Trader Talk: An Analysis of the Markets this Morning

Good morning,

Markets are called to open higher this morning. International investors are expressing renewed faith in the European economy, underpinning a mounting sense of confidence in the outlook for industrial nations, according to the latest Bloomberg Global Poll.

Forty percent of the responding investors, analysts and traders who are Bloomberg subscribers said the euro-area economy is improving, more than four times the number in May and a signal the region’s 3 ½-year debt crisis is ending. With sentiment also rising in the U.S. and Japan, 40 percent said the world economy is strengthening, the most since January 2011.

The bullishness five years since the collapse of Lehman Brothers Holdings Inc. is supporting a taste for risk as 52 percent anticipate stocks will offer the best return over the next year. Reflecting a shift in mood, the prospects of a Chinese slowdown and U.S. fiscal fight displaced Europe’s woes as the biggest global economic threats.

Stock to watch: Facebook

Facebook Inc., operator of the world’s most popular social-networking service, climbed to an all-time high yesterday as investors bet the company will benefit from growing demand for its mobile-advertising products.

Shares advanced 3.3 percent to $45.04 at the close in New York, a record that also surpassed the intraday high of $45 on the stock’s first public trading day in May 2012.

Chief Executive Officer Mark Zuckerberg is stepping up efforts to attract users and advertising dollars to Facebook’s services on smartphones and tablets, where promotions are placed among updates and photos from friends. The company, which has more than 1 billion members, has also worked to simplify the ad-buying process for marketers, with mobile making up 41 percent of ad revenue in the second quarter, up from 30 percent in the previous period.

WHAT TO WATCH:

• Europe Gains Confidence of Global Investors Seeing Rebound

• Josef Ackermann Said to Plan Resignation From Siemens Board

• U.K. Banks Face $79b Capital Boost in Future Basel Rules

• Royal Mail Lines Up GBP1.4b Borrowing Facilities, Sky News Says

• Nestle Says It’s Seeing Slight China Sales Slowdown: China CEO

• BOE’s Miles Says 7% Jobless Threshold Is Still Some Way Off

• Activision Shareholder Sues Vivendi to Halt Stock Sale

• Vivendi Edges Closer to Split With Bollore as Vice Chairman

• Coca-Cola HBC, Sports Direct International, Mondi to be included in FTSE 100 Index

• Phone Roaming Premiums in EU Would End 2014 Under Kroes Plan

• U.K. Companies Want Britain to Stay Part of EU: CBI Survey

• Praet Says Single Resolution Mechanism Needed in Timely Manner

• Putin Appeals to U.S. for Syria Caution Before Kerry-Lavrov Talks

EARNINGS All times CET, estimates where available:

• Swiss Prime Site (SPSN VX) TBD, 1H, no est.

• WM Morrison Supermarkets (MRW LN) 8am, 1H adj. EPS GBP0.13 (3 ests.)

• Next (NXT LN) 8am, 1H adj. EPS est. GBP1.34

• Richemont (CFR VX) TBD, 1Q trading statement

• Aeroports de Paris (ADP FP) TBD, Aug. traffic

• Home Retail (HOME LN) 8am, 2Q trading update

Good day and happy trading!

Kristian Camenzuli