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7-Apr-09 TANGO AND CASH

Investors, households and Corporate are all cash invested. All of them were rigorously and scrupulously following the “cash is king”
rule. Problem being for households that there are not much place to go in term of investment vehicles but take opportunity of the low yield
situation to come back on equity and property businesses, precisely what the worldwide stimulus was aiming at. The investors followed
the bear strategists running after the market and worsening their view as the market kept on falling, forgetting the reason for the abyssal
levels which was hedge fund withdrawals needing some cash whatever the price of the positions cut, while the visibility was too poor for
fund managers to jump in and counter the move so much the environment was scary, reason why there were no bidders. Problem, once
again, being that the drop was big enough to potentially screw all the trillion dollars of stimuli and their hypothetic positive impact on the
economy. Whatever is being spent, it will only work if credit conditions are biting, and confidence coming back. As such the market
rebound is a relief, and the upside potential becomes huge. As to corporate, they were just happy to preserve their cash flow situation and
cash-in what ever storage they had, at whatever prices, better explaining the bad earnings seen in Q4 with the after Lehman heart attack,
and probably once more in Q1, but with some inflexion possibly been seen in the middle of the quarter, which will be the focus of the
earnings releases more than the poor results seen in Q1.
This low inventory story was the one to push Q4 and Q1 GDPs (Q1 out on April 29th) sharply down, in addition to a really
economic shock, but this low inventory situation will be difficult to handle as things are picking up. Indeed, it might be a brake to the
economical rebound short term so much firms will not be able to deliver, and a sharp boost for the manufacturing sector which will be
good news in term of hiring. Even on the housing front, economists keep on telling you it can’t pick up so much the inventory level is high.
But the drop from 11 months in November to 8 months in February can accelerate promptly given the optimistic mood that might be
spreading, boosted by the amazingly low long term yields level which makes the housing sector a big opportunity to jump in, before things
are back on track and yields flying up in order to fight a possible inflation.
In the meantime the healthy and needed consolidation took place as early as Monday lunchtime (the old good expected “Tuesday
Counter Day”), so much this market is pre anticipating, ahead of the feared Alcoa earnings out tonight. It will be interesting to see the
strength of the indices back to strategists friendly bearish trend. Chartists are very much looking for the gap to be filled on the Eurostoxx
cash (2103/2111) as a temporary target. This level will obviously be a downside target, in which we do not believe as it is too much of a
consensus. Remember that a gap can stay open for a long time. However, the focus will be this gap, fitting with the ones on a few single
stocks (see below in the “trading ideas” part)
Vallourec news that it will pay 6 euros dividend is reflecting the reason why the bear rally is not so bear, 7.5% yield at a time when
there is not much place to go but property and equity businesses . The market when falling down like a knife was already suggesting no
one would pay any dividend … The economic calamity, that was enough discounted anyway, might not be such a calamity. It is instructive
to examine the 1973-74 period when the stocks fell, which occurred in a context of great inflationary stress. The decline of equity
valuation registered in Europe through 1973-74 was of the same order of 2007-2009. The reversal of January 1975 was dramatic, without
evidence of significant improvement in the economic environment. Stocks rose without significant correction until May, and without major
correction until the summer. A new cycle had begun, one in which the environment for equities was unfavourable in many respects.
Nonetheless, economic calamity provided investors with a fantastic opportunity in January 1975. Investor capitulation works in both
directions. A good part of the investment community is now hoping that market correction will give them a second chance. Do not be
surprise if the consolidation doesn’t head far down.
The Nikkei is holding rather well this morning (flat when writing), welcoming the expansion of collateral loans from the Bank of Japan
which left rates unchanged, while Australia did cut interest rates by 0.25% to 3%
Yesterday’s low volume should remain today, with some fear ahead of the Alcoa data tonight which are expected bad / same
kind of session in Europe as yesterday’s one.
WTI €/$ $/¥ 10 yr US 10 yr Euro Basic Energy Financ Health Tech Tel Indus Utilities SOX S&P NAS DOW Close

