Good morning,

Markets are trading higher in Europe following the Japanese market which is up 4% this morning (the most since June last year) on a report that Japan’s public pension fund will raise its allocation target for domestic shares to about 25% from 12%.

The Euro Stoxx 50 is down 10% from its previous high and the S&P is down 6%. We are at a level in the markets where investors are starting to see the current levels as being an attractive entry points whereas others continue to hold on to cash. The sell-off we have seen in the markets was a consequence of the German government holding on to its previous statements of not wanting the ECB to adopt a US form of quantitative easing. The Germans are of the view that countries like Italy and France should adopt structural reforms rather than turn to the ECB for help. The ECB intervention will be a short term fix to a long term problem. This lack of cooperation by the Germans towards a US type of quantitative easing in Europe has put in doubt the President of the ECB who said that he will do ‘whatever it takes’ to avoid that Europe falls back into recession.

This lack of confidence in growth in Europe has also been felt in the commodity market. The price of Brent crude is down 25% from its high in June. The weakness is the price of oil is the result of both an increase in supply aswell as a consequence of an economic slowdown. Whatever the reason, no one can argue that the weakness in the oil price is a positive for European companies. Airline industries in particular will benefit from a lower oil price.

As investors prepare for some of the busiest earnings days this week, companies from Unilever NV to BASF SE will seek to explain the downward trend that’s kept a lock on corporate Europe in the third quarter. Among companies reporting in the region are SAP AG, Philips Electronics NV, Electrolux AB and drugmaker GlaxoSmithkline Plc. Analysts have already responded to a string of negative news, cutting earnings estimates for companies on the Euro Stoxx 50 Index. Companies in the US reporting results today are Apple and Halliburton.

Apple Inc. Chief Executive Officer Tim Cook is ready to tackle the holiday season with a full product array including new iPads. His challenge now is luring the hordes of buyers that analysts are projecting. Apple unveiled refreshed iPads and Macintosh computers at an event at its Cupertino, California-based headquarters. The iPads are thinner and include fingerprint sensors, with the Macs boasting features such as sharper displays and faster processors. The devices follow Apple’s introduction last month of larger-screen iPhones, a smartwatch and a mobile-payments system. The lineup is ratcheting up Wall Street’s projections that Apple is entering a high growth phase, which Cook will now have to meet. The CEO is also facing calls by activist investor Carl Icahn to increase Apple’s value. Investors will get a taste of how Cook’s latest gambits are performing when Apple reports fiscal fourth-quarter results today.

Adidas is having a very good day today with the shares up 7%. Adidas AG, the world’s biggest sporting-goods maker, jumped in Frankfurt on speculation that a group of investors plan to bid about 1.7 billion euros ($2.2 billion) for the company’s Reebok unit.

Good day and happy trading!

Kristian Camenzuli