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17-Feb-09 OBAMA’S DAY

Today in Denver is the D-Day for “The American Recovery and Reinvestment Plan”, the Obama Administration’s first fiscal
stimulus expected to be signed into law by the President today. Obama in his inaugural address promised “bold and swift” action on
the economy and hinted that big plans were underway. There are many pressing needs that can be loosely divided into two major
categories: stabilizing the financial system and stabilizing the broader economy. The financial crisis has led to a collapse in confidence
and a sharp pullback in private sector demand. Restoring confidence will take time, and in the meantime the only alternative source of
demand comes from the public sector. The Obama Administration has proposed a substantial fiscal stimulus program aimed at preventing
an even deeper loss of jobs and more lasting economic damage. “The American Recovery and reinvestment Plan” in its latest form calls
for a $787bn package which includes roughly $540bn in government spending and $240bn in tax relief. The package amounts to about
5.5 % of 2009 estimated 2009 GDP (-2 % YoY). But this amount will be spread out the eleven fiscal years to 2019. The cost in the
remainder of the current fiscal year (ending in September) is a more modest $184bn, which works out at around 2 % of GDP over this
period. The maximum annual cost is put at just under $400bn in FY 2010 (around 2.5 % of GDP). As the impact is spread over several
years, the boost to activity in any one year will be similar to the one recorded in 2001 and 2002 when fiscal stimuli were each worth 1.7 %
of GDP.
The biggest single items include some $115bn in new tax credit, $54bn in spending on education and science (education programs,
grants, job training and scientific research), $46bn for transport infrastructure, and $40bn in more generous unemployment benefits.
Around $70bn is allocated to ensure that middle-class families continue to escape the ”alternative minimum tax”, although since it was
always likely that the coverage of this tax would be adjusted it is debatable whether this $70bn should be counted as an additional
stimulus.
“The American Recovery and Reinvestment Plan” is welcome as a new stimulus for the economy after last year’s two major stimuli:
the fiscal package under the Economic Stimulus Act of 2008, worth around $150bn, and the boost to real incomes from the fall in gasoline
prices, which was worth at least the same again. The advantage of the new plan is that more 70 % of the amount is accounted for by
increased government spending (including increased welfare payments) rather than by tax cuts, which would be more likely to be saved.
The package could add 1.0 % to GDP growth this year and next.
Today, the NAHB releases its Housing Market Index for February. Pending home sales rose in January and existing home sales rose
in December (+6.5 % at 4.74 million units annualized), hinting that some buyers are willing to venture back in the market. Declining prices
and low mortgage rates may lead the NAHB index to bottom out from historical low level (8 in January vs. 19 one year ago and 33 to
years ago with a top at 72 in June 2005). Some comfort can be taken from the fact that the American Recovery and Reinvestment Plan
is expected to include a new first-time home buyer tax credit in which qualified home buyers who buy between Jan. 1st and Dec. 1st,
2009, can be eligible for up to an $8,000 credit that doesn’t have to be repaid if the home isn’t sold for three years.
U.S. markets were closed yesterday for Presidents’ Day, but indications from Asia this morning confirm a high volatility of long
th
term U.S. treasury rates. The 10-year rate is down 8 bps at 2.81 %. But it rose from a low of 2.05 % on December 30 ,2008, to 3.00 %
th
on February 6 , 2009. This reflects a stop-and-go in investors’ mind who seems to fear both inflation and deflation at the same time. The
best insurance for this risk is gold: remember that in 1933, Roosevelt forbad individuals to hold gold… This morning gold rose as high as
th
$959.60 /oz up from $712.30 /oz on November 12 , 2008K. A target above $1 000 /oz is not unrealistic…
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 36,7 1,2645 92,48 2,81 3,04 US

