANK is “one of the best capitalised in Europe” (Chairman in daily Dagens Industri)

TO BE NOTED : As of Today, the following changes in the Athens Stock Exchange are effective : 1. Closing auction (Local Times)
PRE CLOSING 1700-1703 / RANDOM CLOSING AUCTION 1703-1704 / TRADING AT CLOSING PRICE 1704-1720 / 2. Change in
price ticks : Stocks trading between €0.01 to €59.99 = Tick €0.01 / Stocks trading > €60.00 = Tick €0.05
NEGATIVE IMPACTS
PORSCHE (Minor) : Hedge funds might sue the German carmaker for allegedly causing VOW's share price to rise extraordinarily (FT)
SCHNEIDER’s CFO is to become Carrefour's new CFO (French business newsletter La Lettre de l'Expansion)
TELECOM ITALIA’s EBITDA margin will remain stable in 2009 at 38.8% before rising above 39% in 2011 (Il Sole 24 Ore)
RIO TINTO : Australia's Foreign Investment Review Board will take an extra 90 days to scrutinize Chinalco's proposed $19.5 bn
investment in Rio (Sydney Morning) / Separately, shareholders in Rio Tinto are trying to force the company to table a special resolution
which could block the bailout by Chinalco (The Observer)
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16-Mar-09 WHAT IF …
HSBC : A group of investors has sued HSBC and Bank of NY Mellon, alleging that the banks failed to protect Hong Kong buyers that
bought into complex derivative instruments known as “minibonds” linked to Lehman /The class-action lawsuit calls for $1.6bn of collateral
held by HSBC and BNY Mellon to be released to investors
HRX : The German government plans a takeover offer for HRX should a law for the expropriation of shareholders fail (Der Spiegel)
BRIT INSURANCE has abandoned plans for a £150 m rights issue amid signs that the appetite of institutional investors for discretionary
fund-raising is in steep decline (The Sunday Telegraph)
UK BANKS : The U.K. FSA will unveil a blueprint for international financial regulation on Wednesday, paving the way for a global
crackdown on the “shadow” banking system and high-risk trading strategies (The Sunday Times and Sunday Expres)
INTESA will seek to apply for bonds worth about €3bn under an Italian govt program to boost banks' capital (Il Sole 24 Ore) / Separately,
Intesa’s CEO said he is in talks with GENERALI on whether to continue or end their bancassurance JV , Intesa Vita
BANCO POPOLARE will launch a buyout offer for BANCA ITALEASE at €1.50/sh. and delist it / Italease closed at €1.316 on Friday
/ Italease said FY08 writedowns on doubtful and non-performing loans amount to € 850m / Gross doubtful loans rose to €3.7bn
from €202m (90% represented by real estate leases) / Postpones board meeting to 28 March from 19 March.
ING : Bondholders have launched 4 U.S. class actions seeking damages from the financial services group and former management
DEUTSCHE TEL and trade union Verdi agreed on a 5.5% wage hike over 24 months for 50,000 workers
RESULTS DIVIDENDS EVENTS
Today Acerinox / Linde / Steria Endesa (€ 5.897) / Roche (CHF 5.00)
Tuesday Cimport cimentos / Mediaset / Adobe / Goldman Sachs
Baloise / BMW / Unicredit / Inditex / Lanxess / FedEx / Oracle / Land Securities (GBp 16.50) / HSBC ($ 0.111111) / Standard Life
Wednesday HP AGM
General Mills / Nike (GBp 8.555556) / Swiss Re (CHF 0.10)
Thursday Hermes / Prudential / Aegis / HeidelbergCement Novo Nordisk (DKK 6.00)
Friday Generali / Intesa San Paolo / Alleanza Assicurazioni HSBC rights issue 5 per 12
TRADING IDEAS
BUY SANOFI / BNP / ALLIANZ / DTE / VIVENDI / SAP on double bottom possibility still
BUY AXA / AEGON / SANTANDER / BBVA / PHILIPS / TELEFONICA / THYSSEN on reversal Head & Shoulder possibility

BUY BAYER / SELL BASF // BUY DANONE / SELL NESTLE / BUY METRO / SELL AHOLD // BUY ALLIANZ / SELL AEGON
BROKER METEOROLOGY

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

NH HOTELES...............................RAISED TO NEUTRAL FROM SELL ..................................................................................... BY UBS
ENI................................................RAISED TO OVERWEIGHT FROM NEUTRAL ...................................................................... BY UBS
BELGACOM .................................RAISED TO HOLD FROM SELL ................................................................................ BY CITIGROUP

HENKEL .......................................CUT TO SELL FROM HOLD .................................................................................................. BY RBS

HOLCIM........................................CUT TO UNDERWEIGHT FROM EQUALWEIGHT ...................................... BY MORGAN STANLEY
HANNOVER RE ...........................CUT TO UNDERWEIGHT FRO NEUTRAL............................................................... BY JP MORGAN

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO

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16-Mar-09 WHAT IF …
CHART OF THE DAY
US trade balance
since 2000

-20

-25
-30

-35
-40

-45
-50
-55
-60

-65
-70
00 01 02 03 04 05 06 07 08 09

Source : Bloomberg

A final push from lower oil prices sent the U.S. trade deficit down to a six year low of $36 billion in January. Nevertheless as oil prices
are getting stable at roughly $45 there is little scope for any further narrowing of the petroleum-related deficit.

