ECONOMIC DATA

- (JP) BOJ April Regional economic Assessment lowered its view in 7 of the 9 regions

- (JP) Japan Cabinet Apr Report: Keeps economic assessment unchanged; Economy remains in 'severe state'

- (HU) Hungarian Avg Gross Wages Y/Y: 2.5% v 3.5%e

- (SP) Spain Feb Industrial orders Y/Y: -30.8% v -31.0% prior

- (SP) Spain Q1 House Prices Q/Q: -3.0% v -2.3% prior; Y/Y: -6.5% v -2.8% prior

- (SP) Spain Central Bank: February Spain Bank bad loan ratio 4.15% v 1.13% y/y

- (SZ) Swiss Feb Retail Sales (Real) Y/Y: -3.8% v -0.2%e

- (IT) Italian Feb Industrial Orders M/M: -1.5% v -2.6%e; Y/Y: -32.7% v -30.7%e

- (IT) Italian Feb Industrial Sales M/M: -3.1% v -4.0% prior; Y/Y: -23.9% v -20.3% prior

- (NO) Norwegian March Trade Balance: NOK30.3B v NOK29.5B prior

- (SW) Swedish AMV Unemployment Rate: 4.8% v 4.8%e

- (EU) Euro-zone Feb Trade Balance: -€2.0B v -€5.0Be; Trade Balance sa: -€4.0B v -€4.9Be

- (EU) Feb Construction Output M/M: -1.8% v 1.6% prior; Y/Y: -11.8% v -9.0% prior

- (IT) Italian Feb Current Account: -€3.80B v -€7.248B prior


SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

- Following a now familiar weekly trend, equity markets in Europe opened to the positive side following yesterday's strong close. Opening moves were pushed by financial names expecting further good news out of US banks [C] and a continued up trend in steel names following further upgrades [TKA.GE]. In another now familiar trend choppiness immediately entered the markets as realization of below expected numbers out of French firms that reported in the post market yesterday brought down their sectors (namely travel and hotels due to Accor [AC.FR] and retail following Carrefour [CA.FR]). Following earnings from Nokia yesterday, and SonyEricsson today, have seen both those firms trading in the green despite a common belief that the overall handset market is to contract 10% in 2009 and that both units lost market share in Q1. All three main European bourses had moved convincingly into negative territory through the first 45min of trade, the major bankruptcy of General Growth Properties in the US spooking investors in commercial REITS and property based funds, names such as Hammerson [HMSO.UK] led the decline in this sector with additional weight coming from analysts cuts in the sector at UBS. Overall volumes remain below their averages with the CAC40 slightly outperforming due to volume in Carrefour and Accor following Q1 reports. Drifting off their lows, markets again headed into negative territory just at 5:00EST as Euro zone construction figures fell m/m and overall trade balance continued its decline for 'all the wrong reasons.' Markets, however, are continuing to place themselves for the widely anticipated GE and Citigroup earnings due out at 6:30EST.

- In equities, Carrefour [CA.FR] reported Q1 Rev €22.7B v €23Be, Q1 SSS +1.5% ex fuel, Q1 French Rev €9.6B v €9.7Be. The global grocer stated that trading has not improved since March and that the firms 'Hard discount' like for like sales were -8% y/y. CEO: the environment remains tough, generation of free cash flow remains a priority. || Accor [AC.FR] reported Q1 Rev €1.62B v €1.79Be (-5.8% on a like for like y/y basis) and cut its 2009/2010 renovation CAPEX to €315M. Europe's largest hotel chain will accelerate cost savings plans and holds no illusions that sales will improve in Q2 of 2009. The groups US based Motel 6 unit saw sales decrease 12% y/y. || Sony Ericsson [SNE] [ERICB.SW] JV reported its Q1 Net loss €293M v profit €133M y/y. Rev €1.7B v €2.7B y/y, Q1 Gross Margins 8% v 15% q/q, v 29% y/y, Q1 Market share i6% v 8% q/q, Q1 ASP €120 v €121e and Q1 Units shipped 15.4M (-35% y/y). The handset maker plans to cut another €400M in costs. Sony Ericsson forecasts that the global handset market for 2009 will contract at least 10% from around 1,190M units in 2008. Note** on 04/16: NOK: Nokia continues to expect 2009 industry mobile device volumes -10% y/y. Continues to expect the decline to be greater in the H1 than in H2.

- Speakers: ECB's Trichet commented in late Asia that Euro weakness did not reflect current conditions. The ECB must maintain appropriate balance between immediate needs and long-term sustainability. The central bank would fully take into account financing structure of Euro area, with decision coming on May 7th. Ambiguity on policy would delay return to sustainable prosperity. He did note that risks of sudden economic, financial developments do remain || BoE's Blanchflower reiterated his view that the UK was facing a jobs 'crisis' and that government action was needed quickly . he saw high probability that jobless rate could rise above 3M and that the issue of unemployment would likely be biggest issue at next election || UK Trade Minister commented that he as not concerned over a further fall in the GBP currency. The export competitiveness would help the UK move out of the recession || BOJ April Regional economic Assessment lowered its view in 7 of the 9 regions. Regional economic situation has continued to deteriorate and production has decreased. It expected continued weakness in business sentiments and decline in corporate profits. Industrial CAPEX levels have continued their decline || SNB's Roth commented that Switzerland's near term economic outlook was 'anything but bright' and noted that any recovery would not start until 2010 and would be a slow process. He did see some signs of stabilization at this time. He reiterated the SNB view that CHF currency interventions would continue for as long as needed to avoid deflationary expectations. Interventions were not aimed at any competitive devaluation. Lastly, Roth noted that corrective measures would be needed once the economy does recover. || BOE's Kate Barker commented that it was clear that inflation targeting alone cannot produce a stable economy. She stated that the fall in loan-to-value in existing home mortgages may be coming to an end, expect home prices to rise once again || BoJ's Hayakawa noted that he was observing signs that output could reach bottom in current quarter but added that it was uncertain if output would rise after leveling off || Czech Central Banker Tuma stated that there was no reason to open IMF credit line for Czech Republic. Direction of interest rates depends on CZK and economy and could move in either direction. || French PM Fillon stated that he was confident that economic recovery would arrive in early 2010 as there were increasing signs of recovery in emerging nations and US

