Daily Market Reviews by UWCFX

Commercial Content Analysts
103

[B]07 DECEMBER 2012: EURO FALLS ON BLEAK OUTLOOK[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The European Central Bank, ECB’s, bleak outlook for the euro zone presented at a press conference yesterday, created turbulence in the currencies markets. The euro/USD fell to its lowest level in one week at 1.2969, down 150 basis points from its high on Wednesday. The fall in the Euro has worsened by the political development in Italy where Silvio Berlusconi’s Freedom Party withdrew its support for the technocrat government of Prime Minister Mario Monti. This immediately put pressure also on Italian bonds.

The main trigger for the sharply negative euro reaction was the mention of a “wide discussion over rate cuts. ECB President Mario Draghi said policymakers had considered cutting its main 0,75 % policy rate before deciding to leave it on hold. Draghi added that the ECB also “operationally was ready for negative rates”. This caused the euro to tumble and led biggest one-day loss in the single currency in one month.

The Euro fell steeply also against yen and other currencies. USD/JPY is urging up at 82,48. The slid in the Euro helped push the dollar index, DXY, up to 80,236 rebounding from a six week low of 79,58. Investors’ eyes are now on US non-farm payrolls report to be published later today. A sharp slowdown in employment growth IS expected due to the disruptions caused by super storm Sandy.

Asian shares touched fresh 16-months on Friday following modest gains in global equities as investors watched progress in US budget talks. Recent indicators suggesting stabilized growth in China has helped improve sentiments in Asia. The MSCI index for Asia-Pacific shares rose 0,6 percent and has gained 17 percent during 2012. Hong Kong shares reached a 16-month high. In the US a rebound in Apple helped boost technology shares on quiet exchanges.

Oil prices fell heavily yesterday. Brent crude tipped below USD 107 a barrel, but has recovered somewhat. Gold is again trading above USD 1700 an ounce.

[I]Copyright: United World Capital[/I]

104

[B]10 DECEMBER 2012: ASIAN SHARES FIRM ON US OPTIMISM[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Asian stocks stayed firm at its 16-month high Monday morning as better growth outlook for US and China gave raise to modest optimism. This came after US consumer confidence plunged in early December as fear over imminent tax raises and spending cuts, the fiscal cliff, outweighed the better than expected raise in non-farm payrolls job data. Unemployment fall from 7,9 to 7,7 % in November adding 146 000 new jobs suggests a modest momentum in US economy. The drop in unemployment figures is, however, mainly due to 350 000 people leaving the labor market.

The Asia Pacific share index rose 0,3 percent. The index was up 1 percent last week for its third successive weekly gain. Regional Asian market was Sunday further boosted when China reported a pick-up in factory output and retail sales after stagnating for seven quarters. Chinese exports and imports were, however, delivering below forecast presenting a mixed picture.

The Euro/USD continues to slide. Euro reached a two week low of 1.2876 on Friday after the German central back warned that Germany, the biggest economy inside the euro zone, might soon enter into recession. The Euro is at present trading at 1.2893. The pro Euro Italian Prime Minister, Mario Monti, announced during the weekend that his government will withdraw. That will put the Euro under increased pressure. The development in ten-year Italian bonds which are seen as a main confidence barometer for investors shall be closely followed today.

The American dollar is up 0,3 percent against a basket of major currencies. Commodity markets led by copper are generally firmer on expectation of stronger Chinese industrial demand. Oil prices are stabilizing after falling steeply last week. Brent crude trades at USD 107,40 a barrel. Gold (1706) and silver (33,14) are up from Friday.

[I]Copyright: United World Capital[/I]

105

[B]11 DECEMBER 2012: EUROPEAN LEADERS URGE MONTI TO STAY[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

EU leaders urged the next Italian government to stick to Mario Monti’s reform agenda after the Prime Minister’s surprise decision to resign earlier than expected. Silvio Berlusconi’s return to front-line politics rattled the financial markets in Europe. Ten year Italian bonds, a good barometer on investor’s confidence, fell to 4,75 percent. EURO/USD also fell well below 1,29 on Monday, but has since recovered and trades at 1.2942 in early Asian trading.

Monti’s surprise weekend announcement came after Berlusconi’s People of Freedom Party withdraw its support for his technocrat government which over the last year has brought some predictability back to Italian politics. Monti, a former EU-Commissioner, has been seen as Brussels’ man and enjoy strong support from Germany’s Angela Merkel. Monti is a strong supporter of the Euro in contrast to Berlusconi who is seen as a Euro skeptic. Italian shares fell along with bonds yesterday. New elections are scheduled for February.

In the US political haggling over the “fiscal cliff” continues with no solution in sight as the clock is ticking closer to the 31st December deadline. US indexes ended flat with low turn-over. Asian stocks are marginally up. Australian stocks gained 0,4 percent on stronger commodity prices and better prospects for China. The Japanese Nikkei dropped after successive days of gain. A 10 % rally over the last month has worried investors as see signs of over buying.

The dollar firmed against Yen trading at 82,40. JPY is also under pressure by expectations of monetary easing by the Bank of Japan (BOJ). Oil prices were up during yesterday’s trade. Brent crude reached USD 108 a barrel, but has as gold and precious metals fallen back in early Asian trade. Brent trades at 107,25 and gold has dropped from 1715 to 1708.

[I]Copyright: United World Capital[/I]

106

[B]12 DECEMBER 2012: WORLD STOCK MARKETS GROW ON POSITIVE EXPECTATIONS FROM FRS MEETING[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The stock market in the USA has finished trading session rising on positive expectations concerning results of negotiations of politicians about reduction of state expenses and a country budget deficit. Index Dow Jones reached level of 13248.44 and added 0.59%, S&P increased for 0.65%.

Today in Vienna the next meeting of the countries of exporters of oil of OPEC will take place. Main question: discussion of quotas of oil production. According to Platts agency the cartel extracts 31,08 million barrels per day at a quota in 30 million. There will not be eventual influence on an environment of the oil market. This morning the oil futures are adding in price with Brent traded on 106.90 and Light on 86.35.

In India industrial production in October grew by 8,2%, increase for 4,5% was expected. In the last three months the government of India undertook a number of measures for attraction to the country of foreign investments, and also developed the steps directed on maintenance of internal demand and export. The reserve bank of India also tries to support economic growth and, in particular, gave a feeling that can reduce the main rates in the next quarter.

Democratic People’s Republic of Korea carried out Ynkha-3 rocket start with an artificial Earth satellite “Kvanmenson-3”. This is the second attempt then North Korea was trying to send the satellite on orbit, the rocket firing which taken place in April has ended with a failure. Japan regarded rocket start as violation of the international norms and decisions. Special session of UN Security Council on start of “Ynkhi-3”, which Japan demanded to carry out, can pass already today.

Euro grows the second day in relation to dollar after the report showed that the trust of the German investors grew in December to a 7-month maximum. The German index of economic expectations of ZEW in December unexpectedly jumped up from -15,7 points to positive value in 6,9 points though -12 points were expected. This morning EUR/USD managed to stabilize above level of 1.30 and is traded on a level 1.3001.

[I]Copyright: United World Capital[/I]

107

[B]13 DECEMBER 2012: BERNANKE UNDERMINED ENTHUSIASM OF BULLS[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Investors finally got the most awaited news of a December after FRS announced its decisions. Results of meeting were quite expected: was made the decision on repayment of state bonds with longer circulation periods for $45 billion. Plus to it will remain the QE3 program of $40 billion a month. Total $85 billion a month.

And the markets fell into thoughtfulness: in fact, FRS finally undersigns that constant injections is the only thing that can help economy and a financial system. The debt market reacted to it with the sales of treasures - rates on 10-year bonds grew to 1,7%. Dow Jones, Nasdaq and S&P500 could not continue its upward development and were closed practically at a zero level.

EUR/USD tested a reasonable demand from the very beginning of trading day though it is impossible to tell that movements had large-scale character. The British positive data gave optimism; however confusion with the Greek debt and expectation of the next meeting of Ministers of Finance of Europe limited growth, but further publication of the accompanying statement of FOMC which has coincided with expectations of the QE expansion led the prices to a maximum of 1,3097. This morning EUR/USD is traded on a level of 1.3082.

Today the Japanese yen is again sharply weakening and bargains on the minimum levels since spring of the current year against euro and dollar. Dynamics of yen also gives support to the Japanese market, helping to show a steady growth. Pair yesterday from levels of opening 82,53 broke through higher than 83,00, reached a maximum 83,29 and was rolled away to the area 83,20 on closing. This morning, we can already see USD/JPY traded on a level of 83.61. There is not much time left till elections, so movements will be warmed up upward not only with USD strengthening, but also on expectations on political change in Japan.

Prices of oil following the results of last trading session showed positive dynamics. The OPEC countries following the results of the meeting on Wednesday, as expected, kept a quota of oil production at former level - 30 million barrels a day. At the same time, the OPEC plans to reduce gradually raw materials production to correspond to the designated quota. Today Brent crude bargains with fall, losing 0,23% to level of closing of previous day.

Prices for metals and precious metals are strongly falling, gold is losing more than 1% and traded on a level of 1699.38; silver is on a level of 32.97 and decreasing for 2.40%.

[I]Copyright: United World Capital[/I]

108

[B]14 DECEMBER 2012: THE PROBLEM OF “FISCAL CLIFF” AGAIN CAME TO THE FOREFRONT[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

After decisions coming from meeting of FRS nothing distracts investors from a problem of “fiscal cliff”, especially, taking into account that till Christmas there is less than two weeks, and gleams in negotiations between democrats and republicans aren’t observed yet. For example, the speaker John Beyner noted that the president Barack Obama “isn’t serious" concerning a question of decrease of expenses which republicans consider as the main priority. Even successful data on a labor market according to which the number of primary requests for unemployment benefits fell in one week to 343 thousand at being expected 370 thousand couldn’t affect moods of investors. Dow Jones and S&P500 ended up with loosing 0.56% and 0.63% accordingly.

In the last day of the current working week the index of China SSE again shows growth almost for 3%, practically coming back to the autumn maximum levels. As occasion to such positive became preliminary statistics on the production index PMI from HSBC bank according to which the index grew again and reached level of 50,9. It is a maximum level since October of last year, besides value of an index increases the second month in a row that testifies about growth of business activity in production sector.

Important news were coming from Europe where Ministers of Finance agreed to give a right to European Central Bank to regulate the main European banks of the Euro zone, however while it isn’t known when the regulator will be able to start new duties. Besides, today the Euro group approved allocation of the following monetary tranche to Greece as it estimated efforts of the country on national debt reduction. This factor is a positive moment for the EU markets. 34 billion euro will be available to Greece immediately, and total amount for a repayment of a debt will be 49.1 billion euro.

The European currency still keeps above a level of 1.30 in relation to dollar, however today it was corrected from 1.3090 to 1.3045 points, and now reached a level of 1.3105.

Meanwhile the Japanese currency continues to fall. Today USD/JPY pair bargains at the level of 83,9, against yesterday’s level of 83,5. On this background the exporters sensitive to fluctuations of exchange rates, still are leaders of growth, Sharp rises in price for 4,4%, and Toshiba and Pioneer for 1,8%.

Prices of oil following the results of last trading session showed negative dynamics against decrease in the majority of world stock markets. Further weakening of dollar in case of resolution of a collision around the budgetary agreement in the USA can become a key factor of growth of the oil prices. Today this morning Brent crude is traded on a level of 107.01.

[I]Copyright: United World Capital[/I]

109

[B]17 DECEMBER 2012: USD/JPY AT 20-MONTH LOW AFTER ELECTIONS[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The yen slumped to its lowest level against the dollar after Japan’s conservative Liberal Democratic Party (LDP), which is committed to aggressive monetary easing, won a landslide victory in Sunday’s Japanese elections. The LDP surged back to power giving ex-Premier, Shinzo Abe, another chance to push through his agenda which includes outspoken active steps towards deflation, possibly revival of Japan’s nuclear energy program and a more nationalistic policy that might cause more tense relation towards China.

The dollar rose to 84,18 yen reaching its highest level since April 2011 from around 83,50 yen on Friday. There has been active profit taking in the morning, but USD/JPY is still trading above the 84 level. The Euro jumped to 111.30 yen from 109,81. The Australian dollar climbed above 89 for yen for the first time since May 2011. The Bank of Japan meets later this week and most analysts expect the central bank will ease policy further by asset buying and lending program which will continue to put downward pressure on the yen.

The open question is whether Prime Minister Abe shall follow up on his tough talk. Strategists at Barclays bank recommend long positions in three-month dollar/yen call options on estimates suggesting that a 10 percent multilateral nominal yen depreciation would be needed to get a one-off inflation boost of just 1,5 percent. Other analyst and market participants warned that the yen might be poised for a rebound as Abe’s actions are likely to fall short of tough intentions.

In the US House of Representative Speaker, John Boehner’s offer to accept a tax rate increase for the wealthiest Americans knocks down a key Republican obstacle to deal with the revolving year-end “fiscal cliff”. Boehner shall presumably have offered extended tax hikes for everyone who has less than one million in net annual income. Taxes for all income above USD 1 million shall rise. President Obama’s reaction on this presumed offer is going to be decisive for a possible solution within the 31st December deadline.

[I]Copyright: United World Capital[/I]

110

[B]18 DECEMBER 2012: “CLIFF” OPTIMISM BOOSTS MARKETS[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Both US and Asian shares inched higher as optimism grew for a “fiscal cliff” deal as President Barack Obama yesterday met with his Republican counterpart, House of Representative Speaker, John Boehner. Obama presented a counter-offer to the Republicans that is said to include a major change in position on tax hikes for the wealthy in efforts to hammer out a compromise to avert steep tax hikes and indiscriminate spending reductions set for the beginning of 2013.

According to informed sources the White House in a dramatic change of position has proposed leaving lower tax rates for everyone except for those earning above USD 400 000. That is up from the former threshold of USD 250 000 proposed by the President, but still far from the Republican proposal of USD 1 million. Obama is also said to be willing to compromise on budget cuts and revenue figures.

The rumors on movement in the negotiations had the US stock indexes to soar led by financials and other growth-orientated sectors. Bank of America jumped by 3,97 % followed by other major blue chips as Home Depot, JP Morgan, General Electric and Sisco. Dow Jones were up 0,76 % to 13 235. Nasdaq rose 1.32 % and ended at 3010 again passing the 3000 threshold. The positive trend continued in Asia this morning where Australian shares outperformed with a 0,7 percent increase. Also Nikkei, Shanghai and the MSCI index for Asian Pacific rose.

