Good morning,

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

  • Japan’s second-quarter economic data comes as Bank of America Corp. cuts its growth outlook for China. Bank of England Governor Mervyn King said Europe’s crisis has “no obvious end in sight” before a report tomorrow that may show the euro- area’s economy contracted in the three months through June 30;
  • Federal Reserve Bank of San Francisco President John Williams said it’s time to move ahead with a third round of asset purchases, according to the San Francisco Chronicle;
  • 10-year Italian debt is trading at 5.902%, 10-year Spain is trading at 6.907% and 10-year Portuguese debt is trading at 9.978%;
  • Brent is trading at $113.70/barrel;
  • EURUSD is trading at $1.2293;
  • Apple closed the session at $621.70 and Priceline closed the session at $563.16


Bank of America Corp. cut its 2012 economic growth forecast for China to 7.7% from 8% as growth prospects in developed economies are getting worse and further policy easing is constrained by the nation’s rebounding home prices and leadership transition.


The euro rose before data tomorrow that may show the region’s economy shrank 0.2% in the second quarter, according to economists surveyed by Bloomberg. France probably contracted by 0.1% from the previous period and German growth slowed to 0.2%, separate surveys showed.


Sales at U.S. retailers probably rose in July for the first time in four months as employment picked up, economists said before reports this week. Still, the central bank should begin a third round of bond purchases to stem slowing growth, Williams, a voting member of the Federal Open Market Committee this year, said in an interview with the San Francisco Chronicle.

Stock to watch: Siemens (E74.17, DB Price Target E85)

Siemens is a diversified industrial group and the outlook therefore varies by division. The Industry sector has recovered but future growth depends on the sustainability of the recovery. Order trends at Energy are now improving and we think Energy has good growth prospects. The Healthcare sector is stable but growth has been disappointing and margins have been easing. Siemens has undertaken major (and successful) restructuring in recent years which we think has made the company structurally more profitable. Unfortunately, Siemens has become accident-prone recently, with a stream of charges for contract losses. We think that the underlying cause has been an excessive focus on growth with inadeqaute attention paid to risks. There are signs that this is changing, which would be very welcome. We think Siemens is attractively valued and offers a relative safe haven at a time of deteriorating macro sentiment. We rate Siemens a Buy.

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

Good day and happy trading!

Kristian Camenzuli