Perf 1d % -2,12 -1,23 -0,81 -8,36 bp -7 bp Europe
ECONOMIC DATA with impact
Empire manufacturing – 13.30 GMT – exp 23.75
NAHB Housing Market – 18.00 GMT – exp 8
ABC consumer confidence – 22.00 GMT – exp –53-
POSITIVE IMPACTS
BG raised its bid for Australian coal seam gas firm Pure Energy by 25% to nearly $650 m, trumping a rival offer by Arrow Energy
CIMENT FRANCAIS will be absorbed as part of reorganisation project by ITALCEMENTI = 8.25 ord. shares Italcementi for 1 share of
Ciments Francais / 12.9% premium vs prev. 3 months / Concerning the evolution of the cement market, Italcementi’s CEO said that
he did not expect a rebound this year and does not see an improvement in the U.S. construction market in the H1 of 2009…
SCHINDLER : FY revenue SFR 14.02bn (13.9bn exp) / Ebit SFR 889m (878m exp) / Ups dividend to SFR2 from 1.60 / Expects to
maintain net profit in 2009 at the current level
STATOILHYDRO : Q4 sales NK 150.73bn (134.2bn exp) / Adj. operating Nk 43.7bn (40.2bn exp) / Dividend NK7.25 = 4.40 for
ordinary + 2.85 special (7.04 exp) / Repeats 2009 & 2012 production targets
ENEL-ACCIONA : The board of Endesa may approve today the payment of a €4.5 bn extra dividend following an asset sale to [Link]
(Cinco Dias) / In addition, Enel & Acciona may have reached an agreement over Enel's purchase of Endesa's 25% stake held by Acciona
BARCLAYS-RBS : Hedge fund manager Crispin Odey, who made a reputation short-selling UK banks, has turned bullish on some British
lenders, such as Barclays and RBS, betting they will escape nationalisation (FT)
ALLEANZA : GENERALI could be studying the possibility of buying out minorities in Alleanza (50%) ( Il Sole 24 Ore + Corriere)
AXA Asia Pacific Holdings : FY08 net loss of A$278.7m (In line) “hurt by negative returns on their investment portfolio”.
MINERS : Vale, Xstrata and Rio Tinto are among the companies that have submitted proposals to develop Mongolia's prized $2 bn Tavan
Tolgoi coal mine
NEGATIVE IMPACTS
L’OREAL : FY revenue €17.54bn (17.59bn exp) with org. growth at +3.1% (3.5% exp) / Northam org. gwth -12% in Q4 / West Europe
-1.9% / Operating €2.73bn (2.77bn exp) / Dividend €1.44 (+4.3%) / No guidance 2009 / Conf. Call 0800 UKT
CLARIANT : Q4 sales SFR 1.74bn (1.77bn exp) / Operating loss SFR148m (-42m exp) / Net debt SFR 1.21bn (1.32bn exp) / No div. /
No evidence that global economy will recover soon / Plans further restructuring with additional costs of SFR200-300m
GIVAUDAN : FY sales SFR4.09bn (4.14bn exp) / Ebitda SFR765m (850m exp) / Dividend of SFR 20 / Confident to achieve the
announced savings target of SFR200 m by 2010 and therefore to reach its pre-acquisition EBITDA margin level of 22.7% by 2010
RIO TINTO : Merrill Lynch surveyed the top 20 shareholders in Rio & told BHP that majority of leading investors are against Rio's plan to
raise cash & sell assets to Chinalco / Several investors want BHP to suggest an alternative proposal to buy some of Rio's assets (FT)
LLOYDS may have to write off more loans made by the bank in addition to the £10bn it wrote off last week (the Guardian)
HSBC : Morgan Stanley has reduced its estimate of the amount of capital HSBC may need to raise = Between $20bn & $35bn from
between $27bn & $42bn previously… (Radio Television Hong Kong)
MLP : 2008 Revenue €597.7m (€622m exp) / EBIT €56.6m (€74m exp) / Net Profit €31.1m (€42 exp) / To propose Div €0.28 (0.35 exp)
BBVA has agreed to buy back from investors 95% of its Spanish real estate fund BBVA Propidedad (Source)
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17-Feb-09 OBAMA’S DAY

FERROVIAL : BAA is struggling to raise the £2bn it’s seeking for Gatwick as the number of bidders dwindles & financing dries up
CREDIT AGRICOLE : Agricultural Bank of China is in talks to sell a stake to China Life Insurance (HK Economic Times) / Talks between
Agricultural Bank and Credit Agricole over a stake sale have stalled because of concern over funding
DEUTSCHE TELEKOM : The German Federal Cartel Office plans to take a closer look at the telecom's plans for fibre optic network
expansion to ensure competition is not hampered (FAZ)
AEGON : Shareholder’s equity of approximately €6.1bn at Year-end / Q4 Net Loss €1.2bn (€-764m exp) / Says total impairment charges
of around €500m before taxes / Says further release of Capital expected of €1.5bn in 2009 / In track to achieve €150m in cost saving for
2009 / Further detail will be made avaible on March 12
INTERCONTINENTAL : FY rev. $1.85bn (1.91bn e) / Adj. Operating $549m (535m e) / Final div. maintained at 29.2c / Net debt
$1.27bn (1.51bn e) but saw "sharp deterioration" in Q4 trading with Q4 revpar -6.5% / Jan. revpar -12.2% with no sign of improvement
YARA : Q4 revenue NK 18.96bn (20.08bn exp) / Operating NK 408m (958m exp) / Dividend NK 4.50 (5.50 exp) / Experienced
“unprecedented slowdown” in prices and deliveries since September 2008

