Morning Meeting 20090123 (2)

United States: housing starts tumble to a record low in December United States: initial jobless claims sharply up

On the currency side, U.S. stance on the yuan gets tougher Pfizer may buy Wyeth for $60bn

US Housing starts since 1960

1960 1966 1972 1978 1984 1990 1996 2002 2008

Source : Bloomberg

Housing starts fell sharply in December as activity in the construction sector continues to collapse. They were down to their lowest level since the data were held in 1959, at 550 000 (605 000 expected) after 651 000 in November. They are down 75 % since their peak of January 2006 (-45 % over the year 2008). The intensification of the recession during the 4th quarter explains this marked decline. Building permits were down from 615 000 to 549 000

23 Jan. 09

Indexes Price % 5 Days YtdDJIA 8122,8 -0,86% -7,45%

S&P 500 827,5 -1,77% -8,39%Nasdaq 1465,5 -1,62% -7,07%CAC 40 2869,6 -4,21% -10,83%

DAX 4219,4 -2,71% -12,28%Eurostoxx 50 2160,1 -4,32% -11,75%

DJ 600 182,9 -4,33% -7,82%FTSE 100 4052,2 -1,62% -8,61%

Nikkei 7745,3 0,35% -12,58%Shanghai Comp 1990,7 4,41% 9,33%Sensex (India) 8701,7 -2,57% -9,80%

MICEX (Russia) 557,6 -7,95% -10,00%Bovespa (Brasil) 37894,3 -3,21% 0,92%

Forex Price % 5 Days YtdEUR/USD 1,2878 -2,89% -7,79%EUR/JPY 114,07 5,15% -9,89%USD/JPY 88,58 2,39% -2,30%

Oil Price % 5 Days YtdBrent $/b 43,6 -0,30% 4,38%

Gold Price % 5 Days YtdGold $/oz 853,4 1,23% -3,23%Rates USA Euro Japan

Central Banks* 0,25 2,00 0,12Overnight 0,20 0,90 0,123 Months 0,10 1,20 0,23

10 Years** 2,57 3,09 1,24*US: Fed Funds; Jap: Overnight; Euro: Refi** Euro: German Bund rate Source : Bloomberg

- 2 - Global Equities – Institutional Financial Services Company

23, rue Balzac – 75008 Paris - Standard : + 33 (0) 1 444 333 00 – Fax : + 33 (0) 1 70 70 19 19 www.global-equities.com

The Bank of Japan publishes its monthly report. Ban Ki-moon, United Nations secretary general, is expected to report on the UN mission to Sudan and recommend a review of the force’s size. North American International Auto Show (Detroit) Jan. 11th – 25 th

Time Country Indicator Period GE forecasts Consensus Previous0.50 am Japan All industry activity index November -2,2 % -0,4 %

Business confidence indicator 70 73production outlook indicator -76 -73

10.00 am Italy Retail sales November 0,0 %, -0,4 % YoY -0,3 %, -0,7 % YoY10.00 am Euro area PMI manufacturing (advanced) January 33,1 33,910.00 am Euro area PMI services (advanced) January 41,5 42,110.30 am United Kingdom GDP (1st estimate) 4th quarter -1,2 %, -1,4 % YoY -0,6 %, +0,3 % YoY10.30 am United Kingdom Retail sales December -0,7 %, +1,5 % YoY +0,3 %, +1,5 % YoY

8.45 am France January

Results Ford / General Electric (13.30 GMT) / Schlumberger(11.00 GMT) / Xerox

Obama accuse la Chine de manipuler le yuan, Le Figaro économie, p.1

Microsoft licencie massivement pour la première fois, Les Echos, p 22 et 23

ECB explains reasons for caution on rates, The Wall Street Journal, p 3

Sony gloom fuels sector’s pain, Financial Times, p 13



Economic data preview

Today ,watch in the United-Kingdom the release of the GDP ( advance) for the fourth quarter due at 10.30 am which is expected to decrease significantly as the United-Kingdom is particularly hit by the financial turmoil and by the construction crises.

In the Euro area what the released of the manufacturing PMI ( advanced) due at 10.00 am expected to remain at a very low level indeed

global economic indicators in the area and in the most developed countries are down. Keep an eye in France to the business climate due at 08.45 am expected to remains at a very low level as household consumption ,investment and global external demand are down . ./JB

ate

ECONOMY UNITED STATES: HOUSING STARTS TUMBLE TO A RECORD LOW IN DECEMBER Housing starts fell sharply in December as activity in the construction sector continues to collapse. They were down to their lowest level since the data were held in 1959, at 550 000 (605 000 expected) after 651 000 in November. They are down 75 % since their peak of January 2006 (-45 % over the year 2008). The intensification of the recession during the 4th quarter explains this marked decline. Building permits were down from 615 000 to 549 000. UNITED STATES: INITIAL JOBLESS CLAIMS SHARPLY UP Initial jobless claims registrations jumped during the week ending on January 17th, from 527 000 to 589 000 (550 000 expected). They are back to their 26-year high already hit in mid December 2008, confirming the fact that the modest decline in jobless claims over the previous weeks was only due to the Christmas and New Year Eve period. UNITED STATES: WEEKLY MORTGAGE APPLICATIONS DOWN Weekly mortgage applications fell 9.8 % during the week ending on January 17th, after a 15.8 % increase the week before. A 12.4 % decline in refinancing applications prompted this decline after the 5-year high hit last week. Applications for a house purchase edged up 2.5 % as long-term mortgage rate continue to fall in the wake of the decision of the Fed to directly purchase mortgage-backed asset securities.

/AP JAPAN : THE ADJUSTED MERCHANDISE TRADE BALANCE STILL SHOWED A HUGE DEFICIT AS EXPORTS PLUNGED BY A RECORD IN DECEMBER Japanese growth being mainly based on its exportations the country is significantly affected by the global economic slowdown cutting the demand for Japanese goods abroad. Indeed Japan’s exports plunged by a record of 35 % in December from a year ago ( the lowest record since 1980) as companies are now forced to shut factories and to fire more and more workers. As a consequence the adjusted merchandise trade balance revealed an important deficit in December at -Yen 328.5 billions ( prior -Yen 367.6 billions ). As a result of the sharp recessions hitting the country the supermarket sales are plunging of 2.8% ( prior -0.6%) as Japanese household hit by the unemployment and by the tight credit condition must face a sharp drop of their purchase power. In addition as showed by the last meeting of the Bank of Japan the country as no more move of margin regarding the monetary policy and the leading rate remains unchanged at 0.10% underlining a “liquidity trap” situation. CHINA : GDP DRCREASED AT THE FOURTH QUARTER BUT REAMAINED GLOBALLY HIGH IN 2008 At the opposite of the United-Sates and of the Euro area, China is not facing an economic recession, nevertheless the country is mechanically affected by the global economic crisis cutting its exportations and slowing down its economy. If the GDP decreased significantly at the fourth quarter from 9.0% to 6.8% the annual GDP ( constant prices) is at 9% ( prior 13.0%) . The drop of energy prices ( mainly oil) and the fell of commodities led down consumer and production prices. Indeed producer price index dropped from 2.0% YoY in November to -1.1% YoY in December and consumer price index dropped from 2.4% YoY in November to 1.2% YoY in December . On the other hand the household consumption is resisting as retail sales increased 19.0% YoY in December ( prior 20.8% YoY) and another positive point is the increase of the industrial production of 5.7% YoYat it was expected to decrease at 4.2% YoY. Consequently even if the economy is slowing down China is resisting to the global economic downturn. FRANCE: CONSUMER SPENDING RETREATED IN DECEMBER After being one of the last developed country to resist the yearly French consumption is felling down .Indeed after dropping of 0.9% in December the household consumption fell of 1.7% from a year ago. This is the first time since September 1997 that the yearly change of the household consumption is negative. On the other hand the due to the drop of oil and of food prices the household manufacturing expenses are not felling down. But the real test for the French household consumption will be the sales period,indeed presently the French consumption of leather an textile lost 3% from a year ago. EURO AREA: INDUSTRIAL NEW ORDERS ARE GOING DOWN IN NOVEMBER As detailed in the European Central Bank monthly report the Euro area will have to face further weakening in the economic outlook. Indeed the area is facing its worst recession since 1993. This is confirmed by the collapse of the industrial orders felling 26.2% from a year ago and felling of 4.5% in November. Global economic downturn is weakening the demand for Euro area goods and domestic consumption is not taking over consequently , companies new orders are dropping and industrial sector is particularly hit ./JB



On the currency side, U.S. stance on the yuan gets tougher Pfizer may buy Wyeth for $60bn

