HBOS House Price Index registers its first MoM increase in 13 months

ECONOMIC DATA

- (RU) Russian Jan CPI M/M: 2.4% v 2.4%e; Y/Y: 13.4% v 13.4%e; YTD 1.3% v 1.2%e

- (SP) Spain Industrial Output nsa Y/Y: -15.4% v -17.4% prior; WDA Y/Y: -19.6% v-16.0%e

- (CZ) Czech Dec Trade Balance: -CZK11.8B v -CZK9.2Be

- (UK) Jan HBOS House Prices M/M: +1.9% v -1.6%e; 3M/Y: -17.2% v -18.4%e; First M/M increase since Jan 2008

- (IT) Italian Jan Preliminary CPI (NIC icl Tobacco) M/M: -0.1% v 0.0%e; Y/Y: 1.6% v 1.8%e

- (IT) Italian Jan Prelim CPI- EU Harmonized M/M: -1.6% v -1.1%e; Y/Y: 1.5% v2.0%e

- (GE) German Dec Factory Orders M/M: % v -2.5%e; Y/Y: % v-24.5%e

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

- Equities: Swiss Re [RUKN.SZ] Guided FY08 Net loss of-CHF1B belowconsensus estimates of CHF582.9M. It sought to raise CHF3B in capitalfrom Berkshire Hathaway and could consider an additional CHF2B capitalraise. Berkshire to be issued with convertible capital instruments inreturn for funds, notes can be converted into shares after 3 years. Itnoted that it would cut dividend to 'nominal amount' ||Zurich Financial[ZURN.SZ] Reported Q4 net profit $205M versus $606.7M expected with OpProfit at $1.0B slightly below consensus of $1.1B. The company did notsee significant improvements in the economic environment in the nearterm || Bonduelle [BON.FR] Reports Q2 Rev of €403.5M, up 4.2% y/y. Itreaffirmed its FY08/09 operating profit targets and noted that theywould match year ago levels || Norske Skog [NSG.NO] Reported Q4 Netloss of NOK1.28B slightly better than the loss of NOK1.31B expected. Itrevenues came in at NOK7.4B above the NOK6.39B consensus. ||Skandinaviska Enskilda [SEBA.SW] Reports Q4 Net profit ofSEK3.51B v3.75B y/y, Op profit SEK5.51B v SEK4.38B y/y, Proposes no div for 2008,plans SEK15 right issue || Deutsche Bank [DBK.GE]. The company reportedits Q4 net loss was €4.8B, which was in line with its pre-announcementon Jan 14th. Its Q4 sales were a negative €885M versus the €7.3B y/y.Reported 2008 loss before income taxes of €5.7B with Net sales of€13.5B compared to year-ago levels of €30.7B. CEO Ackermann stated thatJan revenues of €2.8B were significantly above those y/y, just offrecord levels || Unilever [UNA.NV] Reported Q4 Net profit of €1.14Babove consensus of €867M. It revenues were €10.2B roughly in line withthe estimates of €10.1B with volumes down 1.6% y/y. It would notprovide FY10 guidance. Its FY08 Rev came in line with consensusestimates with €40.5B || Atos [ATO.FR] Reported Q4 revenues of €1.41Band in line with expectations of €1.4B with an organic revenue growth3.6% .Its Order book stood at €7.4B at end of 2008. || Crucell[CRXL.NV] Reported Q4 Net €19.2M above expectations of €6.8M. Itrevenues €93.7M roughly in line with the €92M estimates. Its FY08 Netprofit €14.6M beat expectations of a loss €2.8M. with revenues of€283.3M better than the €267M consensus. It guided FY09 revenues up 20%in constant currencies and saw op profit improving significantly. Thusit expected another positive year in 2009 and added it had solidcashflow. || Air Berlin [AB1.GE] Reported Jan Load Factor of 69.4%versus 69.1% y/y || Tui Travel [TT.UK] Provided Interim ManagementStatement noting that its bookings continued on track with capacitycuts. It reported 2008 Total Load Factor of 75%, which was "broadly inline" y/y and noted it would continuing to achieve load factor targetswith strong average selling prices. || Fortum [FUM1V.FH] Reported Q4Sales of €1.6B compared €1.65B.
Op profit €611M slightly below the€622M estimates. It saw continued economic slowdown as negativelyeffecting power demands, current crisis may increase counterparty riskissues || Peter Hambro [POG.UK] Sought to raise £55M in new share issueand commented that itsmerger plans with Aricom were at an advancedstage || Danske bank [DANSKE.DC] Reported Q4 Net Loss DKK5.89B belowexpectations for a profit of DKK385.7M. Net interest income DKK7.37Bwas slightly above the DKK6.91B expectations. To seek DKK25B fromgovernment || Santander [SAN.SP] Reports Q4 Net €1.94B v €2Be, FY08 Net€8.88B v €9.2Be, Op profit €17.73B v €16.37Be ||

- Speakers: BoJ Mizuno stated that it must observe Japanese corporatefunding after the end of March's fiscal year. Cutting interest rates tozero might hurt the market and saw little point in setting range ofpolicy rate. Controlling term rates is likely to have better impact ||Japan Vice Fin Min Sugimoto: To maintain current foreign reserve stance|| Former Japan Fin Min: Tanigaki: Sharp increase in Yen FX rate mayhurt exporters but noted the current USD/JPY FX rate was not deviatingfrom Japan economic conditions. He warned against increases in tradeprotectionism and suggested that G7 address such an issue || PolishCentral Bank Skrzypek comented that Euro adoption wasnot a cure foreverything and that ERM2 entry would trigger constant interventions. Hereiterated that their could be additional interest rate cuts || RussianCentral Banker Shvetsov: Reiterates additional rate hikes are possibleif its currency situation remains unchanged ||

