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14-May-09 PITCH MARK ON THE GREEN

April’s U.S. retail sales decline (-0.4 % MoM after -1.3 % in March, -9.4 % YoY) don’t affect the scenario showing that the worst is
now over. A 2.3 % price related fall in gasoline sales contributed to April’s drop. Excluding gasoline, sales fell by a modest 0.2 % MoM (-
6.1 % YoY). Admittedly, anecdotal evidence suggests something of an improvement in sales activity in recent weeks.
The jump in Japan’s Economy Watchers Survey of business conditions in April also provides some of the best evidence yet that
the economy is past the worst. The EWS is also consistent with the improvement in other sentiment indicators seen so far this year,
including the manufacturing PMI, and points to a further recovery in the April consumer confidence survey, published next Monday. There
are three key reasons why ojne should give Japan another look: 1) Crisis-induced restructuring: While Japanese companies are famous
for their lack of attention to profits, nothing forces cost-cutting measures like a global crisis. And with exports down more than –45% YoY
for three months running, the Japanese have never faced a crisis like this one. Unable to count on a weak Yen or unquenchable demand
from the US consumer to bail them out this time around, companies are being forced to take rather un-Japanese-like measures to survive.
The smartest and strongest players could emerge from this crisis with greater market share, lower costs and thus greater profits 2) A
cyclical opportunity: Japan is of course a persistent underperformer, and as such both domestic and foreign investors often look
elsewhere for greater returns. This can make for some very cheap Japanese equities. The result is a tendency towards some great
opportunities to time the cycle. For the first time since Lehman went bust, we just learned that both domestic and foreign investors were
net purchasers of Japanese equities at the end of April 3) Improving Politics: the prospect of warmer ties between Japan and China,
stemming from the calming of the Sino-Taiwan situation (after all, if China is more confident that it is moving toward reunification with
Taiwan, than it can afford to be friendlier to Taiwan’s “natural defenders”, such as Japan) is positive.
In China, retail sales figures (+14.8 % YoY in April) were good and were in line with growth the month before.
Yesterday, the Bank of England released its quarterly “Inflation Report”. For the Monetary Policy Committee, the outlook for
economic growth is unusually uncertain. The sharp downturn in global economic activity, combined with the process of adjustment inder
way in the U.K. economy, as private saving rises and bank restructure their balance sheets, continues to act as a significant drag on U.K.
growth. But that is counteracted by the considerable stimulus stemming from the easing in monetary and fiscal policy at home and
abroad, the substantial depreciation in sterling, past falls in commodity prices, and actions taken by authorities internationally to bolster
the availability of credit. This stimulus, when combined with a turnaround in the stock cycle, should lead to a recovery in economic growth.
Equity markets are consolidating again, with the dollar still weak (1.3572 EUR/USD), oil prices on the upside (WTI at 58.02 $/bbl) such
as gold (925 $/oz). Gold may extend its two-week advance after breaching the so-called resistance level that defined the precious metal’s
bear trend since this year’s peak in February. Long term U.S. Treasury rates slightly retreated (10-year rate at 3.10 %) but are still on the
upside.
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 57,4 1,3578 95,56 3,10 3,34 -5,82 -3,21 -4,98 -0,33 -2,42 -2,51 -4,21 -2,79 -2,36 -2,69 -3,02 -2,18 US
Perf 1d % -3,69 -0,17 -0,27 -2,19 bp -6,4 bp -3,87 -2,40 -3,13 0,54 -1,99 -1,37 -3,72 -1,67 -2,18 -1,95 -2,12 -1,80 Europe
ECONOMIC DATA with impact
Jobless Claims (12h30 gmt) expected 610k from previous 601k / interesting as any improvement would be welcome following the better
than expected Employment report out last Friday (remaining very gloomy though)
PPI (12h30 gmt) expected 0.2% from previous –1.2% // ex food & energy 0.1% from flat / interesting although the focus will remain the
CPI tomorrow in term of inflation, which will tell that the deflation concept is far from granted
POSITIVE IMPACTS
BOUYGUES : Q1 revenues €6.7bn (6.55bn exp) as poor weather over the winter limited revenue at Colas / TF1 weighted
HOCHTIEF : Q1 Ebitda €142m (130m exp) / New orders €4.38bn (4.08bn exp) / Remained “cautiously optimistic” & confirmed guidance
LUFTHANSA said 85.1% of Austrian Airlines shares have been tendered (88.1% of voting rights)
RWE : Q1 sales €14.51 bn (13.69bn exp) / Operating profit €2.62 bn (2.55bn exp) / Lowers 2009 sales target (now sees 2009 sales
matching 2008 sales vs small rise prev.) but reiterates 2009 operating & recurrent net income to be unchanged
RICHEMONT : FY sales €5.42bn (5.3bn exp) / Operating €982m (929m exp) / Dividend SFR 0.30 + extend share Buyback / Sees
very few encouraging signs in the global economic picture & cannot predict when an overall improvement in trading will come about
SBM OFFSHORE : Q1 rev. $681m, in line / Order book $8.6 bn / Sees FY revenue $2.8-3 bn (2.9bn exp) / Confirmed EBIT margin
ADP : Q1 revenue up 4.8% to €608.5 m / Retail up 4.4% to €218.8 m
TELECOM ITALIA : One of the options proposed by the government's adviser on telecoms would spin off Telecom Italia's fixed-line
network, worth about €15 bn (Il Sole 24 Ore)
FINMECCANICA : Boeing said it would help build 16 ICH-47F Chinook helicopters for the Italian Army in a deal worth $1.23 bn
EUROPE APR NEW CAR REGISTRATIONS -12.3% ON YR : FIAT +4.7% / VOLKSWAGEN -4.2% / FORD -6.3% / GM -13.1%
AEGON : Q1 New Business €201m (€186m exp) / Underlying loss €22m / Impairments €386m / Solvency ratio170% / Cost cut on
track / EV = €11.35
BANKINTER has decided to raise capital through a new share issue worth €361.4m after buying the half of Spanish unit of Direct Line
Insurance it didn't already own / The new shares will be issued at €5.35 (vs €8.74 close)
GALP ENERGIA : Q1 EBITDA €151m (€136m exp) / Net profit €49m (39.4m exp)
COMMERZBANK : Kleinwort Benson has attracted interest from more than 20 trade buyers as well as up to 10 private equity firms
NEGATIVE IMPACTS
KBC : Q1 NII €1.48bn (€1.33exp) / Net Commission income €317m (€375m exp) / Net Loss €3.6bn (€ -190m exp) due CDOs losses of
€3.8bn (As rumoured yesterday) / Govt says gives €22.5bn guarantee for structured portfolio / Tier1 11% after govt aid
CREDIT AGRICOLE : Q1 Rev €4.06bn (€4.4bn exp) / Gross Operating Income €1.08bn (€1.2bn exp) / Risk-Related costs €1.08bn /
Tier1 ratio 8.8%
NATIXIS : Q1 Underlying Net Income €214m / NBI €106m / Net Loss €1.84bn (€-330m exp) impacted by €2bn write-downs and
provisions / Tier1 ratio 9.4% / Can’t rule out further asset sales / To get further capital boost of €3.5bn from main shareholders
BNP-FORTIS : Q1 business update = Total inflows €4.2bn / Net profit €44m / Says solvency remains strong, in line with 2008 levels
TF1 : Q1 operating loss €12 m / Cut 2009 sales goal, now expects around 13% decline from –9% previously
VALLOUREC : Q1 sales €1.313 bn, in line / EBITDA €339.3 m (326m exp) but sees further reduction in sales and EBITDA compared
with the Q1 + sees risk of orders being postponed from one quarter to the next / Intends to reinforce cost reduction measures
SANOFI : The FDA in a letter released yesterday warned Sanofi over misleading marketing of its cancer drug Taxotere
KLOECKNER : Q1 sales €1.1bn (1.19bn exp) / EBITDA loss €132m (-79m e) / Cannot issue a forecast for FY but sees earnings to
improve markedly in the Q2
SALZGITTER : Q1 sales €2.19bn (2.10bn exp) / PT loss €98m, in line / Sees '09 breakeven but no clear sign of recovery in Q2
EUROPE APR NEW CAR REGIS. -12.3% ON YR : BMW -31.2% / DAIMLER -26.3% / TOYOTA -22.4% / PSA -14.7% / RNO -14%
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14-May-09 PITCH MARK ON THE GREEN

