Good morning,

Markets are called to open flat this morning. This is what's happening today:

  • Cypriot lawmakers will begin debate on legislation to unlock bailout funds and prevent a financial collapse with ECB deadline to cut off funding for its lenders in 3 days;
  • German IFO business confidence will rise for a fifth month, according to economists;
  • U.K. sells bills;
  • Companies in Europe reporting results today include Phoenix Group and Homeserve

Cypriot lawmakers will begin debate today on legislation to unlock bailout funds and prevent a financial collapse with a European Central Bank deadline to cut off funding for its lenders in three days. Euro-area finance ministers expect a proposal from Cyprus as rapidly as possible to raise the 5.8 billion euros needed to trigger the emergency loans. Cyprus in June became the fifth euro-area nation to request a rescue. The action came after Greece’s debt restructuring, the largest in history, trashed the financial health of lenders including Bank of Cyprus Plc and Cyprus Popular.

As the standoff continued, Standard & Poor’s cut its rating on Cyprus by one level to CCC from CCC+, citing “acute problems” in the island nation’s banking industry. S&P said it has a negative outlook, pointing to the possibility of another cut. Investors often ignore ratings, as evidenced by the rally in Treasuries after the U.S. lost its top grade at S&P in 2011.

Asian companies are listing a record amount of bonds on Singapore Exchange Ltd. as the city-state’s top-AAA rating and transparent rules help cut borrowing costs and attract global investors. New fixed-income offers on Southeast Asia’s largest bourse surged 54 percent in 2012 to $166 billion. The extra yield investors demand to hold Thai Oil Pcl’s bonds fell since they listed in Singapore in January, while the average premium on Thailand’s sovereign debt rose in the same period. The spread on Hana Bank’s 2016 dollar notes also narrowed.

Citigroup said a profit-sharing plan, among pay practices shareholders rejected last year, helped return the bank to profitability by retaining leaders including Chief Executive Officer Michael Corbat. The plan was essential for the survival of the New York-based lender as “important executives” were leaving for competitors, the bank said in an annual proxy filing. The firm designed the awards in 2009 after it received a $45 billion U.S. bailout to prevent its collapse amid the financial crisis.

Qualcomm (Price $65.35, Price Target $78)

Deutsche Bank Research – Our Buy rating of QCOM is based on the fact that Qualcomm continues to be a leader in the WCDMA/LTE baseband market. The company is now sampling its third generation LTE chipset while its competitors are just sampling their first. In addition to leveraging the LTE upgrade cycle, Qualcomm is well-positioned to benefit from the 3G smartphone upgrade cycle in developing markets. As Qualcomm continues to develop technologies for top-tier handset vendors, a "trickle-down" effect allows them to leverage technology for other vendors in higher growth markets. Moreover, their scale allows them to invest heavily in pushing down semiconductor process nodes, with a large portion of their products currently coming out on 28nm geometries. Over the next year, we expect smartphone penetration levels in the emerging markets to grow significantly. As these markets transition to 3G and even LTE smartphones, we anticipate Qualcomm to participate meaningfully.

For further information on Qualcomm or other stocks and bonds we follow, contact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli