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Investment Views (March 1st1999)

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

Markets all around the world seem to be stuck in a trading range. Only two
markets show some positive range trading: the New York and the London
stock markets. Both made new highs last week, before coming down again.
But even New York, the technical picture has turned a bit less rosy. The
advance and decline line is getting weaker. The trading volume is becoming
thinner. The only positivie thing is the decline in volatility. Thus we could
breakout any day now, although we're still tilted towards a positive breakout
more than a negative one. But no one knows for sure.

The Swiss market follows New York more to the downside than the upside, because
of the poor earnings reported for the last year. Theoretically the market should
have factored in those results already. After all the SMI is still more than 16%
down from the all time high made last summer. The dollar has recovered in
strength. So we should see better numbers next quarter despite of the weakness
in Asia and Latin America. I still think it's the Japanese and Anglo-Saxon
investors disengaging because of the Swiss Frank weakness. The domestic
investors are staying on the sidelines. I expect the market to breakout of the
trading range 6950-7200 by mid or end of March. If the SMI closes above
7250, then we expect the market to go up to 7500 or even test the 7760 highs
made in January.

The German markets suffer from the same lack of buying. It is even weaker than
the Swiss market. Politically the pay settlement with the IG Metal union of more
4% has turned the market sentiments negative.

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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
8489	5108.30	SMI	6942.70	7131.60	7050.90	7063.80
SFr. 2300	1351	Bachem	2077	2060	2060	2060
Gbp 9.85	4.67	C&W	8.51	8.63	8.35	8.54
SFr. 51	25	Ericsson	37.70	39	38	38.15
E.133.90	104	Nokia	117.70	127	123.50	124.60
Gbp10.75	2.40	Orange	8.74	9.18	8.85	9.07
E. 11.80	5.30	Raisio Group	6.10	5.90	5.56	5.60
SFr. 607	420	SAP	457	498.5	480	487.50
SFr. 2000	1843	Stratec	1860	2450	2361	2420
SFr89	71	Veba	80.85	78.85	76.15	76.65

* prices now quoted in Euro

Stratec has essentially been taken over by the American firm Synthes. The combined
company will be one of the largest in the bone-replacement field. The shares jumped
by about 24%. The Swiss small and mid-cap companies are extremely cheap. Most
companies are priced around one times their sales, whereas the American norm is around
3 or 4 times. It's no wonder that American companies are looking abroad again.

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Currencies

The dollar has strengthend since mid-January. There are some arguments in favor
of a strong dollar. The Japanese economy doesn't seem to be able to recover on its
own. It needs to export out of its mess. Second: the US is the only major economy
with a government budget surplus. The virtuous cycle has some time to run. Third:
the European economy is weakening. The ECB will have to cut the interest rates
after they have demonstrated their political independence for a few more months.
Otherwise they risk helping the global deflationary spiral to accelerate. The monetary
policy of the ECB is too tight for Germany and France. Both countries are slowing
down rapidly. A decisive push to reflate is necessary.

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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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