FIAT's talks with GM about creating a car supergroup have hit obstacles over the issue of GM's Latin American operations (FT)
ENI could be considering an offer for Maurel & Prom (Il Sole 24 Ore)
RIO TINTO shares sank as much as 12% on bet it would scrap a planned $19.5 bn Chinese investment in favour of a diluted rights issue
RESULTS DIVIDENDS EVENTS
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
Today Metro (€1.18) / Solvay (€1,7333) AGM / Ford AGM / SBM Offshore AGM / ASM
Paschi di Sien / Banco Popolare / Natixis / British American
International AGM / Unibail-Rodamco AGMF
Tobacco / Geophysique / SABMiller / Salzgitter / Theolia /
Portugal Telecom / Rexel / Hochtief / BT Group / Wal Mart
Total AGM / STM analyst meeting / Commerzbank
Terna / Thales / Belgacom / Gazprom / Havas sales / AGM / Ingenico AGM / Michelin AGM / Total AGM /
Friday BMW (€0.30)
Ladbrokes Linde AGM / AngloGold AGM / Ladbrokes AGM /
Standard Life 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
Accor (€1.65) / BNP Paribas (€1.00) / Groupo
Telefonica AGM / Rhodia AGM / Deutsche Boers
Ferrovial (€1.50) / Home Retail (€ GBp
AGM / Gas Natural AGM / GlaxoSmithKline AGM /
Wednesday London Stock Exchange 11.11111) / LVMH (€1.25) / SAP (€0.50) / Statoil
Zurich Financial investor day / Telekom Austria
Hydro (NOK 4.40) / Swatch (CHF 4.25) /
AGM
Unilever (GBp 44.65556)
TRADING IDEAS
BUY NOKIA / CAP / SAP / EON / BAYER / ADIDAS / SANOFI / GLAXO / DANONE to play eco recovery + looking good
BUY AXA / SAINT GOBAIN / EDF / FTE / DTE / MERCK / NESTLE / VIVENDI on reversal Head & Shoulder possibility

BUY AHOLD / SELL UNILEVER // BUY LUFTHANSA / SELL AIR FRANCE // BUY RDSA / SELL TOTAL // BUY VINCI / SELL LAFARGE
BROKER METEOROLOGY
BARCLAYS ............................... RAISED TO OVERWEIGHT .......................................................................... BY MORGAN STANLEY
DEUTSCHE BANK .................... RAISED TO OVERWEIGHT .......................................................................... BY MORGAN STANLEY
DEXIA ........................................ RAISED TO NEUTRAL ........................................................................................BY CREDIT SUISSE
ARKEMA ................................... RAISED TO NEUTRAL FROM UNDERPERFORM ..............................................BY CREDIT SUISSE
SAITN GOBAIN.......................... RAISED TO BUY FROM NEUTRAL ................................................... BANK OF AMERICA-MERRILL

ORASCOM TELECOM............... CUT TO HOLD FROM BUY ............................................................................ BY DEUTSCHE BANK

EON ........................................... CUT TO UNDERWEIGHT FROM NEUTRAL ........................................................................ BY HSBC
CASINO ..................................... CUT TO NEUTRAL FROM OVERWEIGHT ............................................................... BY JPMORGAN
SBM OFFSHORE ...................... CUT TO UNDERWEIGHT FROM NEUTRAL.............................................................. BY JPMORGAN
SOCIETE GENERALE .............. CUT TO EQUAL WEIGHT ............................................................................. BY MORGAN STANLEY
ADECCO .................................... CUT TO SELL FROM NEUTRAL ............................................................................................ BY UBS

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO

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14-May-09 PITCH MARK ON THE GREEN

CHART OF THE DAY
Industrial Production Eurozone Industry Ex construction YoY WDA
Since 2001

10

-5

-10

-15

-20

-25
2001 2002 2003 2004 2005 2006 2007 2008 2009

Source : Eurostat

After declining from a year ago of 19.1% in February European industrial production fell of 20.2% in March (forecast -17.6%), the
biggest drop since the data series started in 1986.

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
7.00 GMT Euro area Newcar registrations (EU25) April -9,1%
9.00 GMT Euro area European Central Bank publishes monthly report April
13.30 GMT United-States Producer price index April 0,1%MoM 0,2%,-3,7%YoY -1,2%,-3,5%YoY
Producer price index core April 0,1%MoM 0,1%,+3,4%YoY 0,0%,+3,8%YoY
13.30 GMT United-States Initial jobless claims May 9th 610 000 601 000
13.30 GMT United-States Continuing claims May 2 th 6 400 000 6 351 000

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

DJIA 8284,9 - 2,53% - 5,60% EUR/USD 1,3562 1,28% -2,93%
S&P 500 883,9 - 3,79% - 2,14% EUR/JPY 129,54 2,44% 2,19%
Nas daq 1664,2 - 5,37% 5,53% USD/JPY 95,52 3,78% 5,10%
CA C 40 3152,9 - 3,39% - 2,02% Oil Price % 5 Days Ytd
DA X 4727,6 - 3,14% - 1,72% Brent $/b 56,6 1,73% 35,54%
Eur os tox x 50 2357,3 - 2,60% - 3,69% Gold Price % 5 Days Ytd
DJ 600 200,7 - 3,16% 1,19% Gold $/oz 925,1 1,57% 4,86%
FTSE 100 4331,4 - 1,29% - 2,32% Rates USA Euro Japan
Nikkei 9068,7 4,05% 2,36% Central Banks* 0,25 1,00 0,70
Shanghai Comp 2641,9 2,76% 45,10% Overnight 0,10 0,60 0,70
Sens ex ( India) 11897,8 0,56% 23,33% 3 Months 0,17 0,61 0,20
MICEX ( Rus s ia) 1007,9 6,69% 62,69% 10 Y ears** 3,09 3,34 1,44
Bov es pa ( Bras il) 48679,2 - 5,48% 29,64% *US: Fed Funds; Jap: Overnight; Euro: Ref i
** Euro: German Bund rate So urc e : B lo o m berg
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14-May-09 PITCH MARK ON THE GREEN

