PRIVATE BANKING WEEKLY

WEEK 44 / 27 OCT - 02 NOV 2014 BRIEF “ “ “

“ Successful Investing Professionals are Disciplined and Consistent and They Think a Great Deal About What they Do and How They Do It “ BENJAMIN GRAHAM

• CONTACTS → ECB STRESS TEST IDENTIFIES 13 BANKS UNPREPARED FOR

IBRAHIM ITANI CRISIS → HONG KONG PROTESTOERS CANCEL BALLOT AT +961‐1‐360460 Ext.786 LAST MINUTE → BRAZIL’S ROUSSEFF WINS SLENDER RE ‐ [email protected]

ELECTION → IEA: US SHALE OIL PROFITABLE DESPTIE JOSEPH KALAYDJIAN +961‐1‐360460 Ext.788 DECLINING GLOBAL PRICES → GLOBAL INVESTORS WORRY [email protected] ABOUT EUROZONE CRISIS → TALKS END WITHOUT DEAL ON JAD MOUSSALLY +961‐1‐360 460 Ext.787 RUSSIAN GAS FOR UKRAINE → RUSSIAN CREDIT RATING [email protected] LOWERED BY MOODY’S → VENEZUELAN BONDS ALL ALONG HOTLINE +961‐1‐36 00 37 WITH OIL PRICES

Crude Oil TECHNICAL ANALYSIS

83.50 82.40 RESISTANCE 81.20

80.20 SUPPORT 79.30 78.75

Crude Oil ended the week on a low note at 81.30 down by 79 cents on Friday, while Brent Oil gave up 60 cents on Friday to end at 86.23. Global oil futures have posted a fifth weekly loss as concerns about high global supply continued to weigh on prices.

Prices have tumbled for months as supply growth has outpaced demand. Market participants are waiting to see whether the Organization of the Petroleum Exporting Countries, and specifically , will cut production to raise prices. OPEC’s next meeting is November 27. According to reports Saudi Arabia shipped 9.36 million barrels a day last month, down 328,000 barrels a day from August. However, Saudi Arabia’s oil production was up slightly last month, at 9.70 million barrels a day.

OPEC had earlier indicated the cartel will maintain its output without any cut in production, with some member countries preferring to slash prices in order to gain share of the market.

Last week, US oil prices had tumbled to the lowest level in more than 2 years, amid concerns over excess supply globally, with OPEC member countries reportedly unwilling to cut crude production.

Gold TECHNICAL ANALYSIS

1,254 1,245 RESISTANCE 1,238

1,221 SUPPORT 1,208 1,195

Gold closed the week in the red at 1230.90 falling almost $20 for the week. A report from the US Commerce Department showed new home sales to have inched up 0.2% to an annualized rate of 467,000 in September from the revised August rate of 466,000. Economists expected new home sales to drop to a rate of 460,000 from the 504,000 originally reported for the previous month.

In economic news from Euro zone, German consumer confidence index rose slightly to 8.5 in November, up from 8.4 in the preceding month. The score was forecast to fall to 8.

Gold futures snapped a two‐day loss to end higher Friday, on lingering concerns over the health of the Euro zone economy, notwithstanding an unexpected improvement in German consumer sentiment in November. On Thursday, gold futures ended down 16.40 or 1.3% at USD 1,229.10 an ounce, losing for a second straight session. A stronger dollar also weighed on the yellow metal.

GLOBAL ECONOMY

decrease exchange rate pressures on the blue‐chip OPEN CLOSE swap. 20‐10‐14 24‐10‐14 NIKKEI 14882.84 15291.64 Bloomberg: Economy Minister and Vice Chancellor HANGSENG 23239.78 23302.20 Sigmar Gabriel, on his first visit to the United States, ASX 200 5271.70 5412.20 praised the country's "reindustrialization" referring to cheap energy provided by fracking ‐ saying it opens up opportunities to German companies. While on his EU OPEN CLOSE two‐day visit in Washington, he attended an event 20‐10‐14 24‐10‐14 Wednesday at the Center for American Progress, STOXX 50 2957.24 3030.37 where he criticized a demand that the German FTSE 100 6310.30 6388.70 economy take blows in order to boost the European economy. Instead, he said one of Berlin's goals was to DAX 8819.26 8987.80 create European growth and attract more private investment. Regarding austerity measures, Gabriel defended Germany's goal to create a budget for 2015 US OPEN CLOSE without incurring new debt. Supporting Chancellor 20‐10‐14 24‐10‐14 Angela Merkel, he said that government stimulus DJIA 16373.15 16805..41 packages, riding on the back of debt, only had the S&P 500 1885.62 1964.58 effect of "burning straw."CNBC: A dramatic upswing NASDAQ 4254.16 4483.72 in volatility is putting post‐crisis financial markets to CNBC: Argentina’s first international dollar‐linked the test, as curbs on banks' ability to take risks and an bond auctions since 2001 will take place this week increase in technology‐driven trading expose after a series of delays brought by the vulture funds potential new cracks in the system. While investors conflict, a move which analysts have described as a and traders say markets have become safer since the relief for the peso’s value. Cabinet Chief Jorge 2008 financial crisis ‐ there is less leverage in the Capitanich also met with Inter‐American system andbanks are better able to withstand shocks Development Bank (IDB) representative in Argentina ‐ they worry that the post‐crisis rule book has Hugo Flores Timorán to speed up a series of reduced the market's ability to absorb sharp spikes in scheduled disbursements before the end of the year, buying and selling. last week's sell‐off in stocks and with a goal of reaching US$1.25 billion for the period, lower‐rated bonds, which was attributed to a and spoke about convincing the IDB into issuing new confluence of factors such as disappointing data, loans. Goldman Sachs analyst Mauro Roca, speaking fears over global growth and anxiety over the impact yesterday to investors, saw the country’s move back of an eventual rise in U.S. interest rates. into the markets as indirectly increasing the relative supply of dollar‐denominated bonds, helping to

FINANCIAL MARKETS

Bloomberg: United Parcel Service (NYSE:UPS) reported earnings and revenue that topped analysts' expectations, driven by robust U.S. consumer and business demand and strong growth in Asia. The company's top executive also said that after a challenging holiday period last year the firm is ready for the 2014 peak season. After the announcement, shares for the company rose by 1.5 percent in premarket trading. The Atlanta‐based company confirmed its full‐year outlook, forecasting earnings of $4.90 to $5.00 a share. The shipment company posted earnings of $1.32 per share on revenue of $14.29 billion. Last year, UPS reported earnings per share of $1.16 on revenue of $13.52 billion. Wall Street had expected UPS to deliver quarterly earnings of $1.28 per share on revenue of $14.2 billion.

Bloomberg: Boeing (NYSE:BA) reported quarterly earnings and revenue that beat analysts' expectations, and the aerospace giant raised its full‐year guidance. After the earnings announcement, the company's shares rose in premarket trading. The company posted third‐quarter earnings of $2.14 a share, up from $1.80 a share in the year‐ earlier period. Revenue increased to $23.8 billion from $22.13 billion a year ago. Analysts had expected the company to report earnings of $1.97 a share on nearly $23.02 billion in revenue.

Bloomberg: General Motors (NYSE:GM) moved closer to putting its costly ignition switch recall behind it as strong North American sales and demand for its redesigned pickup trucks bolstered the company's third quarter earnings. GM posted earnings of 97 cents per share, up from 96 cents a share the year before. Revenue came in at $39.3 billion, decreasing from $38.98 billion a year ago. After the announcement, the automaker's shares rose 2 percent in premarket trading.

Bloomberg: (NYSE:CS) reported third‐quarter net profit above analyst forecasts as revenue rose. Net profit for the July‐September period came in at 1.025 billion Swiss francs ($1.073 billion), against the average 810 million Swiss francs forecast by analysts in a poll conducted by Reuters. In the second quarter, the group posted a steep loss after it was forced to pay a U.S. fine. Brady Dougan, chief executive of the Zurich‐based banking group told CNBC that he was happy with the group's performance.

Bloomberg: Amazon (NASDAQ:AMZN) reported a third‐quarter loss and revenue that missed analysts' expectations. The online retailer also projected weaker‐than‐expected sales for the important holiday quarter. The company posted a loss of 95 cents per share, compared to a loss of 9 cents per share in the year‐earlier period. Revenue for the quarter came in at $20.58 billion; against the comparable year‐ago figure of $17.09 billion. Shares in the company fell nearly 13 percent in after‐hours trading. At its current after hours levels, Amazon's stock price is at its lowest in well over a year. Amazon shares have often fallen after its earnings announcements. In fact, the stock has sunk no less than 9.6 percent in the day after earnings over the past three quarters.

ENERGY & COMMODITIES Bloomberg: Gold fell $5.80 to trade at 1239.70 as the US dollar gained momentum after US inflation data printed on a positive note. Over the period, prices of gold the most popular security asset in the world have fallen from a high of $1,921 per ounce to $1,240 per ounce. Economists said any further drop in prices is likely to render the gold production unviable. Already, the mining cost is on upward trend. For example, an average recovery from operative mines was five grams/ton in 1990s contrary to an average 1.18gms/per ton now, said an economist. As the emerging fast growing economies look towards gold as safer investment avenue, the US dollar and euro rates are likely to go higher in the coming days. Asian economies having huge dollar reserves scramble to shield themselves by buying gold. Crude Oil tumbled to a 2 year low to trade at 80.54 while Brent Oil added 11 cents to trade at 84.82. crude oil plunged by over 2.5 percent following the US inventories report from the Department of Energy. The government agency revealed a jump in total crude stockpiles by 7.11 million barrels for the week, well‐ above the consensus forecast. Moreover, refinery utilization slipped to its weakest since March and supplies at Cushing jumped by their highest since July. Looking ahead, US preliminary manufacturing survey figures are set to cross the wires. Data from the world’s largest crude consumer has been relatively positive of‐late. Yet another strong economic reading may do little to offset lingering supply glut concerns, which stand to depress WTI.

FOREX

Bloomberg; The EUR/USD added 7 points to trade at OPEN CLOSE 1.2655 after German manufacturing data printed better 20‐10‐14 24‐10‐14 than forecast, while others were on a negative note but EUR 1.27462 1.26749 overall services and manufacturing PMI reported higher CAD 1.12888 1.12369 than expected. The euro fell 0.5 percent gaining as much GBP 1.60890 1.60890 as 0.2 percent. It slid 0.7 percent, the biggest decline since JPY 107.152 108.175 Oct. 14. The greenback advanced as the U.S. consumer‐ CHF 0.94700 0.95168 price index climbed 0.1 percent after decreasing 0.2 AUD 0.87539 0.88035 percent in August, a Labor Department report showed in XAU 1234.50 1227.94 Washington. A Bloomberg survey called for no change. XAG 17.254 17.142 Core inflation, excluding volatile food and fuel, also advanced 0.1 percent after being little‐changed in August. Eurozone businesses performed much better than anyone expected this month but did so by slashing prices again, and optimism about the future fell to its lowest level in over a year, surveys showed . The GBP/USD fell by 38 points to trade at 1.6012 after BBA mortgages and retail sales fell below expectations. Sterling fell sharply against the dollar with the minutes from Bank of England’s (BoE) latest rate‐setting meeting showing that members remain split on the future path of interest rates in the U.K. Two members of the central bank’s Monetary Policy Committee (MPC) again voted for an interest rate hike in October. Martin Weale and Ian McCafferty were the two to vote for the move, with the economists widely viewed as the most hawkish members at the central bank.

IRAQI MARKET

opening highest lowest Closing change Trading Company Name Price price price Price (%) Volume

Bank Sector Bank Of Baghdad 1.590 1.600 1.590 1.600 0.00 18,596,000 Dijlah & Furat Bank 0.690 0.690 0.690 0.690 0.00 69,000,000 Dar es salam Investment Bank 0.950 0.950 0.950 0.950 ‐2.06 950,000 Gulf Commercial Bank 0.880 0.900 0.880 0.900 2.27 20,438,000 Investment Bank of Iraq 0.950 0.950 0.830 0.830 ‐4.60 8,308,800 Investment Bank 0.640 0.680 0.640 0.680 1.49 1,686,000 Al-Mansour Bank 0.790 0.800 0.780 0.780 ‐1.27 23,605,000 National Bank Of Iraq 0.870 0.870 0.870 0.870 8.75 3,582,878 North Bank 1.080 1.080 1.080 1.080 0.00 8,931,600 Credit Bank Of Iraq 1.000 1.000 0.990 1.000 ‐0.99 10,550,000 Sumer Commerical Bank 0.900 0.900 0.900 0.900 0.00 10,800,000

ECONOMIC CALENDAR DATE TIME COUNTRY EVENT FORECAST PREVIOUS Tue 28 03:30pm USD Core Durable Goods Orders m/m 0.5% ‐0.4% 05:00pm USD CB Consumer Confidence 87.4 86.0 Wed 29 03:00am NZD ANZ Business Confidence 13.4 09:00pm USD FOMC Statement 09:00pm USD Federal Funds Rate 0.25 0.25 11:00pm NZD Official Cash Rate 3.5% 3.5% 11:00pm NZD RBNZ Rate Statement 11:15pm CAD BOC Gov Poloz Speaks Thu 30 All Day EUR German Prelim CPI m/m ‐0.1% 0.0% 03:30pm USD Unemployment Claims 277K 283K Fri 31 Tentative JPY BOJ Press Conference Fri 24 Tentative JPY Monetary Policy Statement

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