Daily market update by UWCFX

[uwcfx]

17.08.2011

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.

[uwcfx]

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.

[uwcfx]

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.

[uwcfx]

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.

[uwcfx]

Optimism rules
in strong markets

The optimistic sentiments which have ruled the markets since Bernanke’s Friday speech continued
through yesterday’s Wall Street sessions with Dow adding an impressing 2,26 % and Nasdaq up 3,32 %.
The Asian stock exchanges are up, and European futures are indicating a new good day on European
stock exchanges.

Asian markets are up four day in row. A contributing factor was the strong American consumption figures
Monday night. Hong Kong was the winner with a gain on 2,2 %. European markets expected to follow
suit. Healthy rebound in Russian market with a stronger ruble.

Oil prices are higher with Brent trading on 112,26. Better stock markets have had a negative effect on Gold
which fall back below 1800. Investors are taking profit and moving into equities. Dollar is falling. Euro/USD
trading at 1.4525. Market optimism has boosted smaller currencies. Norwegian krones (NOK) with
strong currency reserves is close to a year high. NOK/USD 5,34.

[uwcfx]

Mixed sessions
Gold recovers

After a mixed session were markets tried to fight off negative news as reduced US consumer optimism Dow Jones tipped into positive territory and ended slightly up; 0,18 % and Nasdaq (0,55 %) following suit. Asian markets were mixed with the South Korean KOSPI gaining after a 15 % free fall during August. European markets dipping between red and blue.

Gold made a strong recovery with 1835 after last days profit taking and some renewed optimism for equities. The US index for
consumer sentiment, poured some cold water back in the head of investors thinking that the bottom is reached and the worst over in stock markets. Oil prices are up. Brent is trading on 114 this morning, the highest level seen for weeks.

Dollar gained ground against the EURO at 1.4429 telling it’s story of an unsettled sovereign debt and looming bank
crisis within the Euro-zone. Finland’s insistence on firm collaterals before extending any helping hand to Greece, continues to
rattle market confidence. A stronger Yen tells that safe haven currencies are back in mood.

After a couple of days respite be prepared for increased currency and market volatility for the rest of the week.

[uwcfx]

Chinese industry stagnates
raises fear of stagflation

World markets have seen a temporary stabilization during the first three trading days of the week. European markets
ended up, while US struggled before DOW and Nasdaq finished in blue for the fourth consecutive day. In Asia the South Korean,
Kospi, jumped 2,5 % gaining back some of the steep losses from first weeks of August.

The Euro is loosing ground. Euro/USD is again down at 1.4355. Yen somewhat weaker towards the dollar at 76,83. Gold
at 1822, loosing USD 12 from yesterday’s top. Oil prices are up with NYMEX touching USD 90 level and Brent trading
at 114.

August industry production figures for China came in slightly better than July, but confirmed China’s challenge in finding a balance
between growth and inflation. With stagnating growth in US and Western Europe, Chinese export is struggling with
weaker export without domestic demand picking up.

In spite of China being more independent from a possible double dip Western recession, a stagflation in US and Europe with slower growth combined with inflationary pressure shall have a strong negative effect on China and other emerging markets.

[uwcfx]

Pessimism back with
Asian markets in red

Pessimism ruled in Asia Friday morning with falling markets in nervous waiting for unemployment figures
coming out of the US later during the day. The Japanese Nikkei was down 1,4 % followed by 1,3 % both in
Shanghai and Hongkong. South Korean Kospei is falling 1,3 %. In US both Dow (- 1,03 %) and Nasdaq (-1,30 %)
were down.

Sluggish economic growth, sovereign debt worries in Europe and global fears for stagflation in the form of a
combination of weak growth and higher inflation, seemed to be back on the top of the agenda superseding the
more positive sentiments which have given markets a lift during the last days. US Unemployment numbers
which is one the best indicators of the health of the economy is expected to stay at 9,1 %.

Gold and old prices are steady while EURO continues to loose against the Dollar at 1.4243. Expect big
turbulence in late afternoon trading both in Gold and currencies if the unemployment figures come in
lower than expected.

[uwcfx]

Recession fears scare
global financial markets

US unemployment figures sent new shivers through global financial markets on Friday renewing fears for a double dip recession. Unemployment stayed at 9,1 %, missing to add a single new job in August.

US stock markets plummeted. Dow lost 2,20 % while Nasdaq dipped 2,58 %. European markets were in free fall. Asia markets have fallen steeply during the night and Europe is expected to follow suit during to-day’s trade. US is closed for Labor Day.

Gold rebounded strongly and reached 1890 during Friday’s night trade, stabilizing around 1880 in this morning’s trade. Silver as well strongly up to 43,30. EURO/USD Is at 1.4150. Oil prices are loosing ground on weaker demand expectations.

EURO’s down trend is expected to continue. Western European leaders seem unable to get their act together. Merkel lost her sixth
regional elections in row campaigning on her handling of the sovereign crisis; leaving the electorate confused and bewildered.

[bensmith0363]

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