Good morning,

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

  • In the U.S., combined purchases of new and existing houses increased to a 4.89 million annual rate in July from a 4.72 million pace in June, and durable goods orders may have climbed the most this year, according to economist estimates before reports this week;
  • Luxembourg Prime Minister Jean-Claude Juncker, the head of the euro group of finance ministers, visits Greece tomorrow;
  • German Chancellor Angela Merkel and French President Francois Hollande meet in Berlin on Aug. 23 and both are set to talk separately with Greece’s Prime Minister Antonis Samaras later in the week;
  • 10-year Italian debt is trading at 5.773%, 10-year Spanish debt is trading at 6.282% and 10-year Portuguese debt is trading at 9.608%;
  • Apple closed the session at $665.15!!!

Sentiment is good in the market. We are seeing a pick up in the housing market in the US and this indicates that the unemployment figure in the US should continue coming down as the situation in the US improves. Infact, durable goods orders may have climbed the most this year, according to economist estimates before reports this week. So despite the slowdown in numbers we had seen in the previous quarter, we are seeing the situation improve in the US and we are seeing this improvement being reflected in the markets.

With Europe we are seeing a rally in the markets but the situation is different from the US. In Europe we aren't seeing an improvement in data like we are seeing in the US. However European stocks are rallying because they are banking on the EU leaders and ECB intervening to help solve the European crisis. This comment puts a smile to my face because I've written it down many times before and many times the markets were left disappointed. It is good to start getting exposure to some European names because they are discounted to their American peers, however there is still alot of uncertainty in Europe and an investor must keep that in mind when he invests in Europe. The markets are expecting the ECB this week to come up with a program to incease its bond buying program in the European markets and improve liquidity in the system. This is a major contributor to the rally we are seeing in the markets in Europe. However, I remain overweight the US until predictions start to become reality. The thing is, it is true Europe is cheap, but despite having to pay more for a US corporate, their balance sheets are so strong that an investor who has a well diversified portfolio has a high probability of reaching his targets by year end. There are so much great stocks in the US. The list is endless. It's not like you have to go through a list of a 1000 stocks to pick up a handful of names which give decent returns. Apple, Google, Amazon, Cisco, SAP etc are all bluechip companies which trade on major exchanges and in the long run have given investors decent returns. There is no need to go into complex products to try and re-invent the wheel when you can get a decent return by getting exposure to a portfolio of great names with the help of your advisor. Don't forget that you can get a copy of our CC equity list by contacting our offices on 25688688.

Moving on the China, what can I say! It another great place to be invested in and every portfolio should have exposure to China. There is alot of speculation about China in the markets and investors are divided into bulls and bears. My strategy is to build on positions in China in times of weakness because in time China will become greater than the US and the situation for the Chinese will continue to improve as time goes by. We already saw a pick up in property prices in China. Ironically we saw the markets fall because of a lower probability that the Chinese government will stimulate the economy. On the other hand with property sales increasing in the US we saw the markets rally. Of course the Chinese have the luxury of stimulating the economy whenever they want using any tool they want. Conversely, the hands of the Fed are tied because there is only a limited amount of things they can do to kick start the US economy.

I cannot not mention the great performance of Apple! We have see this share rally day after day and this is because the market is expecting the company to launch the new iphone 5 and mini ipad on Sept. 12. Apart from the release of these products analysts are upgrading their price targets and outlook on the stock. pple Inc. Apple’s shares soared to new heights in the wake of an exceptionally bullish research report by Jefferies analyst Peter Misek.

Conclusion: Stay in the markets, but do actively manage your portfolio. Don't be scared to cash in on shares which you think have run their course and switch into good companies which have further to run. The situation is improving across the board though there is still alot which needs to be done and we will remain in these volatile market for much longer.

Stock to watch: Schoeller-Bleckmann

Impressive Q1 performance sustained in Q2 & rig count rising, PT up to E80 We expect Schoeller-Bleckmann to sustain impressive Q1 performance in Q2, with pot. for pos. trigger from orders and/or margins, raise our forecast slightly and our PT to E80 (74) based on that and peer multiples re-rating. We retain Buy on industry upturn & potential in new markets, solid orders & utilization.

For further information on Schoeller-Bleckmann or other stocks and bonds we follow contact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli