Market update by UWCFX

Trading Discussion News and Economy
21

[B]15.09.2011[/B]

Greece to remain
in the EURO-zone

Markets bounced back in a sigh of relief when France and Germany yesterday night gave Greece firm assurances that the country shall remain in the Euro-zone despite its serious debt problems. US and Asian markets rallied and futures in Europe are up. Euro is strengthened across the board. Euro/US at 1.3723 in morning’s trade.

The message from the Merkel, Sarkozy and Papandreou meeting is that regardless of a possible Greek default, Greece shall remain in the Euro. Papandreou gave his assurances that Greece shall stick to it’s austerity and reform promises, meaning that a green light has been given to payment of the critical September tranche.

The immediate fear for a Lehman Brothers type of crisis in Europe is over at least for now. The ECB yesterday gave strongly hurt French bank possibilities for USD credit. Chief EU-Commissioner Barbarossa at the verge of the mini-summit of Merkel – Sarkozy created some confusion with reiterating the desire of issuing Euro-bonds to debt stricken EU-members. That was immediately strongly rejected as a feasible opportunity by Germany.

While some optimism has been injected in global stock markets volatility continues with EURO and Yen somewhat stronger this morning. Oil prices are firm with NYMEX close to 89 and Brent at 112. Gold substantially down trading at 1808.

22

[B]20.09.2011[/B]

[B]Threat of a default of Greece
keeps the market in suspense[/B]

On Monday, on September, 19th, the basic American indexes were closed with fall, winning back threat of the Greek default. Players were focused on a situation in Europe, and all attention has been chained to conference regarding Greek debt. Investors tend to opinion that Greece declares itself insolvent, and the possibility of a default for the next 5 years exceeds 90 %.

Following the results of the trading session the indicator of “blue chips” index Dow Jones Industrial Average has gone down on 0, 94 % and was closed on a level of 11401,01 points, the index S&P 500 has fallen on 0,98 % to the level of 1204,09 points, and the index of hi-tech companies Nasdaq has reddened on 0,36 % to a level of 2612,83 points.

“Blue chips” were closed mainly in red territory. The greatest losses have caused a stir Bank of America (-3,32 %), JPMorgan (-2,81 %), American Express (-2,87 %), Alcoa (-3,26 %).

The price for futures for oil of LIGHT has decreased on $2,26 or 2,6 % to level of $85,70 for barrel. Oil has gone down in price to minimum for 3 last week’s marks in connection with fears of delay of global economy and reduction of demand for energy carriers in case of default approach in Greece. Price for BRENT is on level of 109.06 for barrel.

The price for futures for gold has decreased on $35,80 or 2 % to value of $1778,90 for ounce. Gold has fallen to its minimum price since August, 25th of final level owing to essential strengthening of dollar concerning the majority of competing reserve currencies.

Results of session of FRS which will begin today, in many respects will define the future of the world financial markets on mid-range term prospect. We will remind that investors would prefer to hear the announcement of a new round of quantitative softening QE3 from B.Bernanke.

23

[B]21.09.2011[/B]

[B]EUR/USD:
the intrigue remains![/B]

That fact, that negotiations between Greece and EU, ECB, IMF are tightened for a week, means that we are not going to see sharp growth of EUR/USD within next few days. Some encouraging moment for euro also can be that recently the financial markets, in particular currency, have ceased to react to a stream of negative news from Europe that besides assumes some improvement of a situation with appetite to risk (positively for EUR/USD).

From good news it is necessary to notice messages that Fitch has confirmed a credit rating of Germany at level ААА on September, 21st.

Situation in USA seems not to be better then in Euro zone. Yesterday the IMF has lowered forecasts on world economy growth on 2011 and 2012 years on 0,3 % and 0,5 % accordingly to 4 % for both years.

Following the results of session - Dow Jones Industrial Average has raised on 7,65 points or 0,07 % to level in 11408,66, Standard and Poor’s 500 has decreased for 2,00 points or 0,17 % to a level 1202,09, and Nasdaq Composite has left in a minus on 22,59 points or 0,86 % and has reached a point 2590,24.

Gold company Newmont Mining has jumped up on 5,5 % on the basis of comments of Richard O’Briens’ - he has declared that gold till the end of 2012 can go up in price to $2000 for ounce. The world markets recently brought to us so many surprises that it can quite appear a reality much earlier, isn’t it?

24

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25

[B]22.09.2011

Markets negative to
Bernankes’ “twist”[/B]

FED’s chief Bernanke’s financial “Operation Twist” combined with a bleak assessment of the global economy had an immediate negative effect on markets. The US exchanges fall steeply, followed by ASIA with Shanghai as the biggest looser plunging 4,1 %. Futures for Europe and US are down. Markets are expecting to see the lowest numbers since July 2010.

In his speech yesterday Bernanke painted a bleak picture of a stagnating global economy which runs a great risk of a double dip recession. FED introduced simultaneously “Operation Twist” to invest 400 billion USD into buying short term treasury bills and reinvest into longer term treasuries and bonds with between 6 and 30 years maturity.

The market answered by selling securities and commodities. Even gold plunged to 1775 and oil prices (NYMEX 85 and Brent 108) under strong pressure on the prospect of lower economic growth. USD is stronger against all currencies EURO/USD trading at 1.3450. The fall in banking shares are continuing world wide with downgrading of major European banks. New Greek austerity measures are met with a new wave of strikes and social unrest.

26

[B]23.09.2011[/B]

[B]Full panic grips
global markets[/B]

Global markets experienced its worst falls since the Lehman Brothers bankruptcy in 2008.
Dow Jones fall 3,51 % to 10 733 after a miserable session in Europe. Statements from the World Bank
and IMF (International Monetary Fund) renewed fears for a double dip recession.

The steep falls continued in Asia. Oil and banking shares were hardest hit, and commodities followed
suit. Gold reached its lowest levels in week tumbling to 1736. Silver fell with 10%. Oil continued its slide. NYMEX
tipped below 80, but recovered to 81 in late Asia trading. Brent is 106.

USD normally regarded as a safe haven in crisis, gained against all currencies Wednesday, but corrected
somewhat during Asian trading. Euro/USD trading at 1.3525; 1 % up from bottom levels the day before in
expectation that the week-end G-20 meeting shall bring some relief for the Euro-zone and especially Greece.

Several commentators yesterday took a double dip recessions as a forgone conclusion and predicted the start
of a prolonged bear market. The market met slightly better US-unemployment figures with no movement and a sigh.

27

[B]27.09.2011[/B]

Orderly Greek default
rumors rally markets

Rumors on an orderly Greek default rallied market’s yesterday and through the night’s trading in Asia. Dow Jones jumped 2,53 % and Nasdaq 1,35 %. Asian exchanges likewise rallied. Commodities are up with Gold trading at 1648 up from Monday’s low on 1525. Silver which reached a bottom on 26.00 in early intra trade makes a daily jump on 20 % trading at 31,25. EURO/USD is at 1.3548 and USD/JPY 76,34. Australian dollar is up and regarded one of traders favorites in forthcoming weeks.

Greek Premier George Papandreou is heeding to Berlin this morning to convince reluctant German politicians and public that Greece is worthwhile supporting. This while the Greek Parliament is discussing the new proposed property tax. Leaked information from talks between European finance ministers injected some optimism in the markets yesterday. According to rumors foreign banks with credit exposure to Greece shall have to accept a back payment of only 50 %. To avoid a collapse in the banking system the European Central Bank’s emergency fund is to be strengthened to facilitate interbank credits.

Both stock, commodity and currency markets continue to be extremely volatile. Stock prices even in solid companies are jumping 10 – 15 % intra day. The same goes for commodities and currencies. This opens up for tremendous trading opportunities with big gains – and – losses within a short period of time. In such an environment fortunes could be created and – lost – within few hours. Traders need to bear this in mind. The volatility is expected to continue for the foreseeable future.

