Market update by UWCFX

Trading Discussion News and Economy
41

[B]18.10.2011[/B]

[B]Germany sinks hopes
of an early recovery[/B]

More careful statements from German leaders on the sovereign debt crisis along with GDP numbers from China indicating somewhat slower economic growth sent world markets in red yesterday wiping out most profits gained over the last ten trading days. Both Dow Jones and Nasdaq in USA fell with 2 percentages. The Shanghai composite, Hang Seng, dropped 3,4 %.

Last quarterly figures for China indicate continued strong growth with a GDP growth of 9,1 %. This is somewhat slower than market expectations and represent an eight consecutive quarter fall in GDP. Industrial production is, however, up with export and housing numbers stagnating. The overall picture of Chinese economy is positive, and the steep falls in Asia this morning may be seen as an overreaction more reflecting the continued nervousness surrounding the European debt crisis.

The spokesman of Angela Merkel yesterday plaid down unrealistic market expectations as to a quick fix to the European debt crisis after the G-21 meeting. His statement that ‘these problems have been with us for the last two years, and they are not going to whither away over night”, immediately turned market around. The EUro/Usd fall steeply from a month high. It has recovered somewhat in early trade today at 1.3772. Oil prices are down; Brent 110 and Nymex 84.

42

[B]19.10.2011[/B]

[B]Markets rally on
EU-solution rumors[/B]

After a dismal start on the trading week, rumors on a French-German agreement on increasing the emergency fund for sovereign debt and bank recapitalization to 2 Trillion Euros, spurred a strong world market rally initiated in US where Dow rose 1,58 and Nasdaq 1,63 %. Asian markets jump, and European futures are pointing up. US futures are down on disappointing quarterly results also from Apple. Finance and banking shares have recovered. Bank of America is up 7 %.

The rumors from Europe has led to a strong rebound in the EURO. Euro/USD trading at 1.3812. Oil prices are up; NYMEX at 88 and Brent on 111 levels. Greece is facing a Parliamentarian vote on continued austerity measures on Thursday. All Greece is on strike. Premier Papandreou is seeing the vote as decisive to avoid default. Moodys has downgraded Spain credit rating. This does not, however, place Spain on the same credit standing as Greece, Europe and Portugal.

In spite of some renewed market optimism, Angela Merkel yesterday repeated that the European credit crisis is deep rooted and shall be with the markets for a long time to come.

43

[B]20.10.2011[/B]

[B]Markets down on
internal EU-quarrels[/B]

Last hours disagreements between France and Germany on the role of the proposed new emergency bail out fund, have created new fears and dispair in global markets. Markets are back in deep red in US and Asia and futures for Europe and opening in US are pointing down threatening to wipe out gains over the last weeks.

The Euro is falling along with oil (NYMEX 86 and Brent 108) and commodity prices. Copper prices, one of the best indicators of economic growth, are falling for the seventh consecutive day. Even safe haven gold, is falling 65 dollar from from 1675 at the start of the week to present 1610. The US Federal reserve, FED, indicated yesterday that the US economy is showing slow, but steady progress with no turn around in either employment or housing. This careful statement, however, boosted the strength of the dollar.

An emergency meeting in Frankfurt yesterday evening between Merkel and Sarkozy ended in no results or statements with mixed signals coming from the countries top officials prior to the crucial EU-summit on Sunday both to the functioning of the emergency fund and the “hair cut” for Greece. As a prelude demonstrators came out in great numbers and changed central Athens into somewhat of a war zone, while Parliament discussed new austerity measures. Inside the EU it still seems to be disagreements as to whether the “hair cut” shall be as big as 50 %.

44

[B]Nervous markets wait
outcome of EU-summit[/B]

Global markets experienced big volatility with steep fall and rebound in currencies and commodities
during yesterday. No clear direction I the stock markets in sight. . Headlines and rumors continued to rule
the day. Dow turned around midways into the session. After seeing steep losses it ended up 0,32 %.
Euro/USD went between 1.36 and 1.38 reflecting more or less substantiated leaks from German –
French negotiations, at present trading higher at 1.3803.

Oil prices are stabilizing with NYMEX on 86,50 and Brent 111.69. News on Khadafi’s death have not
seriously influenced prices. Gold is up at 1629 after it saw bottom levels on 1605. USD/Yen is flat on
76,755. Forecasts see a strong Yen on Euro volatility and USD weakness over the next couple of weeks.

The Papandreou-government survived a critical vote in the Greek Parliament over the individual part of the
austerity measures while street demonstrations saw it’s first death toll. Negotiations on the final
package to be voted on EU-summit on Sunday continue. Last rumors tell about an emergency fund for
sovereign debt and recapitalization on banks of 1 Billion Euro. Whether the final “hair cut” for Greece
shall end on 50 or 60 % seems still left open.

45

[B]24.10.2011[/B]
[B]
Negotiations of the European leaders
keep investors in suspense[/B]

At EU summit in Brussel which first stage has passed on October, 23rd, leaders of the European countries have depicted an overall picture of the program of rescue of region. In particular potential measures on support of banks have been planned and questions of increase in a role of IMF in a question of rendering assistance to region were mentioned. Last decision will be taken on Wednesday, on October, 26th.

Indexes grew last week and today we also expect positive opening because all investors live in hope that the European regulators will take measures in the decision of debt crisis. Positive reporting of some companies also have supported purchasing moods. According to WSJ, quarter results about 70 % of the reported companies have surpassed expectations of analysts.

Following the results of the trading session the indicator of “blue chips” index Dow Jones Industrial Average has raised on 2,31 % and was closed on a level of 11808,79 points, an index of wide market S&P 500 has risen on 1,88 % to level 1238,25 points, and the index of hi-tech companies Nasdaq has raised on 1,49 % to a level 2637,46 points.

The prices for oil and gold also show an ascending trend. NYMEX is on 88,54 and Brent 110.76. Gold is up at 1652.28.

46

[B]25.10.2011[/B]
[B]
The fourth week of October:
European summit in focus[/B]

On Monday, on October, 24th, American indexes were closed with an increase. Corporate reporting and increasing oil prices have supported purchasing moods. At the same time, market growth limits the European factor. Despite some progress at the summit, regulators can’t come to the consent on some questions, as for example, what share of losses will be incurred by private creditors on the Greek debt. Investors hope for a positive outcome of the second summit on Wednesday, but at the same time while some uncertainty remains, investors are careful, and we can see rather low volumes.

Following the results of the trading session the indicator of “blue chips” index Dow Jones Industrial Average has raised on 0,89 % and was closed on a level of 11913,62 points, an index of wide market S&P 500 has risen on 1,29 % to level 1254,19 points, and Nasdaq has reached on 2,35 % to a level 2699,44 points.

The price for futures for oil of mark Light has raised on $3,87 or 4,4 % to level of $91,27 for barrel. Oil reached its maximum since 3rd of August.

The price for futures for gold with delivery in December has raised on $16,20 or 1 % to value of $1652,30 for ounce. Gold has risen due to the fact that dollar is weakening towards all other reserve currencies.

Today trading session can be affected by the statistics from USA.

47

[B]26.10.2011[/B]

[B]Nervous markets wait
outcome of EU-summit[/B]

Leading western indexes have decreased yesterday because of the published weak macroeconomic statistics. As well as the concern of investors that the anti-recessionary plan is not going to be accepted after it became known that the meeting of Ministers of Finance of the European Union countries, planned for October, 26th, is cancelled.

No clear direction in the stock markets in sight. As a result the American market has finished Tuesday’s trading session with fall of leading indexes on 1,7-2,3 %, due to the negative data of macroeconomic statistics and some weak reports of the companies. Dow reached level of 11706.62 with a decrease of 1.73%, S&P 500 was closed on a level of 1229.05 points with a decrease of more than 2%.

The extremely disturbing, yesterday has appeared the data on an index of consumer confidence to economy of the USA which in October has fallen to the minimum level for last 2,5 years, practically having reached crisis levels of 2008. From 10 indexes of sectors of the wide market of the USA yesterday have decreased all 10, and the financial sector which index has lost 3,1 % became the outsider.

Nevertheless, futures for share indexes of the USA this morning add 0,4-0,5 %, Brent continues movement below $112, increase above the given level assumes further growth.

Negotiations on the final plan seem still left open.

48

[B]28.10.2011[/B]

[B]Strong relief rally
continues in Asia[/B]

Global markets skyrocketed in Europe and US yesterday and continued in Asia during the night with all exchanges
in positive territory. Yen is record strong against the USD which is falling against all major currencies. Dow Jones jumped 2,86 % while the technology exchange, Nasdaq added 3,2 % and made October the best stock exchange month in US this year.

Better GDP figures from the US contributed ton the market relief after the EU presented its its package for Greece Wednesday night. The package involves a 50 % “haircut” of 50 % for banks having invested in Greek bonds
preconditioned that Greece follows up with continued tough austerity measures.

The exposed banks are asked to recapitalize, and need to present their plans for such recapitalization by December 25th. The EU emergency fund (EFSF) for sovereign debts and bankruptcy threatened banks are increased
to one trillion Euros. Negotiations have started with countries as China and Norway to contribute to the fund which represents the double value of the present Norwegian sovereign oil fund.

The latest turn of events have most observers to think that the worst in the stock markets are over for now and that the low index numbers from early October represented the bottom of the market. As a consequence of the latest developments USD has fallen against most currencies; oil and commodities are recovering. Euro/USD i s at 1.4181.USD/Yen trading at 75,88. Brent reached 112,50 and is at present 111,85. Gold has climbed to 1745 and Silver has made a strong recovery reaching 35,50 up more than 5 %.

49

[B]31.10.2011[/B]

[B]Asian stock markets basically
showed “the bear” dynamics[/B]

The September gain of consumer incomes in the USA has appeared a little below forecasts, expenses of the American consumers, on the contrary, have a little exceeded market expectations. On this background the American stock markets on Fridays basically showed positive dynamics.

On Saturday the European Fund of Stability EFSF has declared that all three leading world rating agencies, Standard & Poor’s, Moody’s and Fitch, have confirmed its rating at level “ААА”.

Nevertheless, this morning the Asian stock markets basically showed “the bear” dynamics, the prices for oil and metals have gone down. Behavior of investors’ affects intensity in the market, remaining on the threshold of a number of important events - as appointed for Wednesday and Thursday meetings of European Central Bank and Federal Reserve.

50

[B]02.11.2011[/B]
[B]
Expectation of FR meeting in the USA
and summit G20 can support the markets[/B]

Yesterday we saw downfall on all the markets. Collapse on Tuesday has provoked desire of Greece to hold a national referendum, meaning that risks for financial stability and the existence of a euro zone have increased again. Another announcement about the bankruptcy of large American broker MF Global brought even more pessimism to the markets.

The European markets have fallen off yesterday on 2-7 %, thus have most worse proved to be French CAC-40 (-5,38 %) and German DAX (-5 %), Greek General Share has fallen on 6,92 %. The American stock markets have lost yesterday 2,5-2,9 %.

Today influence on the markets can have two factors: first, a lot of stocks are oversold, and secondly, expectations of a fundamental positive. Summit G20 in Cannes which begins today where, of course, the cores will be Greek questions. Leaders of Germany and France have already expressed the hope of performance of the arrangements reached at the summit of EU last week. Now the basic risk is the consent to carrying out of a referendum from the Greek government as in the country the most part of the population doesn’t support the given program in this connection reached arrangements can be not executed.

Also from events of day it is necessary to allocate the data on employment in the USA: according to the forecast the data from ADP will support the share “bulls” who have remained in minority lately. Results of FR meeting which will be announced today - shall not bring any surprises and will not change market picture.

Oil prices are increasing. The future for oil of mark Brent has reacted to the data on stocks API: stocks of crude oil were unexpectedly reduced to 0,156 million barrels, gasoline stocks - on 1,129 million barrels, stocks of distillates were reduced to 3,435 million barrels. NYMEX is trading on 92,409 and Brent 109.632. Gold is up at 1726.45.

