Daily Market Reviews by MAYZUS.com

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22 JULY 2013: RECORD HIGH INFLOWS IN STOCKS

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Outstanding quarterly results for the major American banks and the Federal Reserve's (FED) assurances to keep supporting the US economy by continued printing of Dollars, spurred investors to pour more money into US equity funds last week more than any other time since the financial crisis in 2009. Global markets seem to have also regained their appetite for stocks; equity markets being for the moment by far the best sector to invest money into. The three major US-indexes; Dow Jones Industrial, the technology heavy NASDAQ and S&P financials have posted one record after the other in July, after being rocked by volatility in May and June.

The big banks: Bank of America, Citigroup, Goldman Sachs, J P Morgan Chase, Morgan Stanley and Wells Fargo, have all beaten analysts forecasts for their quarterly earnings. S&P hit a record USD 15 trillion after the three biggest banks posted USD 23.12 billion of net income for the three months leading up to July, the highest being reported since the second quarter of 2007. It is, however, worth being reminded that only one year later, in 2008, financial markets suffered their worst crisis in decades and brought the liberal market economy on the verge of collapse. Some analysts foresee a similar development when FED finally decides to terminate its excessive bond buying program. For now, the market is run by optimism. S&P financials index is up more than 6 % in July.

There has been a strong increased demand for trading and investment banking services. The record inflows into the stock market contrast with money pulled from bond funds. Last week saw outflows of USD 1.7 Billion from investment-grade debt funds and another billion of outflows from US treasuries as investors turned away from assets regarded as “safe”. The riskier high-yield bonds saw USD 4 billion in inflows: the highest level in two years. Exchange traded funds which track US stocks, have, over the last month, attracted USD 24.4 Billion in inflows, four times higher than in the previous six months.

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22 JULY 2013: MCDONALD’S FAILS TO DELIVER

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

After hitherto strong quarterly earnings season the heavyweight, McDonald’s, failed to deliver according to expectations. US-housing numbers for June were also weaker than forecast. After jumping in April and May the growth in housing sales unexpectedly took a breather last month. Experts are, nevertheless, unwilling to see the late figures as a token of underlying weakness in retail and US economic fundamentals.

The weaker profits of the world’s largest restaurant retailer are mainly seen as a result of declining sales in it's biggest market, Europe. In Europe one of the leading banks, the Swiss UBS, followed up the strong banking results from the United States and beat forecasts, in spite of an expansive lawsuit settlement with US regulatory authorities over housing bonds prior to the financial crisis in 2008. UBS added 2.7 % and reached a two-year high during yesterday’s trade.

The trading week started with a fall in the Dollar both in relation to the Japanese Yen (JPY), following Prime Minister Abe’s victory in the Upper Chamber elections, and in a stronger Euro. Abe has promised to keep focus on the economy. USD/JPY fell to 99.42 during Monday’s trade. EUR/USD added 100 points during Monday’s trading at 1.3215. The British Pound (GBP) stands at 1,5368 against the green back. Gold reached its highest level in a month and jumped USD 1328 an ounce after dipping below the 1200 level only a couple of weeks ago. Silver has also recovered strongly at 20.42. For the first time in years, New York crude, NYMEX, trades higher than Brent crude, both are above US 108 a barrel.

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24 JULY 2013: CHINA SHOWS MUSCLE

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The US Dollar continues to lose ground against most currencies. The DXY-index, a Dollar weighed towards a basket of six major currencies, fell also on Tuesday from Monday’s low on 82.325. The Euro inched marginally above 1.32. USD/JPY keeps steady at 99.721. After new record highs in Asia spurred by a Chinese stock rally, Wall Street continued to new record highs on good quarterly earnings from Dupoint and United Technology. Apple is going to present results after closing in New York.

In an upbeat statement on Tuesday, the new Chinese Premier stressed that the aim of his authorities is to double the Chinese Gross Domestic Product, GDP, from 2010 to 2020, to obtain this target of economic growth of a minimum 7 % annually, which is needed. The last forecast for yearly growth in China in 2013, is 7.5 %. The Chinese government has introduced measures which encourage bigger competition between banks and financial lenders, while simultaneously keeping inflation under control.

The Hang Seng index added 2.1 % on the announcement that China shall start huge infrastructure projects within the railway industry. These projects will consume big amounts of cement, steel and commodities, and are seen by markets as a sure token that China will continue to be the same driving global force as it has been for the last few years. Chinese new leadership has no desire to give up on ambitious targets set by its predecessors. It is also determined to avoid any hard landing in its economy.

The Chinese statements were positively received, as were quarterly earning results from the US and the Federal Reserve’s (FED) statement last week, that monetary easing is going to continue for the unforeseeable future. Oil prices are keeping steady at the USD 108 a barrel level, and Gold and Silver started the week with higher prices than seen in weeks. Gold took a breather on Tuesday, and stayed at USD 1336 after adding 3 % on Monday. Commodities don’t show any clear direction, but the Chinese statements should represent a clear boost for a sector being under strong pressure.

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24 JULY 2013: USD AND EURO PICK UP GLOBALLY

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

US stocks edged lower on Wednesday after days with increases and new record highs. Disappointing results from heavyweights Caterpillar and AT&T, overshadowed a solid quarterly earnings report from the worlds highest capitalized company, Apple. The Dollar DXY-index weighed against a basket of six major currencies, picked up on data showing stronger domestic manufacturing and housing numbers in June. New home sales rose to a five-year high.

Surprise improvement in US and European factory activity offset further signs of cooling in the China’s economy. New data showed that the Chinese manufacturing sector is contracting for the third straight month. That had an immediate impact on the oil demand where prices fell 2 Dollars. NYMEX and Brent crude trade USD 106 – 107 a barrel. On Monday, strong statements from the new Chinese Premier lifted global stocks, demonstrating the markets volatility on day to day economic news.

Seemingly better outlooks for the United States and Europe caused investors to reduce safe-haven holdings in US and German Government debt. Gold, a traditional safe-haven asset, which has risen close to USD 100 an ounce over the last four days, snapped its winning streak on profit taking. The same trend is witnessed in Silver, which has also taken a breather after several winning days after being in free fall over the last five – six months.

Apple’s results which initially were met with some reluctance when presented after the closing session on Tuesday, beat analyst’s forecasts. The stock price climbed 5.9 % at USD 443.87, a far cry though from the peak numbers in the high 600's, a year ago. Apple has promised solid dividends. This is also pleasing investors which took the stock to its highest level since June the 10th. The stronger euro-zone factory data sent the EUR/USD to a one month high at 1.3230. USD/JPY is gaining ground trading above 100 Yen to a Dollar.

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26 JULY 2013: GLOBAL SHARES DROP ON CHINESE WORRIES

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Shares fell worldwide on Thursday on worries about China’s slowdown and its impact on corporate earnings. These fears weighed heavier than tokens that Europe slowly might drag itself out of recession. Data showing better business morale in Germany and improvements in British economy pointing towards modest growth, did little to spark fresh demand from investors more focused on recent developments in Asia.

Investors worry that the Chinese growth engine is no longer running at full power. Chinese stocks suffered their second straight loss on Thursday despite measures from the government to spur the economy with heavy investments in railway and encouragement of the export industry. The Asia-Pacific, MSCI-index, lost 0,5 % from the previous day’s seven week closing high. Worries about China were also reflected in commodity markets, where copper dropped 0,5 %. Brent crude fell for a second day in row at USD 106,59 a barrel. Gold stands at USD 1314.

There have been marginal changes in the currencies. EUR/USD has lost 35 points and trades at 1.3196. The Japanese Yen (JPY) trades stronger against the USD at 99,68. The dollar is again dipping below the 100 yen a dollar mark.

Facebook shares soar after the social media delivered much stronger results than expected. Presented quarterly earnings delivered strong evidence that Facebook can drive on smartphones and tablets. Advertising revenue in the second quarter ignited a nearly 17 % share a rally. 700 million people daily use the Facebook platform. Facebook which was off to a rocky start when it introduced its IP in May 2012. In spite of a 15 % increase in the stock price yesterday, Facebook has still 20 % to go to reach its IPO-price.

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29 JULY 2013: DOLLAR ENDS WEEK LOWER

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Concerns that the US Federal Reserve (FED) may lower its unemployment threshold at 6,5 % before terminating monetary easing and its USD 85 Billion monthly bond buying program, sent the dollar lower on Friday. Euro/USD climbed 1,1 % to 1.3282 over the week. The dollar as lost against a basket of currencies. Inflation data Prime Minister Shinzo Abe’s Upper House victory, boosted the Japanese yen. USD/JPY fell back from 100,32 to 98,50 yen a dollar. New Zealand dollar was the biggest gainer of the week - gaining 2 % against its US counterpart.

Speculation about a lower unemployment threshold comes after FED Chairman, Ben Bernanke, insisted that any monetary easing remained data-dependent. This convinced investors that any raise in interest rates was still a long way off. Investors have interpreted FED forward rate guidance that an interest rate hike will come earliest in 2016. The speculation was triggered by an article in Wall Street Journal which immediately put the dollar and US treasury yield under pressure. If the report signals will be a false alarm, USD will rally.

EURO gained ground on optimism on a turnaround in the Euro zone which is still in a deep recession. Even if the Euro zone remains in contraction, the negative figures are better than previous months due mainly to the recovery in Germany which continues to deliver better than its fellow European members. It is expected that the European Central Bank (ECB) will leave its interest rate unchanged when it meets later in the week.

The global equity market was in spite of good US-corporate quarterly results under pressure as China doubts on growth take hold. Indexes all over the world have climbed to new record highs, and technical corrections may be expected on this uncertainty. Gold and silver have consolidated last week’s gains after FED’s dovish attitude. Gold stays above USD 1300.00. Precious metals are helped by raising demand in China where sales volumes in gold and silver jewellery and coins are at record highs so far in 2013.

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30 JULY 2013: STOCKS FALL AS USD STRUGGLES

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Wall Street stocks fell broadly as investors eye - US Federal Reserve (FED) two day policy meeting starting tomorrow. Its statement will be closely scrutinized and interpreted for any signal that FED will start tapering monetary easing. Economic data both from Euro zone and the United States last week were better than expected. If July monthly jobless figures to be published at the end of the week comes out on the positive side, this would constitute a strong argument for FED tapering in September as many observers have forecasted.