28

[B]28.09.2011[/B]

[B]Short rally ends
in new volatility[/B]

After two days optimistic rally the markets in Asia were last night back to normal. Futures for Europe and US
are pointing down. Commodity prices are lower, and the EURO which got a boost following rumors on an
orderly Greek default, dropped back to Euro/USD 1.3559. USD/Yen is trading on 76,58. Oil is down 1,5 %
(NYMEX 93,50 and Brent 106,35)

September has been one of the worst months ever for commodities. Copper, zink and nickel have fallen steeply on
assumptions on lower economic growth, and even precious metals as gold, silver and palladium saw falls
between 10 and 20 %. There is no comfort for the metals that October traditionally is one of the worst
performing months for metals.

The rally over the last two days have been based on expectations and hope rather than fundamentals. the Merkel/
Papandreou meeting was marked by positive rhetoric, but Greece seems to heed closer to a default for each
passing day. New consumption and production figures coming from the US later today is not expected to
give the market any relief.

29

[B]29.09.2011[/B]
[B]
Greece again
sink markets[/B]

The Euro/USD is slightly up trading at 1.3661 this morning on expectations that Germany today shall ratify the next debt tranche to Greece. The upturn in Markets experienced over the last couple of days, came to a quick halt in Europe, US and Asia, on renewed fears for a Greek default and its consequences for the Euro and the world banking system.

Commodities continued its free fall with dramatic day trading eases in both precious metals and commodities. Oil price fell to NYMEX 79,50 and Brent 103. Silver fell more than 10 % from a Wednesday high on 32,50 down to 29 on intra trade in the US, recovering to 31 this morning.

The markets are extremely volatile with the smallest news and rumors creating havoc and big swings during daily trading. Till the Greek debt package has been ratified by national parliaments, the most important during this week, markets shall continue to be extremely volatile.

30

[B]30.09.2011[/B]
[B]
Better job numbers
lift US-markets[/B]

The number of jobless claims in the US fall from registered 423 000 to 391 000 during September, injecting some optimism at Wall Street last night. Wall Street rose with 1,21 %. Better forecasts for the US GDP added along with German ratification of the temporary crisis fund for the Euro-countries, EFSF, to a somewhat more positive market sentiment.

The Euro has stabilized on 1.3561 to USD after yesterday’s rally which saw 1.3628. USD/Yen is 76,56. Oil prices are slightly up with NYMEX 82 and Brent 104,42. Gold stabilizing on 1625. Markets in Asia are mixed with Shanghai trading at lowest numbers seen in 10 years after a dismal last quarter. Commodities continue to fall on negative growth aspects.

The German willingness to increase state guarantees for the European Stabilization Fund from 123 to 211 Billion Euros, is seen as
small step on a very long journey. The so called Troika is meeting in Athens to day to consider the effects of the Greek austerity measures. This amid new demonstrations and public frustrations.

30th September marks the end of a disastrous third quarter in markets with renewed fears of a double dip recession in the world economy along with an intensified sovereign debt crisis in Europe with questions as to the future of the EURO adding increased nervousness and uncertainty. The last couple of days have seen a certain market stability; that might be a token that we are in for a softer sailing at the last remaining months of the year?

31

[B]03.10.2011[/B]

[B]Sell off
continues[/B]

Sell off of shares continued in Asia this morning with Hang Seng dropping 5, 4 %. The sell off came on top a dismal third quarter which saw stocks falling 25 %. October is traditionally one of the worst performing months in stock markets.

The Euro continues tits slide towards other currencies. EURO/USD trading at 1.3319. Oil prices (NYMEX 78 and Brent 101,85) are trading at lowest levels in one year. The sell off in Asia is due more to foreign investors taking profit and cutting losses elsewhere than weaker fundamentals. Industrial output in China is up in September. Gold is stabilizing on 1630. Silver is also up since last Friday.

Uncertainty continues to dominate in the EURO-markets. Obama added his worries stating that Eurozone debt crisis clouds the global horizon. EU finance Ministers meet in Luxembourg today amidst growing concern on Greece. No clear solution seems in sight with continued political bickering. The austerity measures are adding to the pain. The Greek GDP is expected to fall 5,5 % in 2011, much steeper than predicted.

