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24-Apr-09 DRY CLEANING


President Obama said yesterday that the credit-card industry needs more accountability and that the White House will push for
more protections for consumers. Congress is working on consumer-friendly credit-card legislation, and Obama said reform could be
enacted "in short order." "We are confident we can arrive at something that is commonsensical, something that allows the industry to
continue to provide loans and run a stable business model," Obama said. He laid out four core principles: nanning unfair rate increases,
fees and penalties, providing transparent and easy-to-understand forms and statements, providing easy-to-access contract terms to
enable simplified comparison shopping for consumers, creating more accountability in the system, with stronger monitoring and
enforcement. "The goal of any additional efforts should be to achieve the right balance between enhancing consumer protections and
ensuring that credit remains available to consumers and small businesses at a reasonable cost"
Cleaning process of the banking sector, in addition to a stable housing sector thanks to better credit conditions is what the
worldwide officials were aiming at to set the base of a solid and sustainable economic recovery. The stress bank from the Geithner’s team
th
is supposed to deliver its conclusions to the banks today, nothing public. On May 4 there should be an official announcement about it.
But again, remember that the stress test was decided in February at a time when every assets were falling down, in order to bring
confidence back and help cleaning banks balance sheets. Same for the G20 in Washington today, which should not bring much more
than the previous G20 in London. Politics and economists experts are about to succeed, don’t expect them to fail at this stage in some
further awkward negative announcement.
Earnings went rather fine, making the GDP next week not that relevant anymore. Either companies followed the sharp activity drop
in building cash to face a tough activity in case it was to last (Intel, Caterpillar, IBM, Apple etc…) , while so much cash may not be needed
as some corporate are already saying March month is stabilizing (Novartis, ABB, Casino, Akzo, EMC Corp once again yesterday for
instance). Some stabilizing housing data and business environment at a time of low energy prices, low yields, low mortgage rates, a
rebounding equity market just reflecting that a Great Depression has been avoided might quickly boost demand and heavily reduce
already declining inventories. Equity markets might enjoy that scenario for a while, especially at a time when fund managers are still in a
heavy and lasting recession mood, if no longer on a 29 crisis one. Q1 GDP will be bad, but now we will focus on Q2, once the Eurostoxx
is back on some 2600 level, and filtering good and bad names as well as scrutinizing valorizations.
In Europe yesterday the increase of the PMI survey in April was a surprise, and already reflecting the positive impact of the
dreaming monetary environment as well as the rebounding equity markets. It provides some early hope that the region will contract much
less sharply in the second quarter than in Q1 and Q4 last year. The rise in the composite PMI index from 38.3 to a 6 month high of 40.5
was stronger than expected (consensus 38.9). Of course, the index still points to a fairly sharp fall in GDP, of around 0.6% q/q, but this is
a significant improvement on Q4’s 1.5% q/q decline and the even bigger fall likely to have been seen in Q1. The improvement reflected
sharp rises in both the manufacturing and services indices. In all, then, coupled with other recent surveys like the German ZEW, there are
some signs here that the worst of the euro-zone economic downturn may well be over.
The 3.0% m/m fall in US existing home sales in March, from 4710k to 4570k, reverses the improvement in February. In more
general terms, home sales have stabilized following the post-Lehmans plunge and remain above January’s trough of 4490k. March’s fall
is probably just noise rather than a renewed downward trend. Admittedly, around 50% of sales are now related to distressed properties,
which is hardly a sign of strength. But at least these sales are helping to reduce the inventory overhang. Even though it nudged up from
9.7 to 9.8 in March, the months’ supply of existing homes for sale remains well below November’s peak of 11.0. This will make today’s
new home sales even more of a thrill.
Analyst are at last starting to switch their view. Goldman Sachs and Morgan Stanley (the latter being very bearish so far), have
recently raised their forecasts for China's growth this year, citing the aggressive moves by the Chinese government to stimulate the
economy. Economists at Morgan Stanley upgraded on yesterday their forecast for China's 2009 gross domestic product growth rate to
7% from 5.5%. The revision is "based on much stronger-than-expected policy responses that have boosted confidence and thus
effectively prevented a potentially more severe slowdown in private consumption and investment in Q1, boding well for a sooner and
stronger recovery in headline GDP growth". While China has been hurt by the collapse in global demand for its manufactured products,
the aggressive stimulus measures taken by the government in Beijing appear to be successful in stimulating growth. Goldman Sachs is
even more bullish than Morgan Stanley on China's growth prospects, raised their forecasts for Chinese growth to 8.3% from 6% for 2009
and to 10.9% from 9.0% for 2010. China and US back on track thanks to a prompt and huge reactivity will spare the all world from a deep
recession. Remember China is boosting its domestic housing infrastructure to welcome millions of workers in urbanization, and is setting
up a developed health and security programs. All in all, until 2011 China is building an equivalent of a NY city &Hong Kong every year ...
The right questions, bear or bull, is what is the market worth in term of valorization. Whatever the economic pace, certainly not the
5% growth seen not so long as you don’t run the 100 meters in Olympic games just after you left the intensive care for a heart attack
recovery, so that analysts and strategists thoughts can be useful in term of forecasts, and certainly not the Great Depression negative
growth from 29. Second question being how will the Fed unwind such an inflationary threat smoothly. But for that one, cross that bridge
when you come to it., enjoy the ride first. Rangy day today though due to the G20 and fear of a leak of the stress test during the weekend
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 49,2 1,3179 97,05 2,92 3,22 -0,17 1,67 3,69 0,13 0,16 -0,19 0,91 0,17 -0,69 0,99 0,37 0,89 US
Perf 1d % 1,36 0,27 0,95 -0,18 bp 1,3 bp -1,03 0,69 0,08 0,63 -0,90 0,24 -0,39 -0,02 -1,43 0,03 -0,71 0,03 Europe
ECONOMIC DATA with impact
German IFO (8h gmt) expected flat at 82 / should reveal further signs of business confidence stabilizing / the expectations component
might be rising for the fourth month in a row, mirroring recent increases in the ZEW / interesting
Earnings : Honeywell (HON), Schlumberger (SLB), Ford (F)
Durable Orders (12h30 gmt) expected –1.5% from previous +3.4% / ex transport –1.3% from +3.9% / the rebound in the ISM new
orders index points to a sharp moderation in the rate of decline of durable goods orders, although it doesn’t imply that durable goods
orders will necessarily increase in March / interesting if any improvement
New Home Sales (14h gmt) expected 337k from previous 337k / housing data in the focus lately to determine whether it has been
recovering, which would bring a sign of a possible economic recovery / interesting
Treasury Secretary Geithner hosts meeting with G-7 and G-20 finance ministers in Washington
POSITIVE IMPACTS
ALLIANZ and American Express are considering selling down their 2.3% stakes in Industrial & Commercial Bank of China
FRENCH BANKS are working on a plan to put bad LBO debt into a special structure to remove their risk from the balance sheet (Les
Echos) / According to the newspaper, LBO exposure are : BNP €8.9bn - ACA €6.5bn - Natixis €6.2bn - GLE €5.6bn
TELIASONERA : Q1 sales SEK 27.2bn (27.36bn exp) / Ebitda SEK 8.82bn (8.57bn exp) / Sees FY09 Ebitda at 2008 level + said the
economic downturn is beginning to hit consumer demand in several of its markets, especially its Eurasian businesses
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24-Apr-09 DRY CLEANING


ENSKILDA (SEBA) : Q1 revenues SK11.43bn (10.51bn exp) / NII SK5.9bn (5.25bn exp) / Loan Losses SK2.39bn (in line) / Operating
SEK1.8bn (1.97bn exp) as total costs reached SEK7.24bn (6.15bn exp) / Strong start to year / Press conf at 8:30 UKT
DEUTSCHE BANK : Fitch affirmed and removed from Rating Watch Negative the 'F1+' ratings assigned to the ABCP
VALEO : Q1 sales €1.62bn, in line / Operating loss €66m (-73m exp) / To reinforce cost-cut programme + cut 2009 investments by
1/3 vs 08 / Confirms forecast of 30% cut in H1 global auto prod. / Sees global auto prod. continuing to fall but at less strong rate from Q2
AREVA : Q1 sales €3.003bn (in line) / Confirms its outlook for backlog and revenue growth

AMERICAN EXPRESS : Q1 revenue $5.93bn (6.45bn exp) but with EPS $0.32 (0.20 exp) / Consolidated provisions $1.8bn (from $1.2bn
in Q1 2008) / Repeated it saw some improvement in early deliquency rates /
AMAZON : Q1 sales $4.89bn (4.76bn e) / EPS $0.41 (0.31 e) / Sees Q2 sales $4.3-4.75bn (4.61bn e) & operating $110-190m (174m e)
JUNIPER : Q1 revenue 764.2m, in line / EPS $0.17, in line / Sees Q2 revenue $740-780m (774m exp) with EPS $0.16-0.18 (0.18 exp)
NEGATIVE IMPACTS
VOLVO : Q1 sales SEK56.1bn (54.88bn exp) / Operating loss SEK 4.53bn ( -2.90bn exp) / Q1 FCF -SEK15.7bn / Expects its key
European market to be cut in half or worse by plunging demand this year / Cut 2009 European & Northam truck sales forecasts
FERROVIAL may raise less than it hoped from the sale of Gatwick airport after disappointing air traffic figures (Reuters)
GENERALI : CEO said he sees first signs of Q1 revenue in line with Q108 but impossible to give FY outlook

SAMSUNG EL. : Q1 sales W18.6 Tln (17.5 Tln e) / Operating 147.6bn (-242 bn e) / Said too early to call a recovery in demand & prices
HYNIX SEMICOND. : Q1 sales W1.2 Tln, in line / Operating loss 652bn (-585 bn exp) but forecast an upturn as chip prices recover
JFE (world's 3rd-biggest steelmaker) reported Q1 operating below estimates + did not provide a profit forecast for FY
MICROSOFT : Q3 revenue $13.65bn (14.1bn exp) / EPS $0.39, in line / Expects Q4 shipments to be weak with continued slowdown in
biz PC / But it also said that it will continue its efforts to cut costs & said that Windows 7 is well on track…
AMGEN : Q1 rev. $3.31bn (3.63bn e) / EPS $1.08 (1.15 e) / Sees FY rev. $14.4-14.8bn (14.9bn e) with EPS $4.55-4.75 (4.62 e)
US CAR SECTOR : The U.S. government is preparing a bankruptcy filing for Chrysler that could happen as soon as next week (NYT)
RESULTS DIVIDENDS EVENTS
CNP (€2.85) / Nokia (0.40) / Reed Elsevier NV
ENI / ACS / Bankinter / Valeo / Volvo / Bristol Myers Squibb
Today (€0.29) / Swisscom (CHF 19.00) / Syngenta Lufthansa AGM
/ 3M / Honeywell / Schlumberger / Xerox
(CHF 6.00) / VW (€1.93)
Atlas Copco / Scania / Merck KGaA / Nippon Steel / Verizon Lufthansa (€0.70) / Eiffage (€1.20) / Heineken
Monday
/ southwestern Energy (€0.34)
Tuesday BBVA / BP / Sandvik / Theolia / Pfizer / Sun Micro Bouygues (€1.60) Fortis EGM
ArcelorMittal / royal Dutsch Shell / Sanofi-Aventis / SAP /
Siemens / Bayer / Continental AG / Volkswagen / France
Aegis (GBp 1.711111) / Akzo Nobel (€1.40 ) /
Wednesday Telecom / Geberit / Nordea Bk / Norsk Hydro / ST Micro Fortis EGM / Allianz AGM
Nestlé (CHF 1.40) / Sandvik (SEK 3.15)
(after US close) / General Dynamics / American Electric
Power / Time Warner
AstraZeneca / BASF / BG group / B Sky B / Cap Gemini /
Technip / Scor / Dassault Systemes / Lufhansa / Edison / Allianz (€3.50) / Credit Suisse ( CHF 0.10) /
Thursday AXA AGM / Deutsche Tel AGM / BASF AGM
Ferrovial / Novo Nordisk / Kellogg / Motorola / Safeway / Danone (€1.20) / Ahold (€0.18)
Eastman Kodak / International Paper
TRADING IDEAS
Reistance 2358 on the cash Eurostoxx should only be broken next week due to the fear of the weekend and leak regarding the stress test
BUY PHILIPS / DANONE / UNILEVER looking good
BUY OIL names as TOTAL / ENI / BP / ROYAL DUTCH to play the economic recovery
BUY NESTLE / L OREAL / VIVENDI / SIEMENS / PERNOD on reversal Head & Shoulder possibility
BUY AHOLD / GSZ on double bottom possibility

BUY PEUGEOT / SELL DAIMLER // BUY BASF / SELL AIR LIQUIDE // BUY AHOLD / SELL METRO // BUY BAYER / SELL AKZO
BUY TOTAL / SELL REPSOL // BUY BNP / SELL SOCGEN
BROKER METEOROLOGY
CREDIT SUISSE ..................RAISED TO NEUTRAL FROM SELL ........................................................................................... BY UBS
CABLE & WIRELESS ..........RAISED TO OVERWEIGHT FROM NETURAL ............................................................... BY JPMORGAN
STORA ENSO ......................RAISED TO BUY FROM UNDERPERFORM ........................................................................ BY MERRILL

LUKOIL ................................CUT TO NEUTRAL FROM BUY ........................................................................................... BY MERRILL


SACYR .................................CUT TO SELL FROM NEUTRAL ................................................................................................ BY UBS
SOLARWORLD ............CUT TO NEUTRAL FROM BUY ........................................................................................................... BY UBS

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO


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24-Apr-09 DRY CLEANING

CHART OF THE DAY


France Industrial Production outlook indicator and GDP in volume
Since 2001

a/a, %
40 3,0
30
2,5
20
2,0
10
0 1,5
Avril
-10
1,0
-20
0,5
-30
-40 0,0
-50
-0,5
-60
T4 08 -1,0
-70
-80 -1,5
01 02 03 04 05 06 07 08 09

Perspectives générales de production dans l'industrie - G -


PIB en volume - D -

Source : Bloomberg

After dropping to its lowest level in February at -76 and reaching -66 in March the French production outlook gained 48 pts to reached
-18 in April its highest level since June 2008. Such improvement as never been seen since the creation of the statistic in 1987.

ECONOMIC DATA
Time Country Indicator Period GEforecasts Consensus Previous
5.00GMT United-States Treasury's Geithner tohost G-7Financeministers 0
7.45GMT France Consumer spending March 0,2%,-0,5%YoY -2,0%,-2,0%YoY
9.00GMT Germany IFObusiness climate April 82,5 82,3 82,1
9.00GMT Germany IFOcurrent assessment April 82,1 82,7
9.00GMT Germany IFOexpectations April 82,6 81,6
9.30GMT UnitedKingdom GDP(advanced) First quarter -1,5%,-3,8%YoY -1,6%,-2,0%YoY
9.30GMT UnitedKingdom Retail sales March -0,3%,+1,1%YoY -1,9%,+0,4%YoY
13.30GMT United-States Durablegoods orders March -1,5% -1,5% +3,4%
13.30GMT United-States Durablegoods orders (ex transportation) March -1,3% -1,3% +3,9%
15.00GMT United-States Newhomesales March 337000 337000

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


DJIA 7957,1 - 2,03% - 9,34% EUR/USD 1,3186 1,02% -5,68%
S&P 500 851,9 - 1,52% - 5,68% EUR/JPY 127,94 1,15% 0,91%
Nas daq 1652,2 - 1,09% 4,77% USD/JPY 97,02 2,20% 6,58%
CA C 40 3008,6 - 0,49% - 6,51% Oil Price % 5 Days Ytd
DA X 4538,2 - 1,55% - 5,65% Brent $/b 48,9 -6,51% 17,22%
Eur os tox x 50 2259,5 - 1,27% - 7,68% Gold Price % 5 Days Ytd
DJ 600 191,5 - 0,92% - 3,46% Gold $/oz 911,4 4,91% 3,33%
FTSE 100 4018,2 - 0,73% - 9,38% Rates USA Euro Japan
Nikkei 8727,9 1,05% - 1,49% Central Banks* 0,25 1,25 0,11
Shanghai Comp 2459,3 - 2,77% 35,07% Overnight 0,10 0,63 0,11
Sens ex ( India) 11109,6 1,71% 15,16% 3 Months 0,10 0,79 0,20
MICEX ( Rus s ia) 928,1 1,29% 49,81% 10 Y ears** 2,92 3,22 1,43
Bov es pa ( Bras il) 45801,2 1,17% 21,97% *US: Fed Funds; Jap: Overnight; Euro: Ref i
** Euro: German Bund rate So urc e : B lo o m berg
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ECONOMIC DATA PREVIEW


Watch in the United-States the durable goods orders for March due at 13.30 GMT expected to drop of 1.5% after the rebound of
3.4% in February, excluding transport the durable goods orders should drop of 1.2% after rising of 3.9% in February.

Watch in Germany the IFO business climate for April due at 9.00 GMT, expected to remained stable at 82.5 as is most likely already
reached a bottom in March . Watch in the United Kingdom the GDP (advanced) for the first quarter due at 9.30 GMT, expected to
drop of 1.5% as the financial crisis and the global economic downturn are strongly hitting the activity. /JB

ECONOMY
UNITED-STATES : INITIAL JOBLESS CLAIMS INCREASED AND CONTINUING CLAIMS REACHED A NEW HISTORICAL HIGH
After reaching 674 000 at the end of March and 660 000 the first week of April the number of Americans filing first time applications for
unemployment dropped to 610 000 (revised from 613 000) April 10 th. Unfortunately this encouraging data did not last and the initial
jobless claims rose last week to reach 640 000. Meanwhile the continuing claims break a new historical high for the 12 th straight week
to reach 6 137 000 April 11th. These gloomy data are confirming that the strong deterioration of the employment market as more
American are loosing their jobs and as it became more and more difficult to find a new job once you have been lay off. Nevertheless the
situation is not that dark as it seems , indeed around 50 % of the lay off are not the consequence of the weak activity but of “fear state
of mind” meaning that the recovery could show good surprises on the labour market.

UNITED-STATES : EXISTING HOME SALES FELL MORE THAN FORECAST IN MARCH


After improving in February existing home sales fell more than forecast from 4.71 million to 4.57 million in March (expected 4.65 million).
Nevertheless sales of existing U.S. home in March remained close to a four month average and prices rose from February underlining
the fact that housing recession is significantly improving. Indeed prices for home resale reached their biggest monthly gain since June
2005. Existing home sales figures are showing a stabilisation and it must be noticed that as the housing market led the economy into the
recession it should logically be the first sector to stabilise.

EURO AREA : PMI MANUFACTURING AND SERVICES CONTRACTED AT A SLOWER PACE IN APRIL
Europe’s manufacturing and service industries contracted at a slower pace in April. Indeed after reaching its lowest level at 33.5 in
February and after reaching 33.9 in March the PMI manufacturing rose to 36.7 in April. Meanwhile the PMI services which reached it
lowest level in February at 39.2 rose to 40.9 in March and reached 43.1 in April . Finally the European PMI composite rose from 38.3 in
March to 40.5 in April. If we quickly look to the breakdown by countries the PMI manufacturing and services rose in France at 40.0 (prior
36.5) and 46.2 (prior 43.6) and in Germany at 35.0 (prior 32.4) and 43.5 ( prior 42.3). If these improvements are encouraging the PMI
manufacturing and service remained under the level of 50 indicating a contraction of the activity.

FRANCE : PRODUCTION OUTLOOK INDICATOR REACHED ITS HIGHEST LEVEL SINCE JUNE 2008
After dropping to its lowest level in February at -76 and reaching -66 in March the French production outlook gained 48 pts to reached
-18 in April its highest level since June 2008. Such improvement as never been seen since the creation of the statistic in 1987.The
production outlook level was expected to be much worse as the economist consensus forecasted a data of -67. Even if one data do not
make a trend this is surely a very positive new for the French economic outlook as such an improvement is only seen in a period of
recovery. Meanwhile personal perspective of production gained 12 pts in April even if at -35 they remained very weak, showing that the
bottom is behind us. On the other hand the French business confidence indicator rose from 68 to 71 (forecast 69) . These figures are
encouraging and confirm our scenario of a French recovery end of 2009 and we expect the French GDP to reach +1.0% (YoY) at the
fourth quarter 2009./JB
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24-Apr-09 DRY CLEANING


VIXindex: impliedvolatility ontheS&P 500 $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
24/04/2007 24/10/2007 24/04/2008 24/10/2008 24/04/2009 24/04/2007 24/10/2007 24/04/2008 24/10/2008 24/04/2009
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
24/04/2007 24/10/2007 24/04/2008 24/10/2008 24/04/2009 24/04/2007 24/10/2007 24/04/2008 24/10/2008 24/04/2009
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
24/04/2007 24/10/2007 24/04/2008 24/10/2008 24/04/2009 24/04/2007 24/10/2007 24/04/2008 24/10/2008 24/04/2009
Source : Bloomberg Source : Bloomberg
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