We have been short banks.

UK government is investing $10B in RBS and $3B in BCS. We do not know how the stock prices will react. Should the prices begin to rally, we recommend covering in London. If the prices fall precipitously, again the right action will be buy to cover. If the prices open unchanged, we recommend buying to cover half and lose stop on the rest.

Similar recommendations apply to UBS and IBN. We have been using IBN as a proxy for our recommendation to short Indian and Chinese Banks. We recommend following the aforementioned advice related to these positions and buying to cover in their home countries at the open

Closing prices: IBN $13.85, RBS $1.45, BCS $15.20 and UBS $15.30 in New York

Same advice applies to other European banks and insurance companies we have been short. We have been using AXA, XL and AZ as proxies. We hit a home run with XL.

Closing prices: AXA $22.90 , AZ $9.71, XL $ 5.41 in New York