From outside Greece seems on the brink of a social collapse. Demonstrators are crowding the streets, and a new general strike is announced for Tuesday.

Expect a new volatile week with continued opportunities for traders who read the rends correctly.

32

[B]04.10.2011[/B]

[B]European debt crisis
spread global panic[/B]

October is living up to its reputation as the worst performing month in financial markets. Monday’s steep falls
in Asia were followed by Wall Street. Dow Jones dropped 2,4 % to 10 655 with the magic 10 000 limit in sight. Futures for Europe and USA are down after Asia fall for the consecutive day. Oil prices plunge with NYMEX tipping below
USD 76 and Brent fighting to stay beyond 100 barrel.

EURO/USD is at 1.3200. The EU-finance ministers failed to give any signals to calm markets after meeting in Luxembourg. This
has added to the pressure on the Euro. A Greek default is seem to be taken for granted. The visiting TROIKA (representative from the European Central Bank, IMF and EU-commission) has once again stated that Greek austerity measures are lagging behind. The final decision to release the next debt tranche to Greece is postponed to the 17th October meeting with heads of state.

In the meantime there is no money left in the Greek state coffers and the massive protests against the austerity measures and greedy bankers are continuing in the streets. Protests against bail outs and greedy bankers are not limited to Europe. Wall street witnessed over the week end that 700 protesters were arrested.

Big US banks as JP Morgan and Bank of America are as heavy debt loaded as its European counterparts. One of the few messages given by EU-ministers of finance, is that creditors must be prepared for taking increased Greek losses. Greek treasury bills are trading on 46 % of face value indicating creditor losses up to 50 %.

In an atmosphere of volatility and uncertainty Gold is springing back to life up to1671. Another precious metal, silver, is also been given a boost. Among the currencies British pound is under increased pressure GBP/USD at 1,5465.

33

[B]05.10.2011[/B]

[B]Italian downgrade
adds to market fear[/B]

Moody’s downgrade of Italy has increased volatility prior to opening of markets in Europe. After steep falls Dow Jones and Nasdaq turned around during last hour’s trade and ended up 1,44 and 2,95 % respectively. The EURO/USD corrected down upon the news of the Italian downgrade from 1.3365 to 1.3305. The rally did not influence Asian traders. Hang Seng dropped new 3 %. One share is up for each three falling shares. Copper gained for the first time in six days, but is 35 % down from it’s peak in January.

Copper is though a sensible indicator on industrial activity and yesterday’s gain might signal that the bottom trend is starting to phase out. Most analysts do, however, agree that the worst is not yet been seen, and that markets still could fall another 10 – 15 %. A lot of wild speculation going on illustrated in Gold trading. Gold fluctuated between 1680 and 1605 during yesterday’s session opening the morning at 1630. Yen is steady towards USD at 76,665. Downward trend in GBP continues.

Italian SOVEREIGN debt was downgraded from A2 to AA2. Moody’s Investor Service is finding future perspectives for Italy negative with weak economic growth and problems and consequent problems in refinancing their debt. These are problems very similar to those facing Greece and other debt-stricken EU-countries. Before EU is coming up with a credible answer as to how to handle the sovereign debt problems market volatility is going to continue.

34

[B]Europe’s leading central banks
returned to crisis-fighting mode[/B]

On Thursday, on October, 6th, key stock markets of the European region, as well as U.S. market have finished the trading session in positive territory. Interest rates as it has been predicted were left at former level of 0,5 % and 1,5 % accordingly.

Investors have complacently apprehended news that the European central bank will support liquidity in bank system by carrying out of two long-term operations on refinancing in October and December. Besides, ECB will start the new program of the repayment of sovereign debt papers for the amount of 40 bil. Euro.

