up under both baseline and extreme economic situations, institutions would have 6 months to raise private capital before getting a government-issued capital buffer. Estimated future losses and the resources to absorb them will be estimated over a 2-year period. The baseline economic scenario is made of a GDP estimated fall of 2 % in 2009 and an upturn of 2.1 % in 2010. The worst case scenario assumes a 2010 unemployment rate of 10.3 %, a Case-Shiller home price decline of 22 % in 2009 and 7 % in 2010 and GDP contractions of 3.3 % in 2009 and 0.5 % in 2010. Any capital provided to the institutions would be preferred securities convertible into common equity at a 10 % discount to the prevailing price as of Feb. 9th, coming with a 9 % dividend. They would be convertible at the issuer\u2019s request, but if not converted or redeemed within 7 years, the securities would automatically be converted into common stocks. Banks that have already issued preferred shares to the U.S. Treasury under the TARP ($196bn in more than 400 institutions) would be able to convert those shares to the new convertible instruments. The new government investment requires banks to submit plans for their use of government capital. Dividend payments, share repurchases and acquisitions will be restricted. Credit allowance would be controlled.The

upshot of it all is that there will be only few banks to be nationalized, on their request, let\u2019s say those with low Tier one ratio after stress test (below 4 %?). Those with high Tier one ratio (above 8?) won\u2019t get state capital support. The majority (Tier one ratio between 4 % and 8 %?) will get state capital support, but we can imagine that this won\u2019t last long (much less than the 7 years after which the convertible preferred securities would be converted to common stocks) because of the drastic conditions of these convertible preferred securities, mainly a 9 % yearly dividend. Urgently, bank will have to find private capital support and, so, they will avoid nationalisation.

2) The \u201cCapital Assistance Program\u201d doesn\u2019t specify any potential limit on the amount of money involved. On Feb. 24th, Obama signalled that the administration would seek more money from Congress for the effort to break the back of the credit crisis. And yesterday Obama unveiled his first budget which includes as much as $750bn in new aid for the financial industry. And some funding could be found in the Financial Stability Program (the \u201cGeithner\u201d plan, which is no more than the second tranche of the TARP): initially, $100bn were allocated to a \u201cbad bank\u201d devoted to buying \u201ctoxic assets\u201d, with the target of reaching $1trn after the private sector joined state funding in the institution. $100bn more were devoted to capital injections.

3) The housing market is certainly facing bottoming data after existing home sales and new home sales hit record low in January. The housing market will soon get a lift from very favourable buying conditions \u2013 not only from improved affordability, but also from the stimulus of a $8 000 first-time home buyers tax credit (if the buyer keeps his home at least there years), and higher conforming loan limits that will allow more people to tap into 50-year low mortgage rates. The National Association of Realtors estimates the impact of the stimulus package and lower interest rates on the housing market to be about 900,000 additional home sales in 2009 compared to conditions before the stimulus package. Inventory is expected to fall below an 8-month supply by the year end, which would be consistent with home price stabilization.

This morning, economic data confirmed that Japan is back into deflation (national CPI ex-food and energy down 0.2 % YoY) and that activity is weaker and weaker (industrial production -30.8 % YoY in January). In the U.S., 10-year Treasury is close to 3.0 %, which means a 100 bp rise since the beginning of the year.

DEUTSCHE TEL: Q4 Rev \u20ac16.1bn(15.83e) /Q4 EBITDA \u20ac4.7bn (4.6 e) / Q4 Adj net pft \u20ac861M (693 e)/ DIV \u20ac0.78 (in line)
THALES: 08 Rev \u20ac12.665bn (12.7e ) / 08 EBIT \u20ac877M (876 e) / 08 Net \u20ac650M (547 e) / Sees 09 org. rev +3-5%
DAIMLER has won approval to offer vehicle leases in China a sign that China plans to help auto makers use financing tools to stimulate

ERSTE BANK: Q4 NII \u20ac1.34bn / Q4 net loss \u20ac603.4M/ to raise \u20ac2.7bn (from inverstor & 1.9bn by Gov) / DIV \u20ac0.65 (0.5e) / No outlook
WERELDHAVE : 08 direct results \u20ac109.4M (101.8e) / Indirect result \u20ac-100.6M (-140.6 e) / DIV \u20ac4.65 (in line)
ITALIAN BANKS & INSU : Consob has extended the short-selling ban until May 31
NORWAY\u2019s BANKS : Norwegian Prime Minister said the country\u2019s major banks will probably participate in the government plan to inject

British Land rights Issue 2 per 3 / Diageo (GBp 15.4444) / Thomas Cook (GBp 7,222222) / Bank of America ($0.01) / Pepsi ($0.425)

BUY Eurostoxx, CAC and Dax to play double bottom / sell the Bund very toppish
BUY the dollar to play US will manage a recovery sooner than Europe (and obvioulsy S&P and Dow building round bottom)
BUY SAP / DEUTSCHE TEL / EON / AEGON / DAIMLER / LUFTHANSA / AIR FRANCE / METRO / L OREAL / VEOLIA on double bottom possibility
BUY DEUTSCHE BANK / ING / RENAULT to play recovery + charts looking good now
BUY CARREFOUR on reversal Head & Shoulder possibility

ANGLO AMERICAN....................RAISED TO BUY FROM NEUTRAL.............................................................. BY GOLDMAN SACHS CGG VERITAS............................RAISED TO NEUTRAL FROM SELL.................................................................................... BY UBS EDF...............................................RAISED TO OVERWEIGHT FROM NEUTRAL................................................................... BY HSBC

DANSKE BANK..........................CUT TO SELL FROM NEUTRAL................................................................... BY GOLDMAN SACHS RIO TINTO...................................CUT TO SELL FROM NEUTRAL................................................................... BY GOLDMAN SACHS NORSK HYDRO..........................CUT TO SELL FROM NEUTRAL................................................................... BY GOLDMAN SACHS RBS..............................................CUT TO SELL FROM HOLD..................................................................................................BY S&P BRITISH AMERICAN TOBACCO CUT TO BUY FROM STTRONG BUY....................................................................................BY S&P

US new homes sales plunged to a new record low in January as soaring unemployment and mounting foreclosures drove buyers away. The US home sales dropped from 344 000 in December to an annual pace of 309 000 or 10% in January. Theses figures that came after yesterday's existing home sales that fell also to a lowest level, underline that housing activity remains in freefall...