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    Investment Views  (November 16th 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 


    It was a week of backing and filling as we have foreseen last week.  The Dow
    tested 8800 and bounced back on Friday, despite of rumblings of war with
    Iraq.  Since the markets held so well, it is likely to rally next week.  However
    if the Fed decided not to cut interest rates on Tuesday, we might see some
    further testing to the downside.

    The Asian markets have been generally weaker.  The situation in Indonesia
    is critical.  If the violences in the streets continue, we might see the collapse
    of the government.  Recovery for the Indonesian economy will not be possible.
    The other Asian economies will not really be affected.  But sentiments about
    the other Asian markets will certainly turn negative again.

    The European markets followed the movements of the Dow last week.
    But the declines were steeper than on Wall Street.  The only exception
    is Switzerland.  The Swiss markets barely budged even on weak
    Wall Street openings.  That in itself is a positive sign.  On the other hand
    the volume has been thin all week.  We're therefore not confident that
    the SMI will break above 6800 next week, unless the Fed decided to
    cut interest rates.  The downside remains at about 6500 at the moment.

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    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 1800 1800 1790 1800
    Gbp  8.13 4.67 C&W 6.25 6.73 6.40 6.57
    SFr.  51 25 Ericsson 32.25 31.90 31.40 31.90
    FIM  509 182 Nokia 452 456 449 451.50
    Gbp 8 2.40 Orange 5.98 6.08 5.82 5.92
    FIM  1080 640 Raisio Group 53.40 56.50 52.80 55.50
    SFr.  1029 419 SAP 620 615 598 602
    SFr.  2350 1820 Stratec 1800 1770 1710 1763
     
     
    There seems to be a little bit of delay in marketing Benecol in the US.  The FDA seems to have
    some reservations about how to label the margarine.  Raisio's stock prices seem to have
    tanked in connection to this news.  We think this is creating an excellant buying opportunity.
    We have visited the US last week and have seen that the trend in supermarkets and
    drug stores towards health foods is alive and well.  We're therefore still convinced
    that benecol will be well received in the US.  The setback is temporary.

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     Currencies 

    The possible Gulf war did not manage to push the dollar over SFr. 1.40.  We
    do not think the bull trend in the dollar has resumed until it closes substantially
    above SFr.1.40.

    The IMF package for Brazil has been received almost as if it were a nonevent.
    We're still skeptical that it will work.  We do not see the world currency
    turmoil subsiding without further regulartory measures that really discourage
    international speculators pushing a whole country's currency down the
    drain.

    Recently I saw a film on the NBC about the world economy.  The
    film was pretty good in explaining how the last world depression
    came about.  It wasn't because there was too little free markets.
    It was because the free markets seemed to have carried its
    speculations to such an extreme that the world economy
    collapsed.  I agree with one of the thesis of the film:  the
    present world economy, because it is ruled by the free markets,
    cannot but deflate, because the market punishes any country and
    any government that follows an expansionary policy.  The bond
    markets demands fiscal discipline.  Governments cannot fight
    deflation, because bond traders see inflation at every corner.
    This therefore supports my thesis that unless we have some kind
    of new Bretton Woods agreement stablizing the currencies, the world
    economy will continue on the deflationary spiral.

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    *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!
     

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