- In Currencies: The better HBOS Housing data provided the GBP to sustaina mildly bullish tne during the course of the European morning. GBP/USDtested near the 1.45 level. EUR/GBP holding below the 0.89 level.Russian: Ruble weakened against its basket to test its imposed ceilingof 41 ceiling. Back on Jan 22nd the Russian Central bank halted thewidening of the Ruble corridor at the 41 level against its basket andnoted that the upper basket boundary would not change in coming monthsand later added that it would use all tools available to maintain theceiling. BoJ Mizuno noted that confidence in USD depended upon USeconomic and fiscal sustainability. Japan growth could be worse thanlatest BOJ projection as economy in hard landing mode || UBS commentedthat USD demand seems uncertain but US Treasury appetite could supportdollar || EUR/USD: Chatter circulating of a 'significant' optionbarrier build below the 1.23 level. || Bank of Tokyo currency analystcomments on Euro noting that the EUR/USD pair could rally in short termbut its sustainability is doubtful

- Fixed income: A combination of Supply from France and Spain, weakerequities and a slim chance of ECB easing pushed the German yield curveto its steepest levels in over decade in early trade.
France sold €6.2Bin 10 and 30y OAT's with reasonable results, but the increased supplysent yields higher in longer parts of the curve. The 2-y 10y yieldspread touched 190bps, its widest level since August 1997. Spain alsosold €4.8B in 2y and 5y Bonos. Bunds are currently down 26 ticks in theMarch contract at 121.66 with just over 200k contracts traded at thistime .

- In Energy: Petroplus [PPHN.SZ] Reports Q4 Net loss $774.9M v profit$21.8Me. It noted that it had $700M credit available in working capitalfacility at end Dec. It expected refining margins to be lower in FY09and FY10 || Neste Oil [NES1V.FH] Reported Q4 Op loss of €352M worsethan expectations of a profit €138.2M. Sales were €2.81B aboveexpectations of €2.6B. It saw the distillate market outperforminggasoline market in 2009 and expected weaker global demand for petroleumproducts in 2009. It guided its 20009 CAPEX at around €950Mlevel.Pressure on diesel margins due weak economy and expects "very weak"demand for gasoline throughout 2009 || Tullow Oil [TLW.UK: Successfullycompletes Kingfisher-3A Appraisal Well, Uganda and sought developmentOptions for Albert Basin being considered ||

- Credit Crisis: France won EU's approval to provide aid for firms inform of reduced interest rates || Polish Deputy Fin Min commented thatZloty currency softness was a serious concern for its debt service ||UBS [UBSN.SZ] Swiss Gov't dened press speculation that it intended tobreak up the bank ||

NOTES

- After the record $67B US quarterly refunding announcement on Wednesday, there were some notable comments out of the Far East as both Japan and China seem to indicate no immediate change in their appetite in Treasuries.

- Dealers pointing out that another EU bank (Spain's Sabadell) did not exercise a bond call option.
Deutsche performed a similar feat a few weeks ago and traders are pondering if a trend is in place on this type of activity.

- The UK HBOS housing index saw its first Month-over-Month increase since jan 2008.

- Waiting for BOE and ECB interest rate decisions. BOE expected to cut by 50bps to 1.00% while the ECB is likely to 'pause' at its 2.0% level.

- US earnings and Jan retail Same-store sales data highlight a busy NY morning. Boeing received its second cancellation of a 787 Dreamliner order.

- Looking Ahead:

- Key US corporate earnings seen ahead of the opening bell: Burger King [BKC]; Cardinal health [CAH]; Cigni [CI]; Duke Energy [DUK]; Estee Lauder [EL]; Flir Systems [FLIR]; Kellogg [K]; Mastercard [MA]; Sonoco [SON]

- 7:00 (UK) Bank of England Interest Rate Decision: Consensus expectations are for a 50bps cut to 1.00%. The Current Bank Rate is 1.50%

- 7:45 (EU) ECB Interest Rate Decision: Consensus expectations are for rate to remain steady at 2.0%. Thus the ECB would pause after enacting 225bps cut from last Oct.

- 8:30 (CA) Canadian Dec Building Permits M/M: -5.0% expected v -11.8% prior

- 8:30 (US) Q4 Non-farm Productivity: 1.5% expected v 1.3% prior

- 8:30 (US) Q4 Unit Labor Costs: 2.8% expected v 2.8% prior

- 8:30 (US) Initial Jobless Claims w/e Jan 31st: 580k expected v 588k prior

- 8:30 (US) Continuing Claims: 4.795M expected v 4.776M prior

- (CZ) Czech Interest Rate Decision: 50bps cut to 1.75% expected, current Repo Rate is 2.25%

- (SA) South African Interest Rate Decision: 100bps cut to 10.50% expected; current rate is 10.50%

- 10:00 (CA) Ivey Purchasing Managers Index: 40.0 expected v 39.1 prior

- 10:00 (US) Dec Factory Orders: -3.1% expected v -4.6% prior

Speakers:

- 8:30 (US) Fed's Plosser speaks in Philadelphia

- 8:30 (EU) ECB's Trichet holds monthly news conference

- 12:30 (SZ) SNB's Hildebrand speaks in Zurich