Dow Jones, Nasdaq and S&P fell broadly yesterday, indicating that the air might start to run out of weeks’ booming stock markets. The European stock markets were also weaker yesterday following a 3,3 % fall in the Nikkei index in Japan during Monday morning. The steep fall in the Nikkei followed a new increase in the value of the Japanese yen which rose to 97,83 yen to a dollar, a 2 % gain to the dollar over the last week. A stronger yen works against the interests of the big Japanese exporters and weigh negatively on the Nikkei.

Euro traded steady against the dollar at 1,3261. The International Monetary Fund (IMF) has approved the release of a new tranche of loans to Greece amounting to USD 2.2 B. The release follows a fourth review of the “troika” which together with IMF, ECB and EU releases a tranche of Euro 6,8 B. The total value of the loans granted in March 2012 amounts to Euro 175 Billion over a period of four years. The loans are dependent upon serious austerity measures including firing thousands of state employees, likely to raise to new strikes and social unrest.

Oil prices which peaked to months high last week, have stabilized. Brent crude fell to below USD 107 a barrel on the first trading day on Monday, but has recovered 107,57, NYMEX, New, York crude, which traded higher than Brent for some days ago, stays steady between USD 104 and 105. Gold is down from its high on USD 1338 an ounce last week, trading at 1328. Silver which reached USD 20,50 last week, trades in the interval between USD 19,80 – 20,00 an ounce.

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31 JULY 2013: DOLLAR EDGES UP FROM 5 WEEK LOW

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Dollar edged higher on expectations that the US Federal Reserve (FED), based on better economic data, will start tapering monetary easing in September or later in the autumn. Central bank meetings are due in the United States, England and European Central Bank (ECB) later in the week. No big changes are expected, but a FED policy decision pointing towards a termination in bond buying will probably put upward pressure on the interest rates and strengthen the Dollar.

The Dollar gained both against the Euro, 1.3254, and Japanese Yen which paid 98.06 Yen to a Dollar. The DXY-index where Dollar is weighed towards a basket of six major currencies, was up 0.3 % from a five week low. Oil prices, and precious metals, Gold and Silver, lost ground on a stronger Dollar. The Swedish Krone lost one percent on the Minister of Finance’s announcement of weaknesses in the generally perceived 'strong' Scandinavian economy.

The US banking giant JP Morgan Chase, which has lately been under regulators sharp scrutiny, settled on USD 410 million on alleged power market manipulations in California, and Midwestern states. The settlement dictated that JPM accepted the facts presented by the Federal Energy Regulator without denying or admitting certain allegations. Banks involvement in the commodity chain by trading metals and at the same time owing warehouses and pipeline/plants, have, this week, been under increasing fire from Congress. The disputed practice was initiated in 2003.

Global stock markets have lost some of their momentum starting a new trading week. Both Dow Jones and S&P ended in red following a sell off in telecoms and materials, after disappointing quarterly results from Verizon and Mosaic.

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01 AUGUST 2013: FED COMMENTS HALT DOLLAR RALLY

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

A Dollar rally across the board followed news that the US added 200 000 new jobs in the private sector in July. Last quarter’s economic growth was also stronger than expected, topping economists’ expectations. Gross Domestic Product (GDP) grew 1.7 % annual rate. 1 % was forecast. The rally quickly terminated on FED’s statement that the economy continues to recover, but still needs further support, giving no indication when to terminate monetary easing.

The published data marked the third straight quarter of GDP growth below 2 %, a pace normally too soft to bring unemployment down. Growth is, however, expected to move faster in the second half of 2013 as the fiscal burden brought on by Washington belt-tightening eases.

Investors first reactions on the data seemed to indicate that they increased the likelihood for an early autumn tapering. Traders betted initially on a stronger Dollar and the green back rose across the board. EUR/USD fell to 1.3218 to bounce back at 1.3278. USD/JPY is also initially stronger at 92.29. Oil and precious metal prices posted immediate losses on the predictions of a stronger Dollar. Brent crude fell below USD 106 a barrel and Gold to 1.317.

This turned on FED’s latest statement which kept investors guessing. An end to monetary easing would have weakened the stock markets, which have been given strong capital injections due to the bond buying program. Instead the data and FEDs lack of commitment boosted US stock markets as indexes inside the Euro area ended in red. USD/GBP, fell to 1.5133 following the data after trading above 1.53 for the last few days.

Chinese authorities, mindful of the risk of a sharp economic slowdown that could derail their reform efforts, sent their clearest signal yet that they will do what it takes to safeguard growth. China’s main planning agency followed Tuesday up on the Politburo assurances, stating that this year’s growth goal of 7.5 % was safe. Authorities will, if necessary, supply markets with ample funding. The official growth target represents already a 23-year low.

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02 AUGUST 2013: BOE AND ECB KEEP RATES AT 0.5 %

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Both Bank of England (BOE) and The European Central Bank (ECB) decided yesterday to keep interest rates at a record low of 0.5 %. BOE also affirmed to continue bond buying at its present level of 375 billion pounds (USD 571 billion). ECB President Mario Draghi likewise hinted not to tighten monetary easing until well into 2014.

Before the ECB meeting the Euro fell from a six-week high of 1.3345 on Wednesday. The Euro fluctuated between 1.3345 and 1.3228 and trades now at 1.3225. EUR/ GBP advanced for the first time in eight days after a gauge in UK's July manufacturing. The Swedish Krona slumped on a report that factory activities were slowing down.