Following the results of the trading session " index Dow Jones Industrial Average has raised on 1,68 % and was closed on a level of 11123,30 points, the index of wide market S&P 500 has grown on 1,83 % to level 1164,97 points, and the index of hi-tech companies Nasdaq has risen on 1,88 % to a mark 2506,82 points.

The price for futures for oil of Light following the results of the auctions on NYMEX has raised on $2,91 or 3,52 % to level of $82,59 for barrel.

The price for futures for gold following the results of the auctions on COMEX has raised on $11,60 or 0,7 % to value to $1653,20 for ounce.

On Friday all attention will be chained to the data on a labor market of the USA - to a rate of unemployment and employment in non-agricultural sector. This news will affect the further dynamics of the market and in a case of negative results – we can see new minimums.

35

[B]10.10.2011[/B]

[B]Bulls successively
keep leadership[/B]

On Friday, on October, 7th, the basic share indicators of the European region have shown mainly growth, having continued a positive tendency of previous days. Investors were satisfied with a positive data from the USA on a labor market, in particular, employment growth in nonagricultural sector in September has increased on 103 000 after increase on 57 000 month before.

Following the results of the session the indicator of “blue chips” index Dow Jones Industrial Average was closed on a mark of 11103,12 points, the index of wide market S&P 500 on a level of 1155,46 points.

Quotations of “black gold” this morning moderately rise: North Sea oil costs $104.33 for barrel, the future for oil of mark LIGHT - $83.77 for barrel.

Both futures for indexes of the USA, and futures for oil are up 1,5 %. Results of a meeting of the federal chancellor of Germany of Angela Merkel and the president of France Nicolas Sarkozy who agreed about working out of the plan of the decision of debt problems of the countries of an euro area (obviously to settle problems of Greece) became a driver for the opening of session. Leaders of Germany and France promised to develop the new plan before summit G20 which will be in the beginning of November, and, it means, that till the end of October there can be encouraging news regarding decision of debt problems.

Today is a holiday in the USA – Columbus Day - in this connection volatility will decrease together with volumes of the trades. Day of Columbus foretells quiet session.

36

[B]11.10.2011[/B]

[B]Strong rally
continues[/B]

End of last week’s market rally continued on Monday with Dow Jones up 2,97 % and Nasdaq jumping 3,50 %. China Investments Corp has bought stocks in four major banks, creating increased confidence in the Chinese banking sector and initiating a strong rally.

These steps contributed to the positive market sentiment in Asia. Chinese bank skyrocketed 8 – 10 %. Hang Seng jumped 3,5 %. Asian stock exchanges rose for the fourth consecutive day experiencing their best four day period since 2009 with an increase of 5,9 %. Toki which was closed on Monday saw Nikkei jumping 2 %.

Statements from Merkel and Sarkozy have likewise been positively received. The leading Western European powers seem willing to transfer necessary funds to a new European emergency unit for sovereign debt and recapitalization of major banks.

Gold continues up 1679 while other commodities like copper are slightly down. Euro/USD is trading at 1.3640 and USD/Yen at 76,685.
Exchanges in Europe are expected to open slightly up after rallies in US and Asia.

37

[B]12.10.2011[/B]

[B]Increased volatility
after Slovakia’s NO[/B]

Tiny Slovakia’s no to bail out for Greece has along with the Senate’s rejection of Obama’s plan for increased jobs, sent new shivers into financial markets questioning economic growth prospects and EURO stability. The giant aluminium producer ALCOA’s disappointing quarterly results injected a new dose of realism into volatile markets. Both Dow Jones and Asian markets ended down after a four day rally.

The falls in Asia were, however, less than expected due to news on better prices for shipping services. The Chinese Banks continue to rocket after the state investment fund yesterday bought heavily into four ailing banks. The Agricultural Bank of China is up 12 % this morning. Many investors are asking whether Chinese stocks have fallen, too, heavily and are underpriced.

The Slovakian parliament rejected the proposed changes in the European emergency fund involving major banks and sovereign states. A new government has is in the making. There are, however, certain optimism that the proposed package shall pass Parliament later this week. In the US President Obama has suffered a new defeat on his proposal for increased jobs.

