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    •   
    Investment Views  (August 3rd 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 has been a volatile week. On Monday both the German and the Swiss markets lost
    more than 2% in one day.  The Dax broke the 6000 level support.  And all week long
    it tried to come back from the 5880 level.  But it ended the week without moving back
    above 6000 level decisively.  Therefore it is highly likely that it will test the
    5300-5400 level again.
    The Swiss Market index broke the 8000 level on Monday.  But 8000 proved to be
    a support level.  By Friday the market recovered all the loss made on Monday and
    gained about 30 points for the week.  With the weak close on Wall Street Friday, we
    doubt the Swiss market will make further gains on Monday.  Again Wall Street holds
    the key to further developments.
    So what will Wall Street do next week?  Will we see a mini crash?  The technicals are
    certainly very negative.  The breath (the number of advances vs. declines) has deteriorated.
    The second quarter earnings weren't great (+3.8%).  The Clinton scandal is again reaching
    crisis level.  The Japanese muddles on instead of doing something energetic to win
    back the confidence of the market.  But the question still hinges on the liquidity.  There
    is still no lack of liquidity in the US.  Although the PE levels are high and valuation seems
    astronomical to the Americans, foreign investors continue to buy American.  I don't
    think they will pull out of the American market until the Asian markets finally
    recovered.  Thus we still think the American market will be trading within the
    range between 8500 and 9300 on the Dow.  The volatile trading pattern will
    probably continue. But if we break the 8500 level, we might see even more weakness. There should be strong support around 8100-8200 on the Dow.
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    Stocks 

    Our favorite stocks remains SAP, Nokia, Raisio Group, Ericcson, Cable and Wireless
    Baan and Bachem.*   Raisio Group's stocks spit 1:10.
     
     
    High of the Year Low of the Year Stock Last Week's 
    Close    		 Daily high Daily low This +Week'sClose
    HFl.  108.70 62.60 Baan 79.50 77 74.80 75.60
    SFr. 1495 1351 Bachem 1920 1880 1820 1835
    Gbp  8.13 4.67 C&W 8.02 8.02 7.90 7.97
    SFr.  44 25 Ericsson 48.50 43.50 42 42.60
    FIM  378 182 Nokia 498 473 459 471
    FIM  1080 640 Raisio Group 86.50 86 83.80 86
    SFr.  785 419 SAP 942 980 930 975
    SFr.  440 385 Straumann 379 369 365 367
     
    +We're using the closing prices of Thursday.

    Ericsson reported disappointing earnings and warned that because of the competition
    in the mobile telephone market, their margins are getting squeezed.  The stock got
    hammered. We still like Ericsson and Nokia.  We recommend holding on to these
    stocks for the long term.
    SAP soared on the expectation that listing on the NYSE Monday will bring additional
    institutional investors' interest.
    Go to Index
     


     Currencies 

    Little has changed in the currencies markets.  The yen remains weak.  The dollar hasn't
    gained against the European currencies despite of the yen weakness.  We think the
    dollar has probably peaked.  But we still don't see the dollar breaking down yet.

    Go to Index
     

     
     
    *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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