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

lunedì 18 luglio 2011

Market Comment - July 18

(Marco Bonelli) When was the last time that GOOG traded up 13% following very strong earnings and the broad market was essentially flat, at some points even trading in negative territory (and eventually recovering in the last hour to close at the highs of the day)?


At least it was not another reversal to the downside, but Friday's session was far from convincing as investors continue to look for direction ahead of the Q2 reporting season getting into full swing this week.

IBM tonight will probably provide a better picture of the condition of the technology sector than GOOG did. A bunch of other technology giants will report this week, half of the companies in the Dow Jones Industrial Index will report and most of the other major banks will join JPM and C, that already reported last week but failed to give the sector a lift. In fact, COF, JPM and C all turned south after their earnings report (following a brief, initial reaction to the upside) and the BKX Index fell back to the lows from June. Reports from WFC, BAC and GS tomorrow will likely catch some attention although overall, the focus will be on the technology sector.

Let's talk about something substantial, nothing major substantial but if it turns out to become a new trend, it would be substantial. I'm talking about the disappointing Empire Manufacturing Survey from July and the disappointing preliminary reading of the July Michigan Consumer Confidence number.

First of all, all these numbers are surveys! The media usually refers to these statistics as facts ("...manufacturing activity improved in June...") but that's not correct. The Empire Manufacturing Survey, Chicago Fed Index, Philadelphia Fed Index, NAPM are all surveys, where purchasing managers, production managers or operating executives get asked how they feel about production, employment, new orders etc. Even if they don't see it in their operation, if they read of a slowdown in China, problems in Europe or simply have a bad day they probably answer the survey questions more cautiously and the other way round. We all know that your mind directs your action and if you think more cautiously, you will act more cautiously, which means you may slow down production and hire less employers as you expect less new orders. It's the same for consumers: if you feel less certain about the future you will more likely push out certain purchases and maybe order one take-out less per week. So to a certain degree the survey numbers clearly correlate to the actual numbers. That's why the weak Empire Manufacturing Survey and Consumer Confidence (current conditions and expectations) was surprising following a few stronger economic numbers end of June and an almost 10% stock-market rally. Later this week, we will get some housing data and the Philadelphia Fed Index, so let's hope that the two weak economic reports from Friday don't indicate a longer than expected soft-patch in the economy!

Unfortunately, we probably have to go day by day this week to get a clearer idea of where the market is heading. So far it was encouraging that there was no selling pressure in the recent market pullback, only a clear lack of follow-through buying and also conviction (you could argue what the better or worse option is - as long as the market drops, it doesn't matter if more sellers or less buyers, right...). Q2 earnings reports and Q3 outlooks could feed both, selling pressure or follow-through buying.


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

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