Good morning,

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

  • Facebook Inc. is set to start trading today after a record initial public offering that made the social network more costly than almost every company in the Standard & Poor’s 500 Index. Facebook sold 421.2 million shares at $38 each to raise $16 billion;
  • Asian stocks fell, with the region’s benchmark index erasing the year’s gains, South Korea’s won weakened and Japanese bond yields slid to the lowest since 2003 as Europe’s debt crisis worsened and a U.S. factory gauge contracted;
  • The Dollar Index extended a record 15-day rally;
  • Moody’s Investors Service lowered debt ratings at 16 Spanish banks, citing the recession and mounting loan losses;
  • Greece had its credit rating downgraded to CCC from B- by Fitch Ratings yesterday after political leaders failed to form a government in the wake of a May 6 election;
  • The Federal Reserve Bank of Philadelphia’s general economic index slid to minus 5.8 in May;
  • Data today showed China’s home prices fell in a record 46 of 70 cities in April;
  • 10-year Italian debt is yielding 5.829%, 10-year Spanish debt is yielding 6.292%, 10-year Portuguese debt is yielding 11.84%
  • Brent is trading at $107.25;
  • G8 summit opens today.


Greece’s credit rating was downgraded one level by Fitch Ratings on concerns the country won’t be able to muster the political support needed to sustain its membership in the euro area as leaders began campaigning ahead of the second national vote in six weeks. Greece was cut to CCC from B-. Failure to form a government that would implement the bailout terms would mean a “probable” exit from the currency union, Fitch said.

Greece swore in a caretaker government led by Panagiotis Pikrammenos yesterday as the leaders of the two biggest parties clashed over how the country could stay in the 17-nation euro region. The new vote follows inconclusive elections that propelled the Syriza party, which wants to annul the bailout, into second place. Most opinion polls since the election have shown that Syriza may build on that support to come first in any rerun, complicating Greece’s efforts to avoid running out of cash by early July.


Despite further banking reform, Moody's announced to downgrade 16 Spanish banks with ratings of Banco Santander (SAN) SA and Banco Bilbao Vizcaya Argentaria SA (BBVA), Spain's biggest lenders, cut 3 notches to A3. The rating agency stated that the downgrades were mainly due to reassessment of each bank's standalone credit quality which is expected to deteriorate further in the coming year. Moreover, downgrades of 5 banks were also due to anticipation of reduced support from the Spanish government. Both the EU and the IMF welcomed the latest round of reform announced in Spain earlier in the month. However, in our opinion, the 4 key measures, including additional provision requirements for banks, availability of government capital injections, creation of a framework for 'bad banks' and employment of independent audits, while indicating some progress for the restructuring, are rather modest and are not expected to have significant impacts on transforming the banking sector.


Facebook Inc. is set to start trading today after a record initial public offering that made the social network more costly than almost every company in the Standard & Poor’s 500 Index.

Facebook sold 421.2 million shares at $38 each to raise $16 billion, a statement yesterday shows. That values the Menlo Park, California-based company at $104.2 billion, or 107 times trailing 12-month earnings, more than every S&P 500 member except Inc. and Equity Residential.

That valuation also makes Facebook, co-founded in 2004 by a then-teenage Mark Zuckerberg, the largest company to go public in the U.S. Now the 28-year-old billionaire has to reward investors by squeezing more profit out of advertising, said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.

In less than a decade, Zuckerberg has overseen Facebook’s evolution from a Harvard University dorm-room project into a social network with more than 900 million users. Still, revenue growth is poised to slow for a third straight year and advertising sales haven’t kept pace with user additions.

Stocks to watch: Linkedin and Global X Social Media Index ETF (SOCL US EQUITY)

LinkedIn Corporation operates a social networking website used for professional networking. The Company's website allows members to post a profile of their professional expertise and accomplishments. LinkedIn allows members to be introduced to potential clients, service providers, and subject experts.

Global X Social Media Index ETF is an exchange-traded fund incorporated in the USA. The Fund seeks to track the performance of the Solactive Social Media Index.

For further information on Linkedin or Global X Social Media ETF, contact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli