Good morning,

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

  • The Nikkei is trading lower once again as investors price in the results of the BOJ meeting. Investors are not happy with the fact that the BOJ will start buying debt in 2014 rather than 2013 and also they are not happy with the fact that the BOJ did not give a time limit within which it wants to reach an inflation target of 2%;
  • Google increased in price in after hours trading after reporting profit that topped analysts’ estimates as advertisers boosted spending to reach consumers during the holiday season. Fourth-quarter profit, excluding certain items, rose to $10.65 a share. Analysts had projected per-share earnings of $10.50;
  • Bank of England releases monetary policy committee minutes.

Companies reporting results in Europe today: Novartis, Siemens, SAP, Delticom, Unilever, Land Securities, Sage, Hochschild, Close Brothers, Britic, WH Smith, Eurotunnel, Tod's

Companies reporting results in the US today: General Dynamics, Abbvie Inc, Air Products & Chemicals, Baker Hughes, WellPoint, Praxair, United Technologies, Textron, Quest Diagnostics, Coach, St Jude Medical, McDonald's, Abbott Laboratories, Motorola Solutions, US Airways Group, Netflix, Apple

Yesterday it was Google, today it is Apple that will steal the scene. Let's start off with Google. Revenue from Google Inc's core Internet business outpaced many analysts' expectations during the crucial holiday quarter and advertising rates fell less than in previous periods, pushing its shares up roughly 5%. Google cited growing demand for its spectrum of online advertising services, including mobile ads, display ads, video ads and its newly-launched product listings.

Barclays raised theri price target on Google this morning from $800 to $850. These are there comments, 'The strength of core Google’s quarter pleasantly surprised us as paid click growth was buoyed by traction for mobile and Android, emerging markets clicks, and the positive impact of Google’s web services offerings. PF operating income modestly exceeded our estimates and EPS was $10.65, slightly above our $10.60 estimate. We are modestly raising our core Google revenue estimates, and though we adjust for the sale of MMI Home, our 2013E EPS increases modestly to $46.29 from $46.25. Our PT goes to $850 on ~18.5x $46.29 (from ~17.5x $46.25) to reflect improving momentum at core GOOG.'

Moving on, Siemens just reported results which were in line with expectations. In my opinion, the shares are trading at fair value after having rallied in 2012 and are up also in 2013. I see limited upside from this point forward until we see a substantial change in the outlook for the company. My opinion is to switch out of Siemens into Lyxor ETF Stoxx Europe 600 Industrial Goods & Services. Siemens is doing well because it is cutting costs and selling parts of its business. It would make more sense to shift into stocks which have a positive outlook going into 2013 and beyond.

SAP also reported results which where a record for 2012 though slightly below estimates. The company is very optimistic about 2013 but the only problem with SAP now is that alot is priced in. The share has had an outstanding performance in 2012 and since investors are putting risk back on the table it makes sense to shift into a company which is trading on lower multiples and has more upside potential. In my opinion it would make alot of sense at this point to switch out of SAP and move into Oracle.

All in all, another positive start to the day. It makes sense to be in this markets as money keeps on coming into equities and markets keep on trading higher. What's imperative is that your asset allocation makes sense both to you risk-reward ratio aswell as to sentiment in the market. That is you want to be exposed to those sectors which will rally with the markets and not lag the markets.

For more information on the stocks mentioned in this blog or other stocks and bonds we follow, contact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli