Market update by UWCFX

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S&P plays politics prior to EU-summit;

EURO countries
downgraded

On the eve of the EU summit Thursday and Friday the US rating agency Standard and Poor has created new panic in
the markets by downgrading all members of the EURO including Germany and France. Germany is loosing its triple
A rating and France is degraded to AA. All EURO-countries are set under immediate economic surveillance. The S&P
decision would put increased pressure on banks and bigger companies also threatened by downgrading.

The news came just hours after Sarkozy and Merkel in a joint press conference announced agreement on how to
tackle the Euro-zone crisis. France and Germany are proposing a revision of the European Treaty to be ratified by
member states by March 2012. A part of the package is introduction of stronger budget discipline whereby immediate
sanctions are going to be taken against member countries not following its obligations. Monthly EU- meetings at top level
is also included and a more effective mechanism for the rescue of troubled sovereign economies.

The package was well received by the market. Europe and the US rose till S&P spoiled the party in late US-trading. After
listing impressing gains over the last weeks the Asian exchanges are steeply down. Oil prices are falling as precious
metals. Gold is falling 40 dollar from inter day high on yesterday.

The downgrading has put the Euro under increased pressure. Euro/USD is 1.3377. Speculators are watching the
EURO drama, and it is expected that the EURO shall be under constant attacks for weeks and months to come.
Japanese Yen is strengthened and trading at 77,76 against the dollar.

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EURO remains firm
before key summit

EURO remained firm against the dollar (1.3426) in Wednesday

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Short term EURO fate
hangs on the summit

The short term fate of the EURO rests to a considerable degree on the outcome of the highly anticipated end of the week meetings
in the European Central Bank (ECB) and the two days summit of European leaders Thursday and Friday.

There are strong rumors this morning that ECB shall cut it

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England blocks
EU-treaty revision

After a marathon session running into the early morning hours England blocked Sarkozy-Merkel

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Markets calm down:
Asia opens in blue


The Asian stock exchanges opened the week up on positive US macro numbers and some
optimism after last weeks EU summit.

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Global markets drop
on EURO concern

After a couple of days of digesting the result of end of last week

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EURO set to
dip further

The Euro was mostly flat in static Asian trading after tumbling over night to its lowest level in
nearly a year. EURO/USD at present trading at 1.3038. Traders see a further slide in the single
currency when no silver bullet is in sight for the Euro zone debt woes.

It seems to be only a question of time before the EURO falls through the 1.3000 mark and will
test the technical support level on 1.2860 seen in January 20011.

The negative EURO sentiment is likely to persist unless Germany and the European Central
Bank (ECB) step up their efforts to put an end to Eurozone crisis. Such changes are, however,
unlikely to occur within soon.

Under the present circumstances the EURO is expected to come under increased
pressure also from the yen. In October the Euro fell to a ten years low against the Yen at 100,77.

Japanese analysts predict that the EURO may fall as deep as to Yen 96. They predict Euro/USD
down to I,20; testing earlier low levels seen after the financial crisis in 2008.

Traders will today keep a sharp eye on the Italian bond auction and EU production data numbers
for October which shall be published as well.

Meanwhile stock markets are extremely volatile. Dow Jones went yesterday from plus 100 to minus 100
during the same session. Financials are under strong pressure.

MF Global

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[b]Fitch and Moody

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Pessimism still is present
in the market

On Monday, on December 19th, the basic American indexes were closed with a fall. After short trade in plus the market has rolled down against comments of Mario Dragi that economic prospects in the European region remain very uncertain, and laws don't allow to increase purchase of bonds.

Article in Wall Street Journal about FR's possibility to make to banks more rigid requirements to the capital, in turn, "has added fuel to the fire", and the bank sector has appeared in leaders to decrease.

It seems that in Asia threats also accrue and situation every day becomes more and more heated. The basic indexes in Asia have shown negative dynamics yesterday. The death of the head of the North Korea Kim Jong II became one of the latest news, which has provided prompt falling at stock exchanges. According to investors, younger son of the dictator appointed as its successor, could be not strong enough to settle the unstable political situation observed in the country.

We will notice that problems of Europe remain significant news, which put pressure upon investors. Yesterday came news that additional 150 milliards are going to be released in order to help Europe to overcome debt crisis. Germany and France should make the greatest payments. The countries not entering into an Euro area, but being thus members of EU, are going to allocate funds to IMF too.

Prices of oil will be also considered as a significant fact. Oil prices has gone up and recovered a bit from the bottom levels and reached 104,02 dollars per barrel in price. Gold is picking up a little bit and is traded on a level 1600,19.

There are expected statistics from Germany and statistics on house building in USA

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The positive on the American, Asian and
European markets can last not for long

After quite long time of corrections and large falling, yesterday has brought positive sentiments and growth on stock exchanges all over the world.

The European indexes have finished trading session in a green zone: British FTSE100 - +1,02 %, German DAX - +3,11 %, French CAC40 - +2,73 %.

