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

mercoledì 27 luglio 2011

Market Comment - July 27

(Marco Bonelli) Similar to Friday last week, a look at the Dow Jones Industrial Index doesn't paint the complete market picture, but it raises a crucial question: Should investors worry more about macro-economic growth?


The decline in the Dow Jones was enforced by the weak performance of MMM, UTX and BA that contributed more than 50 points to yesterday's trading after surprisingly disappointing results from MMM. Last Friday, CAT alone added almost 50 points to the index decline (after surprisingly disappointing results) and already at that time UTX was among the worst performers. With a few exceptions like strong Q2 from CMI yesterday, the average results in the industrial and basic material sector were below expectations and many companies sound quite cautious in their Q3 guidance. Yesterday, also UPS, a company that often gets mentioned as the mirror of the economy, talked down expectations and pointed out the uncertain economic environment below normal seasonality.

Adding to that, the majority of macro-economic numbers look quite weak. Except the Philadelphia Fed and Dallas Fed Index for July, the Empire Manufacturing, the Chicago Fed Activity Index and Richmond Fed Index for July came in well below estimates. This morning, Durable Goods orders for June disappointed on all measures. In the past two weeks, manufacturing data from Europe and China also disappointed (the official read on China's Manufacturing PMI for July gets reported this weekend and the Non-Manufacturing PMI on Tuesday next week). Q2 in the US was already a soft-patch but we get more and more data that indicate that the economy didn't recover at the end of Q2 and continues to grow below average in July. More importantly, while the global economy continued to expand in Q2 (which is also reflected in many Q2 results from multi-national companies), growth apparently started to slow outside the United States in the past two months.

So back to the initial question: Should investors worry more about economic growth? The answer is probably yes.

However for now, the few negative data we have don't change the outlook picture and the consensus view of a global economic rebound in the second half is predominant. That aside, the imminent topics investors talk about is the debt ceiling/ spending cuts discussion, earnings and the booming IPO market that already exceeds the number and value of offering from the whole last year.

The technology sector and with that the Nasdaq continues to act well and outperforms the broader market. A few solid and even strong Q2 results in the technology space from last night will probably confirm that development.

As the deadline for a budget deal to avoid an official default is only a few days away, some (expected) positive news from Washington could easily turn the current sluggish mood into positive. Having said that, given the severity of the matter, the market already acted quite resilient in recent days.

Let's see how long the resilience lasts, let's see how far any kind relief rally goes once a budget agreement gets announced and let's see when a discussion about the macro-economic picture takes over. As long as the Dow Jones and SPX trade above their 50day and 100day MA and as long as the Nasdaq trades close to its rally highs the chart-picture isn't broken, however further weakness from here could quickly change that picture.

Trade well.


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

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