The more optimistic market attitude had a positive impact on commodities and precious metals. Oil prices led by Brent crude are up to 108,18 and gold again passed the USD 1700 ounce level after falling back to below 1690. The pressure on Yen following the Japanese elections continues. USD/JPY is trading at 83,98 after reaching 84,48 on Monday. The dollar has probably still an upside against yen prior to the Central Bank of Japan’s meeting later this week. Prime Minister Abe’s comments yesterday strengthened the assumption that BOJ would initiate monetary easing. EURO/USD stands at 1.3170, in line with the new higher level seen established in relation between USD and Euro. The Euro countries principle decision to establish a banking union has positively impacted the strength of the Euro.

[I]Copyright: United World Capital[/I]

111

[B]19 DECEMBER 2012: EURO OUTPERFORMS ON INCREASED RISK APPETITE[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The Euro reached multi-months high against dollar and Japanese yen on Wednesday extending recent gains. Signs of progress in the US fiscal talks bolstered demand for riskier assets. Euro/USD is trading at 1.324655. USD/JPY stands at 84,282. The Scandinavian currencies, Norwegian, Swedish and Danish krones have gained substantially against the dollar over last week.

The US House of Representatives Majority Leader, Eric Cantor, said yesterday that he expected a vote on a Republican offer to avert the “fiscal cliff” on Thursday. Republicans plan a vote on a bill to raise taxes on income above USD 1 million while extending low rates on other tax payers. The White House has proposed a compromise USD 400 000 threshold. Cantor said he expected to have enough votes to pass the measure.

In spite of the big distance between the two parties’ stock markets all over the world rose on expectations of a compromise. Gains in Asia this morning came after Wall Street S&P 500 index for the biggest 500 companies rose more than one percent completing the best two-day rally in a month. The US market is higher driven by the fact that the parties now at least are engaged in constructive negotiations striving to find a middle ground.

Tokyo’s Nikkei rose 1,3 percent topping 10 000 points for the first time since April as Bank of Japan (BOJ)started their two day meeting. BOJ is expected to take measures for monetary easing and a more expansionistic fiscal policy. The Yen continues to fall against most currencies. Australian shares rose to a 17-month high led by miners and banks. Australian dollar, however, barely budged in part because currency speculators were already holding record long positions.

Boosted by optimism on a US budget compromise analysts predict that EURO/USD might reach the 1.33 level year-end targets. Oil prices are steady with Brent crude trading at 108,88 on better economic outlook. Copper is flat in the morning after falling Tuesday. Both Gold and silver fell rather dramatically yesterday slowly recovering somewhat this morning. Gold fell from a 1705 peak down to a 1660 bottom. It is now trading at 1670.

[I]Copyright: United World Capital[/I]

112

[B]20 DECEMBER 2012: STALLED NEGOTIATIONS TURN MARKETS[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

After reaching a 18-month high Asian stocks eased and commodities fell in morning trade on stalled budget negotiations in Washington. President Barack Obama accused his opponents of holding a personal grudge against him and threatened to use his veto power. The top Republican negotiator branded the President “irrational”. The mutual accusations came after substantial progress to avert the so called “fiscal cliff” had been obtained during the last days. The personal taunts put a timely solution at risk and threaten the world largest economy with recession.

The harsh rhetoric had an immediate effect on markets. After a flat opening Dow Jones plunged 0,78 while Nasdaq lost 0,33 %. Financials and retailers, the big winners earlier in the week, were hardest hit. General Electric, Alcoa, Home Depot and the Bank of America were among the big losers. The Asian indexes with exception for the South Korean Kospi which rose 0,3 % on news of the election of its first female president, lost ground. Australia is still up. It is expected that European and US markets today will open lower on profit taking and risk aversion. Decreased risk appetite shall probably hit also smaller currencies.

Bank of Japan (BOJ) has according to expectations expanded its asset-buying program by 10 trillion yen to fight deflation. USD/JPY which saw 84,50, has fallen to below 84 as result of the stalled budget negotiations. Euro/USD peaked to 1.33085 on Wednesday has fallen back trading at 1.3210. Smaller currencies are due to the changed risk sentiment atmosphere losing ground.

Oil prices which rose on growth optimism, has retreated somewhat in early Asian trading. Brent crude stands at 110.08 with NYMEX just below USD 89 a barrel. Copper is down. Gold and silver are at the lowest levels seen for months.

US prosecutors have charged two former UBS (Union Bank of Switzerland) traders for participating in a scheme to manipulate Libor and other benchmark interest rates. This is the first individuals criminally accused in the Libor scandal. UBS has agreed to pay a fine of USD 1,5 billion to regulators in the US, UK and Switzerland. The Hong Kong Monetary Authority has simultaneously stated that UBS is under investigation for similar fraud in Hong Kong.

[I]Copyright: United World Capital[/I]

113

[B]21 DECEMBER 2012: SERIOUS SET-BACK FOR “CLIFF” NEGOTIATIONS[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

In a statement to the House late yesterday, Republican Speaker, John Boehner, announced that there was not enough support to have “Plan B” to avoid the fiscal cliff voted through. Two options seem to remain: The Republicans can wash their hands on the entire matter or try negotiate a compromise with Democrats that could secure support from a sufficient number of Republicans. Plan B involved increased taxes on incomes above USD 1 million. President Obama’s proposals set the threshold at USD 400 000.

