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3-Apr-09 THE LAST OF THE MOHICANS

The Employment report at last out, and this is today. The last biggest reason for bear guys to tell you that the improving macro
data we did attend are irrelevant since the poor employment situation is bound to spoil the improving background sooner or later. The
problem in this theory is that it is related to the past, and the current situation never happened before. Meaning the quantitative models as
well as economists looking at history to try and predict the coming economic outcome can’t predict anything more than your 4 year kid
would. Or even worse, your 4 year kid would profit from its inexperience to tell you that things are improving and so much money can
only lead to some recovery which might happen sooner rather than later, and prompt some sharp economic recovery which the indices
are already playing. Will also remind that the equity indices rebound is an important economic component, as well as the housing sector
in term of wealth effect. Add to all this some energy and food prices drop, combined to the falling mortgage rates and you better
understand the resilient consumption data to be expected, making the latest stabilisation and little rebound the start of a full recovery.
The UK example is just amazing. Bear guys will remind you it is far from being a trend, but the sharp and aggressive response from
officials in such a leveraged economy prove to be efficient. The Bank of England’s latest Credit Conditions Survey was encouraging in
suggesting that lenders intend to start loosening credit conditions. The initial impact of the Monetary Policy Committee’s first foray into
quantitative easing has been fairly positive, with bond yields falling sharply. This better explains that the housing prices March rise might
not be as a surprise as most economists are telling us. Same old story, the market correction in the UK might be over, thanks to
historically low long term yields, and falling mortgage rates. Banks being at last keen on lending. Same as for the macro data, just a
stabilisation of the housing market is enough to be equity supportive as we no longer can think “Great Depression” such as the indices
were pricing. It may have started the same way, but officials response have been fast, big and historical.
Chinese manufacturing PMI out 52.4 vs 49 in February was good news once more yesterday, picturing the speed at which the
stimulus has reached the economy there, being the first time above the 50 psychological level, and shading the soft move from the ECB.
Indeed the 25bp interest rate cut to 1.25% is a disappointment given expectations of a 50bp cut and will add to concerns that the Bank will
lag further and further behind in its support for the economy. A less worrying interpretation is that, with the deposit rate already at just
0.25%, the ECB feels that it has already done all it can with official interest rates. If that’s right, the Bank might be ready to move on to
bolder unconventional policies such as asset purchases to support the economy, which should be announced next month.
th
London G20 summit was in the end just a broken window in RBS, nothing else, no twin tower 11 Sept attack etc… The Summit has
failed to break any new ground on a global fiscal stimulus or support for the financial sector (which played it positively earlier in the week
and suffered from a little and healthy profit taking ahead of the employment report), but there has at least been agreement on generous
increases in funding for the IMF and additional trade credits. This is perhaps the most that could realistically have been expected.
Yesterday’s rise might so predict some better days, the volume was big given the new reduced market capitalization (5.2 bn vs 2.3
roughly in average the last 6 days on the CAC for instance), while the gap has more than been closed on the Eurostoxx (2176/2193)
when reaching 2222 on the cash index. One of our old tweak says that when you step that much over a gap, whatever the short term
consolidation to occur just behind, it does predict some higher levels for the coming months. So, in such a context the Employment report
might just be a reason for a healthy consolidation, being the last of the Mohicans in term of depressing macro data. Some fundamental
inflows should occur as soon as on Monday, fundamental investors will hardly wait much longer, cash not that king anymore…
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 51,9 1,3416 99.6 2.757 3,16 4,21 3,74 3,11 0,23 3,15 3,09 5,38 1,40 4,28 2,87 3,29 2,79 US
Perf 1d % 5,59 -0,34 0.2 0.03 16,6 bp 4,33 4,19 3,55 0,91 4,10 3,46 6,40 1,32 4,99 3,54 3,96 3,40 Europe
ECONOMIC DATA with impact
Employment report (12h30 gmt) expected –660k from previous –651k jobs / rate 8.5% from 8.1% / a better data would be welcome and
a very strong boost for equity indices, but the employment should only get better in the next few months once the stimulus is deeply
reaching the real economy and confidence gradually coming back. Might be worth play long as a report is very much played already,
better picturing the strength of the latest equity rebound and its potential / interesting
ISM services (14h gmt) expected 42 from previous 41.6 / interesting to see whether there are some signs of stabilisation in here too,
such as the recent rebound in core retail sales growth was showing lately.
Bernanke to speak on rebuilding the credit markets (16h30 gmt)
POSITIVE IMPACTS
TECHNIP has not seen any existing contracts renegotiated this year, and the beginning of 2009 was in line with group plans (CEO)
ROLLS-ROYCE’s sales will likely be flat this year but could potentially double next year as the global economy is expected to recover and
as the firm introduces new models.
STAN. CHARTERED passed HSBC to become Hong Kong’s top mortgage lender in March (HK Economic Journal) / Separately,
Standard Chartered has entered a partnership with the World Bank to support emerging market banks with $7.5bn to $10bn (CNBC)
GERMAN BANKS : Germany’s govt plans to meet next week to discuss the “bad bank” model for toxic bank assets (FAZ)
SWEDEN BANKS : Government extended a guarantee scheme for new borrowing by the banks for 6 months + said it would also offer to
secure a wider basket of LT loans / Only SWEDBANK has signed up to the scheme
KPN agreed to make additional payments to the pension funds up to a maximum of €390 m over the coming years

