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 31 agosto 2011

Market Comment - August 31

(Marco Bonelli) 1.) Is the increasing focus on QE3 good or bad?

2.) What's the better option: Weak economic data, looming risk of sliding into recession and QE3 or stabilizing economic data, slow growth but no recession and no QE3?

The plunge in consumer confidence in August to the lowest level since April 2009, Chicago Fed Chairman Charles Evans' negative comments about the economy, the Minutes from the last FOMC meeting and repercussions from Ben Bernanke's Jackson Hole speech last Friday are all painful reminders of the current state of the economy and the necessity (really?) of more fiscal or monetary accommodation, which leads directly to QE3!

In addition, the synchronized move of stocks, bonds and commodities to the upside on Friday last week and yesterday also represents the playbook trade of QE3.

In the last few days the focus on QE3 is enormous and although the result of another multi-hundred-billion liquidity injection into the financial system will most likely - once again - lead to substantial price appreciation in various investment fields, you still wonder if the effect may be different this time, given the weak global economy, given the evidence that QE2 didn't really help economic growth and also given numerous criticism in regard of the Dollar, inflation, deflation etc.

Something the global economy doesn't need is higher commodity prices. Since the lows three weeks ago, the CRB Index gained 8%, broke the 200day MA to the upside and is about to break the 4-months downtrend line to the upside. Energy commodities were one of the leaders with crude up 16.8% and gasoline up 15.4% since August 9. A continuation of this trend will certainly bode ill for any kind of economic recovery.

For the short-term outlook it will be interesting to see if financials continue its strong performance (despite some profit taking yesterday, the BKX is up more than 15%, the XBD is up more than 10% and diversified financials are up even more than 16% in the past five trading sessions), which role window dressing will play on the last trading day of the month and if yesterdays performance should be treated as a sign of consolidation or sign that the rally already runs out of steam. Each intraday rally attempt yesterday was very narrow-based and lacked follow through buying, most evident in the final 15 minutes, where all major indexes gave up 1% gains to close more or less unchanged. Remember, all major indexes still trade only slightly above the highs from the first rebound middle of August.

So far, the slightly weaker than expected but not disastrous ADP National Employment Report gets treated positively as it is probably perceived as strong enough to not be afraid of a recession but weak enough to keep QE3 hopes alive. So let's see if the rally lifts prices to the next resistance levels or if it runs out of steam. Some profit-taking into the strength might still be a good idea for short-term oriented players.

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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