EURO/USD is remarkably stabile at 1.3632 taken the Slovakian NO into consideration. USD/Yen is 76,715. Oil prices which have increased for one week is slightly lower this morning. NYMEX on 85,50 level and Brent 110 – 111, 10 dollars up from lowest levels a week ago. Gold is steady at 1666.

38

[B]13.10.2011[/B]

[B]Stagnating Chinese
trade in September[/B]

The Chinese trading figures for September came in weaker than expected. The trade balance show a surplus on 14,51 Billion USD,
1.8 B USD less than the forecasts with weaker export and import numbers. Inflation is still running high on 6 %. The somewhat disappointing numbers had, however, no influence on Asian stock markets that continued to rally for the 6th consecutive day. The Japanese Nikkei is up more than 1 % after a new strong day for the US-exchanges. DOW is up 0,90 % and Nasdaq 0,84 %.

Copper and oil prices are slightly weaker in the morning trade with Brent 111, 17. South Korean and Australian currencies are stronger, and the EURO continue to climb against the USD at 1.3796 after reaching 1.3825 in early morning trade. The stronger Euro and the continued stock rally reflects investors belief that the EU-countries shall take quick and decisive action to recapitalize struggling banks and to avoid the Greek debt crisis to contagion further and hit Spain and Italy.

The speech by EU-Commission President, Jose Barroso, yesterday was seen in this light and as a strong expression of European willingness to take strong action to save ailing Western European banks.

39

[B]Spain is downgraded.
Added pressure on EU[/B]

The rating agency Standard and Poor has downgraded Spain on weak economic growth prospects. S & P sees zero growth for Spain in 2012 due to high unemployment and huge private credits. The downgrading has increased the pressure on EU-countries to recapitalize banks and solve the sovereign debt crisis in Europe. One hinder was overcome yesterday when Slovakia as finally ratified the the proposed emergency fund.

After a strong market rally over the last days investors are back on the fence. European markets fell. Dow Jones was down 0,35 % and most Asian markets ended in red. The Euro is stabile against USD at 1.3789, Japanese Yen is falling against the dollar trading at 76, 90. Brent oil is steady on the USD 111 level while NYMEX is down to 84,50 on increased oil storage numbers from the US.

Market futures give no clear indication on how the decisive US-markets shall open today. Analysts seem still to be optimistic as to a temporary solution to the problems within the Euro-zone. Spain’s downgrading is, however, a stark reminder that Greece is not a lonely sovereign problem. Portugal yesterday introduced new emergency matters to tackle it’s grave economic problems and Italy is on the verge of a new government crisis. The fear of a serious contagion is overwhelming. Investors have to be prepared for some dumpy weeks ahead.

40

[B]17.10.2011[/B]

EU receives one week
to get house in order

The Ministers of finance within the Group of 20, the strongest industrial countries in the world meeting in Paris during the weekend, have given the EU a week dead line to get their house in order. This has lifted the stock exchanges in Asia which continue to raise after seeing the strongest weekly rally in six months. The increases indicate strong belief that European leaders shall find a way out of it’s sovereign debt and looming bank crisis. Recent statements give raise to some optimism that a way out shall be found.

The MSCI Asia Pacifice, an index for the Asian stock exchanges, is up 1,7 % Monday morning. Five shares are up while one falling in price. Last week the index rose 3,4 %. The Japanese Nikkei is up 1,46 %. Australia jumps 1,66 along with a stronger Aussie dollar. The South Korean Kospi increases 1, 1 percentage.

The Euro/usd is stabile at 1,3842. Gold is trading at 1682, more or less the same level as seen last week. The US Congress has passed a resolution against China, threatening increased tariffs on Chinese import goods, and expressing strong dissatisfaction with the presumably low Chinese Huan. This in a situation whereby the USD has depreciated or lost in value against most world currencies. The strongest gainers against USD being Norway and Indonesia which see their currencies strengthened 6,92 % against the dollar. This trend towards a weaker USD is seen to continue for the nearest months.