51

[B]FR has refrained from
changes in a policy[/B]

This morning the external background looks mixed enough. The American indexes were closed in plus, having added on the average 1,2 %-1,6 %. The encouraging rhetoric of head of FR has supported transatlantic players. Though it has been noticed that the forecast of development of economy of the USA has worsened: growth of gross national product of the country in 2012 will make not 3,7 %, but only 3,3 %. Interest rate FR of the USA has left at former level.

In Asia we can observe different dynamics: KOSPI decreases on 1,4 %, Hang Seng falls on 0,98 %, Shanghai Composite in plus on 0,85 %. Japan doesn’t trade today in connection with a national holiday.

The prices for oil are again trying to correct a little. The yesterday’s data from the USA has shown that oil stocks, according to EIA, have risen for the past week on 1,826 million barrels while growth on 1,070 million barrels was expected. Nevertheless, the price for “oil” still is at high enough level: the barrel of mark Brent bargains today at level of $108,73, Light is estimated in $91,59.

Today statistical data from the euro zone and the USA can have affect on the dynamics of the day. Data on number of primary references for unemployment benefits in the USA, also data on labor productivity out of agricultural sector, and index of business activity in non-productive sector will be published today. Markets still do not have any concrete directions and volatility increases.

“It is a question whether we
want to remain in European
Zone”- G. Papaandreou.

52

[B]04.11.2011[/B]

[B]Greek instability keeps
grip on global markets[/B]

After initially declaring a referendum on the EU crisis package, Premier Papandreou turned around and gave up the idea
after tough pressure both from EU and his own government. Markets don’t like unpredictability and shivered. Cancelling the referendum, however, created a relief rally in Asia with major exchanges increasing more than 3 %.

The G-20 summit of the biggest industrialized countries in the world,meeting in Cannes have watched events intently without being able to contribute to a solution to the nightmare riding the Euro-zone. Greece is constituting 3 % of total EU-economy. The real worry is contagion and Italy and Spain being next in line, being, too, important countries to default.

The Euro has recovered from lower levels earlier in the week Euro/USD trading at 1.3815. Central Bank interventions in Japan buying dollar to weaken the Yen have worked for now; USD/JPY at 78.1028. Oil prices has recovered; NYMEX at 94,25 and Brent 110,75. Gold rallied to 1775 yesterday and is at 1762 in today’s morning trading.

The Greek Parliament is having a confidence vote during the evening probably resulting in a positive outcome after the last days
maneuvers. Rumors from Athens says that Georg Papandreou has agreed to resign, preparing the ground for a broad national unity government.

53

[B]04.11.2011

Forex News
Brent crude steady above $109[/B]

On Friday, Brent crude held steady above $109 after recovering in the previous session on optimism that policymakers will move closer to resolve the debt crisis of euro zone at a meeting this weekend and stem any slowdown in oil demand.

European leaders be examining in detail a global solution to the crisis on Sunday and aim to adopt the plan on Wednesday at the latest, France and Germany said.

Brent crude fell 26 cents to $109.50 a barrel at 0707 GMT, after rising to as much as $110. U.S. oil gained 22 cents to $86.29 a barrel.

“If we see some solid agreement on the debt crisis, then we may see Brent rising to $114, a technical resistance level,” Caren Seren Varol, a risk manager at Global Risk Management said. “If there is no agreement, we may see prices fall all the way down to the $103-$104 level.”

Brent is poised to fall 2.6 percent this week after been on the increasing side for the past two weeks and inching closer to the 2.8 percent decline of the week ended September 30. U.S. oil looks set to slip 1 percent this week, after rising 5.3 percent in the last one.

France and Germany did not share consensus over the best way to bolster the facility, with Paris fearing its triple-A credit rating could come under threat if the wrong method is chosen.

“The market will trade in a very narrow range, between $84 and $88 a barrel for U.S. crude till the outcome of the summit is known,” said Hasegawa.