Disappointing economic data and dismal corporate news and guidance from techs sent indexes initially down. But some bargain hunting during afternoon hours had the major indexes struggling to break even. At the close though, the bears won out. Traders originally frowned on the latest corporate results, particularly those in the tech sector, as well as letdowns in the housing and labor markets. Techs were mixed with Apple (+6.68 %) reporting fiscal Q1 net income up 1.9% on strong iPod sales. But the company predicted fiscal Q2 results will be below Wall Street's expectations. The stock price had fallen in the past week on concerns about Chief Executive Steve Job’s health. "Even in these economically challenging times, we are incredibly pleased to report our best quarterly revenue and earnings in Apple history - surpassing $10 billion in quarterly revenue for the first time ever," Jobs said. Peter Oppenheimer, Apple's chief financial officer, added in an interview that "we were well ahead of the market, and the response to the Macbook and Macbook Pros notebooks were off the charts." Microsoft (-11.71 %) said it will cut 5,000 jobs over the next 18 months, confirming rampant speculation that the software giant's first major round of layoffs in its history were in the offing, as the company reported a 11% drop in fiscal second-quarter net income and pulled its view for the year. Hewlett-Packard (+1.08 %) rose but major techs retreated (Symantec -4.59 %, Adobe-7.82 %, Cisco -2.10 %) such as semiconductors: Texas Instruments -1.37 %, Micron Technology -5.52 %, Xilinx -2.64 %. Banks were mixed with Wells Fargo -5.17 %, Bank of New York -4.00 %, US Bancorp -13.74 %, Bank of America -14.52 % (John Thain resigned) Citigroup -15.26 % down and JP Morgan +2.08 %, Morgan Stanley +4.27 %, Goldman Sachs +1.62 % up. Home builders were down after a sharp decrease in housing starts: Centex -1.80 %, DR Horton -4.11 %, Lennar -7.49 %, KB Home -4.58 %. Retailers were mixed: Home Depot -1.39 %, Wal Mart -0.55 %, Costco -0.94 %, Family Dollar -1.17 %, but Macy’s +1.40 %, Nordstrom +0.23 %, Walgreen +1.79 %. The energy sector was down. Oil companies (ExxonMobil -1.30 %, Chevron -1.80 %, ConocoPhilips -2.61 %), oil services (Schlumberger -4.41 %, Halliburton -4.91 %, Nabors -7.67 %). Car Makers were down: Ford -7.18 %, General Motors -5.95 %. Among pharmaceuticals, Pfizer (-1.54 %) may buy Wyeth (-1.84 %) for $60bn. eBay (-12.12 %) said revenue decreased by 7 % while net profit was down 30.9 %. After session : General Electric fell 1.19 % ahead of the release of its Q4 results this afternoon, Bank Of America –1.05 %, Citigroup +3.11 %, Microsoft +2.4 %, Intel –1.48 % The Us futures were down this morning (7.30 GMT) : Dow Jones –0.72 %, S&P 500 –0.74 %, Nasdaq –0.58 %/ JFV

US Treasuries were mixed after Geithner comments and weak economic data. Longer-dated Treasury prices headed lower, reversing earlier gains, after President Barack Obama's pick for Treasury secretary said that China may be manipulating its currency. Short-term Treasurys held onto earlier gains that followed a pair of government reports that showed the U.S. labor market and housing sector continued to weaken. (Treasurys 2-year rate at 0.72 %, -5bps, 5-year rate at 1.58 %, -3 bps, 10-year rate at 2.57 %, +3bps, 30-year rate at 3.25 %, +9 bps). /LC

Japan’s markets fell 306.49 or 3.81 % for a third weekly decline to close at 7,745.25 in Tokyo after losses at Sony Corp .and Samsung Electronic add to gloomy economic data released in the United-States the main trade partner of Japan underlining the fact that global recession is deepening. In addition the fast appreciation of the Yen against the dollar and against the euro had a negative impact on the market. As a matter of fact component sector went down (Tokyo electron -9.28%, NEC -7.41%,CSK Holding-7.25%, Kyocera-6.74%), electronic sector went down (Pioneer-8.57%, Sharp -7.62% , Nikon -7.56%) and Sony the world’s second largest consumer electronic maker plunged 7% in Tokyo after forecasting its first annual loss in 14years , Canon the world’s biggest digital camera maker sank 5 %.Oil sector went down as the barrel is felling again ( INPEX -5.95%), financials went down ( Credit Saison -8.15% , Resona -7.34%,Nomura-5.61%),car sector was hit ( Nissan-4.36%,Bridgestone-4.0%,Denso-3.92%,Mitsubishi-3.33%)and heavy industry went down( Daikin Industries-6.29%)./JB

