Market Update 2009

January 12, 2009

Austen Morris Associates

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January 12, 2009

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Dear Sirs & Madams,
Market forecasts for the year will be sent out in February as the January price action will set the
parameters for markets for the year. If any markets create a clear picture this should then help
evaluating the rest of the markets.
For the next few weeks though we will be batting along the following lines, oh and a Happy New Year
to all and I am determined to make this our best trading year yet and I do think that Mr Market will be
trying to help us.
Currencies
Currencies first up and US$ continues to rise all be it at a slightly lower trajectory, this should continue
in to mid-Feb at least. GBP appears to have dropped enough for the time being versus Euro and
should now head back up towards the 120-130 level. A 20% move from the current position so no
small change there. GBP seems to be taking most of the hits lately and it would not be unreasonable
for us to expect a move to 1.30-1.35 versus USD before we see some sort of GBP strength, hitting
these levels should set up a nice opportunity to be long GBP. Australian Dollars- I am still looking for
the 47-52 range against USD nothing has changed and this may shock you that it does have the
potential to slice though this level and hit 35-40. Philippine Peso target is still 51-53 and then we would
be looking for a correction back down to 43-46, how we get back to the 43-46 range will determine
where we go next. Yen having a brief correction versus US$ at this time prior to rocketing higher I
would say.
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Jpan
GBP V USD Target 1.30-1.35 current 1.49
GBP V EURO Target 1.20-1.30 current 1.12
AU$ V US$ Target 47-53 current 69
Peso V US$ Target 51-53 current 47
Yen V US$ Target 75-80 current 90
Property
Western property markets are looking rather dismal. I was reviewing information about the UK in mid-
December and the only conclusion you could take from it was that the property would have to reverse
and start going higher NOW or a further horrific fall of 30-45% awaits which would make the overall
drop 45-65% from the highs. Meanwhile over in Dubai our Indian Astrologer is calling for a 90% price
fall so beware. There is such a thing as the skyscraper chart which I show the recent version of below
from 1990, this dates back to whenever a new height peak has been reached and that this usually
coincides with a historic market peak within that country.
Peak to trough as they say, it will be interesting to see if the Dubai gazillion$$$ can thwart this
directional trend. Australia has been rather tardy in coming in to line with the rest of the western
property markets with drops being experienced in select areas only, this is expected to move to
country wide as the snowball picks up speed downhill this year so please be careful on re-mortgaging
or purchasing. No comment on the local market here in the Phil's as the data information is rather
slack especially from an historic perspective.
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apan

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 Bonds
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 Commodity News I don't usually have a waffle about the bond market but with bond prices rising sharply over the past
few months they are setting up a short position later this year. I think going long yields would be the
 Derivatives News play and it could turn in to a marvelous trade with limited downside risk.
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We purchased around the 1.20 level and the price has since moved up to 2.40 at the recent peak but
 Keeping U Posted closed last Friday at 2.10. The information hasn't changed and we are still looking for the 7-10 price
 Market Snapshots level. We could drop in to the 1.80 level to finish the recent correction. The monthly chart below
shows plenty of room to move higher on the strength indicators while the shorter term charts were
 Stocks & Shares approaching over-bought levels but these are now being worked off by this slight drop.

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Our next stock purchase should be ready this week, again this is a buyout with the expected buy out
timeframe of late Feb. Current price around US$6 with a target at buy out of US$25-30. We may have
one more stock to purchase as well over the next few weeks.
The picture appears to be clear while appearing muddled at the same time. I used a little of the grey
matter to help me make it to the chart below which is not usually on the radar, suddenly things
become as clear as they can be in EW terms. There is no way you can view any downside action
complete in EW terms so there must be another low on the horizon.

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If we make new lows then the drop could be around 30-50% below current prices so this will be a
substantial fall. Panic would be global and then markets should bottom out which then lends itself to a
rather large bear market correction. The profit potential will be huge. Here at AMA we are currently
already trying to select specific stocks that we should buy as this bottom approaches, the speed of
the move up will be unlike any this generation of investors has seen before so most investors will not
be involved and will miss out on the bargain prices on offer at the bottom.

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NZ- Looking at the clarity of this chart advise that the 5th wave should extend and be the largest
move.
S&P500- A triangle within a triangle which is why you have seen sideways action in the US markets,
the B wave below is 3 waves and not 5 which advised something complicated was coming along. As
Cocoa below the triangle advises that the next move in the preceding direction (down) will be the
last before a strong reversal takes place.
Commodities

More of the same here. After the recent corrective move up is complete we expect a fall of 30-50%
across the board. We are looking to place 2 commodity shorts next week as cocoa and cotton seem
to be leading the way, this should give us chance to play the laggards as well if most of the moves on
the first set of shorts are close to completion. Once these moves are complete we will be looking to
buy, at this time our main focus is on Copper and Oil with possibly Natural Gas as well. The move in
Copper over the next 2-3 years I would expect to be in the region of 600% from the bottom. This fits
with all the infastructure projects currently in planning which will increase copper demand
substantially, this is while copper mines are currently closing due to the low price. Lower supply
meets large demand for those of a fundamental nature.
Cotton- Still looking for a move to 53 prior to taking the short position.
Cocoa- The triangle forming below advises that the next move up will be the last move in that direction. It
should be a sharp move as well so we have to be ready to place the short trade.
If you have thought about opening a portfolio account then this is the time to do it, there should be
extraordinary gains to be made during this time which will help you to survive this bear market. For
most the opportunity will pass by and their pensions/savings will be severely hurt when the market
bottom eventually arrives.

Solar, Wind, Water.

This sector is expected to be the next bubble although I have to admit I need a little more convincing
as these stocks have tracked the broad markets up and down. We should see a divergence if the
broad markets make new lows and these stocks follow but drop less in percentage terms. Quite
simple really.

Trend Following

AHL returned 20% in 2008 while IQS made 16%. We were able to trade between IQS and CFL funds
at the correct time and the net return was 55% for the year for our IQS/CFL holding. I expect this to
continue performing well this year and we have to stay alert and invest at the correct time.

Regarding the Global Dividend fund which has been disappointing to say the least, I do not have the
figures yet for December or the size of the dividend payment, I expect to receive these this week and
will send this plus the current thoughts on the fund.
News

Well that's about it for January as the above should stick and we will review and forecast the year
ahead at the end of the month. Any questions please fire away. One last little tid bit, our astrologer
friend who continues to hit home runs has advised that 80% of the worlds volcanoes will ignite this
year. I know nothing about volcanoes so if anyone does and can advise if this is common or not and
which type of company would benefit from this then we may have ourselves an eruption of our own.
Last year I mentioned concerns over the global warming debate advising that it was actually getting
colder, I've been in the Phil's now for 9 years and at the current time it is cold to an extreme for the
Phil's, we are down to 25ºC.

Cebu Presentation

We have a presentation together with IQS and Amsterdam Trust Company in Cebu at the Gustavian
Deli on January 21st at 6.30pm. Please let me know if you would like to attend as we are organising
refreshments from the excellent Chef Robert.

Your trying to stay away from volcanoes advisor.

Kind Regards,

Gareth Cookson
Country Manager
International & Investment Banking Division
Private Client Group
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