ECONOMIC DATA PREVIEW
Watch in the United-States the release of the producer price for April due at 13.30 GMT, expected to slightly increase since March
lead by the rise of energy and commodity prices, but from a year ago producer prices should decrease further. Meanwhile producer
price core should slightly increase showing that oil and commodities are not the only reason of the rise but core prices should drop
from a year ago. Keep and eye on the weekly release of the initial jobless claims and of the continuing claims due at 13.30 GMT as
well. Americans claiming for unemployment benefits should slightly increase after two consecutive weekly decline and continuing
claims should break another historical high./JB

ECONOMY
UNITED-STATES : RETAIL SALES UNEXPECTEDLY FELL FOR A SECOND CONSECUTIVE MONTH IN APRIL
Despite the good resistance of the household consumption, despite the sharp increase of the Conference Board index and despite the
slight price increase expected, advanced retails sales surprisingly dropped of 0.4% in April. Discretionary spending was particularly
weak : furniture, electronics and clothing sales dropped by 0.5%,2.8% and 0.5% respectively, meanwhile gasoline station dropped by
2.3%. Nevertheless retail sales ex-gas dropped 0.2% and sales less auto dropped 0.5% (forecast 0.2%). This unexpected drop of retail
sales can be explained by high level of uncertainty about economic outlook. In addition unemployment is rising humping household
purchase power and increasing the fear to be lay off pushing Americans to save incomes generates by the drop of interest rate. Indeed
household savings rose from 0.0% to 6% showing that Americans are improving their personal financial situation. Nevertheless when
saving will be reconstitute the household consumption should rise driving up retail sales. Not to mention the positive impact of the revival
plan and the “checks” that American will receive.

EURO ZONE: INDUSTRIAL PRODUCTION FELL BY RECORD IN MARCH

After declining from a year ago of 19.1% in February European industrial production fell of 20.2% in March (forecast -17.6%) , the
biggest drop since the data series started in 1986. The breakdown by sector is revealing a drop of 27% of intermediate goods and a
drop of 23.5% of capital goods. From a month ago European industrial production dropped of 2.0% (forecast 1%)and the breakdown is
showing the following decline : 3.1% for intermediate goods, 2.8% for energy, 2.5% for durable consumer goods, 1.0% for non durable
capital goods and 0.5% on capital goods. The global economic downturn and the high level of the euro are strongly hitting European
economy reducing the foreign demand and despite a good resistance in France domestic consumption remained weak in the euro area.
March ‘s sharp decline in the euro zone industrial production confirmed that the recession is deepening at the first quarter and the
European growth domestic product should sharply drop next Friday of 2.0%.

FRANCE : INFLATION REACHED HISTORICAL LOW LEVEL IN APRIL

France’s inflation reached 0,1% from a year ago in April the lowest data since the creation of the statistic. Of course this figure by itself
do not explain a deflation spiral. Indeed the year on year core inflation index (meaning excluding energy and food) remained at +1.6% in
April, meanwhile services prices continue to increase significantly : +0.3% in April and +2.4% from a year ago mainly led by the increase
of the rent prices (3.0% YoY).Its interesting to notice that excluding tobacco prices reached 0.0% from a year ago. As consumer price
index rose respectively of 0.5% and 0.4% in May and June it is almost sure that starting in May 2009 the year on year inflation will
reached negative territory and should remained below zero till June. At a time when some people are talking about a risk of
hyperinflation it will be pertinent to notice that the real risk in France as well as in the euro zone, is the deflation. If the deflation became
a reality it will be the worst scenario as we can fell in a negative spiral deflation-recession- unemployment similar to what have been
seen in the United-States in the 30th or presently in Japan for more than fifteen years. To face this risk of deflation the present economic
policy measures appears to be weak and the European Central Bank refi rate too high as well as the level of the euro. /JB
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14-May-09 PITCH MARK ON THE GREEN

VIXindex: impliedvolatilityontheS&P500 $Libor-3-Month(InterbankRate)

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

UnitedStates: 10-year Treasuryyield 10-year TreasuryspreadUSA-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
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: EurovsDollar (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
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