“Nobody is willing to take positions at this point.”

Brent crude will remain neutral in a range of $106.96-$110.30 per barrel, Reuters’ technical analyst Wang Tao said.

54

[B]07.11.2011[/B]
[B]
Coalition government
stabilizes Greece for now[/B]

The Greek government won the confidence vote I Parliament last Friday. This opens for a coalition between PASOK and the conservative opposition probably with former Vice President in ECB, Lukas Papademos as new Premier in an interim period before new elections scheduled for early 2-012.

This has led to a temporary relief after Premier Papandreou’s proposal on a referendum on the austerity measures, created havoc in global markets at the end of last week. The referendum was seen as a major threat to the EURO, and the markets reacted accordingly.

The Euopean Central Bank (ECB) simultaneously lowered the interest rate with 0,25 %. Pressure on Italy continues with bond rates increasing. EURO/USD is trading at 1.3703 and USD/JPY at 78.075. Oil prices stabilize with Brent at 111.96. Gold saw an increase in morning’s trade in Asia, but is now at 1765. Asian markets were mainly flat. European exchanges have opened down with Frankfurt falling 1.95 and Paris exchange with 1,41.

The market volatility is expected to continue during the week. Unemployment figures in the US were slightly down without creating any impact on the US indices. Futures for the US-markets indicate a flat to downward trend. Some analysts, however, predicting stabilization in the nearest weeks with opportunities for a Christmas rally.

55

[B]08.11.2011[/B]

[B]Gold at seven
week high[/B]

Gold reached a seven week high at 1799 yesterday and is at 1791 in morning trade. Oil prices are at highest
levels seen in 4 weeks with NYMEX at 94,75 and Brent reaching 114,44. Asian exchanges are down following
the scandal with Olympus which for years have manipulated books and sales figures.

A new crisis is brewing inside the EURO-area with the Italian government next in line after Greece for a
confidence test in Parliament today. Premier Berlusconi seems increasingly isolated, and even within his own ranks
questions are asked whether he is the man to handle Italy’s debt challenges.

Greece is still struggling to agree on a new Premier and composition of a national unity government. Spain is
facing national elections. Japan has agreed to buy 10 % of the treasury bills the European Emergency Fund yesterday
presented for sales amounting to 300 Billion Euros. Russia has indicated a similar willingness based on less
amounts.

The US exchanges ended in blue last night after a nervous and volatile sessions. Futures point to
similar volatility in European exchanges today. Euro and Yen keep stabile towards the US. Israeli threats
to attack Iran was met by a strong warning by Russia stating that such move shall seriously jeopardize
the stability of the whole region.

56

[B]09.11.2011

Berlusconi’s retreat
make markets rally[/B]

Volatile stock exchanges reacted with relief and sent markets up when disputed Italian Premier Berlusconi yesterday announced his retreatment. Dow Jones rose 0,84 % and Nasdaq 1.20 %. Asian markets followed suit also inspired by news on lower Chinese inflation. Oil prices continued to raise; NYMEX at 79 and Brent 115,50. The EURO got a boost on the news from Italy and reached 1.3850 falling back this morning to 1.3802. The Yen is stronger against USD 77,6635. This might trigger new Central Bank intervention.

Interest rates on Italian bonds are under pressure, but still trading below the critical 7 % mark. Rumors tell that France is under similar pressure indicating that the last round of Euro-zone problems don’t stop with Greece and Italy. The new IMF president, Christine Lagard, stated yesterday that the sovereign debt problems in Europe threatened to make this decade a lost one.

There is generally a more positive sentiment in today’s markets. China’s lower inflation figures indicate opportunities for more economic growth orientated policies. Copper prices, a good indicator on market sentiments, are at its highest for one week.

The Berlusconi effect is probably going to have a positive on European stock exchanges today.

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57

[B]10.11.2011

Italian debt makes
global markets shiver[/B]

Berlusconi had barely announced his departure as Premier followed by a relief rally, before global markets crashed back to realities as a stark reminder of fundamental realities. Interest rates on Italian bonds smashed through the critical 7 % level which has been seen as pain threshold earlier in relation to debt stricken Greece, Portugal and Ireland, and raised new serious questions as to the sovereign debt crisis in Europe and the future of the Euro. Short term Italian debt which has to be refinanced next year is especially bothersome.

