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13-May-09 RE TAIL WIND

The focus of the week is today with the April US Retail Sales. At a time when Q1 earnings are mostly over, providing evidence that
the economies have past their worse moment with a “non collapsing anymore” activity since mid February, pessimistic players will be
keen on watching whether this reversing trend in term of slowing activity is lasting or was just a short lived slower motion of a sharp drop
which should resume anytime. As such the Retail sales data today will provide evidence that the US economic recovery is on track thanks
to a lasting reversing and bullish trend which started early March, which will bring further doubts to fully cash overweight fund managers
expecting the activity to fall back down. April belongs to Q2 period, and a good start of quarter could revive the concept of an early
beginning of economic recovery leading top a nice positive growth period, whatever the pace. Any sign of such a scenario would prompt
fund managers to jump in now that equity indices are in the green year to date, and bring our equity index on its 2608 temporary target.
March’s US external trade figures brought more evidence that the rate of decline in both world and domestic activity is easing.
The widening in the trade deficit, from $26.1bn to $27.6bn in March, reversed only part of February’s sharp narrowing from $36.2bn. As a
result, the trade deficit remained close to a nine-year low. The 2.4% monthly fall in exports in March more than reversed the 1.5% rise the
month before. But even that 2.4% drop compares well with the monthly declines of 6% plus that had become the norm since last
September. This supports other evidence suggesting that, while world demand is still declining, it is no longer falling off a cliff. Similarly,
the 1.0% fall in imports was more modest than the average fall of 6% seen in the previous three months, suggesting that the pace at
which domestic demand is plunging has also eased. The recent rebound in the export and import balances of the ISM manufacturing
survey suggests that the rate of decline in both imports and exports will slow further. This supports other evidence suggesting that both
the global and US recessions are now past their low points. Indeed, these data open the door to an upward revision to the preliminary
estimate that GDP fell at an annualised rate of 6.1% in Q1. Moreover, if imports and exports continue to fall at the same pace, as the
recent survey evidence suggests, the higher absolute level of imports means that the trade deficit will continue to narrow, providing a
support to GDP in the coming quarters.
Once more yesterday’s news from the UK did add to the half full glass players. The smaller than expected rise in the UK claimant
count in April is good news. Meanwhile, the headline (3 month growth rate) of average earnings fell into negative territory for the first time
since the data began in the 1960s, dropping from 0.2% to -0.4%. Admittedly, the annual growth rate rebounded slightly, suggesting that
the drag to earnings from lower bonuses is now starting to ease. And excluding bonuses, growth remained far more robust, with the
headline rate at 3.0%. The latest figures on industrial production, trade and the BRC retail sales survey released on Tuesday brought
further encouraging signs that Q1’s plunge in GDP probably marked the absolute low point of the UK recession. March’s 0.6% monthly
drop in industrial production was close to the consensus forecast of a 0.8% fall. But the fall was driven almost entirely by further weakness
in energy extraction and supply. The core manufacturing component fell by just 0.1%, the smallest monthly decline since February 2008.
Combined with the recent improvement in the tone of some of the manufacturing surveys, this offers hope that industry will make a
significantly less negative contribution to overall GDP growth in the second quarter.
We end up in a very classic scenario where equity rise ahead of the economic recovery. Not only macro fundamentals are picking
up and might well fit very soon with the current equity levels, making equity valorisation look cheap, but also flows will be very supportive.
Indeed, the rally in U.S. stocks should continue as the largest money managers shift their record levels of cash into equities, according to
Bank of America Corp. Professional investors had $2.51 trillion in money-market funds on April 27, suggesting they are still shunning risk.
Institutions that avoided equities missed out on the steepest rally since the 1930s, which drove the S&P to a 37 percent surge between
March 9 and May 8. The fear of a Great Depression has prompted investors to flee stocks and seek safety in money-market funds. On
March 9, when the S&P 500 slipped to a 12-year low, institutions had a record $3.55 trillion in money-market funds. "This cash is a future
source of demand for U.S. equities and a contrarian’s bullish signal". This signal might soon not be so contrarian anymore …
Opening flat, we should be resuming the upside rally to reach 2608 on the cash Eurostoxx. Retail sales could be the booster, and if
not the market resiliency should make fund managers jump in on any weakness.
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 59,5 1,3675 96,45 3,19 3,41 0,29 0,99 -1,61 1,19 -0,78 1,06 -1,11 0,30 -2,54 -0,10 -0,89 0,60 US
Perf 1d % 1,92 0,19 -0,01 1,84 bp 1,9 bp 0,02 0,21 -1,92 1,09 -0,92 0,72 -1,73 -0,15 -2,86 -0,52 -1,08 -0,08 Europe
ECONOMIC DATA with impact
Mortgage Applications (11h gmt) / the highest the better / previous was up 2% / minor
Wal Mart earnings today or tomorrow
April US Retail Sales (12h30 gmt) expected flat from previous –1.1% // ex autos 0.2% from –0.9% / the one of the week as it will be
important to see whether macro improvement from March is being confirmed in April / important this week in term of impact possibility /
this expectation represent an improvement from the declines of 2.0% plus that became the norm in the second half of last year.
Business inventories (14h gmt) expected –1.1% from –1.3% / minor as the story behind the data too hard to read
Oil inventories (14h30 gmt)
POSITIVE IMPACTS
VINCI : Q1 revenue €7bn (6.92bn exp) / Order book €23.8 bn at the end of March (+6% yoy) / Confirmed expectations for stabilisation
of toll road income and slight drop in contracting revenue in 2009
EDF : Q1 revenue €21.10bn (20.13bn exp) / Confirmed FY09 financial targets
MEDIASET : Q1 revenue €967.2m / Ebit €139m (111m exp) / Confirmed forecasts for a FY decline in net and operating
PERNOD RICARD completed its capital increase = Oversubscription reached 2.3 times / Proceeds totalled €1.036 bn
ACCOR said it is planning new measures to cut costs and cut back capital expenditure
BG GROUP : China National Offshore Oil signed a deal with BG to buy gas from BG's proposed liquefied natural gas plant in Australia
DEXIA : Q1 Revenues €1.7bn (1.44bn exp) / Expenses €896m (€1bn exp) / Cost of risk €409m (€308m exp) / Tier1 10.7%
K+S : Q1 rev. €1.08 bn (€941m exp) / Operating €174 m (137m exp) / Confirmed 2009 outlook saying recovery should be seen in H2
TELEFONICA : Q1 rev. €13.70bn (13.8bn e) / OIBDA €5.35bn (5.3bn e) / Reiterated guidance for FY, pointing to a 1-3% rise in OIBDA
RENAULT : Nissan up 7% this morning after it forecast a smaller-than-expected operating loss for the next financial year
HSBC is "very confident" it will be able to deliver ROE of between 15 and 19%, despite banks needing to hold more capital (CFO)
ADECCO : Swiss holding group Jacobs Holding wants to increase its stake in Adecco in the longer run (AGM this morning)
NOVARTIS named Jonathan Symonds as deputy CFO
SWEDBANK is open to selling stakes in its subsidiaries in Eastern Europe (Dagens Industri)
EADS : Britain is set to approve the latest order of Eurofighter jets but is examining ways of containing its cost (FT)
COMPASS : Q1 revenue £6.9bn, in line / PTP £405m (379m exp) / Interim div. 4.4 p (+10%) / H1 rev. trends likely to continue into H2
LAGARDERE : Q1 revenue €1.78bn (1.76bn exp) / Keeps 2009 outlook but visibility in advertising remains low
LEGAL & GENERAL : Q1 worldwide new business £382 m (319m exp) / Surplus of £1.6bn and a coverage ratio of 162%
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13-May-09 RE TAIL WIND

