Thread: Market update by UWCFX

08.08.2011

Run, walk or BUY?
Market panic continues.

Panic selling continued in the Asian market this morning after last week’s onslaught. Relatively good
employment figures in the US Friday afternoon created a short relief when the credit rating Standard
and Poor after the closure downgraded the world’s largest economy to AA.

This has sent new shivers into world markets. Fears of Italian and Spanish default are raising new serious questions
On the future of the EURO-zone. Investors are running from stocks and weaker currencies into Gold, Swiss Franc and YEN and surprisingly enough US treasury Bills.

The world market is without doubt facing its gravest challenge since the Lehman Brother crisis in 2008 G-7
and European Central Bank (ECB) assurances over the week-end has done nothing to calm over nervous,
volatile and shaky markets.

Gold is again the big winner reaching 1700 during the night with Silver as well jumping 5 % to 40,20.
Money continues to flow into Swiss Franc, YEN, treasury bills and bonds. The Chinese Huan has appreciated 0,2 %
against the USD as the Chinese stock markets are holding off better than other Asian markets.

USD is the big looser.

Be prepared for a new stormy and volatile week giving FX traders unexpected opportunities.

Panic sell continues
GOLD reaches 1775

Black Monday seems to be followed by a bleaker Tuesday. Wall Street saw one of its worst falls when world markets
continued its free fall. Investors desperately leaving stocks looking for other outlets. Treasuries soared while GOLD broke new records reaching 1785 in Asian trade.

President Barack Obamas assurances that US was still a triple rated country which honoured its obligations did not calm markets. While the President spoke, Dow Jones, NASDAQ and SAP fall to new lows and Gold soared, demonstrating the worst political confidence crisis since autumn of 2008. No big expectations for Fed Chief Bernanke’s speech today.

Fundamental facts, not words and political oratory are needed in order to convince world’s investors that US is not in for a second dip recession. European stock indices today are pointing steeply down reminding investors that also the Euro-zone is in a mess. China’s inflation figures neither gave any comfort illustrating that this is a worldwide crisis. Yesterdays 7,83 % stock market loss yesterday just added to the fact that this a worldwide financial crisis might be deeper than experienced in 2008.

Yen and Swiss francs are still favoured currencies. Currencies in commodity and oil producing countries under pressure. with Australian dollars in free fall. Downward trend expected for Rubles and Norwegian krones (NOK). Oil has fallen 20 USD a barrel in one week. Also agricultural commodities like corn and wheat are falling.

DOW jumps 4 %
on FED statement

DOW Jones bounced back at the end of yesterday’s session and added 3,98 % after more closely digesting the American Federal
Central Bank, FED, statement to leave interest rate unchanged to 2013 in light of continued sluggish economic growth.

DOW initially fall into negative territory, but FED made the trick that President Obama’s statement on Monday did not obtain.
It calmed nervous markets and regained some confidence after the last ten days turmoil.

All the US indices went strongly up with Nasdaq in the driver’s seat with a 5,29 % jump. The Asian markets followed suit and European futures are pointing up. China contributed to a more optimistic sentiment by presenting a monthly high record trade surplus beating by far expert’s predictions.

Commodity markets stabilized. Gold is steady around 1750. Oil stronger on better market sentiments trading at 104,47. 5 % up from yesterday’s inter day bottom on 99,50. FED’s statement was no favor to the Dollar which is falling against most currencies. YEN and Swiss franc still investors favored currencies. USD – EURO is trading at 1.4348.

Markets have been given sigh of relief. But sluggish economic growth and sovereign debt worries shall soon enough be back at the top of the economic agenda.

Stocks back in red
Gold passes 1800

The relief rally in stocks lasted some few hours before markets were back in red.

Yesterday good night sessions in Asia was followed by opening optimism in Europe.

But after some few hours trading the European exchanges were back in deep red.
Speculation on possible downgrading this time of France’s credit rating dominated
along with renewed credit fears and worries of slower economic growth.

Wall Street saw a new terrible session. Asian exchanges picked up somewhat
in the second half, but ended down approximately 2 %.

This led to new records in Gold prices which surpassed record 1800. Adjusted for
inflation Gold has still future potential. The 900 level reached in 1979 equals
2500.

USD was stable towards EURO – 1.4215. YEN and Swiss Franc continue up while
Australian dollar made a little come back in view of more optimistic forecasts
for commodities. Oil fall back in Asia, but Brent is now back on 106 levels.

The markets seem to have stabilized somewhat during the last hours with futures
for USA pointing up in the morning.

Stocks make come
back in market rally

Stock globally made a strong comeback yesterday with markets rallying in late European sessions. Dow Jones
Sky-rocketed with 3,9 % and Asian markets ended in positive territory after days with consecutive big losses.

Investors demonstrated bigger risk appetite and sent Gold down close to hundred dollars from its peak on
1815. Gold stabilized in Asia and is now trading at 1865. Funds went from treasuries into stocks. Strong correction
in Swiss Franc after central bank intervention. Dollar is slightly stronger against most currencies except YEN.

The rally came on the back drop of slightly better employment figures from the US. Job claims for June was down from 402 000
in May to 395 000. US trade balance figures for June did, however, show a decline in export and record deficit.

France, Spain and Italy have along with Asian markets introduced prohibition against short selling
echoing measures taken during the 2008 crisis. Measures are taken in effort to stabilize bank stocks which have been in free fall.

Oil is up from its lows with Brent trading on USD 107 signalizing some optimism for growth., but volatility
and nervousness are just around the corner indicating that the stock rally shall prove short lived.

The week has started on a positive note with market stabilizing after last weeks turmoil. Europe followed
the upward trend from Asia. Dow Jones added 1,90 % and Nasdaq 1,88 %. Asia continues slightly up
this morning.

Guru investor Warren Buffet is on a buying spree, and declared stocks at sales at present prices.

While some of the nervousness, at least for now, seems to be have lost its grip grip in the United States, new
crisis loom around the corner in Europe. Euro-bonds which would have given at Euro zone a necessary
injection and an insurance against sovereign defaults is not on the agenda for the Merkel -
Sarkozy meeting today.

Amidst the uncertainty Euro rose to its highest two weeks level against USD; 1.4450. USD is also loosing
ground towards other currencies while gold is up from yesterday’s 1745 now trading at 1765.

Eurobond is not
at agenda for now

Merkel and Sarkozy yesterday agreed on stronger financial and fiscal bilateral co-ordination, but stopped short of
introducing the Eurobonds many observers had hoped for. The markets reacted negatively. Dow and Nasdaq fell
on continued debt crisis fears in Europe. Shanghai was up, but other Asian markets ended flat. Europe is set to open
down. US futures are slightly up.

Dollar is gaining ground against EURO trading at 1.4385. Gold is close to all time high on 1785 while
oil prices are steady on Brent USD 109 levels. Swiss franc is down fourth day in row following Central
Bank intervention and rumours that Swiss authorities want to see the Franc pegged to EURO.

Gold continues
outshining markets

Gold continues to be the preferred safe haven reaching an end of the day record 1795 yesterday close to the inter day high, 1817, set on August 8th.

Gold is up for a sixth straight month outshining all other metals and equity classes. No end seems to be in sight. Predictions for 2011 is set to 2000, and Standard chartered bank has 5000 in sight for 2020 as Gold is seen as the best hedge against inflation.

Why is money continuing to flow into Gold? The debt crisis in Europe, uncertainties regarding economic growth in the United States
and a consequent slow down in Asia dominate. India with 9 % inflation is by far the biggest buyer of Gold. Central Banks all over the world are storing gold, and the Russian and Mexican central banks are predicted to be the big buyers in 2012.

No wonder that gold shines.

After three – four positive days stock markets in US and Asia ended flat or down. Futures for Europe and opening in US are down.
Oil prices stable. Brent trading around 110. US/Euro is 1.44 and Yen and CHF continue upward.

Global markets
fear recession

Global markets ended in deep red yesterday after one of the worst sell off's markets have seen. Germany was down a record 5,92 %. Sell off's continued with DOW and Nasdaq falling steeply and in Asia where the KOSPI was especially hard hit. European stock futures are pointing down. Gold reached a new record high on 1851. Oil prices are tumbling. Brent trading at 106 down 5 $ since yesterday.

After a couple of optimistic days panic has again stricken the markets. In spite of some good economic data from the US, investors have already started to price in a double dip recession. Markets were in blood red yesterday and futures are pointing down.

The Merkel-Sarkozy Summit in Wednesday did nothing to calm investor’s nerves in Europe. Worries on a sovereign debt crisis in is increasing by the day. The future of the Euro is coming on the top. Investors don’t seem at all convinced that politicians and central bankers shall find a way out. Markets then tend to jump miles ahead of governments creating a serious confidence crisis.

GOLD rush among
investors continue

Five days after Gold broke 1800, the precious metal smashed through the 1900 level with investors panicking into Gold as
the preferred safe haven. 1908 represents a temporarily new record set during last night’s Asia trading.

At the same time analysts wonder whether the flight into Gold may represent a new bobble
which it is better to get out before it is, too, late. They argue that Gold is not an industrial metal, and advise
that this might be the right time to consider oil, silver or palladium as an alternative.

Stock markets in Europe and US continued the stabilizing, slightly upward trend seen at the beginning of the week in Asia
making optimists think that the bottom is reached for now. KOSPI (South Korea) is the winner in Asia this
morning.

CHF and Yen continue to be preferred currencies with EURO/USD trading at 1.4350, waiting for whether Bernanke
and his FED shall come up with a new stimulus package. In Germany Merkel defiantly stated that markets shall
not be allowed to dictate her policies.