Markets saw steep falls in Europe and in the United States where Dow fall 3,20 and Nasdaq 3,88 % followed by a blood red numbers from Asia where exchanges experienced one of their worst days in a long time with Hong Kong leading the pack with a fall of 4,5 %. The Asia Pacific Index is down 3,2 %.

USD again seems to regarded as somewhat of a safe haven. EURO/USD is down to 1.3533, and USD is strengthened against most currencies except Yen; USD/JPY trading at 77.72. Gold and precious metals which were back in favor among investors at the beginning of the week trades at 1757. Oil prices are down. Brent at 114,50 yesterday morning, is two dollar down and stands at 112,28.

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58

[B]15.11.2011

European debt fears
sink Asian markets[/B]

Global markets have awoken to new fear of spreading debt contagion in Europe. After a dumpy session in New York, Asian markets were gripped with fear that the sovereign crisis shall hit more European countries. After a couple of days relief, old aged bankers turned Premiers and politicians in Greece and Italy, proved to have no magic to offer except for continued austerity and clinging to a Euro which more and more observers see as unfit to get Europe out of its deep crisis.

Markets seem therefore slowly to realize that there is no quick fixes to fundamental flaws in the global economic system. Fear is therefore most likely going to dominate markets , except for short moments of optimism when some good figures are reported. We are in for a continued period of volatility both in currencies and stock exchanges.

Most focus is still on Europe where Germany and Angela Merkel along with the European Commission are pushing for closer integration as the best medicine to save the Euro and get out of the crisis. Premier Cameron in England has refused this path. Along with other Euro skeptics he is stressing that the Euro is a major cause for the present imbalances

In Italy Monti is striving to compose a government in an environment of renewed high bond interests. Euro is falling against the USD trading at 1.3593. Oil and gold prices are down while YEN is gaining ground. USD/JPY is at 76,99.

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59

[B]16.11.2011

Asia lower on
fear for Italy[/B]

Asian exchanges continued down this morning with Nikkei falling 0,92 % on fear that the sovereign debt crisis in
Europe is running out of control. In the US both the latest manufacturing and consumption indexes were slightly
up, creating hopes that the US economy shall avoid a double dip recession. Technology stocks were strong with Nasdaq up 1,09 %.

USD is strengthened, and Euro/USD fall to its lowest level in 5 weeks trading at 1.3437. USD/JPY stabile at 77.04. Oil prices
which climbed in US trade are falling back; NYMEX at 98,75 and Brent 111,60. Gold has dipped back to 1767 after reaching 1787
on Tuesday.

The Premier designate in Italy has so far not been able to compose his final government. There are rumors that ex-commissioner Monti shall take responsibility also for the Ministry of Finance. Greece is expecting a confidence vote on its new
government to day. Facing new elections in the nearest days, Spanish bonds raise and are now close to facing the critical 7 % level.

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61

25.11.2011

EU-quarrel
sinks Asia

The Asian exchanges ended in red for the fourth consecutive day effected by Angela Merkel’s
resistance against issuance of EURO-bonds and, unwillingness to let ECB (European Central
Bank) be a lender of last resort.

At the German-France-Italian summit Merkel stressed that Eurobond establishment shall level out
national differences in the interest rates on bonds. An immediate result would be higher German
interest rates. Instead of letting ECB act as lender of last resort, Germany wants changes in the EU-treaty
which can force highly indebted national states to exercise budget discipline.

The continued internal quarrel in EU had a negative effect on Asian market. Europe is expected down for the
ninth day in row. Euro is at at a 8 week low. EURO/USD 1.3332, up from bottom levels on 1.33 in Asia
trading. Oil is flat; NYMEX 96,50 and Brent 107. Gold struggles at 1685 down 10 dollar since
start of morning trade. USD is strengthened against JPY at 77.32.