UNICREDIT : Q1 Banking Income €6.5bn (In Line) / NII €4.7bn (€4.6bn exp) / Net Commissions €1.85bn (In line) / Core Tier1 6.4%
end-March / Gross impaired loans €44.8bn end-March / Net writedowns of loans, provisions total €1.65bn

INTEL said that its orders and billing patterns so far in the Q2 have been slightly better than expected / gross profit margins should return
to "normal" levels (50-60%) in the next several quarters (and from 45.6% in the Q1)
APPLIED MATERIALS : Q2 sales $1.02bn (906m exp) / EPS loss $0.10, in line / The order backlog at the end of Q2 was $3.16 bn,
down from $4.05 bn at the end of the Q1 / Sees Q3 loss $0.06-0.14 (-0.07 exp) with revenue remaining flat to -15%
NEGATIVE IMPACTS
AIR FRANCE : April traffic passenger –2.8% / Load factor 80.5% / Said cargo traffic continued to deteriorate in April
BULGARI : Q1 revenues €178.1 m (207m exp) / Net loss of €29.3 m (-7m exp) / Sees improvement in April
KBC to book further loss of over €1bn on CDO portfolio (De Tijd) / Requested to have its shares suspended from trading, citing
"several wild rumors" circulating in the market.
TELEKOM AUSTRIA : Q1 revenue €1.20bn (1.25bn exp) / Ebitda €455m (478m exp) / Cut FY revenue outlook
ING : Q1 underlying net loss €305m (€ -170m e) / Pre-tax Banking €519m (€196m e) / Pre-tax Insurance loss €824m (€-400m e)
RIO TINTO down 7% in Australia on growing speculation the global miner is set to launch a rights issue instead of selling $19.5 bn in
stock and assets to China's Chinalco aluminium group
BP : The appointment of a permanent CEO at TNK-BP is not seen as a top priority by Russians / TNK-BP is more than ever far from BP's
control (The Times)
ALLIANZ : Final Q1 : Confirms rev. €27.7bn / Operating €1.4bn, in line / Solv. ratio of 159% / CR 98.5% / Sees 1st signs of reco in life
E.ON : Q1 Sales €25.9bn (€24.6bn e) / EBIT €3.1bn (€3.26bn exp) / Repeats 2009, 2010 earnings target & plans €10bn in asset sales

FREDDIE MAC (80% owned by US State) reported a Q1 loss of $3.14 per share / Provision for credit losses totaled $8.8 bn, compared to
$7bn for Q408, reflecting continued increases in the number of delinquent loans and the ongoing deterioration of housing and credit
market conditions / FRE said it needs $6.1bn from the Treasury …
RESULTS DIVIDENDS EVENTS
Allianz / Generali / Dexia / E.On / ING / Telefonica /
Air Liquide (€2.25) / Bayer (€1.40) / BP (GBp ConocoPhillips AGM / Dexia AGM / JCDecaux
Telekom Austria / Acciona / ThyssenKrupp / Vallourec /
Today 10,64889) / Veolia Environnement (€1.21) / AGM / Safeway AGM / Unilever AGM / TUI AGM /
Lagardere sales / Theolia sales / Bouygues sales / TF1 /
Informa (GBp V) Accor AGM / Puma AGM
Allied Irish Banks interim
Credit Agricole / RWE / Prudential (BMO) / Aegon / Vivendi
(AMC) / Aeroport de Paris / Salzgitter / Premiere AG /
Vinci AGM / Cadbury AGM / Ford AGM / BMW
Vivendi / Richemont / Banca Italease / Banca Monte dei
Thursday Metro (€1.18) / Solvay (€1,7333) AGM / SBM Offshore AGM / ASM International
Paschi di Sien / Banco Popolare / Natixis / British American
AGM
Tobacco / Geophysique / SABMiller / Salzgitter / Theolia /
Portugal Telecom / Rexel / Hochtief / BT Group / Wal Mart
STM analyst meeting / Commerzbank AGM /
Friday Terna / Thales / Belgacom / Gazprom BMW (€0.30) Ingenico AGM / Michelin AGM / Total AGM / Linde
AGM
Alleanza Assicurazioni (€0.30) / Assicurazioni
Generali (€0.15) / Atlantia (€0.37) / Banca Monte
dei Paschi di Siena (€0.013) / Banca popolare di
TMT conf at JP Morgan / Healthcare conf at
Monday Nordjyske bank milano (€0.10) / ENI (€0.65) / Finmeccanica
Deutsche Bank / Schering Plough AGM
(€0.41) / Fondiaria-Sai (€0.70) / Linde (€1.80) /
Mediaset (€0.38) / OMV (€1.00) / Saipem (€0.55)
/ SBM Offshore ($0.465) / Unilever (€0.51)
SAP AGM / Power and Utility conf at Goldman
Air France / Corio / Fortis / TUI Travel / HP (AMC) / Sachs / Omnicom AGM / StatoilHydro AGM / Credit
Tuesday
Vodafone / Home Depot / Campbell Soup Agricole AGM / Biotech and Medical Devices at
Merrill Lynch / Casino AGM
TRADING IDEAS
BUY CAP / SAP / EON / BAYER / ADIDAS / SANOFI / GLAXO / DANONE to play eco recovery + looking good
BUY EDF / FTE / DTE / MERCK / NESTLE / VIVENDI on reversal Head & Shoulder possibility