Dow Jones and Nasdaq gained on new expectations for a budget solution within year-end before the news announcement. A solution seems for the moment unrealistic. A possible compromise would mean that a substantial member of Republicans give up their bedrock resistance to all tax hikes. The non-vote in the House represents a serious set-back for the prospects to avert the “fiscal cliff”, automatic spending cuts and tax increases set to start in January. The news had an immediate effect on Asia. Asian shares slid. The MSCI index for the Asian Pacific dropped 0,7 %. Nasdaq and Dow Jones futures are down 1,7 %.

Risk assets from shares, oil to currencies as the Australian dollar and EURO, were sold off in the morning hours. Euro/USD is falling below 1.32 losing 60 basis points. The USD/JPY is slightly firmer at 83,93 down from 84,50 yen a dollar yesterday. The market uncertainty has generally strengthened the dollar. The DXY index where the USD is weighed against a basket of major currencies, gains 0,2%. The steep fall in precious metals continue. Gold is USD 1640 an ounce and silver has dropped two dollars during the last day trading to 29,72.

The Republican-led House of Representative which abruptly recessed late Thursday may return with a not yet decided new plan on December 27th. Markets see the event yesterday as major set-back for a fiscal compromise. The chance for a deal is downscaled from 60 to 30 %. Markets are extremely volatile and will continue to be swayed by the budget negotiations over the next days.

[I]Copyright: United World Capital[/I]

114

[B]24 DECEMBER 2012: THE OPEC DOESN’T WANT THE PRICE OF OIL TO BE LOWER THAN $100[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Last trading session in America was closed with drop, the index S&P500 lost 0,94%. Price stopped at the level of 1430,15 points. Dow Jones lost 0.91%. With approach of 2013 tension at the stock markets increases: the problem of “fiscal cliff” isn’t solved, moreover, investors are getting new reasons for concerns. So, the speaker of the House of Representatives of the Congress of the USA John Beyner cancelled vote according to the project of republicans in connection with insufficient support of the ideas, thus, the resumption of negotiations between republicans and democrats is expected only after Christmas, and for achievement of the agreement they will have only 4 working days.

The most part of “blue chips” included in index finished session in “a red zone”. The most notable decrease showed Bank of America (-2,00%), Exxon Mobil (-1,87%) and Walt-Disney (-1,86%), in plus there was only American Express (+0,44%) and McDonald’s (+0,16%).

Recently we heard news which can become the reason of correction of the world markets at the beginning of the next year. The prime minister of Italy Mario Monty retired on Friday, but thus declared on Sunday that he will consider opportunity to stand for the second term at parliamentary elections on February. Chances to get the second term are insignificant.

As a whole rather quiet situation remains in the oil market. Quotations are consolidating within the trade range of the last months. All attempts to leave out from these limits are unsuccessful. Among the latest news of the sector, it is necessary to note the message of several news agencies referring to the minister of oil of Iran - Rostam Ghasemi. According to him, the OPEC will hold an emergency meeting if price of oil falls lower than 100 US dollars. Besides he also noted that the price of oil is predicted to be higher than 100 dollars for barrel in 2013. This morning we can see Brent on a level of 108.78.

Gold and silver are stable this morning and a slowly recovering from the minimum levels we have seen last week. Gold is traded on a level of 1663.22 and silver is on a level of 30.236. As a whole, for this year prices of gold grew by 5.9% and this is the 12th year of growth of metal. One of the reasons of the high prices is demand of the world Central Banks which buy up metal for hedging of the risks. Nevertheless, judging the last data of the Commission of the market of futures of the USA, rates on further rally of gold fell to 13% to 112.42 thousand contracts.

[I]Copyright: United World Capital[/I]

115

[B]26 DECEMBER 2012: MARKETS ARE WAITING FOR PROGRESS IN NEGOTIATIONS ON BUDGETARY QUESTIONS IN THE USA[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Without special enthusiasm passed the pre-Christmas truncated trading session on Wall Street. Key indexes lost about 0,2-0,4% on small trading volumes. As a part of an index of blue chips - Dow Jones, the greatest contribution to decrease in the indicator made the representatives of hi-tech sector: Hewlett-Packard (-2,3%), Microsoft (-1,42%), Cisco Systems (-0,65%).

Besides, in the days which have remained to New year, statistical departments will submit data on the housing market, in particular housing prices, sales of new buildings and incomplete sales of houses. The research organization Conference Board will publish data on dynamics of an index of consumer confidence in the USA for December. While stock markets stiffened waiting for news from America regarding “fiscal cliff”.

Asian share indexes bargain today in more expanded structure, than yesterday, however the stock exchanges of Australia and Hong Kong are still closed in connection with celebration of Catholic Christmas. At the same time the Japanese Nikkei index continues the ascending movement caused by the next round of weakening of national currency, but the index of continental China SSE corrects today a yesterday’s steady growth.

The Japanese yen continues today to decrease, USD/JPY pair bargains at the level of 85,3, again updating thereby an one-and-a-half-year maximum, and approaching a maximum of 2 years, established at the level of 85,5.