GM : Bondholders ($28 bn in GM debt) have given GM specifics on how to swap the debt for equity following a restructuring (Reuters) /
Since Sunday, GM has also made significant progress in its talks with both bondholders and the United Auto Workers union…
RESULTS DIVIDENDS EVENTS
Aegon / Atos Origin / Clariant / Iberdrola (BMO) / Daimler / Saint Gobain sales /
Today Microsoft ($0.13)
Givaudan / Intercontinental Hotels / Statoil Hydro / Wal Mart
BP (GBp 10.90889) / Rio Tinto (GBp
Carlsberg / Commerzbank / Soc Gen (BMO) / Heineken / HP (AMC) / DSM / ING /
Wednesday 51,43333) / Scottish & Southern Energy Altria
Norsk Hydro / Portugal Telekom / Safran / Sunthes / Goodyear (BMO) / Atos Origin
(GBp 22.00)
Saint Gobain / BAE Systems / PPR / BNP / Cadbury / AXA / Eramet / Fresenius /
Thursday BNP Dividend declaration
Deutsche Postbank / Continental / Man AG / Shire / Reed Elsevier / Swiss 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)
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 / BNP / on reversal Head & Shoulder possibility
BUY AXA / to play on support level & insurance sector recovery too
BROKER METEOROLOGY
CREDIT SUISSE .........................RAISED TO OVERWEIGHT ......................................................................... BY MORGAN STANLEY

SAINT GOBAIN ...........................CUT TO SEL FROM HOLD .............................................................................................BY SOCGEN

LLOYDS ......................................CUT TO HOLD FROM BUY ....................................................................................... BY CITIGROUP
PERNOD RICARD........................OFF CONVICTION SELL LIST REMAIN SELL .........................................................................BY GS

PLEASE FIND BELOW ON THE NEXT PAGE OUR ECO MORNING

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17-Feb-09 OBAMA’S DAY

CHART OF THE DAY
Foreign Direct Investment in China
since 1999

120

100

80

60

40

20

-20

-40
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source : National Bureau of Census

Even if China remains a very attractive country , the credit crunch add to the global recession and falling profits are humping foreign
direct investment in China which declined for a fourth month in January. Investment fell 32,6%to $ 7,54 billion from a year earlier.

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
00.50 am Japan Tertiary industry index December -1,5% MoM -0,9% MoM
07.00 am Japan Machine tool orders ( final) January -84,4 % YoY
10.30 am United Kingdom Consumer price index January -1,0%,+2,7% YoY -0,4%,+ 3,1% YoY
10.30 am United Kingdom Consumer price index core ( excluding food and energy) January 1,0% YoY 1,1% YoY
10.30 am United Kingdom Retail price index January -1,4%,0,0% YoY -1,4%,0,9% YoY
10.30 am United Kingdom DCLG house prices December -10,1% YoY -8,6 % YoY
11.00 am Germany ZEW survey ( economic sentiment) February -25 -31
11.00 am Germany ZEW survey ( current situation) February -82 -77,1
11.00 am Euro area ZEW survey ( economic sentiment) February -27,5 -30,8
11.00 am Euro area Trade balance December € -6,7 billion € -7,0 billion
11.00 am Italy Current account December € - 4,6 billion
02.30 pm United States Empire manufacturing February -23,75 -22,20
07.00 pm United States NAHB housing market February 8 8
11.00 pm United States ABC consumer confidence 15 th February -53 -53

