Jobs data hits US stock markets (page 1 of 2)

US Equities

The credit squeeze led to a decline in our recommended Finance-credit card company, MBNA Corp. (KRB, $25.03, CSFB: Outperform), which increased 7.4% since our recommendation on Oct. 3rd, compared with a 4.04% increase for the financial sector.

We maintain our trading buy on MBNA with a target price of $28.50 ahead of Christmas season. CSFB raise its target price to $32 from $30 on valuation basis.

Investors should be interested in our U.S. Small & Mid Cap Investment Ideas. Year to date, small & mid cap stocks outperformed the blue chips. The S&P 400 Mid-cap and S&P 600 Small-cap indices gained 27.35% and 30.26% respectively, compared with a 16.77% gained for the S&P 500.

We continue to see out performance in these stocks due to their more flexible management and quicker response to the changing economic landscape.

We would recommend investors to consider taking partial profit in the two gold mining stocks Newmont Mining Corp (NEM, $49.59, CSFB: Neutral) and Placer Dome Inc (PDG, $18.34, CSFB: Outperform).

We maintain our positive view on the two stocks in the light of the rising gold price, which we believe should rise to USD 450 per ounce in the next six months. We would also like to draw the attention to the note "The case for gold" posted into the IC Portal by VAN yesterday, which refers to a CSFB report making a bullish case for gold and gold mining stocks in particular.

However in the short-term investors and fund managers will be keen locking in some of their gains on gold mining stocks to close the year. And especially after Placer Dome enjoyed a 57.24% return YTD and Newmont Mining of 69.58% in the same period, reducing positions in the two stocks on a trading base, in order to eventually buy back the shares on lower levels is an attractive strategy to enhance returns by capitalizing on the volatility in the two stocks.

Another possibility to reduce the positions or to enhance returns on the above stocks is writing a call options on a part of the position. We would therefore like to highlight the call options in the table below, to give some ideas on the possibilities.

Europe

European indices reached new year highs with the DJ EuroStoxx 50 Index ending the week up by about 1.5% to close at 2672.02

• We increased our exposure to European equities last Friday from 7 to 8% amidst our general increase of equities from 30 to 35%.

• Siemens and JC Decaux reached our target prices, which we further increased by 11% each.

• After the run in cyclicals, telecoms should benefit from a potential sector rotation

European markets reached new year highs this week widely ignoring the fact that the US Dollar reached new lows against the Euro at the same time.

At the beginning of the week positive manufacturing data from both sides of the Atlantic provided the backdrop for the increases. However, indices retreated slightly towards the end of the week, but still managed to close the week in positive territory. On the economic front, the ECB and the Bank of England announced that they would leave interest rates at current levels as was widely expected.

We increased our exposure to European equities last Friday from 7 to 8% amidst our general raise of equities from 30 to 35%. Please find below some ideas on how to position the portfolio in order to incorporate the increase.

The news that US President Bush withdrew the steel tariffs on imported steel is positive not only for the steel sector, but for Europe in general.