USD/JPY fell on bond flows. Data showed that Japanese investors the previous week sent record-high funds into foreign bonds for a fourth consecutive week. USD/JPY trades on 99.38 after the Central Bank decisions. Asian shares climbed on better than forecast Chinese manufacturing data. The Australian Dollar slipped to its lowest in three years on bets that the Australian Reserve Bank will cut interest rates next week.

Both Oil and commodity prices went steeply up before the Central Banks met. Brent crude jumped two Dollars to above USD 109 a barrel, but has since fallen back to USD 107.70. Copper rose 1 % on signs of modest growth in the global economy. Before Central Banks decisions this week, most investors expected no major changes in policies or forecast for interest rates. The final decisions confirm their outlook. Currencies remain steady with GBP and JPY losing some ground.

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05 AUGUST 2013: US-JOBS WEAKER THAN EXPECTED

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The most important US job report for July was released on Friday. The US established 162 000 new jobs in July, much weaker than expected. Growth for May and June was simultaneously adjusted down with 7000 and 19 000 respectively. 185 000 non-farm payrolls were expected. The unemployment rate decreased from 7.5 to 7.4 %. Employment in the private sector increased with 161 000, 34 000 lower than expected.

The unemployment figures are far from the 6.5 % target set from the US Federal Reserve (FED) as benchmark for terminating the bond buying program of USD 85 billion monthly. It also helps to explain why FED, in its policy forecast last Wednesday, was careful not give any clear indication on a deadline for monetary easing. While the US economy has slowly picked up in 2013, there is no fundamental turnaround.

The postponement of any firm deadline for the termination of monetary easing is seen as positive for the stock markets, which reached new record highs. S&P reached a new peak of 1700. The stock futures have fluctuated following employment data. Stock markets in Europe ended the week in red, while the Japanese Nikkei climbed 2.82 percent on a weaker Yen.

The Dollar extended gains prior to the unemployment report on expectations that an upbeat job report will prompt FED to withdraw stimulus soon. The disappointing employment data turned markets around. The Euro gained 50 points immediately against the Dollar trading at 1.3253. Gold which dropped to 1282 bounced back 30 Dollars in a few minutes. Oil prices are still high.

EUR/USD started trading in Asia at 1.3283. USD/JPY stands at 99.00. Gold dropped down to USD 1311 an ounce. Brent crude started the week down trading at USD 108.95 a barrel.

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06 AUGUST 2013: USD LOSES AGAINST YEN

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Dollar lost ground for the second consecutive day against the Japanese Yen trading at 98.313. The Green back also fell against the Euro. EUR/USD stood at 1.3258 at the end of a turbulent New York stock session, which saw major indices falling from record highs into negative territory. Dow Jones ended at 15 615 . Stock exchanges in Europe traded flat.

Statements from the head of US Federal Reserve (FED) in Dallas, gave rise to a new guessing game as to when FED will start tapering its monetary easing. FED is, at present, buying

USD 85 billion in bonds monthly. Dallas Head Fischer claimed that tapering might start next month already based on unemployment figures. Better services numbers presented yesterday, pushed bond prices to its highest in 2 years.

The DXY index, a basket of six major currencies against the Dollar, stood steady. The Dollar has lost 3 % against major currencies after reaching a peak on July 7th. The British pound, GBP, jumped 0.4 % against the Dollar yesterday and ended 0.4 % up. The New Zealand Kiwi, lost substantial ground after a bacteria was discovered in products from its leading dairy industry. China immediately stopped import of dairy products from New Zealand.

Oil prices exemplified by Brent crude staying at steady high levels trading close to USD 109 a barrel. Gold prices took a new dip at USD 1301 an ounce. Silver tipped down to USD 19.80 after climbing as high as USD 20.40 yesterday.

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07 AUGUST 2013: WALL STREET DIPS

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Wall street dipped in trading yesterday evening after consecutive record highs by Dow Jones and S&P over the last seven weeks. IBM fell on bearish analyst commentary. Trading was muted with investors holding pat to stocks close to historic levels. The fading down of the earnings season weighed in on trading volumes. Continuous speculation on when US Federal Reserve (FED) will start tapering its bond buying program of monthly USD 85 Billion, keeps investors on the side line as well.

The US Commerce Department announced yesterday that the trading gap between export and imports in June fell 22.4 % to USD 34 Billion. This is the lowest level in 3-1/2 years. Exports touched a record high, suggesting an upward revision to second-quarter growth. Adjusted for inflation, the gap narrowed 17 % to USD 43.2 Billion. The June deficit is far smaller than the government had estimated. These are all arguments for starting to taper in September.

Export numbers showed a steep increase in trade with the Euro zone countries, which rose 1.5 % in June. Export to the Euro area fell by 5 % in the first half of 2013. Export to China, which has been stagnating for some time, saw an increase of 4.5 % in June and is up 4.5 % since January 2013. The better trading balance reflected hefty declines in import of petroleum, industrial supplies and materials. The drop in the petroleum imports show that the US is sharply reducing its dependence on foreign oil.

In spite of the better balance of trade figures, the Dollar dropped against the Euro trading at 1.3309. The Japanese Yen continues to gain ground. USD/JPY trades at 77.723. British pound is stronger. USD/GBP stands at 1.5371. Oil prices have climbed and Brent crude trades above USD 109 a barrel. Precious metals started the week in negative territory. Gold has dipped substantially below the USD 1300 level at 1287 falling as low as 1278. Silver is following a similar down turn trend.

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08 AUGUST 2013: GBP JUMPS AGAINST USD

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

USD/GBP jumped above 1.55, the highest level seen in weeks, after Bank of England (BOE) yesterday linked unemployment to rate hikes. BOE stated that before unemployment is reduced to 7 %, there would be no hikes in interest rate. Even if most analysts see such a level unlikely before 3 years time, traders interpreted the move as strengthening the Pound.

BOE follows the US Federal Reserve (FED) suit. FED has decided to keep the interest rate steady as long as unemployment stays above 6.5 %. This level has also been seen as a crucial benchmark for any substantial changes in monetary easing. Speculations on when FED will start tapering are fueling the markets with fear. Stock markets both in Europe and the United States fell for the fourth consecutive session. Dow Jones dropped more than 80 points (0.5 %) during the session.

The Dollar, which lost momentum on the presentation of unemployment figures last week, continues to lose ground against most currencies. The Japanese Yen rose to a seven week high, trading at 96.62 Yen against the green back. The DXY index, which weighs the Dollar against a basket of six major currencies, fell 0.4 %. The stronger Yen impacted Nikkei and other stock markets, which suffered heavy losses during the week. Oil prices also fell yesterday with Brent crude dropping below USD 108 a barrel.

President Obama cancelled his upcoming meeting yesterday with President Vladimir Putin, in a display of anger with Russia’s decision to grant the whistle-blower, Edward Snowden, the man the US sees as traitor, permission to stay in Russia. Obama accused Russia for cold war tendencies and repeated grievances over Syria. Saudi Arabia , seen as a close US ally, recently offered Russia to buy USD 15 billion in military aircrafts if Moscow would trade giving up its support for president Assad.

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09 AUGUST 2013: CHINESE TRADE DATA ENCOURAGES

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Chinese trading data in July proved better than expected. Both export and import figures improved and gave stock markets, which declined this week, a firmer ceiling. The US market rose in the first part of the session helped by strong results from Microsoft – up 3 % - and Tesla Motors which jumped 14.2 %. The market turned around and went into red territory for the fourth consecutive day on criminal charges against J.P.Morgan related to its mortgage backed securities. The leading US bank declined 0.8 %.

The Dollar demonstrated new weakness and fell to a seven week low. DXY Dollar index, where USD is weighed against a basket of 6 major currencies, fell 0.5 %. EUR/USD showed new strength and rose 0.4 % to 1.3392. USD/JPY continues to weaken, paying 96.25 Yen to a Dollar which is far off the peak on 103 seen only months ago. “Abeism” - after the new Japanese Premier 'Abe' - meant to spur inflation into a Japanese economy stagnating for decades, has lost momentum with steady declines in the Nikkei stock index.

US jobless numbers registering the number of unemployed requesting unemployment benefits, which surprisingly jumped the last week of June , did not prove any substantial progress starting a new month. This did neither help the mood in the stock market nor the strength of the Euro, but raised new question marks in the ongoing guessing game on when the US Federal Reserve (FED) eventually will start tapering its bond buying program of USD 85 billion monthly.

In Russia, two of the leading oil company players, in letters to President Vladimir Putin, mutually accused each other for wrong business decisions. Both the head of the biggest Russian oil company, Rosneft, Igor Sechin, and the head of the monopoly oil pipe company, Transneft, Vladimir Tokarev, who both are former colleagues of Putin in the intelligence services, accuse each other respectively for excessive pipeline prices and ambitious and expensive oil terminal projects in Nahodka in the Russian far East.

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12 AUGUST 2013: METAL PRICES RISE ON CHINA

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Metals bounced higher on Friday as stronger than expected data came from China, with a copper rally not seen in one year. China reported a pick-up in factory production, investment, and real estate for construction in July, beating expectations. Data and import and export also rose indicating to investors that the Chinese economy is in the process of stabilizing after decelerating in nine of the last ten months.

A series of Chinese policy measures seem to have had a positive effect and reversed an economic slowdown and the fear of hard landing for the Chinese economy. Chinese analysts expect stable growth in the third quarter with a possible acceleration in the fourth quarter. The unexpectedly strong performance is driven mainly by a rebound in the production of steel, cement, power and non-ferrous metals. This underscores that China’s growth remains disproportionately reliant on credit fuelled infrastructure and property construction.

Global stocks remained close to five-year records as a possible Chinese turn around in the second half of 2013 fueled investors optimism, in spite of a week of mixed activity across the world’s biggest financial centers. This optimism fuelled markets in Europe, but failed to translate for long in the US, as investors took profits after continuous records on Wall Street over the last few weeks. The benchmark S&P index fell for the second week after a rise in stocks on 19% since the beginning of 2013.

In Europe the FTSE All World equity index hovered close to its best level since 2006 after especially large global mining companies climbed on the back of the Chinese data. Shanghai and the Australian stock exchanges jumped as well on the data. In currencies, the US Dollar index continued to lose ground on Friday, but gained against the Euro which eased 24 points to USD 1.3354. USD/JPY descended 0.3 % to 96.38. The Dollar is expected to be under downward pressure until the US Federal Reserve (FED) decides on when to start to taper monetary easing.