Yesterday futures of gold rose in price in Tokyo for the first time for the last four days this is connected with statements of the new prime minister of Japan Shinzo Abe who is the supporter of “soft” approach to economy. He insists that if the Central Bank of the country will not raise a level of inflation for stimulation of economic growth, he will change his powers. All this promotes that gold acts again for investors as “smooth water”. Today this morning, we can see gold traded on a level of 1655.98. Silver is slightly strengthening and traded at level of 29.95, getting closer to a level of 30 dollars per troy ounce.

[I]Copyright: United World Capital[/I]

116

[B]27 DECEMBER 2012: MARKETS WAIT FOR NEWS FROM WASHINGTON[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The European stock exchanges were closed yesterday, but American indexes showed not so positive dynamics and were closed with a decrease. Dow Jones lost 0.18%, but Nasdaq and S&P500 were closed with a fall of 0.74% and 0.47% accordingly. Fears of the American investors are again connected with a dependence of the main problem of year - “fiscal cliff”, and also with a ceiling of the public debt which limit, according to the Minister of Finance - Timothy Geithner, will be reached already on December 31 of the current year.

Also oil to fire was added by data on retails which were record-breaking low, their volume from October 28 till December 24 grew only by 0,7% in comparison with the similar period last year. Master Card also specifies that many people show today restraint in the purchases, being afraid of “fiscal cliff” which can come on January 1 and bring with itself increase of taxes.

Futures for WTI brand oil yesterday jumped up for $2,37 to $90,98 for barrel. Today WTI oil is traded on a level of $91,18 for barrel, Brent is decreasing less than 0,2%, bargaining at the level of $111,05 for barrel.

Gold loses the positions in one of the last days of 2012, trading passes very inertly as many participants of the market already left for holidays. Gold is losing 0.25% and traded on a level of $1656.50, silver is bargaining around level of $30.00 second day in a row.

Absolutely other situation is observed in copper futures which add more than 1.3%. Quotations break through a level of $7900 after the National bureau of statistics of the People’s Republic of China reported that the profit of the industrial companies in the country grew in November by 22.8% in comparison with the similar period last year. China is the largest consumer of copper therefore investors hope that recovery of the Chinese economy will positively influence demand for metal.

[I]Copyright: United World Capital[/I]

117

[B]28 DECEMBER 2012: LAST TALKS ON “FISCAL CLIFF” STRENGTHEN EURO[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

President Barack Obama and lawmakers are launching a last chance round of budget talks just days before a New Year’s deadline to reach a deal to avoid a “fiscal cliff”: an increase of USD 600 billion of taxes and budget cuts to be automatically executed from January 1st if politicians fail to find a budget compromise. Obama and Vice President Joe Biden will meet with congressional leaders from both parties in the afternoon today. The news has for now strengthened risk appetite and Euro/USD is up.

The two political parties remained far apart particularly over plans to increase taxes on the wealthiest Americans to help close the US budget deficit. The coming days are likely to see intense bargaining over numbers or political theatre as each side attempt to avoid blame if a deal looks unlikely.

US stocks sharply cut losses and rose on news of the House reconvening as investors clung to hopes of an 11th –hour deal. Even a partial agreement on taxes that would leave tougher issues like entitlement reform and the debt ceiling until later could be enough to keep markets calm. US stocks recovered, but fell for a fourth day after a jittery session which saw a one % fall after Senate Majority leader, Henry Reid, initially warned that a deal was unlikely. Stock markets recovered and ended flat on news on new negotiations. Dow Jones ended down 0,14 % to 13 096 after a one percentage free fall in the opening of yesterday’s session.

Asian shares inched higher on signs that Washington is making a last ditch effort to reach a budget compromise. The USD/JPY fell to its lowest level in 2 years trading at 86,64, and Japanese stocks to 21 months high on expectations of drastic monetary easing. Australian shares rose to a 19 month high and are on track to post its strongest annual gain since 2009. Oil prices rose on hopes of a US political deal. Brent crude reached USD 111 a barrel.

EURO/USD has recovered to 1.3240 after falling to 1.3170 before Christmas on news of failed budget negotiations. A budget settlement will create renewed optimism for continued US economic growth and increased risk appetite which will strengthen the Euro and smaller currencies. Australian dollar hit a 20-month peak against the yen at 89,93 and is also up against the USD.

[I]Copyright: United World Capital[/I]

118

[B]31 DECEMBER 2012: LAST DITCH EFFORTS TO AVOID “FISCAL CLIFF”[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Democratic and Republican leaders pushed the United States to the edge of the “fiscal cliff” on Sunday as they struggled to reach a last-minute deal that could protect the world largest economy from a politically induced recession. Senate lawmakers are still hoping to clear the way for swift action thereby avoiding sweeping tax increases and spending cuts due to tick in on Tuesday, January 1st. The two sides are, however, still at loggerheads in talks. Senate was adjourned yesterday and meet again today for a last ditch effort to reach a compromise.

Senate Democratic leader Harry Reid last night postponed any possible votes; “There are still significant differences between the two sides”, Reid stated. President Obama had originally proposed a USD 250 000 income threshold for increased taxes. The Republicans are in principle against all tax increases, but has voiced a compromise threshold on USD 1 million. The parties are also wide apart on possible budget spending cuts.

As hours ticked away it appeared increasingly unlikely to avoid a USD 600 billion hammer blow to the fragile US economy recovery. Americans could see a bigger bite taken out of their pay checks starting on 1st January as payroll and income tax cuts expire. Two million unemployed Americans could see their jobless benefits run out. The uncertainties have weighed in on global, financial market. Investors are likely to sell off stocks at the beginning of the new year expressing their displeasure with a no deal.

In a rare appearance on Sunday’s NBCs “Meet the Press”, president Barack Obama warned against the immediate negative effects on markets and blamed the Republicans for rejecting significant presented compromises. His accusations were flatly refused by Republican spokesmen.

Due also to Christmas and the New year holidays investors have been sitting on the side lines waiting for Washington to act. US markets were down for a fifth straight session on Friday, and there were small changes in the currency and commodity markets. Euro/USD is trading around 1.3215 up from last week’s low on 1.3175. USD/JPY is stabile on 86 yen to a dollar. Oil prices are high with Brent crude above USD 110 a barrel. No major changes in commodity and precious metal prices. Gold is at USD 1660 an ounce.

[I]Copyright: United World Capital[/I]

119

[B]02 JANUARY 2013: FISCAL DEAL GIVES RELIEF RALLY IN STOCKS AND COMMODITIES[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

A compromise in the 24th hour avoided the fiscal cliff at least for now. After tough negotiations running into the new year, Democrats and Republicans succeeded in reaching partial agreement on a threshold which imposes tax increases on incomes above USD 400 000. The “grand deal” of bigger taxes on the rich combined with spending cuts which President Barack Obama aimed for, has been suspended till March. The Senate and the House of Representatives voted during night hours in favor of the compromise deal, which has been difficult to swallow for all parties.

The drama around the fiscal cliff which has dominated US and global markets for the last months, has thereby found a temporarily solution. Markets reacted with relief and sent stock markets in Asia to new highs after a bumpy session in the US on New Year’s Eve. Investors shifted between optimism and pessimism till the majority gambled on a deal. Both Dow Jones and Nasdaq posted healthy gains. With president Obama’s signing of the deal this morning that gamble has paid off.

The compromise has given global markets a good start on the year in spite of general consensus that major economic and financial challenges have to be dealt with especially the big US deficits and the problems inside the Eurozone. Angela Merkel in her New Year speech reminded that problems inside the Euro-zone by no means had reached an end. The deal in Congress means, however, that there are good chances that the recovery of the US and global economy will continue. Better prospects for still high growth in China will boost global markets. This more positive sentiment is reflected in today’s trades where oil and commodity prices are up in expectations of increased growth. New York crude, NYMEX, is above USD 93 a barrel and Brent crude is above 111. Copper, gold and silver prices are also up.

The positive attitude is also reflected in the currency markets where there are increased appetite for more risky currencies as Euro and British pounds. EURO/USD trades at 1.3280 up 100 basis points. USD/GBP is above 1.63. Japanese yen, a “safe haven” currency continues to lose ground against both Euro and the USD. USD/JPY is above 87 yen a dollar. Typical commodity currencies as Australian and Canadian dollar are up together with the Scandinavian; Swedish, Norwegian and Danish krones.

[I]Copyright: United World Capital[/I]

120

[B]03 JANUARY 2013: EURO FALLS BACK ON PROFIT TAKING[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The relief rally in securities after the US avoided the fiscal cliff, continued in Europe, the United States and Asia this morning. The Dow Jones industrial average jumped 2,35 % to 13 412. Nasdaq reached 3 112 up more than 3 %. The technology and banking sectors posted the biggest gains with Bank of America up 3,7 % and Apple as the winners. The gains came on heavy volumes with funds leaving the bond market entering into equities. 7,8 billion shares were traded against an average of 6.42 billion.

The dollar slid against high-yielding currencies with investors selling “safe haven” currencies as dollar and yen on strong risk appetite. The losses in dollar and yen might, however, be temporary. Difficult negotiation on US spending restraints and the debt ceiling are waiting in the wings. The EURO which was favourite among investors in morning hours yesterday, lost all its gain during trading yesterday and plunged 150 points to Euro/USD 1.3136 on aggressive profit taking. Commodities which saw big increases on the budget compromise in expectations on stabile growth, have as well technically corrected with the exception of oil. Brent crude still trades above USD 112,40 a barrel.

The compromise agreement on the “cliff” is seen as a victory for President Barack Obama in succeeding to increase taxes on the rich , but set up potentially bruising showdowns between Republicans and Democrats over the next two months on spending cuts and a limit on borrowing. Republicans who on the top are fighting disarray in own ranks with member principally against any tax hikes, were furious that the obtained deal did little to curb the financial deficit. There is a tense atmosphere between the two parties. The Republican House Speaker, John Boehner, is said to have told his Democrat counterparty, Harry Reid, to “go **** yourself” before a final deal was reached.