Last 51,1 1,3364 100,63 2,90 3,22 -2,16 -1,69 -2,60 0,49 -1,08 -0,19 0,04 -1,01 -2,26 -0,83 -0,94 -0,52 US
Perf 1d % -4,44 -0,39 0,36 -1,85 bp -0,3 bp -3,25 -2,41 -2,76 0,43 -2,65 -1,97 -1,87 -0,77 -3,68 -1,63 -2,09 -1,32 Europe
ECONOMIC DATA with impact
Alcoa (AA) expected to post a loss of $0.58 per share (after US close)
POSITIVE IMPACTS
ENI will sign a $4.2 bn accord to sell its stake in Gazprom Neft to Gazprom (WSJ)
FIAT : sales in Brazil (2nd-largest mkt) rose 12% in March from a year earlier
SACYR : Citigroup requested approval from Spain’s regulator to carry out its planned offer of €3.96 /shr to buy
Itinere Infraestructuras (Sacyr’s unit)
IBERDROLA : ACS is looking to increase its stake to 20% in IBE (Expansion)
VALLOUREC : €6 per shr (vs 5 exp ) to be proposed at the General Meeting (4 June 2009)
REPSOL: Petrobras announced a commercial oil & nat. gas find in the Santos Basin (light oil & nat.l gas reserves equal to 550M barrels
of oil.) / PBR hold 63% stake in the site , Repsol holds 37%
DEUTSCHE POST is unlikely to take a stake in the Royal Mail (Handelsblatt)
SPANISH RETAIL : Spain's competition watchdog wants to relax time limits on sales and scrap second permits currently issued by
regional authorities (Cinco Dias)
ALCATEL / ERICSSON (minor): VMS (big Vietnam telco operator) is expected to sign 3 contracts with foreign firms in the 2nd Q to
upgrade its network to provide 3G ("Each contract will be worth dozens of millions of dollars,")
FORTIS confirms will not submit BNP project for shareholders’ vote April 8 & 9 EGM but to Shareholder’s vote on April 28 AGM /
Separately Fortis NV's China fund venture has become the country's first asset manager to pay dividends to investors of an overseas
investment fund, as a rebound in global stock markets eliminated the fund's losses.
CBK may sell its Eurohypo commercial property unit or eastern European operations to win EU approval for German state aid (Source)
NEGATIVE IMPACTS
TOTAL : may postpone an invest decision in the Joslyn permit of the Canadian oil sands due to costs & has suspended & may
dismantle a pilot project in the area.
VEOLIA : is close to a deal to buy about half of Hong Kong Tramways Ltd from conglomerate Wharf
Holdings with an option to buy the rest at a later date (no amount diclosed)
INDITEX (minor) has bought the 20% of its Polish unit that it did not already own (La Vanguardia).
IRISH BANKS : Ireland’s govt may increase taxes and cut spending in an emergency budget today.
RESULTS DIVIDENDS EVENTS
Today Veolia sales / Lukoil / Alcoa (AMC) / BB&B Skanska (SEK 5.25) / Zurich Fi (CHF 11.00) Veolia AGM
BG Group (GBp 7,277778) / Fortum (€1.00) / Prudential Fed to study the end of short selling forbiden (return
Wednesday Constellation Brands
(GBp 14,34444) / Sampo (€0.50) / Unibail-Rodamco of the ''uptick rule") / Intel Developper Forum /
 WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

7-Apr-09 TANGO AND CASH

(€1.75) Sulzer / Belgacom AGM / Schlumberger AGM /
United Technologies AGM / Daimler AGM (08.00
GMT) / Telecom Italia AGM / Daimler AGM
Thursday Chevron (AMC) / Daimler (€0.60) / Givaudan (CHF 10.00) / KPN (€0.40) Klepierre AGM
Philips / Goldman Sachs (BMO) / Intel (AMC) BBVA (€ 1,016129) / Banco Popular (€0.08) / Belgacom
Tuesday 14 th
/ Johnson & Johnson (€1.68) /
Klepierre (€1.25) / Julius Baer (CHF 0.50) / Smith &
Wednesday 15 th ASML / Abbott Nephew ($0,090222) / Sulzer (CHF 2.80) / Tullow Oil
(GBp 4,444444)
TRADING IDEAS
BUY DANONE / AEGON / TOTAL / ENI which just closed their gap ready to resume their upside move
BUY BAYER / MUNICH RE / L OREAL / EON on reversal Head & Shoulder
BUY « SIEMENS / NOKIA / BASF / AIR FRANCE / AIR LIQUIDE » to play bull charts , island reversal looking type
BUY PHILIPS / AHOLD / GSZ / FTE on double bottom possibility & BUY BNP / AXA to play gap closure

BUY AHOLD / SELL METRO // BUY GENERALI / SELL AXA // BUY EBAY / SELL AMAZON // BUY AEGON / SELL ALLIANZ

GAP ON THE EUROSTOXX CASH 2103/2111, which fits with a few gaps on single stocks :

ALLIANZ 65.15/65.60 // ARCELOR 16.15/16.90 // AGRICOLE 8.72/8.80 // AIR LIQUIDE 62.60/53.03 // ALSTOM 39.50/40.01 // AXA 9.816/9.539 //
BAYER 35.98 / 36.19 // BNP 33.09/33.80 // BASF 23.34/23.71 // BBVA 6.42/6.51 // DAIMLER 19.87/20.175 // DBK 31.72/31.985 //
ING 4.51/4.736 // LOREAL 52.325/52.40 // LVMH 48.48/49.01 // NOKIA 9.04/9.18 // PHILIPS 11.53/11.63 // RENAULT 17.05/17.73 // REPSOL
13.32/13.43 // RICHEMONT 18.52/18.82 // SANTANDER 5.44 / 5.53 // SCHNEIDER 51.10/52.385 // SOCGEN 29.80/30.51 // ST GOBAIN 21.78/21.995 //
SIEMENS 43.17/44 // TEL ITALIA 0.971/0.9815 // UNICREDITO 1.325/1.361 // VINCI 29.07/29.215 / ZURICK FIN 182.90/186.30
BROKER METEOROLOGY
MEDIASET ............................................... REMOVED FROM LEAST PREFERRED ........................................ BY BANK OF AMERICA
JAPANESE MARKETS ............................ RAISED TO NEUTRAL................................................................................... BY CITIGROUP
EUROPEAN & ASIAN MARKETS ........... PREFERRED TO US MARKETS ................................................................... BY CITIGROUP
INDUSTRIAL SECTOR ............................ RAISED TO OVERWEIGHT ........................................................................... BY CITIGROUP

FIAT .......................................................... CUT TO HOLD FROM BUY........................................................................................ BY RBS

BMW ......................................................... CUT TO HOLD FROM BUY........................................................................................ BY RBS
BMW ......................................................... CUT TO REDUCE FROM NEUTRAL ................................................................. BY NOMURA
TOMTOM .................................................. CUT TO NEUTRAL FROM BUY................................................................................. BY UBS
INTERCONTINENTAL HOTELS .............. CUT TO NEUTRAL FROM BUY................................................................................. BY UBS
STANDARD CHARTERED ...................... CUT TO SELL FROM NEUTRAL ............................................................................... BY UBS
TELECOMS SECTOR ..........CUT TO NEUTRAL ............................................................................................................. BY CITIGROUP

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO

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7-Apr-09 TANGO AND CASH

CHART OF THE DAY

Producer Price Index Euro zone Industry Ex construction (YoY)
since 1999

10

-2

-4
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source : Eurostat

Producer prices dropped from -1.1% in January to -0.5% in February as expected but fell of 1.8% from a year ago, the sharpest drop
since 1999 (forecast -1.5%). This decline of producer prices was mainly led by the drop of 60 % of oil prices since their peak of July
2008 and by the drop of commodity prices, but not only as prices of other components slowdown.