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13 AUGUST 2013: GOLD SHINES ON STIMULUS WORRIES

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Stocks headed for the fifth fall in six sessions on Monday, as signs of economic recovery pointed towards a cut in economic stimulus and monetary easing tapering. Safe-haven assets such as precious metals and the Swiss Franc, gained. Gold jumped to USD 1342 an ounce, the highest level seen in months, while Silver gained 3 % since the end of last week, trading at USD 21.31 an ounce. EUR/USD continues to descend at 1.3288. USD/JPY is steady at 86.87.

Global stock markets have been tiptoeing in August fearing that economic stimulus, the USD 85 billion monthly bond buying program, may come to a halt in September. Signs that China’s slowdown may run its course and expectations that data this week will prove that the Euro zone is pulling out of its longest recession on record, are bolstering hopes that the global economy is back on track. This most probably means an end to monetary easing.

European stocks quickly lost the momentum created by Monday’s better than expected Chinese data, which gave the Asian markets a boost during the night. The major European indices were down as the futures for the US were down. Both Dow Jones and Nasdaq lost 0.36 % in the opening of Monday’s session. Walt Disney, Boeing and JP Morgan were among the biggest losers. Intel and Alcoa were marginally up.

Nikkei in Japan shed 0.7 % and traded at the lowest level seen since June 28th, after data showed that Japan’s economy grew at a slower-than-expected pace in April-June. This prompted investors to cut their risk exposure. The Japanese Yen has gained 5 % against the Dollar since USD/JPY reached a high of 103 Yen to a Dollar in early spring. The Japanese economy grew 2.6 % in the second quarter, compared with 3.8 % in the first quarter of 2013.

Copper was 0.3 % down after gaining 1.3 %, a three month high, on Friday. Oil prices, which headed up on the presentation of the Chinese data, dipped 0.5 %. Brent crude is trading below USD 108 a barrel. Gold gained for the fourth day in a row when holdings in the world’s biggest Gold exchange-traded fund rose for the first time in two months. The increased volume helped prices, but the fundamentals for Gold are still negative.

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14 AUGUST 2013: GERMAN OPTIMISM FUELS EURO ZONE

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

US Consumer spending rose at its fastest pace in seven months according to figures presented yesterday. The gauge in consumer spending indicates quicker economic growth, and would strengthen the case for the US Federal Reserve (FED) winding down it's USD 85 billion bond monthly bond buying program. Retail sales outside cars, gasoline and building materials rose 0.5 percent in July, in line with expectations. Consumer spending is the biggest driver in the US economy.

A jump in Germany’s economic sentiment survey, dovetailed with a rise in the industrial output in the Euro zone, and the fastest rise in house prices in England in seven years, bolstered renewed optimism also in the European region yesterday. London’s FTSE, Germany’s DAX and the Paris CAC 40 indexes all climbed from 0.3 to 0.8 %, to lift the broad FTSE Eurofirst 300 index to its highest level since mid May. US exchanges were rising on the retail figures yesterday after four losing sessions.

EUR/USD stood at 1.3290 before the release of the US retail figures added to the case for a cut in the Federal Reserve’s (FED) stimulus already in September. The American Dollar is trading higher also in relation to Japanese Yen. USD/JPY is 98.01. Oil prices are up with Brent crude at USD 109.88 a barrel. Gold and Silver stay steady at the last few days higher levels.

A renewed optimism in the Euro zone was yesterday reflected in the debt market. Yields on safe-haven German 10 year government bonds hit their highest level in six weeks. Risk premiums on Italian and Spanish bonds continued to ease. A general improvement In the EU economy seems to have taken place. The question is when positive signs of improvement will eventually take the Euro zone countries out recession and into sustainable economic growth. Gross Domestic (GDP) growth number expected to grow 0.2 % when the last quarterly report is published later on Wednesday.

The Asian market opened Tuesday in strong positive territory, helped by the Chinese data presented on Monday morning. The weaker Yen caused the Nikkei stock exchange to jump 2.6 %. The other Asian bourses were also up. The positive momentum is expected to continue this morning.

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15 AUGUST 2013: US STOCKS DECLINE ON MACY’S SALES

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The US stock indices fell last night after retailer 'Macy's Inc' quarterly results disappointed. This gave new urgency to investors debates on the timing and pace of reductions in the Federal Reserve’s (FED) bond purchases. The department store operator Macy’s shares fell 4.4 % leading to a loss in S&P. Also Dow Jones and Nasdaq ended in red territory after Macy’s disappointing sales.

In Europe, both France and German economies grew faster than the United States in the second quarter of 2013, pulling the Euro zone out of its longest recession seen in years. The increased pace was primarily driven by renewed business and consumer spending in the two largest economies inside the Euro zone. The Euro zones economy continues, however, to be fragile with countries such as Spain and Italy struggling. The figures published on Wednesday show a 0.3 % growth.

Austria and Finland also presented positive growth figures while the Cyprus economy contracted 1.4 % in the second quarter, after the international bailout in March. Laiki, the second biggest bank, was forced to close and the Bank of Cyprus and Hellenic Bank suffered heavy losses on big deposits. In spite of some positive signs inside the Euro zone, the economic and fiscal problems seen in the periphery and especially in Southern Europe indicate that the Euro zone is in for a bumpy and uneven recovery.

