In addition I anticipate a rise in rates

Then, "day is over" Or is there room for a "after" Rarely, in a circle of managers, participating guests do were also interested in other analyses. It is true that the last few months have taken aback than a professional. After losing 13 during the month of May alone, the CAC 40 again moved its records during the summer. But is this a sustainable catching-up or a final Fireworks prior to a sullen receipt This was the issue. To respond, two guests have worn the ludic metaphor: for Marc Renaud (Director General of JRC Actions), "the party is over". According to him, the rates are very low, they can only go up. Corporate profits are at their top. He should expect a slowdown in growth. All this not bode in his eyes for the shares. But it will always be room for those who strive to chase the market anomalies, the stock-pickers. So much the better, it is his job. Conversely, for Roland Lescure, Deputy Director of the management at Natexis Asset Management, central banks are reassured on the evolution of inflation. This relief may be beneficial to the actions or obligations. This is why he allowed to spin the image of "after". Between the two, Pascal Blanqué (Director of the Credit Agricole Asset Management management) was rather for optimism. According to him, the threat of inflation and monetary tightening is exaggerated. Liquidity will remain abundant, the world economy is in the environment of growth cycle, recipient progressions should be close to 10, finally the stock changes are attractive. While Jean-Pierre Petit, Director of economic research and investment strategy (Exane BNP Paribas), a well localized danger begins to emerge from the residential real estate in the United States. The latter is to gripper. Whereas since five years, he represented up to 25 of the growth of the country! In other words, when it was banal to say that, during this time, the expansion of the world was made by American consumers, it would have been more accurate to speak of the entering the property.

After what has happened in the spring, then during the summer, the first question is: how to address the next four months and take advantage of the opportunities that will come on the market

ROLAND LESCURE. can be build on a solid growth without inflation This is the question. A few figures available to us should give air to the market. The US Central Bank has interrupted its tightening cycle. The period is rather favourable to stock and bond markets.

Jean-Pierre PETIT. in my view, the key point is the State of the U.S. residential real estate market. Since 2001, it participated directly or indirectly, more than half of us growth. However, we see signs of a slowdown in sensitive both to the level of transaction prices. This is bound to reflect on the consumption of households, knowing that it is involved for approximately 70 of us GDP and 15 of global growth.

I think that the US economy will slow quite strongly late in the year 2006 and at the beginning of next year, with growth may stabilize at around 1.5. A reassuring point is that the absence of inflation will allow the Fed to react. I think that it has finished its tightening phase, started in June 2004. We can even start to consider rates of the Federal Reserve.

MARC RENAUD. I am strictly a market man. I am not express as an economist. In my view, we are at the top of cycle. On the other hand, rates seem particularly low. In this situation, I do not have a euphoric vision of the future of markets. I am of the opinion that all indicators are for slowing growth and a decline in the margins of the companies. In addition, I anticipate a rise in rates.

I am not totally pessimistic in the sense where markets were cautious, unlike 2000. However, after a happy economic context at the beginning of the year, it seems to me that summer marks an aversion to risk. The CAC 40 actually earned 350 points since the beginning of the summer, but we must not stop at this index. In reality, the cyclic industrial are passed to the second rank and the markets took an any other face. After sometimes excessive declines in 2003, we have certainly seen a real euphoria, justified by the record growth of world GDP. But now, I think that the party is over.

PASCAL BLANQU. I'll be a little more optimistic. We have rediscovered the volatility in the market shares. But there is nothing to very normal for this asset class. It is rather the absence of volatility over the past three years which was abnormal.

The return of flame is sustainable. Global growth is doing well. On the one hand, it is more homogeneous, more balanced geographically. On the other hand, we are witnessing a recovery of the internal requests on background of improvement in the labour market. The bet of the après-bulle was to stimulate households, the turnaround time. We see now the ball return camp from businesses to households by employment and income. "Sustainability" of the debt of households ets at this price.

It seems that US growth is decelerating in the vicinity of the potential for growth (approximately 3) or rain or less. We hear talk of recession in the United States. At this point, this idea seems to us to be fanciful, even the rapid decline in the rate scenarios.

EH! well, to say the least, is that the opinions diverge. So much the better for the vitality of the debate!

Jean-Pierre PETIT. we will have a strong deceleration of the growth of profits by action, whatever happens. However, we observed in the past in the years 50 and 60 in particular that a strong deceleration of the BPA was not necessarily inconsistent with an increase in market shares insofar as this was in part offset by a favourable evolution of rates. This is why it must surpondérer the market American actions that will benefit from the tightening of the difference in rates with other markets as well as the continuation of the decline of the dollar.

MARC RENAUD. I agree with this analysis. However, it must be clearly understood that the oil and banking profits represent between 40 and 45 of the increase in profits by action. These profits are very high but they

are not sustainable in my opinion. I absolutely must not invest in banking values, which are at the top of cycle. However, as I said, I am not totally pessimistic, insofar as the situation is very atypical with very low rates, high growth and high profits.

Jean-Pierre PETIT. in fact, we are witnessing the return of some form of standardization yields: adjustments are gradual, but they are real.

PASCAL BLANQU. we have also a progressive return to normal in the real sphere, with such a growth more balanced geographically. Symmetrically, it is logical that we were at a discount in order of risk premiums in the financial sphere.

Jean-Pierre PETIT. we see that the dollar is declining gradually, rates go back very gradually, that the relative profitability of assets recovered gradually, common scales begin to adjust this evolution is expected to continue if the US slowdown is confirmed. If real estate bubbles were also gradually that I think , the context would be ideal for asset markets. The real question concerns the evolution of the US housing market, which could destabilize the whole.

ROLAND LESCURE. as regards asset allocations, I do not think that the day is finished. As you know, today, the holiday season often continues by "afters": music is y more calm, more subdued light, but also good atmosphere. I think that we are in this situation: the progression of the market shares will be more orderly in my opinion. It will be more visible values, more visible areas of the economy. However, I have a small preference for the Japanese market. We have witnessed a strong correction of the market last year. However, we note that the country is out of deflation, that a large number of balance sheets the banks balance sheets in particular were restructured, and that the country has to full capital equipment market growth, particularly from China. In total, the Japan is going rather well. Investors however withdrew massive market. It is therefore a good time to enter.

Moreover, we are very interested in defensive values, that we find a little expensive, knowing that a number of cyclic have real value.

There are actually two major sectors: telecoms and new technologies. The telecoms sector is a bit stuffy; There are real issues on the sustainable development of this industry. The sector of new technologies has also strongly suffered; However, it presents more value, on the condition that the cycle of capital equipment will continue.

PASCAL BLANQU. the orderly slowdown of the real estate market is good news because it away the risk of rupture of cycle, as the loss of household wealth is partly offset by the improvement in earnings. Furthermore, despite an inevitable phase of standardization interest rates are and remain historically low nominal and real levels. The term "monetary tightening" is improper today: global liquidity is not contracting.

Jean-Pierre PETIT. This is more completely the case; non G7 businesses today again a need of funding.

The housing correction is indeed a new good even as the stock market correction in March 2000 was. The problem is the management of this fix in time. At the macroeconomic level, the margins of manoeuvre are not negligible and I think that it will succeed in managing this slowdown in time. However, do not dream: there will be shaking. Some talk about recession, and the market will not marble.

ROLAND LESCURE. in a certain way, we lost the perception of the nature of the investments in shares, i.e. of the risk associated with these investments. Uncertainties on the growth and inflation creates new volatility.

MARC RENAUD. this situation is rather encouraging, in total, in particular for our businesses. It will enable us to seize opportunities instead of simply to invest on the deemed values lighthouses as EDF. We learn that the markets are inherently volatile.

Since you have started to discuss the theme, can you specify each allowance of assets that you recommend

PASCAL BLANQU. as I have said, we surpondérons the shares to bonds. Obligations are cheaper than at the beginning of year, but are not cheap. With respect to the shares, we give a defensive key portfolios. We prefer markets of the developed countries with those of the emerging countries, with a preference for Europe to the Japan or the United States; the large cap from small values; defensive values from the cyclic values.

ROLAND LESCURE. we are rather favourable to actions and even quite offensive in the very short term. We prefer also the values of the developed countries, including the Japanese titles not covered: we support both market risk and currency risk, knowing that we consider that the yen should appreciate. We are also American, although market-friendly that we are not very optimistic about the dollar. With regard to the markets, we prefer the growth sectors such as the new technologies in the US market.

We are sous-pondérés on the market and even important in the short term, the current we seem particularly low rates.

Jean-Pierre PETIT. the 2007 horizon, the overweight of the shares is still justified for us. In emergent countries, we prefer the United States. For the emerging countries, we are in favour in Asia and we sous-pondérons the Eastern Europe.

Specifically concerning raw materials, it seems to me that the bulk of the increase in oil prices is rather behind us. The price of a barrel should be $ 65 next year, under the levels recorded this summer. The bulk of the increase took place between spring 2003 and summer 2006.

MARC RENAUD. I talk not allowances of assets, knowing that I am a stock-picker of European actions.

The European market is difficult. It is dangerous in the short term. I do learn you anything by telling you that I have less of "small" and "middle caps" than in the past. I have a preference for the good defensive values, which are however few in number. I think in particular of PPR and Lafarge. In any event, we must take advantage of the opportunities a market returning to volatility. The "volatility shit" are all opportunities for investment.