Economic Research-EcoTV n°12, June 2008 ECOTV by BNP Paribas, a 13 minute online monthly program covering economic news. Headlines : -Japan: challenges to be addressed -Government finances in the eurozone -Surging food prices - the consequences! FOCUS D'Arvisenet Editorial - June 2008 by Philippe d'Arvisenet, Head of Economic Research With the worst of the financial crisis safely skirted, many signs now point to stagflation as the obstacle to overcome in developed economies, while in emerging markets efforts to keep up exports as a source of growth only feed into inflationary pressures. Emerging countries: rather moderate slowdown in growth, contrasting trends in country risk by Guy Longueville, Head of Country Risk - Economic Research and François Faure, Senior Economist, Country Risk - Economic Research The global trade and growth slowdown experienced in developed economies today is significantly different than that of 2001-2002. As a result, its effects on emerging markets will remain mitigated, but for certain countries significant risk will stem from worsening in external deficits and social unrest. MARKETS Intervention in the Fed's agenda (FX Strategy) by Ian Stannard, Senior Currency Strategist - Fixed Income Research The negatively correlated and lockstep relationship in between commodity prices and the USD have prompted the Federal Reserve to defend the falling currency and ease global inflation pressure. The ECB in turn, has taken that option away by seeking tighter monetary conditions. How will markets react to these inconsistent policies from central banks? Oil: Is the sky really the limit (Global Outlook) by Harry Tchilinguirian, Senior Oil Market Analyst, Commodity Derivatives - CIT Research Recent trends have highlighted the global economy's seemingly boundless appetite for oil while sources from both OPEC and non-OPEC areas have been stop and start. Read on for the supply, demand and price forecasts that will likely determine 2009 conditions. Bear market alpha strategies (Alpha Strategy) by Clive McDonnell, Head of Equity Strategy - BNP Paribas Securities (Asia) Market momentum skipped a chance for a pull-back in early Q2’08, rallying instead USD 30+/Bbl in April to mid May. NYMEX WTI raced past seasonally weaker refiner demand for crude oil and recovering oil stocks. The window for the current correction is closing as the summer season begins. Extended strength into Q2’08 derived from the distillate product complex, notably in Europe but also in Asia. TRENDS AND ANALYSIS Gas Trends - A bullish cocktail for US Gas prices by Marco Boeri, Senior Analyst - Energy & Commodities Research Delays in liquefaction supplies, a predicted drop in Canadian exports to the Lower 48 and USD devaluation are all factors leading to strong competition on the LNG market in the foreseeable future. But ultimately prices will depend on Finding and Development costs as well as production costs. Energy Snapshots: Carbon capture and storage by Sebastien Loison, Analyst - Energy & Commodities Research How can industries cope with the mounting need to reduce CO2 emissions and slow climate change? Carbon Capture and Storage (CCS) may provide some answers to this problem, but certain aspects including regulatory environments, economic feasibility and set backs in the process’ energy efficiency remain to be addressed. PRC: The prospects for the rest of 2008 and outlook for 2009 By Andrew Freris, Chief economist and head of Credit Research - Asia Pacific In the People's Republic of China (PRC) many factors, be they political, economic or geological, play a part in the prospects for the rest of 2008 and the outlook for 2009. LATEST NEWS New advertising campaign: embrace the future with us BNP Paribas Corporate & Investment Banking has launched its new advertising campaign, illustrating its commitment to clients with the following tagline: "Embrace the future with us". Until the end of this year, BNP Paribas CIB will be present on selected sections of the Wall Street Journal, the Financial Times and The Economist websites. BNP Paribas acquires Bank Of America's equity prime brokerage Business BNP Paribas acquires Bank Of America's equity Prime Brokerage Business and becomes a leading prime broker in the USA. A targeted acquisition which allows one of Europe’s leading Corporate and Investment banks to reinforce its global leadership in Equities & Derivatives. Iberdrola 1.750 billion Euro Benchmark Bond Issue (Spain) With this deal, BNP Paribas has broken into Iberdrola’s inner circle of core banks just as the Spain-based utilities company is consolidating its dominant market position at home and abroad. Pearson Dollar Finance Two plc 350 million USD 5.5% 2013 & 550 million USD 6.25% 2018 (United Kingdom) The Bank helped make Pearson’s first bond issue since 2004 a successful return to the capital markets. Pearson achieved pricing that was close to flat against its secondary curve on the back of an exceptional orderbook – a clear reflection of a strong investor presentation, solid credit outlook as well as a much improved market environment. WPP Group plc 750 million Euro 6.625% bond issue due May 2016 (United Kingdom) BNP Paribas acted as joint bookrunner in this highly successful transaction that demonstrated the full extent of the market's recovery since March. The Bank’s contribution to this landmark deal also shows our mettle in less than perfect market conditions. World Petroleum Congress (WPC) BNP Paribas CIB sponsors as "official Bank" the WPC to be held in Madrid from June 29 to July 3. This congress is the biggest event in the petroleum industry. It is organized every 3 years and covers all aspects of the petroleum industry. It will gather more than 4000 delegates. Mark Gibson from BNP Paribas will present a paper on Catatrophe Bonds "Using insurance linked securities to mitigate the financial impact of natural disasters" and Harry TCHILINGUIRIAN from BNP Paribas CIT will publish a paper: "Oil prices above US$100: Funds or fundamentals?" in the Congress’ newsletter. We will also host a Cocktail on July 2nd at BNP Paribas’ office in Madrid. If you need further information, please contact claire.maudens@bnpparibas.com AWARDS AND RANKINGS HIGHLIGHTS The Banker awards Best overall commodity finance bank Best energy commodities finance bank The Asset Triple A Awards for Derivatives and Structured Products 2008