Oil prices finally ended slightly higher in a very volatile session as US stocks pared losses at the end of session after the White House said it would do what it could to restore financial and economic stability. The WTI advanced $0.02 at $42.27 a barrel while the crude oil for March delivery rose $0.12 at $43.36 a barrel in spite of a bearish oil inventories data. The US petroleum supplies rose more than expected during the week ended January 16: crude oil rose 6.1 million barrels (+1.4 million expected and after +1.1 million), the US gasoline inventories jumped 6.475 million barrels (+1.8 million expected) and the US distillate inventory rose 790 000 barrels ( +500 000 expected) after a 6.3 million rise the previous week. The futures one month for the March delivery were down 1.95 % at $42.82 a barrel. / LC

The U.S. dollar was mostly stronger versus its major counterparts except the Yen as gloomy economic U.S. data were released yesterday and a sell off on Wall Street fed investor’ flight to safety. Indeed the euro lost 0.17% against the dollar at 1.30, the dollar lost 0.64% against the Yen at 88.91. On the other hand the sterling was again under pressure on worries U.K. banks and the potential for further bailouts. /JB



Indices 23/1/09 % ChgNikkei 7745 -3,81%Topix 774 -2,81%Hong Kong 12612 -0,42%Singapore 1699 -0,53%South Korea 1093 -2,05%Thailand 434 -0,92%Indonesia 1309 -1,36%Taiwan

China 1991 -0,71%India 8710 -1,31%

CLOSED

Europe

America

Source : Bloomberg

Asia

Indices 22/1/09 % ChgEuroStoxx 50 2160 -1,30%DJ 600 183 -0,91%FTSE 100 4052 -0,19%DAX (XETRA) 4219 -0,98%CAC 40 2870 -1,24%AEX (Pays Bas) 235 -0,95%SMI (Suisse) 5329 +0,48%S&P / MIB (Italie) 18270 -1,53%IBEX 35 (Esp.) 8159 -0,87%BVL (Portugal) 2065 +0,68%

Indices 22/1/09 % ChgDJIA 8123 -1,28%S&P 500 828 -1,52%NASDAQ 1465 -2,76%TSX 8487 -3,10%Bolsa (Mexico) 19307 -0,98%Bovespa (Br.) 37894 -1,68%Merval (Argent.) 1058 -0,46%IPSA (Chili) 11876 -0,98%IGBVL (Pérou) 6881 -1,21%

Euro Stoxx 50 %SOCIETE GENERALE6,72ING GROEP NV-CVA 4,36ALLIANZ SE-REG 4,16SAP AG 1,22CARREFOUR SA 1,06

UP

Euro Stoxx 50 %NOKIA OYJ -9,09RENAULT SA -7,32UNICREDIT SPA -5,90DAIMLER AG-REGISTERED SHARES-5,61COMPAGNIE DE SAINT-GOBAIN-3,92

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Dow Jones %GENERAL ELECTRIC CO3,45JPMORGAN CHASE & CO2,08HEWLETT-PACKARD CO1,08JOHNSON & JOHNSON0,91MCDONALD'S CORP 0,03

UP

Dow Jones %CITIGROUP INC -15,26MICROSOFT CORP-11,71AMERICAN INTERNATIONAL GROUP-9,66GENERAL MOTORS CORP-5,95CATERPILLAR INC -5,87

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Nikkei 225 %NIPPON TELEGRAPH & TELEPHONE2,85SECOM CO LTD 2,49MITSUBISHI RAYON CO LTD0,94TOAGOSEI CO LTD 0,86ALL NIPPON AIRWAYS CO LTD0,60

UP

Nikkei 225 %MEIDENSHA CORP -9,89TOKYO ELECTRON LTD-9,28NTT DATA CORP -8,89FURUKAWA ELECTRIC CO LTD/THE-8,76PIONEER CORP -8,57

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SIEMENS would be preparing to announce its exit from its 34% stake in AREVA NP, the reactors subsidiary of French nuclear engineering group Areva (Les Echos) / AREVA may buy back the stake, worth around !2 bn ALSTOM : The Siemens’ exit from AREVA could rekindle speculation over a shake-up of the French nuclear sector with ALSTOM, a Siemens competitor that has expressed interest in a tie-up with AREVA, and TOTAL potentially interested in a deal with AREVA TECHNIP : AREVA’s CEO would have proposed a tie-up between her company & TECHNIP but French state rejected the offer TOTAL may join GDF SUEZ in building any 2nd EPR nuclear reactor in France (Le Figaro) / E.ON could also join the project ROCHE : European drug regulators have recommended approval for Roche's top-selling cancer drug MabThera to treat Leukaemia MERCK said oral investigational treatment Cladribine tablets for multiple sclerosis significantly reduced relapse rate in phase III trial ACS : 5 bidders including JPM and GE have presented offers for ACS' port assets, which could fetch around !1.3bn (Expansion) CREDIT AGRICOLE has decided against participating in the 2nd round of the French govt's rescue plan as it is sufficiently capitalized DEXIA may get liquidity from La Banque Postale (Les Echos) / Such a pact would allow Dexia to refinance more easily without going through a major change in its capital HANNOVER RE announces the buy of ING Life Insurance portfolio from Scottish Re / This business is estimated to generate in 2009 a premium volume of around $1.2bn & to improve diversification of earnings sources GERMAN BANKS : German state-controlled bank WestLB will be split up, with a new entity taking on all assets no longer belonging to WestLB's core business / The "consolidation bank" would take on risky portfolios and various assets amounting to around !80 bn / WestLB would then pursue a merger with other banks = Dekabank & Landesbank Hessen-Thueringen, or Helaba… (Handelsblatt) PFIZER would be in talks to acquire rival WYETH in a deal that could be valued at more than $60 bn (WSJ) GOOGLE : Q4 revenue ex-TAC $4.22bn (4.13bn exp) / EPS $5.10 (4.96 exp)

