Good morning,

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

  • China’s economy faces significant downside risks, the International Monetary Fund said, urging leaders to boost domestic consumption;
  • German data today may show a gauge of business confidence slid to the lowest since 2010;
  • Borrowing costs in Italy rose before the country sells debt tomorrow;
  • Greek Prime Minister Antonis Samaras is scheduled to meet with a troika of international creditors representing the European Commission, the European Central Bank and the IMF on July 27;
  • Technology shares retreated after Apple Inc.’s profits and sales missed estimates;
  • 10-year Italian debt is yielding 6.597%, 10-year Spanish debt is yielding 7.62%, 10-year Portuguese debt is yielding 10.98%


Spanish 10-year bond yields surged to a euro-era record of 7.64% yesterday, prompting policy makers to deny an international bailout was being prepared for the euro region’s fourth-largest economy. After taking on as much as E100b of bailout loans to aid banks, Spain’s government is struggling to maintain access to markets.


The International Monetary Fund said China’s slowing economy faces significant downside risks and relies too much on investment, urging leaders to boost consumption and channel citizens’ savings away from housing.

US Stocks

US stocks fell for a third day yesterday, with Standard and Poor’s 500 Index sliding 0.9%, as United Parcel Service Inc., the world’s largest package-delivery company, lowered its earnings forecast and AT&T Inc., the largest US phone company, reported sluggish sales after signing up fewer wireless customers. PepsiCo Inc., the biggest snack food maker, and Caterpillar Inc., the largest maker of construction and mining equipment, release results today.

Earnings at US companies have exceeded analyst estimates at about 71% of the 167 S&P 500 companies that reported quarterly results so far, according to data compiled by Bloomberg. Sales rose an average 3.7% and profits are up 2.2%.

Stock to watch: Apple (Price $567.80, Price Target $675(JPM)

JPM – With Apple, we reiterate our Overweight rating but lower our Dec-13 price target to $675, versus $695 previously. Apple remains on the J.P. Morgan Analyst Focus List. In our view, a compelling part of Apple’s risk-reward profile is that plenty more upside potential exists, despite the near-term setback related to the pending the iPhone 5 launch. Looking ahead, key growth drivers include 1) Apple’s low market penetration rates in tablets, PCs, China, and the enterprise, 2) the relative growth prospects of its key end markets versus other tech segments, and 3) Apple’s role in enabling the burgeoning social media/networking adoption curve. In total, we believe that these drivers can sustain the relative outperformance of Apple’s operating model and stock. Plus, the stock is likely to encounter decreased investor sponsorship following last night’s earnings disappointment, which could create an attractive entry point for opportunistic investors looking to return to the story.

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

Good day and happy trading!

Kristian Camenzuli