BUY LUFTHANSA / SELL AIR FRANCE // BUY RDSA / SELL TOTAL // BUY PINAULT / SELL LVMH // BUY VINCI / SELL LAFARGE // BUY
CHEVRON / SELL CONOCOPHILIPS // BUY BAYER / SELL BASF
BROKER METEOROLOGY
FIAT ............................................ RAISED TO BUY FROM NEUTRAL ....................................................................................... BY UBS
IBERIA ....................................... RAISED TO BUY FROM HOLD ............................................................................................... BY RBS
ANGLO AMERICAN .................. RAISED TO BUY FROM HOLD .................................................................................................BY ING
BHP BILLITON .......................... CUT TO HOLD FROM BUY ......................................................................................................BY ING
PHILIPS ..................................... RAISED TO EQUAL WEIGHT ...................................................................... BY MORGAN STANLEY
JCDECAUX ............................... RAISED TO OVERWEIGHT FROM NEUTRAL ......................................................... BY JPMORGAN
SKANSKA .................................. RAISED TO BUY FROM HOLD .............................................................................................. BY UBS
SWISS RE ................................. RAISED TO OVERWEIGHT FROM NEUTRAL ......................................................... BY JPMORGAN
MEDIASET ................................ RAISED TO OVERWEIGHT FROM NEUTRAL ......................................................... BY JPMORGAN
EUROPEAN MEDIA SECTOR ... RAISED TO OVERWEIGHT ....................................................................................... BY JPMORGAN
ABB ............................................ CUT TO UNDERWEIGHT FROM EQUALWEIGHT ...................................... BY MORGAN STANLEY
REPSOL ..................................... CUT TO UNDERWEIGHT FROM NEUTRAL ....................................................................... BY HSBC
ROCHE ...................................... RATED NEW NEUTRAL ......................................................................................BY CREDIT SUISSE
NOVATEK ................................. CUT TO SELL FROM BUY ............................................................................. BY GOLDMAN SACHS
INTERCONTINENTAL ............... CUT TO SELL FROM NEUTRAL ............................................................................................ BY UBS
LAGARDERE ............................ CUT TO UNDERWEIGHT FROM NEUTRAL ............................................................. BY JPMORGAN
TELEVISION FRANCAISE 1...... CUT TO NEUTRAL .................................................................................................... BY JPMORGAN

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO

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13-May-09 RE TAIL WIND

CHART OF THE DAY

U.S. Trade balance SA ($ billion)
Since 2005

-25

-30

-35

-40

-45

-50

-55

-60

-65

-70
2005 2006 2007 2008 2009

Source : Source : U.S. Census Bureau

After declining for seven consecutives months and reaching its lowest level since November 1999 at $ 26.1 billion, the U.S. trade deficit
widened in March to reach $ 27.6 billion (forecast $ 29.0 billion).

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
3.00 GMT China Retail sales April 14,5%YoY 14,7%YoY
3.00 GMT China Industrial production April 8,6%YoY 8,3%YoY
5.00 GMT Japan Bankruptcies April 14,1%YoY
7.45 GMT France Current account March - € 2,2 bn
7.45 GMT France Consumer price index April 0,1%,+0,1%YoY 0,2%,+0,2%YoY 0,2%,+0,3%YoY
10.00 GMT Euro area Industrial production March -1,0%,-17,6%YoY -2,3%,-18,4%YoY
12.00 GMT United States MBAmortgage applications 8 May 2,0%
13.30 GMT United States Advance retail sales April 0,5% 0,0% -1,2%
Advance retail sales less autos April 0,4% 0,2% -1,0%
15.00 GMT United States Business inventories March -1,1% -1,3%

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

DJIA 8469,1 0,84% - 3,50% EUR/USD 1,3695 2,66% -2,02%
S&P 500 908,4 0,59% 0,57% EUR/JPY 132,24 -0,82% 4,14%
Nas daq 1715,9 - 2,15% 8,81% USD/JPY 96,56 1,81% 6,14%
CA C 40 3231,1 0,93% 0,41% Oil Price % 5 Days Ytd
DA X 4854,1 0,02% 0,91% Brent $/b 58,2 4,72% 39,10%
Eur os tox x 50 2424,3 1,33% - 0,95% Gold Price % 5 Days Ytd
DJ 600 206,2 0,88% 3,94% Gold $/oz 927,1 1,72% 5,09%
FTSE 100 4425,5 2,27% - 0,20% Rates USA Euro Japan
Nikkei 9359,0 5,33% 5,64% Central Banks* 0,25 1,00 0,11
Shanghai Comp 2649,4 1,99% 45,51% Overnight 0,15 0,43 0,11
Sens ex ( India) 12147,5 0,22% 25,92% 3 Months 0,18 0,64 0,20
MICEX ( Rus s ia) 1059,5 11,86% 71,02% 10 Y ears** 3,20 3,41 1,47
Bov es pa ( Bras il) 50325,8 - 0,68% 34,02% *US: Fed Funds; Jap: Overnight; Euro: Ref i
** Euro: German Bund rate So urc e : B lo o m berg
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13-May-09 RE TAIL WIND

ECONOMIC DATA PREVIEW

Watch in the United-States the release of the retail sale for April due at 13.30 GMT, expected to get back to positive territory lead by
the good resistance of household consumption, by the rebound of the Conference Board index and by the small price increase
expected in April.

Watch in the Euro area release of the industrial production for March due at 10.00 GMT expected to drop at a slower pace but which
should remained at a very low level from a year ago. Watch as well in France the release of the consumer price index for April due at
7.45 GMT, France’s inflation is expected to drop and France is getting closer and closer to a deflation situation./JB

ECONOMY
UNITED-STATES : THE TRADE DEFICIT WIDENED IN MARCH
After declining for seven consecutives months and reaching its lowest level since November 1999 at $ 26.1 billion, the U.S. trade deficit
widened in March to reach $ 27.6 billion (forecast $ 29.0 billion). Indeed after rising of 1.5 % in February exports dropped of 2.4% led by
the global economic downturn cutting the demand for U.S. goods abroad. The breakdown by sector is revealing the following decline:
-13.8% for civilian aircrafts, -7.4% for telecom equipment, -5.2% for capital goods and -4.2% for consumer goods. Nevertheless this drop
of exports remained widely under the average since September around 6% showing that the rate of decline of the world economy is
slowing down. Meanwhile the rate of decline of domestic activity is easing as well, indeed after dropping of 5.1% in February imports
dropped of only 1.0% in March (lead by a fell in demand for industrial supplies) which was as well more modest than the average fall of
6% since previous months. If we look ahead as the global economic downturn is easing we can say that the rate of decline in both
exports and imports will slow further.

CHINA : TRADE SURPLUS NARROWED IN APRIL

After increasing from $ 4.84 billion in February to $ 18.56 billion in March China’s trade surplus surprisingly dropped in April to reach
$ 13.00 billion (forecast $ 20.30 billion). Indeed despite the stabilisation of the global economic downturn exportations dropped of 22.6%
(forecast 15.3%) as total trade with the U.S. fell 17.1% showing that even if household consumption remained at an encouraging level in
the United-States importations from China are significantly affected. Meanwhile total trade with the European union fell 24.1%. On the
other hand imports dropped of 23.0% (forecast 22.4%) showing that domestic demand is significantly hit . China’s trade balance is
strongly linked to the U.S. economic recovery and the recent American economic data are showing us that ground floor has been
reached in the United-States.

GERMANY : INFLATION ACCELERATE IN MAY

German’s consumer price index rose from -0.1% in March to 0.0% in April, meanwhile from a year ago inflation accelerated to reach
0.7% after reaching the low level of 0.5% in March. There are three mains explanations of the rise of German consumer price, first
prices were pushed higher as the Easter break prompted hotel and travel companies to increase costs, second prices were lead by the
slight rebound of energy and commodity prices and finally by the global economic downturn generating a lake of demand is forcing
companies to keep low prices./JB
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13-May-09 RE TAIL WIND

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
14/05/2007 14/11/2007 14/05/2008 14/11/2008 14/05/2009 14/05/2007 14/11/2007 14/05/2008 14/11/2008 14/05/2009
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
14/05/2007 14/11/2007 14/05/2008 14/11/2008 14/05/2009 14/05/2007 14/11/2007 14/05/2008 14/11/2008 14/05/2009
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
14/05/2007 14/11/2007 14/05/2008 14/11/2008 14/05/2009 14/05/2007 14/11/2007 14/05/2008 14/11/2008 14/05/2009

Source : Bloomberg Source : Bloomberg