Good morning,

Markets are trading flat this morning but don’t read too much into it since equity markets have not stopped rallying since the 8th August of this year. The ECB took the market by surprise yesterday by cutting its refinancing rate from 0.15% to 0.05% and signaled at least €700 billion of fresh aid for the Eurozone economy and left a fight with Germany over sovereign-bond purchases for another day. The rate cuts mark the bottom line for conventional monetary policy. Declaring that the ECB can now reduce them no more, Draghi committed to buying so-called asset-backed securities and covered bonds in the hope that will funnel cash into an economy which stalled in the second quarter and where lending has been shrinking for more than two years.

The latest round of ECB measures pushed the euro below $1.30 for the first time since July 2013 and sent European bond yields negative. The weaker Euro and injection of cash into the Eurzone is all positive for European equities. In historic perspective, the current rally is rather an average rally, hence there remains upside in equity markets.

Yesterday’s best performing stocks in the Euro Stoxx 50 Index where undoubtedly the banks. Intesa Sanpaolo rallied 5.6%, Unicredit 5.1% and Societe Generale 4.2%. Draghi is honoring his pledge to help rekindle a market that can funnel loans to the real economy and ease funding conditions for banks.

We continue to get mixed signals from Ukraine. Although Putin and Poroshenko appear to be brokering a peace deal, it doesn’t appear that anyone has told the troops in the field.

Positive data continues to come out of Germany. German industrial output grew more than forecast in July, signaling that Europe’s largest economy is headed for a third-quarter rebound.

In corporate news, Michael Kors, a maker of designer clothing and handbags, will hold a secondary offering to let the company’s biggest shareholder sell a stake valued at about $930 million. Michael Kors Holdings won’t receive any proceeds from the stock sale, which will be managed by JPMorgan Chase. The 11.6 million shares in the offering represent the entire holdings of Sportswear Holdings Ltd., a founding investor in the company that owned a 5.7 percent stake. Sportswear Holdings’ representatives on the board, Lawrence Stroll and Silas Chou, also will step down.

BP Plc acted with gross negligence in setting off the biggest offshore oil spill in U.S. history, a federal judge ruled, handing down a long-awaited decision that may force the energy company to pay billions of dollars more for the 2010 Gulf of Mexico disaster. U.S. District Judge Carl Barbier held a trial without a jury over who was at fault for the catastrophe, which killed 11 people and spewed oil for almost three months into waters that touch the shores of five states.

Good day and happy trading!

Kristian Camenzuli