Il Primo Ministro greco Lucas Papademos riceve l'approvazione del governo su tagli al bilancio che corrispondono al 7% del Pil nei prossimi tre anni e su una ristrutturazione finalizzata a ridurre di €100 mld gli oltre €200 mld di debito detenuto dai creditori privati, atteso il voto del parlamento • Standard & Poor's declassa il merito creditizio di 34 banche italiane tra cui UniCredit a BBB+ da A, Intesa Sanpaolo a BBB+ da A e Banca Monte dei Paschi di Siena a BBB da BBB+, S&P anticipa "una redditività decisamente debole per le banche italiane nei prossimi anni" • La produzione industriale italiana aumenta a dicembre +1,4% da novembre +0,3%, oltre le stime degli economisti +0,5%, anche se i dati del quarto trimestre -2,1% suggeriscono che la terza economia della zona euro è entrata nella seconda recessione dal 2009 • I Btp decennali salgono per la quinta settimana consecutiva, il periodo di recupero più lungo in oltre cinque anni, la prossima settimana il Tesoro vende €4 mld di buoni al 6% con scadenza 2014 • L'euro cala dal massimo di due mesi contro il dollaro, il mercato azionario europeo cala dal massimo di sei settimane e l'azionario Usa registra la prima settimana di perdite del 2012 dopo che i ministri delle finanze europee non hanno concesso il pacchetto di aiuto necessario a prevenire il collasso economico della Grecia

venerdì 15 luglio 2011

Market Comment - July 15

(Marco Bonelli) Let's get the real things out first before we get to the sweet-sour soap-opera topics that unfortunately seem to dominate the market more than the real things.

Earnings in the banking sector and results from GOOG arguably don't necessarily mirror the broad earning picture (there are even two measures for SPX earnings growth, total and ex financials). Nonetheless JPM opened the earnings season for financials yesterday on a positive note and C followed with similar results this morning. And everybody saw GOOG crushing their numbers so nothing needs to be added there. Overall, the first week of earnings started on the mixed to disappointing side and ended quite impressively. While JPM alone wasn't able to lift the sector, JPM, C and GOOG definitely could make a difference today and attract some well needed volume.

Having a closer look at trading volumes gives a mixed picture although the fact that the recent pullback didn't see any higher down-volume while up-volume remained subdued, suggests that there is currently a clear lack of conviction and the market simply drops due to lack of buying or lack of follow-through buying. Going back a bit further: During the sell-off in May and June, overall sell-volumes were quite strong, in other words, the correction was real. In the famous rebound between June 20 and July 7, up-volume was strong at the beginning but faded over the course of the rally. Also, in the couple of better trading days during the recent pullback, up-volume didn't pick up at all. So let's see if the recent earnings news brings back some up-volume, if not, the market could lock in a fourth day of intra-day reversal to the downside.

Let's also see, if GOOG's results are able to turn around the recent underperformance of the Nasdaq. The index was already a big underperformer in the May, June correction but took over the lead in the rebound end of June. Unfortunately it didn't last long and the technology sector was even the worst performing sector yesterday.

Finally, economic numbers unfortunately continue to disappoint on average. More or less flat retail sales in June (after retail chains reported very impressive same-store-sales for June earlier this month), weaker than expected industrial production for June (coupled with a downside revision for May) and another weak reading for the Empire State Manufacturing Survey for July.

That's the reality. Quite strong earnings reports in the last couple of days, mixed to disappointing economic numbers and investors who are currently too afraid to sell and even less convinced to buy. This is when the soap-opera topics take over and ruthlessly get exploited by the media that probably leaves a lot of market participants wondering what they should believe and what they should ignore. The way the European sovereign debt crisis gets handled is quite a joke (although it's not funny at all). The "stress"-test for European banks always was and still is an even bigger joke (whoever wants to get excited that almost all European banks are healthy can wait for the results later today). The way the budget and debt ceiling discussion here in the US gets handled is also a big joke (unfortunately it's not funny either). And finally, the discussion about QE3 also lacks quite some seriousness. It's not that the Fed Minutes revealed discussions about QE3 or that Ben Bernanke mentioned the possibility one day only to shift back gears the next day, the funny part is, how much one sentence with three "ifs" gets blown up and almost handled as reality.

Anyway, what were we talking about? I guess it doesn't matter. The futures suggest a subdued but positive opening, the July option expiration may add a little bit to the already high volatility but let's hope that earnings news dominate economic news and that investors follow through in their buying activity and try to finish the week on a positive note.

Trade well and have a great weekend.

(Marco Bonelli is the Managing Director - International for CL King & Associate in New York. The opinions expressed are his own)

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