The American stock exchanges have opened in plus. Moreover, in first half of day growth of the basic indexes has proceeded. Following the results of day, the American stock exchanges were closed positively. Yesterday, we have been mentioning upcoming statistics from USA - on Tuesday the following data has been published: the number of the given out building licenses of new houses in November has made 685 thousand, it was expected 628 thousand; the number of bookmarks of new houses in November has made 681 thousand while it was predicted 653 thousand. As a result: Dow Jones - +2,87 %, SnP500 - +2,98 %, NASDAQ - +3,19 %.

Oil of mark Brent 107,32 dollars/barr. The EUR/USD pair bargains close 1,312. Oil is strengthening and returning from the low levels of last week. Definitely, it is also giving positive support to the markets.

On the other hand, there is another set of the statistics to be issued: data regarding import from Germany and consumer trust index in Euro zone, data on oil and oil products in USA.

We shall admit that the positive on the American, Asian and European platforms, connected with optimistic macro statistics from the USA and Germany, can last not for long time. Moreover, investors could prefer to fix some profit already today.

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Today's statistics on world economy
can become a push to growth of the markets

Yesterday pessimistic moods prevailed in the world markets, due to the results of granting of liquidity to commercial banks from ECB. Cost of loans is quite low - in this connection, demand has considerably exceeded the offer. The excessive demand, which has exceeded the forecast, has been regarded by investors as a signal about weakness of the European bank system. However, the American indexes managed to be closed in plus as the trading session was affected also by statistics on economy of the USA. Sales of the properties in November have grown on 4,0 % though the increase only on 1,9 % was predicted.

Signals from the raw market are more positive: Brent has tested $108 for barrel. Increase was promoted by announcement of the data on stocks of oil and oil products in the USA: stocks of crude oil were reduced to 10,57 million barrels, gasoline stocks - on 0,412 million barrels. The pair of EURO/DOLLAR was consolidated at levels a little above of 1,30, so signals from the currency market were neutral and didn't render pressure upon raw platforms.

The potential growth on world indexes remains, the statistics on world economy, which will be issued today, can become a push to growth. There will be issued data about GDP of Great Britain in the afternoon and closer to trading session end - the traditional week data on unemployment from the USA and gross national product of the USA for III quarter according to the third, final estimation.

We shall not to forget that volatility in the markets is very high also movement can be in any direction, therefore it is necessary do not to make any hasty decisions.

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Better home sales
sent exchanges up

The number of pending home sales in US increased more than expected and created better sentiments in the markets yesterday. Dow Jones jumped 1, 12 % and reached 12 278 far above the psychologically important 12 000 level. NASDAQ was also up with 1 % to 2 613.

On a year basis Dow Jones is up 6 %; NASDAQ has tumbled 1, 5 %. Banks had a good day in yesterday. After earlier steep falls Bank of America was up 3, 3 %. Citi Group, JP Morgan and Wells Fargo increased likewise more than 2%.

Iranian threats to close the Hormuz straits are keeping oil prices high: NYMEX is stabile just below 100 pr.
Barrel and Brent is 108, 16.

Gold and silver prices have recovered after Wednesday and yesterday

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[b]Moody

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EURO falls on
Greek wrangling

Assurances from the leader of the Euro-group, Jean Claude-Juncker that all necessary decisions regarding Greece shall be taken on Monday 20th, did not calm markets in today

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Greek debt deal
expected today

Global markets have over the last days calculated into prices that a solution is going to be reached when the EU Ministers of finance meet in Brussels today. Asia was no exception. Markets were in a positive mood and added new increases to former gains. The composite Asian Stock-index is up one %.

The US Finance secretary, Timothy Geithner, added his voice in support for Greece bail-out when he during the weekend strongly encouraged The International Monetary Fund, IMF, to extend credit to Greece. He characterized the

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The Summit has Come to the End,
but Questions Remained the Same

High appetite to risks remains in the markets, which helps indexes to be kept near yearly maximums. During weekends there were no any significant events, which could be capable to change an alignment of forces in the beginning of this week. At summit G20 the arrangement on possibility of allocation of additional funds of IMF has been reached, however it will be possible only if Europe will realize additional anti-crisis measures. According to the head of IMF, K. Lagard, it is a question of additional 500 billion dollars.

On Friday Government of Greece has directed the offer to private creditors on an exchange of bonds with reduction of their nominal value, now creditors have 10 days to consider this offer. The following provision has been included in the offer of an exchange: In case if 66% from total number of creditors will agree on "voluntary" restructuring - the remained bonds will be restructured compulsorily. In our opinion, it will have bad influence of the markets and fall of ratings.

Positive spirit remains in the commodity markets due to the upcoming LTRO: copper has returned to a level of 8.5 thousand dollars per ton; the oil of mark Light came nearer to a level of 110 dollars/barr., and Brent has finished week above a price of 126 dollars/barr., having updated a historical maximum. However, already today we can see some cooling in the commodity markets: the euro already is under symbolical pressure as expected in the middle of the week huge input of liquidity from ECB (on Wednesday), will break balance between dollar and euro. It is not excluded that probable correction on euro will have influence also on growth of raw actives.

From important events today, we are expecting news from Germany where the package of the help to Greeks should be discussed. However, it is improbable that the German parliament will refuse granting of additional funds to Greece. Therefore today, quite possibly, the markets will lie down in a side trend in expectation of events in the American stock market.

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[b]FED