PORSCHE : Volkswagen reached its 2008 revenue and operating result targets but the global car market could shrink by some 15% this year, and, under such circumstances Volkswagen could not rule out a loss in the Q1 2009 (CFO in Boersen-Zeitung) VODAFONE : India's Supreme Court refused to intervene in a dispute between Vodafone & the income tax authorities / Vodafone had appealed against the federal govt's move to impose capital gains tax of up to $2 bn on its purchase of a 67% stake in Hutchison Essar FIAT : Corporate credit rating may be cut to junk by S&P FORTIS said it made a !14.1bn net loss in the first 9 months of 2008 “due to its sale of ABN and the breakup of its former Belgian-Dutch parent company” / Expects a further !4 to 5bn loss in Q4 “impacted by the continuing global crisis” VIVENDI : France Telecom filed a complaint at the end of 2008 against Canal Plus for abuse of its dominant market position (La Tribune) STEEL MAKERS : Nippon Steel is seen to cut crude steel output by 5 m metric tons, or 15%, during the current fiscal year, the biggest production cut in its history (Yomiuri Shimbun) / JFE, the 2nd-biggest steelmaker, plans to cut annual output by 4 m tons from a year ago AMD : Q4 revenue $1.16bn (1.23bn e) / EPS loss $0.68 (-0.55 e) / Sees Q109 sales to decreas from Q408 due to very limited visibility SAMSUNG : Q4 sales W18.45 Tln (20.3Trl exp) / Operating loss W940bn (-413bn exp) / Chip unit reported a loss margin of 14%, much wider expectations / Sees demand to continue to fall in several key product areas, including computers, cellphones and TVs…



BHP BILLITON RAISED TO BUY FROM HOLD BY ING KBCCUTTO HOLD FROM BUY BY CITIGROUP NOKIA CUT TO NEUTRAL FROM BUYBY NOMURA VALLOUREC CUT TO NEUTRAL FROM BUY BY UBS MEDIAGROUPCUT TO SELL FROM BUY BY UBS UBI BANCA CUT TO NEUTRAL FROM BUY BY UBS BHP BILLITON CUT TO NEUTRAL FROM BUY BY NOMURA ANGLO AMERICAN CUT TO NEUTRAL FROM BUY BY NOMURA RIO TINTO REDUCE FROM NEUTRAL BY NOMURA RIO TINTO CUT TO HOLD FROM BUY BY ING



Source : Bloomberg Source : Bloomberg



510152025303540455055606570758085

23/01/2007 23/07/2007 23/01/2008 23/07/2008 23/01/2009

22,252,5

2,753

3,253,5

3,754

4,254,5

4,755

5,255,5

23/01/2007 23/07/2007 23/01/2008 23/07/2008 23/01/2009

-1

-0,8

-0,6

-0,4

-0,2

0

0,2

0,4

0,6

0,8

1

1,2

23/01/2007 23/07/2007 23/01/2008 23/07/2008 23/01/2009

30

40

50

60

70

80

90

100

110

120

130

140

150

23/01/2007 23/07/2007 23/01/2008 23/07/2008 23/01/2009

1,2

1,25

1,3

1,35

1,4

1,45

1,5

1,55

1,6

1,65

23/01/2007 23/07/2007 23/01/2008 23/07/2008 23/01/2009

1

1,5

2

2,5

3

3,5

4

4,5

5

5,5

6

23/01/2007 23/07/2007 23/01/2008 23/07/2008 23/01/2009



Small & Mid Caps Jean de HENNEZEL Junior Financial Analyst

Documents

Morning Meeting 20090123 (2)