In d e x e s P ric e % 5 D a ys Ytd For e x P rice % 5 D a ys Ytd

DJIA CL O S ED EUR/USD 1,2634 -2,15% -9,57%
S&P 500 CL O S ED EUR/JPY 116,88 0,00% -7,79%
Na s d a q CL O S ED USD/JPY 92,51 -2,17% 1,99%
CA C 4 0 2 9 6 2 ,2 - 5 ,5 1 % - 7 ,9 5 % O il P rice % 5 D a ys Ytd
DA X 4 3 6 6 ,6 - 6 ,4 3 % - 9 ,2 2 % Brent $/b 42,6 -3,58% 1,92%
Eu r o s to x x 5 0 2 1 9 3 ,6 - 6 ,6 1 % - 1 0 ,3 8 % Gold P rice % 5 D a ys Ytd
DJ 6 0 0 1 8 8 ,7 - 5 ,3 3 % - 4 ,8 8 % Gold $/oz 960,0 4,85% 8,78%
FTS E 1 0 0 4 1 3 4 ,8 - 3 ,9 2 % - 6 ,7 5 % Ra te s U SA E u ro Ja p a n
Nikke i 7 6 4 5 ,5 - 4 ,0 4 % - 1 3 ,7 0 % Centr al Banks * 0,25 2,00 0,11
S h a n g h a i Co mp 2 3 3 0 ,5 7 ,4 0 % 2 7 ,9 9 % Ov er night 0,25 1,00 0,11
S e n s e x ( In d ia ) 9 0 8 4 ,9 - 2 ,9 1 % - 5 ,8 3 % 3 Months 0,29 0,97 0,24
MICEX ( Ru s s ia ) 7 1 2 ,0 1 ,9 1 % 1 4 ,9 2 % 10 Y ears ** 2,77 3,04 1,29
B o v e s p a ( B r a s il) 4 1 8 4 1 ,3 - 0 ,6 2 % 1 1 ,4 3 % *US: Fed Funds ; Jap: Ov ernight; Euro: Ref i
** Euro: German Bund rate S o u rc e : B lo o m b erg
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17-Feb-09 OBAMA’S DAY

Economic data preview

No major economic data released in the United-States today

Watch in the United-Kingdom the release of the consumer price index for January due at 10.30 am , expected to decrease, led down by
the drop of oil price which loss 70% since their peak in July even if the barrel stopped dropping now. The United-Kingdom is on its way to a
deflation situation , watch in Germany the release of the ZEW survey ( economic sentiment) for February due at 11.00 am and expected
to decrease as Germany is slumping deeply into recession as shown by the sharp drop of the GDP at the fourth quarter (-2.1%), watch in
the Euro area the release of the trade balance for December due at 11.00 am , the trade deficit is expected to increase as the global
economic slowdown is sharply cutting the demand of the Euro area goods abroad and as the euro is still too strong. This situation will put
more pressure on the European Central Bank to cut sharply its leading rate in March. ./JB

ate

ECONOMY
JAPAN : THE GROSS DOMESTIC PRODUCT SLUMPED ON RECORD AT THE FOURTH QUARTER
Japan growth being mainly based on exportations the country is sharply hit by the rise if the yen against the dollar and the euro, and by the
global economic recession ( especially in the United-States the main commercial partner of Japan),cutting drastically the demand for
Japanese goods abroad. As a matter of fact Japanese exportations dropped very sharply at the fourth quarter of 13.9%, combined with a
2.9% rise in imports, net trade subtracted 3.0% from quarterly GDP growth. In addition the very weak household consumption ( -4.6% YoY
in December) is not taking over. As a consequence Japan’s economy shrank at an annual 12.7% at the fourth quarter the most since 1974
and fell at and historical low of 3.3% from the third quarter. Underlining as well the deepness of the Japanese recession , Industrial
production fell on record at ( -9.8%,-20.8% YoY) at the fourth quarter. Japan’s economy is facing a deflation situation and a “liquidity trap”
as household thinking that very low interest rate will increase keep their liquidity blocking the all economy. The only option for Japan’s
economy is now based on rescue plans , fourth have been placed since 2008 without concrete result on the economy for the moment . At
this stage the Japan’s GDP should reached - 0.2% ( annualized in 2009) and soon the country will over cross by China at the second rank
of the world economies. /JB
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17-Feb-09 OBAMA’S DAY

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
20/02/2007 20/08/2007 20/02/2008 20/08/2008 20/02/2009 19/02/2007 19/08/2007 19/02/2008 19/08/2008 19/02/2009

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
19/02/2007 19/08/2007 19/02/2008 19/08/2008 19/02/2009 19/02/2007 19/08/2007 19/02/2008 19/08/2008 19/02/2009
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
80
1,4

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

30 1,2
19/02/2007 19/08/2007 19/02/2008 19/08/2008 19/02/2009 19/02/2007 19/08/2007 19/02/2008 19/08/2008 19/02/2009

Source : Bloomberg Source : Bloomberg