- In Currencies: The Dealers were analyzing comments from ECB's Trichet with their overall assessment that perhaps Trichet wants a weaker Euro. One dealer noted that the EUR/USD was around 2% below its 200week (4 year average) and noted that the currency could as 'hardly be viewed as "weak". Overall dealers continued to view the outlook for the euro as negative (highlighted by Fed's Fisher comment in Asia that Eurozone challenges exceeded those in US). Moody's placing of Ireland's AAA sovereign ratings on review for possible downgrade also weighed on Euro sentiment.
Dealer suggesting that selling of Euro currency was likely to continue on any rallies. Te EUR/USD did mange to break below the 1.3070 level, lowest since Mar 18th (Pre-FED quantitative easing level). The EUR/JPY pair retested below the 130 level dealer chatter again circulated €45B in Euro bond redemptions today.

- The GBP was softer following the comments from the UK trade minister in which he was not concerned over a further fall in the GBP currency adding that its export competitiveness would help the UK move out of the recession. GBP/USD tested below the 1.48 level on the back of those comments in pre-European trading. The CHF was softer after SNB's Roth 's reiterated the view that "currency intervention had become necessary as the rise in the CHF threatened to offset rate cuts" and pledged to continue to intervene to offset deflationary risks. EUR/CHF nearing the 1.52 level and USD/CHF above the 1.16 handle. Also note that Moody's placed Ireland's AAA sovereign ratings on review for possible downgrade

- Commodities: China Antaike Assoc Pres commented on the alleged China reserve building plans .
They believe that China seeks to purchases 1M tons of aluminum and 400K tons of copper over three years and also target 400K tons of lead and zinc during the same time frame.

- Fixed income: European domestic agenda was sparse this Friday. But dealers noting that next week's will be quite active with notable events and data releases, including the U.K. budget, BoE minutes, UK CPI and UK GDP to name a few. Dealers have also noted €18B in German redemptions are due today, and over €50B due next week which combined with a relative dearth of supply should lead to a good week for EGB's next week. Irish 10y Debt actually firmed up against the Bund this morning despite the potential for downgrade at Moody's , with the yield spread down 8bps at 210bps, and well off the 274bps printed earlier this year

- In Energy: Venezuela Oil Min Ramirez noted that oil prices have stabilized with a floor of $45/bbl.
OPEC must continue monitoring oil prices as they fluctuate and that oil inventories remain overstocked. ||WSJ reported that the Obama administration was strongly urging UN Security Council to issue a formal censure of Iran and Syria for arms-smuggling to militant groups in Lebanon and Palestine

- Credit Crisis: Moody's places Ireland's AAA sovereign ratings on review for possible downgrade.
Action reflects the severe economic adjustment taking place in Ireland, which threatens to undermine the country's low tax, financial services-driven economic model. The govt's debt affordability metrics will probably be lastingly impaired.


NOTES

- Active currency session on the official front. Comments from ECB's Trichet in late Asia and SNB's Roth helped to provide some USD strength (see currency section for details).

- Risk Aversion theme tried creeping back into view ahead of Citigroup earning's release. Aversion also fueled by Moody's comment on Ireland. The agency placed Ireland's AAA sovereign ratings on review for possible downgrade (S&P did cut it back on Mar 30th)

- Some of the early traders chatter about the earnings season. Overall assessment is that a lot of the “unfamiliar” household names forecasting bigger losses to come.

- BOJ's Shirakawa reiterated that Japan economy was worsening sharply. Japan Government concurred this view.

- Fisher in Beijing: Eurozone challenges exceed those in US. Understands China's concerns. Fisher downplayed risk of USD depreciation.

- Yellen noted that a severe economic downside risks persists and the recession's end remains unclear

- Blanchflower: UK is in jobs crisis and biggest issue at its next election (Which must be held before Jun 3rd 2010).

- Looking Ahead: Citigroup, GE report earnings before the NYSE opening bell (6:30am ET likely)

- 7:00 (CA) Canadian March CPI M/M: 0.3% expected v 0.7% prior; Y/Y: 1.4% expected v 1.4% prior; CPI Core M/M: 0.2% expected v 0.5% prior, Y/Y: 1.9% expected v 1.9% prior

- 8:00 (PD) Polish March Employment M/M: No expectations v -0.4% prior; Y/Y: -0.8% expected v -0.2% prior

- 8:30 (US) Fed's Hoeing speaks in Washington

- 10:00 (MX) Mexican Overnight Rate: 50bps cut to 6.25% expected; current overnight rate is 6.75%

- 10:00 (US) Apr Prelim U of Michigan Confidence: 58.5 expected v 57.3 prior

- 12:30 (US Fed's Bernanke speaks in Washington