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

giovedì 21 luglio 2011

Market Comment - July 21

(Marco Bonelli) Can you really take the earnings game serious anymore? The whole guiding, updating and reporting exercise around earnings is a big psychological game and research analysts take the limited information they could get from companies and adjust their models accordingly but usually don't go far beyond (of course exceptions do exist!). So when companies are low-balling and don't give out any more information during the quarter, actual earnings crush estimates and everybody wonders how the company did it.

Given the uncertain and sluggish economic environment, companies couldn't be blamed to give out cautious guidance earlier this year but on the flipside the earnings beats and 'surprises' seem to become more extreme by the quarter (76 of the 96 S&P companies that reported so far, beat, 50 of those 76 beat by up to 10%, 15 beat between 10 and 20% and earnings from 10 'surprised' by more than 20%). AAPL surely is not a perfect example, but the last six quarters the company beat consensus estimates by more than 30%. When you look at the guidance the company gave for Q3 you can easily figure out how consensus estimates and actual earnings on October 18 will look like.

All comments aside, the earnings season so far looks better than many investors expected (and results from AAPL were impressive!). Beside this fake game, the market digested the gains from the day before, nobody cared about June Existing Home Sales that unexpectedly dropped 0.8% to a seven-month low (after falling 3.8% in May) and resumed the volatile monthly reports from housing sector, trading volumes were about average and although it was almost boring to see the market trade in a tight range around the close from Tuesday, a consolidation like this is usually seen as a positive and healthy sign for the days to come.

Yet we are in a confusing environment where the fundamental, technical and sentiment picture changes almost on a daily base. Investors get confronted with as many reasons why the market should go up the next day as there are reasons why the market could give up all the gains from the day before, so it's almost impossible to come up with a credible prediction. Although it is easy to say that investors have to look at the market on a day-by-day base it doesn't really help, so probably the best advice is to simply ignore the daily volatility and concentrate on the big picture.

Here we run into the next 'problem': What's the big picture? Investors kind of know the big picture (or the confusing environment) as all macro and geo-political issues have been discussed in length and the consensus view of an economic recovery in 2H11 is well alive. None of the current issues are resolved and investors switch between cheering better than expected statistics (or ignoring weak economic numbers) and selling on disappointing economic reports. Unfortunately we are currently turning in circles and don't know anything more than we knew one or two months ago. So I started asking myself again some big-picture questions as I'm already tired of the daily ups and downs and the ridiculous earnings game that the market currently experiences:

§  What is the real outlook from here in terms of economic growth (domestic and international), inflation and earnings?

§  How long could the strength in manufacturing last, which has been the driver of economic growth since the recession officially ended in July 2009?

§  Are high inventories an issue in the manufacturing and retail sector?

§  What is the realistic outlook for fiscal and monetary policy?

Regarding the stock market:

§  Where does the market go from here? (great question, next!)

§  Why should investors buy or sell?

§  Do cheap valuations justify buying or are there other ways to evaluate the current level of the stock market?

In the meantime, China's July HSBC Flash PMI Survey dropped to 48.9 (from 50.1), the weakest level in 28 months which also reflects contractions of the manufacturing sector. (By the way, I wanted to point out again that this is just a survey and not an actual statistic!). The July Eurozone PMI also disappointed and dropped from 53.3 to 50.8. Finally weekly jobless claims once again were reported above 400k and higher than expected. So referring to some of the big-picture questions from above, the global economic environment doesn't show such a bright picture.

However, for now, let's get back to day-by-day routine. Index futures reflect some 'good news' from the EU summit in Brussels and the companies beating earnings expectation get celebrated. I thought it was quite interesting that financials were the strongest sector yesterday, outperforming the broader market for the first time in months. So let's see if this was just a party for the 1st Anniversary of the introduction of the Dodd-Frank Bill (which so far has been successfully delayed, diluted or not implemented at all and therefore doesn't pose a threat to the financial sector at all) or if the relative outperformance of financials is the start of a small trend, a trend that could bode well for the overall market. Anyway, let's go day by day!

Trade well.

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

1 commento:

  1. Effettivamente è vero: durante la discesa gli utili erano costantemente letti peggio delle attese mentre nella salita meglio delle attese.
    Verso aprile 2009, una società della quale non ricordo il nome, riportò un -98% di utili ma gli analisti, esultarono: meglio delle attese!
    Avevano previsto un -99%


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