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
6-10 April China Foreign Exchange Reserves March $ 1946 billion
0.50 GMT Japan Official Reserve Assets March $ 1009 billion
Japan Bank of Japan target rate April 7 th 0,10% 0,10%
9.30 GMT United Kingdom Industrial production February -1,2%,-12,5% YoY -2,6%,-11,4% YoY
9.30 GMT United Kingdom Manufacturing production February -1,5 %,-14,2% YoY -2,9%,-12,8% YoY
10.00 GMT Euro area GDP (final) 4th quarter -1,5%,-1,3% YoY -1,5%,-1,3% YoY -1,5%,-1,3% YoY
20.00 GMT United-States Consumer credit February - $ 3,0 billion $ 1,8 billion
22.00 GMT United-States ABC consumer confidence April 5 th -49 -49

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

DJIA 7975,9 6,06% - 9,12% EUR/USD 1,3352 0,76% -4,44%
S&P 500 835,5 6,12% - 7,50% EUR/JPY 134,15 -2,31% 5,61%
Nas daq 1606,7 7,01% 1,88% USD/JPY 100,48 -1,57% 9,84%
CA C 40 2929,8 7,74% - 8,96% Oil Price % 5 Days Ytd
DA X 4349,8 9,04% - 9,57% Brent $/b 53,0 11,10% 27,01%
Eur os tox x 50 2179,7 8,41% - 10,95% Gold Price % 5 Days Ytd
DJ 600 185,0 8,64% - 6,73% Gold $/oz 876,9 -4,60% -0,59%
FTSE 100 3993,5 6,14% - 9,94% Rates USA Euro Japan
Nikkei 8837,5 7,55% - 0,25% Central Banks* 0,25 1,25 0,09
Shanghai Comp 2416,3 1,91% 32,71% Overnight 0,10 0,70 0,09
Sens ex ( India) 10534,9 4,84% 9,20% 3 Months 0,20 0,68 0,22
MICEX ( Rus s ia) 836,1 9,54% 34,96% 10 Y ears** 2,91 3,22 1,45
Bov es pa ( Bras il) 44167,3 8,64% 17,62% *US: Fed Funds; Jap: Overnight; Euro: Ref i
** Euro: German Bund rate So urc e : B lo o m berg
 WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

7-Apr-09 TANGO AND CASH

ECONOMIC DATA PREVIEW

Watch in the United-States the consumer credit due at 8.00 GMT expected to sharply decrease as the country is strongly hit by the
credit crunch.

Watch in the Euro area the final release of the GDP for the fourth quarter due at 10.00 GMT expected confirm its sharp drop as the
global economic downturn , the credit and real estate crisis hit strongly the euro area economy./JB

ECONOMY
EURO ZONE : PRODUCER PRICES FELL THE MOST FOR 10 YEAR AND RETAIL SALES DROPPED TO AN HISTORICAL LOW FROM A YEAR AGO IN
FEBRUARY
Producer prices dropped from -1.1% in January to -0.5% in February as expected but fell of 1.8% from a year ago, the sharpest drop
since 1999 ( forecast -1.5%). This decline of producer prices was mainly led by the drop of 60 % of oil prices since their peak of July
2008 and by the drop of commodity prices, but not only as prices of other components slowdown. This drop was of course boosted by
the global economic downturn humping the global demand and curbing prices. As a matter of fact the risks of deflation are increasing
which will be the worst situation. Indeed as it reflect a wide gap between the demand and the offer, a deflation situation increase the
unemployment and the bankruptcies deepening the deflation as a vicious circle. Meanwhile the retail sales dropped from + 0.1% in
January to - 0.6% in February. From a year ago European retail sales fell from -1.7% to -4.0% the sharpest decline on record (
forecast -2.5%). The retail sales are released in value and inflation is slowly getting close to zero in the euro area (0.6% in March)
explaining the sharp decline. In addition the credit crunch and the strong deterioration of the labor market are impacting negatively on
European retail sales. The fell of producer prices and of retail sales put more pressure on the European Central Bank to cut more
consequently its leading rate in the future./JB
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7-Apr-09 TANGO AND CASH

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
09/04/2007 09/10/2007 09/04/2008 09/10/2008 09/04/2009 09/04/2007 09/10/2007 09/04/2008 09/10/2008 09/04/2009
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
09/04/2007 09/10/2007 09/04/2008 09/10/2008 09/04/2009 09/04/2007 09/10/2007 09/04/2008 09/10/2008 09/04/2009
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
09/04/2007 09/10/2007 09/04/2008 09/10/2008 09/04/2009 09/04/2007 09/10/2007 09/04/2008 09/10/2008 09/04/2009
Source : Bloomberg Source : Bloomberg