Index
Market in General
Stocks
Currencies
Last Week's Views
| Investment Views (September
14th 1998) |
Instead of writing my clients
individually I thought I might as well
do a weekly summary of my views
on the markets, the currencies,
the economy, the world, and
life in general.
Markets in General
The volatility remains the markets' main characteristic last week.
On Monday we saw the European
markets recovering. On Tuesday there were fireworks: most
markets advancing at least 2 or 3%
Tuesday the Dow added to the positive sentiments by rising almost 400
points in one day. But that
was too much and too fast for most participants. After all, Allan
Greenspan only hinted at the possibility
that the Fed might lower interest rates, if the general conditions
on the world markets warrented it. But
he did not promise a rate cut. On Wednesday the shorts piled
back into the markets, demonstrating once
again that the most profitable strategy nowadays is selling into the
rallies. Thursday and Friday we saw
almost panic selling in Europe and Asia, because adding to the usual
problems of the world markets: the
Asian economies sliding deeper into recession, the chaos in Russia
and the instability of Latin American
currencies and stock markets, we have the possibility of a long drawn-out
impeachment process in
the US. Technically the US remains the strongest market.
On Friday the Dow rallied almost 180 points
on the release of the Ken Starr report, on the perception that the
report did not contain any surprises.
In Europe the German, French and the London markets remain technically
the better markets. While
lesser markets have shown no technical strength whatever. Spain,
because of its close ties to Latin America
had been disasterous. The Swiss market has been on the forefront
of the selling too. In spite of all that
we still see some recovery next week: first, because of the option
and futures expirations next week;
second, because of the strenghth shown by the US market on the Friday
close. It's difficult to tell,
how long this recovery will last. All the worrying factors are
still there: no quick solutions in sight.
Therefore we still recommend selling into rallies to raise some cash.
The deflationary secenario is still
quite scary. The fundamentals in Europe have deteriorated!
The weak dollar will eat into the profits of
most companies! On the other hand we would not be all too pessimistic
either. As long as the
interest rates remain low, the stock markets should not have too much
further to fall.
Go to Index
Stocks
Our favorite stocks remains SAP, Nokia, Raisio
Group, Ericcson, Cable and Wireless, Orange
and Bachem.
| High of the Year |
Low of the Year |
Stock |
Last Week's
Close |
Daily high |
Daily low |
This Week's Close |
| SFr. 1495 |
1351 |
Bachem |
1790 |
1750 |
1700 |
1700 |
| Gbp 8.13 |
4.67 |
C&W |
5.83 |
5.72 |
5.11 |
5.30 |
| SFr. 51 |
25 |
Ericsson |
32.20 |
32 |
30.70 |
30.50 |
| FIM 509 |
182 |
Nokia |
382 |
415 |
383 |
410 |
| Gbp 8 |
2.40 |
Orange |
5.65 |
5.72 |
5.10 |
5.30 |
| FIM 1080 |
640 |
Raisio Group |
63 |
59 |
54.80 |
54.90 |
| SFr. 1029 |
419 |
SAP |
750 |
762 |
710 |
736 |
| SFr. 2350 |
1820 |
Stratec |
1680 |
1620 |
1590 |
1590 |
|
Finland's proximity to Russia seems to bother investors. Raisio came
under pressure. But Raisio is a stock that
we recommend because of the future of its margarine, not because of
its other forestry products. Their US business
hasn't taken off yet. But we're quite optimistic that the US
will be a good market for natural health food product
like Benecal.
Go to Index
Currencies
The global financial markets are in turmoil. The Latin American
currencies are under attack. Last Thursday
the Central Bank of Brasil raised the overnight interest rate to about
50%! No wonder the stock market
there is sinking more than 10% a day. The systemic weakness of
the current international currency
system is evident. Speculators can short the stock market indexes and
then start shorting the currencies,
the normal IMF mechanism of defence such as raising interest rates
just play into the hands of speculators.
We can only hope that the G7, especially the Fed will react quickly
to lower interest rates, before the Latin
American economies collapse too. Next Monday the G7 officials
will meet to discuss the Russian situation.
But Latin America is not on the Agenda. The mechanism of G7 are
too slow for the modern market
developements!
The only positive developement is that the dollar is finally falling.
The Asian currencies are stablizing.
There is hope that the Asian economies will recover, if the Fed should
lower the interest rates
decisively to save the Latin American economies from total collapse.
The Europeans will not
like the dollar being so weak thus imperialing the European recovery.
It is therefore a question
of time before they will also lower interest rates, although that is
not likely before the introduction
of Euro at the end of this year.
Go to Index
Current Events
The Starr Report is finally released. On Friday the Dow rallied
instead of falling. So does the market
see something we don't? Will the Republicans refrain from an
impeachment proceeding? I doubt
very much they will give up so easily. Therefore I see a long
dragged out process. If that is correct,
then we're would not be overtly optimistic about the Dow nor the dollar.
| *The stock prices are provided
for informational puruposes only and not intended for trading
purposes. The opinions expressed in these pages are what they are:
opinions! |
LINKS:
-
Archive