NEGATIVE IMPACTS
BAYER’s Chief Executive doesn't see a quick end to the financial crisis (German press) / In particular, the firm's MaterialScience unit has
suffered from the drop in business partners and “inventories are huge”
NOVO NORDISK : A U.S. advisory panel handed Novo Nordisk a split ruling (6-6) on whether liraglutide (potential blockbuster in diabete)
was safe enough to be put on the market / The final decision now rests with the FDA
GIVAUDAN : Q1 sales SFR976m (999m exp) mainly due to flagrance unit / Confident to achieve the announced savings target of CHF
200 m by 2010 and therefore to reach its pre-acquisition EBITDA margin level of 22.7% by 2010
UBS : U.S. authorities arrested & charged an accountant in Florida in the first of what they said could be a series of tax evasion
prosecutions of American clients of UBS
BP : Alaska is seeking as much as $1 bn from BP for lost revenues due to prod. shutdowns in the wake of its 2006 Prudhoe Bay oil spill
ANGLO-AM. has priced a 2 tranche bond offering of $1.25bn 9.375% senior notes due 2014 and $750 m 9.375% senior notes due 2019

RESEARCH IN MOTION : Q4 sales $3.46 bn ($3.4 bn exp) / EPS $0.90 ($0.84 exp) / Sees EPS of $0.88-0.97 ($0.82 exp) with sales of
$3.3-3.5 bn ($3.35 bn exp) / Approximately 3.9 m net new BlackBerry subscriber accounts were added in the quarter (3.48 m exp)
MICRON TECHNOLOGY : Q2 loss of $0.97/sh., including items (may not be comparable to - $0.64 expected) / Sales $993 m ($1.14 bn
exp) / Imbalance of supply and demand for semi. memory products continued in the Q2, resulting in significant decreases in the ASP…
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3-Apr-09 THE LAST OF THE MOHICANS

SUNMICRO. & IBM are in the final stages of negotiations to merge / The companies are now discussing a deal in which IBM would pay
$9.55 a share for Sun, about $1 a share lower than Sun previously expected (WSJ) / JAVA’s close $8.21
RESULTS DIVIDENDS EVENTS
Acerinox ( €0.10) / Nordea Bank ( €0.20) / Svenska
Today Givaudan sales Neste Oil AGM / Merck KGaA AGM / TIM AGM / MAN AG AGM
Cellulosa AB (SEK 3.50)
Vallourec to discuss dividend / Telecom Italia EGM / HSBC end of
Monday
Rights Issue
Tuesday Lukoil / Alcoa (AMC) / BB&B Skanska (SEK 5.25) / Zurich Fi (CHF 11.00)
Fed to study the end of short selling forbiden (return of the ''uptick rule")
BG Group (GBp 7,277778) / Fortum (€1.00) / Prudential / Intel Developper Forum / Sulzer / Belgacom AGM / Schlumberger
Wednesday Constellation Brands
(GBp 14,34444) / Sampo (€0.50) / Unibail-Rodamco (€1.40) AGM / United Technologies AGM / Daimler AGM (08.00 GMT) /
Telecom Italia AGM / Daimler AGM
Thursday Chevron Daimler (€0.60) / Givaudan (CHF 10.00) / KPN (€0.40) Klepierre AGM
TRADING IDEAS
BUY « SIEMENS / NOKIA / BASF / AEGON / AIR FRANCE / ENI / AIR LIQUIDE » to play strong figures as kind of island reversal
BUY BAYER / ROCHE / MUNICH RE / L OREAL / EON / LAFARGE on reversal Head & Shoulder
BUY FTE / PHILIPS / ACCOR on double bottom possibility & BUY BNP / AXA to play gap closure above soon

