Good morning,

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

  • More than half of Spain's regions may need to be bailed out;
  • China’s economic expansion may cool for a seventh straight quarter to 7.4% in the three months to September, said Song Guoqing, a member of the People’s Bank of China monetary policy committee;
  • Greece’s creditors meet this week amid doubts that the country will meet its bailout commitments. German Vice Chancellor Philipp Roesler said he’s “very skeptical” that European leaders will be able to rescue Greece;
  • A July 27 report may show the U.S. economy grew in the second quarter at the slowest pace in a year;
  • EURUSD 1.2113;
  • Apple report results on 24/07/12 after the bell. The stock closed the session at $604.30;
  • Priceline report results on 07/08/12 after the bell. The stock closed the session at $673.20
  • 10-year Italian debt is trading at 6.166%, 10-year Spain is trading at 7.267% and 10-year Portuguese debt is trading at 10.537%
  • Brent is trading at $105.45


The Balearic Islands and Catalonia are among six Spanish regions that may ask for aid from the central government after Valencia sought a bailout. Castilla-La-Mancha, Murcia, the Canary Islands and possibly Andalusia are also having difficulty funding themselves and some of these regions are studying plans to tap the recently created emergency-loan fund that Valencia said it would use yesterday.

Spain created the 18 billion-euro bailout mechanism last week to help cash-strapped regions even as its own access to financial markets narrows.


Greece’s troika of international creditors – the European Commission, the European Central Bank and the International Monetary Fund – will arrive in Athens tomorrow amid doubts the country will meet its commitments and reluctance among euro-area states to put up more funds should it fail. “If Greece doesn’t fulfill those conditions, then there can be no more payments,” German Vice Chancellor Philipp Roesler told broadcaster ARD yesterday.

The IMF will stop paying rescue aid to Greece as it is already clear the nation will not be able to fulfill its promise to cut debt to 120 percent of annual economic growth in euro terms by 2020, Der Spiegel said, citing unidentified European Union officials.


McDonald’s Corp., the world’s largest restaurant chain, releases results today. Earnings at U.S. companies have exceeded analyst estimates at about 73% of the 118 S&P 500 companies that reported quarterly results so far, according to data compiled by Bloomberg. While profits are up 0.4 percent for the group, sales rose an average 2.9%, the weakest since a drop of 0.6 percent in the third quarter of 2009.

The S&P 500 rose last week, posting its first back-to-back gain since June, as results from International Business Machines Corp. to Baker Hughes Inc. beat forecasts and Federal Reserve Chairman Ben S. Bernanke said he’s prepared to add stimulus. U.S. consumer confidence and equity valuations are diverging the most in 17 years as price-earnings ratios fall, according to data compiled by Bloomberg.

U.S. gross domestic product, the value of all goods and services the nation produced, rose at a 1.4% annual rate after a 1.9% gain in the prior quarter, according to the median forecast of 70 economists surveyed by Bloomberg News. Factory orders softened and new-home sales were little changed, other data may show this week.

Stock to watch: Newcrest Mining (Price AUD21.83, Price Target AUD31.10)

Newcrest's activities incorporate six operating assets following its divestiture of Mt. Rawdon and Cracow into Evolution Mining (EVN.ASX) in return for a 33% shareholding. It has a production growth profile of ~6% p.a. for 5 years based on planned and approved projects. We believe Newcrest has attractive long-term merits stemming from its strong management team, and what we see as a stable and diverse operational portfolio. Beyond the planned projects are the large copper-gold porphyries in PNG (Wafi-Golpu) and Fiji (Namosi) to fuel the 10-year growth profile. We rate the stock a Buy given it is trading below our target price.

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

Good day and happy trading!

Kristian Camenzuli