The positive news from France and Germany had little impact on the currencies. EUR/USD traded at 1.3258 after an earlier high of 1.3278. Traders put stop/loss orders on 1.3230. A break could see a slip to 1.3155. The DXY Dollar basket was marginally down after climbing one percent since its low on August 8th. Oil prices fell during yesterday's session, but precious metals, Gold and Silver, demonstrate a clear, positive upward trend.

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16 AUGUST 2013: OIL JUMPS ON EGYPT UNREST

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

Oil prices jumped on the tense situation in the Middle East where at least 535 people were killed in a security crackdown in Egypt. Brent and NYMEX, New York crude, climbed to a four-month high on Thursday with Brent reaching USD 111 a barrel. The escalating violence in Egypt might affect the Suez Canal and spread all over a middle East already torn by a two year civil war in Syria, disturbing death tolls and unrest in Oil producing Iraq and Libya.

Egypt has declared a state of emergency. Supporters of the deposed President Mursi have, nevertheless, announced new major demonstrations. Oil storages in the US are shrinking faster than expected. Egypt is a minor crude producer, but home of the strategically important Suez Canal and the Sumed pipeline. The deadly violence threatens to choke Oil supply routes and have serious consequences for steady Oil supplies from the Middle East.

The Libyan Deputy Oil Minister stated on Thursday that Libya’s Oil production has been reduced by 600 000 barrels a day. Iraq expects to slash supplies with 600 000 barrels a day in September. US crude inventories fell 2.8 million barrels with stocks at the lowest level seen since 2012. As long as the situation in the Middle Eastern area is kept under some control, Brent doesn’t seem to have a potential to climb higher than to USD 113 – 114. Europe’s top Oil company, Royal Dutch Shell, has temporarily closed its offices in Egypt.

The USD has come under new pressure on continued uncertainty over when the Federal Reserve (FED) might start to taper its bond buying program. Retailer Macy’s department store, delivered disappointing results on Wednesday, leading to new question marks regarding the healthiness and growth of the US economy. EUR/USD is at 1.3299 and USD/JPY trades at 98.15. Precious metals, Gold and Silver, have regained some of their safe-haven status and have steadied on levels not seen in months.

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19 AUGUST 2013: EQUITIES STRUGGLE – GOLD REACHES 1373

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

While equities worldwide struggled against the US federal Reserve (FED) tapering concerns, Oil and Silver rallied at the end of last week. Gold rose to a two-month high on Friday. Silver saw its strongest weekly performance in five years with a 13 percent rise, strongly indicating that the wave of selling in precious metals over the last half year, has come to a temporary halt. Gold rose 50 Dollars during the week to hit a peak of USD 1373 a troy ounce.

Precious metal prices were helped by a weaker Dollar. EUR/USD traded steadily above 1.33 during the week with good news coming from the Euro zone. Both France and Germany presented positive growth figures which, in spite of weak fundamentals, are interpreted as the Euro zone possibly coming out of recession. Data on Thursday showed that investors in Japan and China led large sell-offs in US treasuries, following FED's statements on tapering in June.

China has, over the last half year, strongly increased its Gold holdings seemingly in an effort to diversify its investments in US treasuries. China is seen to have built up Gold reserves to become more independent of both USD and EUR. Both currencies are regarded as vulnerable. With eyes pointing towards the future – 10 – 20 years perspective – China seems interested in building up the Chinese currency as a competitive international reserve currency.

Last week saw the first net inflow into Gold backed exchange traded funds, so called ETF's, sine 2012. ETF's sold 402 tonnes of Gold in the second quarter of 2013, double the Gold production of South Africa. Over the last few weeks, the number of Gold 'short positions' have been reduced. This is combined with a surge in Chinese Gold buying which rose 87 % from 2012 to 386 tonnes. Retail buying in India and central banks buying are also boosting Gold prices. Many traders remain, however, gloomy and ask how long the rally in precious metals will continue.

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20 AUGUST 2013: STEADY DOLLAR BEFORE FED MINUTES ON WEDNESDAY

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The Dollar held steady on Monday as investors refrained from bets on the currency before the publication of the US Federal Reserves (FED) minutes on Wednesday. It is expected that the minutes might give a more clear indication on the pace and timing of FED’s plan to trim its bond buying program. Analyst consensus is that tapering could start in September. The Dollar index, DXY, was flat. EUR/USD trades at 1.3348 and USD/JPY is at 97.97.

Higher yields on Dollar denominated bonds have made the Dollar more attractive over the last few days, but this has been blunted by a promising improvement in the Euro zone and UK economies which have underpinned the Euro and Sterling. Data last week showed that both the German and French economies were growing faster than expected in the second quarter. EU manufacturing and services data are going to be published on Thursday and give a more clear indication as to whether the Euro zone is pulling out of recession.

The data will have an impact on the strength of the Euro, which is expected to falter against the Dollar in the upcoming trading sessions. That could mean that Dollar would start to attract demand against the Euro. The Dollar might also be in for a new test against the Japanese Yen. If the August 15th peak of 98.66 Yen is broken, there might be retest on the August high of 99.955 Yen. Oil and precious metal prices are keeping steady at the high levels seen on Friday. Brent trades at USD 110.55 a barrel and gold stands at USD 1376.

Stock markets in Europe continue to be under pressure with France, Germany, and England indexes trading down. There was a weak start in the equity market in Asia with Asian Pacific index in red territory the first day of the week. The unrest in Egypt continues with new clashes between Mursi-supporters and the police, claiming an unconfirmed 1000 lives taken until now. US politicians claim there has been a halt in the US billion Dollar military help to Egypt.

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21 AUGUST 2013: FED SENDS MARKETS TO ONE MONTH LOW

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

World shares sank to their lowest level in more than a month after disappointing sessions in New York yesterday, along with disappointment when trading started in Asia on Tuesday morning. The sell off continued in Europe, and emerging markets saw funds pouring out. Global markets are worried and at unease with expected cuts in US Stimulus and related gains in bond yields, leading to investors being on edge. Oil and precious metal prices have fallen with the Dollar under pressure. EUR/USD stands at 1.3395. USD/JPY is at 97.29.

European stocks were down with the French CAC as the biggest loser at minus 1.35 %. The FTSE London-index dropped 0.57 % while the German DAX was down 1.06 %. The Russian indices suffered similar losses. The losses in Europe are following a fourth day of straight falls on both Wall street and in Asia. India is also hit hard by a dramatic fall in the Rupee in relation to USD. The Japanese Nikkei fell 2.7 %.

US Federal Reserve (FED) shall publish their minutes from the end of July meeting later on today. It is expected that the minutes could offer hints on when FED will start winding down its USD 85 billion-a-month bond buying program. Uncertainty regarding what is going to happen next has recently driven up bond market borrowing costs. This has sparked a sell off in riskier assets as stocks.

Brent crude, which has been steady above USD 110 a barrel, fell below this level on Tuesday due to nervousness about the effect of a halt in monetary easing. Oil prices are, however, supported by export problems in Libya and the continued unrest in Egypt. Western powers are threatening to withdraw their economic assistance, but Saudi Arabia stated yesterday that they would step in to avoid any collapse of the Egyptian economy.

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22 AUGUST 2013: HOME SALES JUMP TO A 3-YEAR HIGH

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

On the eve of the US Federal Reserve’s (FED) presentation of their monthly minutes, US home resales rose to their highest level in three years. Home sales for July suggested that a sharp increase in borrowing costs is only having a limited impact on the housing market recovery. Home sales jumped 6.5 % to an annual rate of 5.39 million units. Analysts previously forecasted a much smaller increase.

The currencies fluctuated heavily during Wednesday before the FED minutes presentation. EUR/USD jumped above 1.34 and fell back to 1.3386 with major banks taking big short exposures, betting on a stronger Dollar and steep falls in both Euro and Yen. Emerging market currencies, especially in Asia, did fall rather dramatically against the USD in the last few days, with the Indian rupee being the big loser. Oil prices are relatively steady with Brent crude trading below USD 110. Gold rose to USD 1376, but lost ground before the FED minute presentation.

Greece’s financial obligations are again under heavy scrutiny. German Finance Minister Wolfgang Schaeuble stated on Tuesday that Greece would need a third bailout. His election campaign statement came the day before today’s arrival of the European Central Banks (ECB) officials to Athens, to scrutinize Greece’s progress in meeting its international bailout obligations. Since 2010 Greece has been bailed out with 240 million Euro's by the ECB, International Monetary Fund and European Union.

Yields on Greek bonds rose immediately to new yearly highs after the Greek government tried to give the impression that a turnaround in the economy is starting to take place lately. Greece has, for the last 6 – 7 years, been through a dramatic recession. The austerity measures ordained by the “Troika” of ECB, IMF and EU, have created record high numbers of unemployment. The anti-austerity opposition was quick to seize on Schaeuble’s comments, pointing to yet another round of painful austerity.

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23 AUGUST 2013: MINUTES CREATE NEW UNCERTAINTY

DAILY MARKET REVIEWS

by Arne Treholt Vice-President of Business Development and Investments

The minutes from the end of July meeting of the US Federal Reserve (FED) which were published on Wednesday night, did not give markets the clarity they were looking for. The minutes repeat the same generalities markets have been fed with over the last half year. Tapering is going to come, but there is no clear time table for when FED will start to slow down their bond buying program. Whether it is going to start this autumn, or the first half of 2014, is still an open question. Everything hangs on the development of the American economy.

Banks and financial institutions gambling on more clear guidance, were disappointed. The USD is gaining some ground against other currencies, and the yield on US bonds continue to raise. The Dollar DXY, a basket of six major currencies weighed against USD, was up 0.5 %. US treasury yields reached a two-year high of 2.936 percent. EUR/USD trades down at 1.3321. The Japanese Yen is weaker trading at 98.64 Yen a Dollar. Brent is steady around USD 110 a barrel. Gold trades at USD 1371.

The higher yields have, over the last few weeks, led to a repatriation of funds back to the US from emerging markets, helping to support the Dollar which in short term looks very bullish. Tapering or termination of printing of the Dollar, shall mean tighter credit conditions and higher interest rates. Many emerging markets have big exposures in US Dollars and would be faced with big credit problems with a combination of increased interest rates and a stronger USD.

The effects of this trend is already felt in Asia where the Indian rupee is under extreme downward pressure. Countries like Thailand and the Philippines are as strongly hit as Turkey. The Turkish lira has lost 4% against the Dollar only this month. Many analysts fear that Asian countries in a short time will be faced with the same financial and economic crisis as during the Asian crisis of the nineteen nineties. This would have a devastating effect also globally.

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