BUY DAIMLER / SELL BMW // BUY LAFARGE / SELL HOLCIM // BUY FTE / SELL DTE // BUY RIMM / SELL APPLE // BUY PFIZER / SELL
SCHERING

BROKER METEOROLOGY

METRO .........................................RAISED TO BUY FROM HOLD ................................................................................................BY ING

JOHNSON MATTHEY..........MATTHEY RAISED TO OUTPERFORM FROM NEUTRAL........................................BY CREDIT SUISSE
VODAFONE..........................RAISED TO OUTPERFORM FROM NEUTRAL ..........................................................BY CREDIT SUISSE
CONTINENTAL ....................RAISED TO NEUTRAL FROM UNDERWEIGHT ......................................................................... BY HSBC
VALEO .................................RAISED AT NEUX OVERWEIGHT............................................................................................... BY HSBC
VALLOUREC .......................RAISED TO EQUALWEIGHT FROM UNDERWEIGHT........................................ BY MORGAN STANLEY
EUROPEAN CARMAKERS ... RAISED TO OVERWEIGHT FROM MARKETWEIGHT ............................................BY CREDIT SUISSE

NORTHERN FOODS............CUT TO NEUTRAL FROM OUTPERFORM ................................................................................. BUY UBS

PORTUGAL TELECOM .......CUT TO NEUTRAL ......................................................................................................BY CREDIT SUISSE

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO

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3-Apr-09 THE LAST OF THE MOHICANS

CHART OF THE DAY

Refi rate of the European Central Bank and Euro zone GDP
since 1996
a/a, %
5,0 5,0

4,5
4,0

4,0
3,0
3,5

2,0
3,0

2,5 1,0

2,0
0,0

1,5
-1,0
1,0

-2,0
0,5

0,0 -3,0
96 97 98 99 00 01 02 03 04 05 06 07 08 09

Taux refi de la BCE - G - PIB - D -

Source : Bloomberg

Despite the recent declaration of Mr Trichet saying that he will do everything including using non conventional tools to get the euro area
out of the recession, despite the sharp rise of the unemployment increasing the social risk and despite the fact that euro zone’s inflation
is getting close to 0% (YoY) the European Central Bank cut its leading rate of 0.25bp only (forecast 0.50%) to reach 1.25%.

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
8.50 GMT France PMI services (final) March 42,9 42,9
8.55 GMT Germany PMI services (final) March 41,7 41,7
9.00 GMT Euro zone PMI services (final) March 40,1 40,1
9.00 GMT Euro zone PMI composite (final) March 37,6 37,6
9.30 GMT United Kingdom PMI services March 43,5 43,2
13.30 GMT United-States Employment report March
Unemployment rate March 8,2% 8,5% 8,1%
Change in Nonfarm payrolls March - 620 0000 - 660 000 -651 000
Change in Manuf payrolls March - 160 000 -168 000
Average hourly earnings March 33,3 33,3
Average weekly hours March +0,2% +0,2%,+3,5% YoY 0,2%,+3,6% YoY
15.00 GMT United-States ISM services March 42,5 42,0 41,6
17.00 GMT United-States Ben Bernanke speaks at Fed Conf in Charlotte

