23 Jan.

09

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 
 
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
th
2008). The intensification of the recession during the 4 quarter explains this marked decline. Building
permits were down from 615 000 to 549 000

Indexes Price % 5 Days Ytd Forex Price % 5 Days Ytd

DJIA 8122,8 -0,86% -7,45% EUR/USD 1,2878 -2,89% -7,79%
S&P 500 827,5 -1,77% -8,39% EUR/JPY 114,07 5,15% -9,89%
Nasdaq 1465,5 -1,62% -7,07% USD/JPY 88,58 2,39% -2,30%
CAC 40 2869,6 -4,21% -10,83% Oil Price % 5 Days Ytd
DAX 4219,4 -2,71% -12,28% Brent $/b 43,6 -0,30% 4,38%
Eurostoxx 50 2160,1 -4,32% -11,75% Gold Price % 5 Days Ytd
DJ 600 182,9 -4,33% -7,82% Gold $/oz 853,4 1,23% -3,23%
FTSE 100 4052,2 -1,62% -8,61% Rates USA Euro Japan
Nikkei 7745,3 0,35% -12,58% Central Banks* 0,25 2,00 0,12
Shanghai Comp 1990,7 4,41% 9,33% Overnight 0,20 0,90 0,12
Sensex (India) 8701,7 -2,57% -9,80% 3 Months 0,10 1,20 0,23
MICEX (Russia) 557,6 -7,95% -10,00% 10 Years** 2,57 3,09 1,24
Bovespa (Brasil) 37894,3 -3,21% 0,92% *US: Fed Funds; Jap: Overnight; Euro: Refi
** Euro: German Bund rate Source : Bloomberg
                


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

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Time Country Indicator Period GE forecasts Consensus Previous

0.50 am Japan All industry activity index November -2,2 % -0,4 %
Business confidence indicator 70 73
8.45 am France January
production outlook indicator -76 -73
10.00 am Italy Retail sales November 0,0 %, -0,4 % YoY -0,3 %, -0,7 % YoY
10.00 am Euro area PMI manufacturing (advanced) January 33,1 33,9
10.00 am Euro area PMI services (advanced) January 41,5 42,1
10.30 am United Kingdom GDP (1st estimate) 4th quarter -1,2 %, -1,4 % YoY -0,6 %, +0,3 % YoY
10.30 am United Kingdom Retail sales December -0,7 %, +1,5 % YoY +0,3 %, +1,5 % YoY

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



Results Obama accuse la Chine de manipuler le yuan, Le Figaro

Ford / General Electric (13.30 GMT) / Schlumberger économie, p.1
(11.00 GMT) / Xerox 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

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             

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

th
Weekly mortgage applications fell 9.8 % during the week ending on January 17 , 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

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             

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

Global Equities – Institutional Financial Services Company

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             

Europe America Asia

Indices 22/1/09 % Chg Indices 22/1/09 % Chg Indices 23/1/09 % Chg
EuroStoxx 50  2160 -1,30% DJIA  8123 -1,28% Nikkei  7745 -3,81%
DJ 600  183 -0,91% S&P 500  828 -1,52% Topix  774 -2,81%
FTSE 100  4052 -0,19% NASDAQ  1465 -2,76% Hong Kong  12612 -0,42%
DAX (XETRA)  4219 -0,98% TSX  8487 -3,10% Singapore  1699 -0,53%
CAC 40  2870 -1,24% Bolsa (Mexico)  19307 -0,98% South Korea  1093 -2,05%
AEX (Pays Bas)  235 -0,95% Bovespa (Br.)  37894 -1,68% Thailand  434 -0,92%
SMI (Suisse)  5329 +0,48% Merval (Argent.)  1058 -0,46% Indonesia  1309 -1,36%
S&P / MIB (Italie)  18270 -1,53% IPSA (Chili)  11876 -0,98% Taiwan  CLOSED
IBEX 35 (Esp.)  8159 -0,87% IGBVL (Pérou)  6881 -1,21% China  1991 -0,71%
BVL (Portugal)  2065 +0,68% India  8710 -1,31%
Source : Bloomberg
Euro Stoxx 50 % Euro Stoxx 50 % Dow Jones % Dow Jones % Nikkei 225 % Nikkei 225 %
SOCIETE GENERALE6,72 NOKIA OYJ -9,09 GENERAL ELECTRIC3,45
CO CITIGROUP INC -15,26 NIPPON TELEGRAPH2,85 MEIDENSHA CORP -9,89
& TELEPHONE
ING GROEP NV-CVA 4,36 RENAULT SA -7,32 JPMORGAN CHASE &2,08
CO MICROSOFT CORP-11,71 SECOM CO LTD 2,49 -9,28
TOKYO ELECTRON LTD
DOWN

DOWN

DOWN
UP

UP

UP
ALLIANZ SE-REG 4,16 UNICREDIT SPA -5,90 HEWLETT-PACKARD1,08
CO -9,66 GROUP
AMERICAN INTERNATIONAL 0,94
MITSUBISHI RAYON CO LTD NTT DATA CORP -8,89
SAP AG 1,22 -5,61 SHARES
DAIMLER AG-REGISTERED 0,91
JOHNSON & JOHNSON GENERAL MOTORS -5,95
CORP TOAGOSEI CO LTD 0,86 -8,76
FURUKAWA ELECTRIC CO LT
CARREFOUR SA 1,06 -3,92
COMPAGNIE DE SAINT-GOBAIN MCDONALD'S CORP 0,03 CATERPILLAR INC -5,87 0,60
ALL NIPPON AIRWAYS CO LTD PIONEER 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…

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23, rue Balzac – 75008 Paris - Standard : + 33 (0) 1 444 333 00 – Fax : + 33 (0) 1 70 70 19 19 -6-
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

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

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23, rue Balzac – 75008 Paris - Standard : + 33 (0) 1 444 333 00 – Fax : + 33 (0) 1 70 70 19 19 -7-
www.global-equities.com
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 
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
23/01/2007 23/07/2007 23/01/2008 23/07/2008 23/01/2009 23/01/2007 23/07/2007 23/01/2008 23/07/2008 23/01/2009

Source : Bloomberg Source : Bloomberg

 
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
23/01/2007 23/07/2007 23/01/2008 23/07/2008 23/01/2009 23/01/2007 23/07/2007 23/01/2008 23/07/2008 23/01/2009
Source : Bloomberg Source : Bloomberg

 
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
23/01/2007 23/07/2007 23/01/2008 23/07/2008 23/01/2009 23/01/2007 23/07/2007 23/01/2008 23/07/2008 23/01/2009

Source : Bloomberg Source : Bloomberg

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 -8-
www.global-equities.com
        

      

     
   
 
     

     


   
     
     


   
     

   
Small & Mid Caps
Jean de HENNEZEL Junior Financial Analyst  

     

   
   
     
    
     
     
     
     
    
     
     
     
   
     
    
    
    

   
   
 

     

   
   
    
    
    
    
 

  

   
   
     
     
     
     
 
     

     

   
    


  

   
   
   
   
   


Global Equities – Institutional Financial Services Company

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