Asian stocks continued to post gains in morning hours Thursday on hopes for a steady economic revival in China. After Wednesday’s two % jump, the MSCI index for the Asian Pacific was up 0,3 %. Service sector data from China in December point to a healthy recovery. Both the China Enterprise index and Hon Kong’s Hang Sheng are up. A momentum that can last at least for some months seem to be building up.

The Japanese yen bounced back after hitting a 29-month low versus USD. Even if USD/JPY looks somewhat overbought any strength in the yen is likely to be short-lived. USD/JPY trades at 87,24. GBP has also fallen back against the dollar, but the trend seems to be in favour of a stronger British pound. The Scandinavian currencies, NOK, SEK and DKK which also boomed on the Congress deal, has technically corrected and fallen back 0,5 to 1 %.

[I]Copyright: United World Capital[/I]

121

[B]04 JANUARY 2013: FED MINUTES BOOST USD. STOCKS AND GOLD PLUNGE[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

The Wall Street New Year’s rally came to an abrupt end yesterday when minutes from the Federal Reserve, FED’s, December policy meeting put severe questions marks to whether monetary policy stimuli will continue. The minutes were released Thursday and the optimistic markets reacted immediately by sending US and Asian markets down. The USD skyrocketed while commodities and precious metals were in free fall. Euro/USD trades at 1.3034, a 250 basis points fall from the first trading day in January. Gold plunged USD 45 from its new year’s peak, and oil prices lose ground.

The released minutes showed that some voting members of FED were increasingly concerned about the potential risks of FED’s asset purchases. The asset-buying policy has been pivotal in underpinning investor risk appetite and supporting global equities. The more hawkish FED minutes unnerved financial markets. Stocks gave up earlier gains and benchmark US Treasury yields rose to a near eight month high having a strong negative impact oil, commodities and equities lifting the dollar.

US private sector hiring was pointing upwards before the monthly payrolls report is due later today. The monthly payroll report is one crucial indicator for FED deciding on future policy course. The rise in the dollar hit precious metals and oil especially hard. A firmer dollar makes dollar-based assets more expensive for non-dollar holders. The strong moves in the markets reflect positioning after the recent rallies and before the nonfarm payrolls report which can tip markets either way.

While Nasdag and Dow Jones fell moderately, the MSCI index for Asia-Pacific fell 0,8 % after reaching a 19-months high on Thursday. The dollar hit its highest level against Yen since July 2010 at 87,78. The Euro fell to a three week low of 1.3018 against the dollar on Friday. The US dollar index, DXY, touched a four-week high against a basket of major currencies. The fall in the yen will probably continue with 90 yen against USD as likely in the short term. Yen’s fall continues to strengthen Nikkei which is at its highest level since March 2011.

[I]Copyright: United World Capital[/I]

122

[B]07 JANUARY 2013: ASIAN STOCKS DRIFT ON PROFIT TAKING[/B]

[I]DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments[/I]

Asian stocks drifted on Monday as investors booked profits from a New Year rally pushed market to highs not seen in months. Financial stocks gained after global regulators relaxed draft plans for tougher banking liquidity rules. The Asian Pacific MSCI-index retreated 0,9 % on Friday and was flat today after reaching its highest level since August 2011. The Japanese Nikkei retreated after last week touching a 23-month high.

US jobless claims reported in line with expectations on Friday adding 155 000 new jobs. The unemployment rate is at 7,8 % indicating a slow, but steady recovery in the US economy which has propelled Wall Street stocks to a five year high. Minutes from the December meeting of the Federal Reserve, FED, released Thursday led to tumults in global, financial markets having riskier currencies and commodities to plunge. The USD index towards a basket of currencies rose to its highest level in week as the minutes were interpreted as FED is considering to end its bond-buying program as early as this year.

The jobless data which strengthen the prospects of economic growth, had a stabilizing effect on commodity and precious metal prices. Gold rebounded from its USD 1625 an ounce level and trades at 1652 in the morning. Also silver has turned from USD 29,50 to 30,30. The dollar is close to a two-and-a-half-year high against the yen as investors adjusted to the possibility of more monetary stimulus from the Bank of Japan (BOJ) and less from FED. The dollar posted a gain on 2,7 % against yen after reaching a 88,40 peak on Friday. USD/JPY is currently trading at 87,941.

EURO/USD fell to 1.30 on Friday on the interpretation that monetary easing is about to end. It has recovered over the weekend trading at 1.3032. The US benchmark S&P index, SPX, closed at its highest level since December 2007 on Friday after the publishing of job data which also showed a healthy expansion of jobs in the services sector.

For the first time since 2001 the United States dominates the list of places that global real estate investors would prefer to put their money in 2013. A published survey reflects a sharply more optimistic view on the US economy and property market for 2013. New York and London top the list with San Francisco number 3 and Houston, Texas climbing to number 5 with Washington in fourth place. Among countries US is ranked number one followed by Brazil, UK and Turkey. Among emerging countries Brazil is the top spot followed by China, Turkey, India and Mexico.

[I]Copyright: United World Capital[/I]