Good morning,

Markets are called higher this morning. This is what's happening today:

  • Markets gained after today’s China PMI data, which is based on a survey by HSBC Holdings Plc and Markit Economics. The preliminary reading for the index was 49.1, compared with a final reading of 47.9 last month. A number below 50 signals contraction.
  • Apple's Chief Executive Officer Tim Cook unveiled a smaller, thinner iPad that carries a price high enough to shore up profit while leaving room for competitors to sell their tablets more cheaply;
  • Facebook Inc., the biggest social networking site, surged 13% in late trading yesterday after reporting sales that topped analysts’ estimates, allaying concerns over its ability to make money from mobile ads;
  • 10-year Italian debt is trading at 4.86%, 10-year Spain is trading at 5.599% and 10-year Portuguese debt is trading at 7.678%;
  • Brent is trading at $109.20/barrel;
  • Apple closed the session at $613.36

Four important topics to talk about today which are as follows;

  • PMI data out of China;
  • Facebook beating expectations and soaring after hours;
  • Apple launching the mini ipad with attractive features but not an attractive price;
  • STMicroelectronics negative forecast for Q412


Starting off with China, the markets gained today after China's PMI data release, which is based on a survey by HSBC Holdings Plc and Markit Economics. China's manufacturers saw growth shrink for a 12th successive month in October, but output at a three-month high and the most robust order books since April signal a strengthening recovery, preliminary results of a purchasing managers survey show. The China's PMI rose to a three-month high of 49.1 in October, the latest indicator of the real economy since official data last week showed GDP growth fell below target in Q3, despite signs of strength in September. The uptick in the headline index, along with rises in new orders and output – its two biggest sub-components – and broad improvement in export orders, inventories and prices charged, all signal a turnaround in the world's second-biggest economy. It will likely be a slow recovery though, as the PMI stayed below the 50-point level separating expansion from contraction.


Facebook shares surged 13% in late trading yesterday after reporting sales that topped analysts’ estimates, allaying concerns over its ability to make money from mobile ads. Sales rose 32% to $1.26 billion during Q312. That compares with the average analysts' estimate of $1.23 billion. That also matched the growth rate of the second quarter, snapping a streak of slowing sales increases. This is different from what we heard out of Google that was suffering from lower advertising. Also appreciate that since IPO, the share price of Facebook came down a hell of alot so a 13% increase in the share price should not come as a surprise. Despite the current good news which came out of the company, I remain on the sidelines regarding Facebook. The way the IPO was handled and the bad news which started coming out of the company after IPO (not to mention the major shareholders continuing to liquidate their positions) does not give a 'feel good factor' about the company. I think that despite the short term problems Google is having, I would rather be invested in Google being confident that it will get through this rough patch than buy Facebook.


Whatever I say on Apple when the shares fall will make me sound as though I'm being defensive. But I'm not. The market has got it wrong and the weakness in the share price was not justified yesterday and this is why. Apart from the fact that yesterday was a bad day for the markets so this doesn't help, Apple launched the mini ipad which is going to start selling at a base price of $329 which is $100 more expensive that the market expected and so they sold the shares. Obviously things happen fast when something is launched and investors take a decision on the spot and many times fail to analyse exactly what are the pros and cons and just stick to gut feeling. Ok the price is $100 higher – but you have to understand why. Analysts where expecting a price tag of $229 because they expected the model to come out with 8 gig whereas the mini ipad is going to be launched with 16 gig. Plus the resolution is excellent and it is also very light.

Keep in mind that the previous quarter was important for Apple but what most important is the coming quarter which includes the Christmas period and will include the sales of the mini-ipad and continued sales of the iphone 5. A very interesting time for Apple and a great company to be invested in.


STMicroelectronics, Europe’s largest chipmaker, had a good Q312 though are worried about Q412. The Company is forecasting that Q412 revenue may fall as much as 5% from the previous period because of weaker demand amid Europe’s economic slowdown. Revenue for the three months ending in December may range from a decline of about 5% to an increase of about 2%, compared with third-quarter sales of $2.17 billion. That indicates a range of about $2.06 billion to $2.21 billion and compares with the average analyst estimate of $2.26 billion.

US Companies reporting Q312 results today:

  • Corning
  • Motoroal Solutions Inc
  • Delta Air Lines Inc
  • Dr Pepper Snapple Group Inc

Stock to watch: Amgen (Price $87.32, Price Target $108)

Deutsche Bank comments: We rate Amgen shares Buy because in the near-term, we believe our bear case deep dive gives us comfort in eps sustainability. We expect earning stabilization over the next 12 months. Additionally, the emerging pipeline represents earnings upside starting 2014. Finally, we believe AMGN will increase its return of cash to shareholders similar to big pharma over the long-term. We believe AMGN is a unique combination of a dividend and earnings growth story over the next few years.

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

Good day and happy trading!

Kristian Camenzuli