Morgan Stanley Market Quotations

We have significantly increased our short-term and long-term commodity price forecasts to reflect our expectation of sustained tight markets and ongoing deficits in 2006.

We recognize that this goes against powerful recent flows into emerging markets and Japan. However, in our view, flows are approaching the point of pushing Japan and emerging markets beyond fair value, creating the relative value opportunity in the U.S..

While 2006 earnings targets appear achievable, we are concerned with the projected sustainability of volume and margins at the core Auto division. Fiat is not alone in lowering costs within its industrial base. Rival volume makers such as VW, Renault, Peugeot-Citroen, GM and Ford will also make significant restructuring improvements. In addition, Japanese and Korean market share gains are set to accelerate, putting manufacturers like Fiat on the hot seat.