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

DJIA 7978,1 0,70% - 9,10% EUR/USD 1,3407 0,96% -3,99%
S&P 500 834,4 0,23% - 7,63% EUR/JPY 133,53 -2,72% 5,21%
Nas daq 1602,6 1,00% 1,62% USD/JPY 99,59 -1,79% 9,03%
CA C 40 2992,1 3,46% - 7,02% Oil Price % 5 Days Ytd
DA X 4381,9 2,88% - 8,90% Brent $/b 52,8 3,86% 26,29%
Eur os tox x 50 2216,5 2,83% - 9,44% Gold Price % 5 Days Ytd
DJ 600 188,1 5,11% - 5,17% Gold $/oz 903,5 -2,10% 2,46%
FTSE 100 4125,0 5,10% - 6,97% Rates USA Euro Japan
Nikkei 8732,9 0,97% - 1,43% Central Banks* 0,25 1,25 0,11
Shanghai Comp 2435,8 2,70% 33,78% Overnight 0,15 0,73 0,11
Sens ex ( India) 10348,8 3,46% 7,27% 3 Months 0,21 0,73 0,23
MICEX ( Rus s ia) 837,9 - 1,37% 35,25% 10 Y ears** 2,76 3,16 1,42
Bov es pa ( Bras il) 43736,5 2,70% 16,47% *US: Fed Funds; Jap: Overnight; Euro: Ref i
** Euro: German Bund rate So urc e : B lo o m berg
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3-Apr-09 THE LAST OF THE MOHICANS

ECONOMIC DATA PREVIEW

Watch in the United-States the employment report due at 13.30 GMT expected to reveal a rise of the unemployment rate which
should reach 8.2% its highest level since 1982, meanwhile the nonfarm payroll should slightly improve. Watch as well the ISM service
due at 15.00 GMT expected to slightly increase led by the good resistance of the American consumption./JB

ECONOMY

UNITED-STATES: INITIAL JOBLESS CLAIMS ROSE THE MOST SINCE 27 YEARS AND CONTINUING CLAIMS CLIMBED TO AN HISTORICAL HIGH
The employment situation is sharply deteriorating in the United-States. Indeed the initial jobless claims rose from 657 000 to 669 000
the highest level since 1982 and continuing claims climbed from 5 567 000 to 5 728 000 their highest level on record. These gloomy
data are not really a surprise as in addition to the bleak economic fundamentals and to the sharp lack of domestic and foreign demand
forcing companies to cut jobs, there is a fear minding generating an over laying off representing at least 50 % of the job cuts.

UNITED-STATES: FACTORY ORDERS REBOUNDED IN FEBRUARY

The credit crunch and the sharp drop of foreign demand impacted very negatively companies investments in the United-States. As a
matter of fact factory orders are dropping since August 2008. Nevertheless the quantitative easing measures and the recent
improvement of the U.S. economy like the rise of durable goods (+3.4% in February) boosted the factory orders which rebounded of
1.8% in February after a drop of 3.5% in January. If we look to the detail the orders ex transportations rose 1.6% and orders ex
defense rose 0.9%. After the good news concerning the retail sales and the housing starts this is another sign showing that the U..S.
economy is on its way to recover.

EURO ZONE : THE ECB CUTS ITS LEADING RATE OF 0.25 BP

Despite the recent declaration of Mr Trichet saying that he will do everything including using non conventional tools to get the euro
area out of the recession, despite the sharp rise of the unemployment increasing the social risk and despite the fact that euro zone’s
inflation is getting close to 0% (YoY) the European Central Bank cut its leading rate of 0.25bp only (forecast 0.50%) to reach 1.25%.
At the opposite of the Fed and of the Bank of England as usual the ECB is doing the strict minimum responding to an exceptional
situation by an ordinary decision. What a waste of time when you know that each decision of monetary policy takes between 6 to 9
months to impact the economy. As a consequence the necessary drop of the euro will take much longer impacting negatively the
European competitiveness, the recession should last till the second quarter 2009 and the GDP will start to rebound only at the third
quarter, meanwhile the unemployment will rise till next winter./JB
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3-Apr-09 THE LAST OF THE MOHICANS

VIXindex: impliedvolatility ontheS&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
03/04/2007 03/10/2007 03/04/2008 03/10/2008 03/04/2009 03/04/2007 03/10/2007 03/04/2008 03/10/2008 03/04/2009
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
03/04/2007 03/10/2007 03/04/2008 03/10/2008 03/04/2009 03/04/2007 03/10/2007 03/04/2008 03/10/2008 03/04/2009
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
03/04/2007 03/10/2007 03/04/2008 03/10/2008 03/04/2009 03/04/2007 03/10/2007 03/04/2008 03/10/2008 03/04/2009
Source : Bloomberg Source : Bloomberg