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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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Compound Interest GBP V USD GBP V EURO AU$ V US$ Peso V US$ Yen V US$

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Target 1.30-1.35 Target 1.20-1.30 Target 47-53 Target 51-53 Target 75-80

current 1.49 current 1.12 current 69 current 47 current 90

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Western property markets are looking rather dismal. I was reviewing information about the UK in midDecember 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.

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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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Bonds 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 play and it could turn in to a marvelous trade with limited downside risk.

Stockmarkets Platinum Group Metals We purchased around the 1.20 level and the price has since moved up to 2.40 at the recent peak but closed last Friday at 2.10. The information hasn't changed and we are still looking for the 7-10 price 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 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.

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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