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
00.01 GMT United Kingdom Rightmove house prices March 1,2%, -9,1%YoY
10.00 GMT Euro area Consumer price index February + 0,4 %, 1,2 %YoY + 0,4 %, 1,2 %YoY -0,8%, +1,1% YoY
10.00 GMT Euro area Consumer price index core (ex food and energy) February +1,6% YoY +1,6% YoY
12.30 GMT United-Sates Empire manufacturing March -33,00 -34,65
13.15 GMT United-Sates Industrial production February -1,3% -1,8%
13.15 GMT United-Sates Capacity utilization February 71,7 % 71,0% 72,0%
17.00 GMT United States NAHB housing market index March 9 9

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

DJIA 7224,0 9,13% - 17,69% EUR/USD 1,2910 2,38% -7,59%
S&P 500 756,6 10,79% - 16,24% EUR/JPY 126,80 -1,70% 0,09%
Nas daq 1431,5 10,68% - 9,23% USD/JPY 98,23 0,63% 7,72%
CA C 40 2705,6 6,75% - 15,92% Oil Price % 5 Days Ytd
DA X 3953,6 7,83% - 17,81% Brent $/b 43,3 -2,39% 3,57%
Eur os tox x 50 1969,5 8,38% - 19,53% Gold Price % 5 Days Ytd
DJ 600 168,6 5,77% - 15,02% Gold $/oz 926,3 0,50% 5,05%
FTSE 100 3753,7 6,56% - 15,35% Rates USA Euro Japan
Nikkei 7704,2 5,52% - 13,04% Central Banks* 0,25 1,50 0,09
Shanghai Comp 2145,7 - 2,93% 17,85% Overnight 0,05 0,70 0,09
Sens ex ( India) 8740,6 3,67% - 9,40% 3 Months 0,18 0,67 0,24
MICEX ( Rus s ia) 749,3 11,52% 20,95% 10 Y ears** 2,90 3,06 1,31
Bov es pa ( Bras il) 39015,4 5,15% 3,90% *US: Fed Funds; Jap: Overnight; Euro: Ref i
** Euro: German Bund rate So urc e : B lo o m berg
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16-Mar-09 WHAT IF …
ECONOMIC DATA PREVIEW
Watch in the United-States the release of the industrial production and the capacity utilization for February due at 13.15 GMT. The
U.S. industrial production is expecting to pursue its drop trend as the national and the foreign demand are very weak and as the ISM
survey remained at a very low level. Meanwhile the capacity utilization should stabilized at its lowest level.

Watch in Euro area the release of the consumer price index for February due at 10.00 GMT and expected to increase as the energy
prices slightly rose./JB

ECONOMY

UNITED-STATES : THE TRADE DEFICIT NARROWED TO A SIX YEAR LOW IN JANUARY

A final push from lower oil prices sent the U.S. trade deficit down to a six year low of $36 billion in January (forecast -$ -38).
Nevertheless as oil prices are getting stable at roughly $45 there is little scope for any further narrowing of the petroleum-related
deficit. Led by the deep recession and the credit crunch, U.S. imports collapsed of 6.6% in January, all sectors are hit from oil to
Japanese automobiles. As the global economic downturn is cutting demand for American goods abroad, exportations dropped sharply
of 5.7%. American exports have slumped at a 44% annual pace in the most recent six moth of data while imports shrinking 51 % most
likely the most since the great depression. Looking at the detail the weakness are everywhere ,capital goods, consumer goods,
exports and imports all trade whatever what type of goods or in which direction are fallen off. Nevertheless the drop of the interest
rate, the drop of energy prices add to the strong revival plan should boost the economy which should start to recover this summer.

EURO AREA : RETAIL SALES DROPPED FOR AN EIGHT MONTH FROM A YEAR AGO IN JANUARY
European retail sales fell for an eight months from a year ago in January of 2.2% (forecast -2.3%) as the global economic downturn
eroded consumer confidence and as the credit crunch is sharply cutting household purchase power. As this data is released in value
the sharp drop of inflation in the euro area (felling from 4.0% YoY in July to 1.1% YoY January) impacted negatively on the retail sales
from a year ago. On the other hand the retail sales increased of 0.1% in January from -0.3% in December, but it must be noticed that
the monthly data are volatile and frequently revised. As inflation is on a dropping last trend the retail sales should drop in the coming
months in value. If we look to the core retail sales (excluding food and energy) we can see an increase of 0.4% in January and a drop
of 2.2% from a year ago showing that prices of energy and food increased more than the average in January./JB
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16-Mar-09 WHAT IF …
VIXindex: impliedvolatility onthe S&P 500 $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
16/03/2007 16/09/2007 16/03/2008 16/09/2008 16/03/2007 16/09/2007 16/03/2008 16/09/2008
Source : Bloomberg Source : Bloomberg

UnitedStates : 10-year Treasury yield 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
16/03/2007 16/09/2007 16/03/2008 16/09/2008 16/03/2007 16/09/2007 16/03/2008 16/09/2008
Source : Bloomberg Source : Bloomberg

Oil : Brent ($/b) Forex: Eurovs 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
16/03/2007 16/09/2007 16/03/2008 16/09/2008 16/03/2007 16/09/2007 16/03/2008 16/09/2008
Source : Bloomberg Source : Bloomberg