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 1 agosto 2011

Market Comment - August 1

(Marco Bonelli) Where is QE3? Has anybody seen QE3?

It's not that QE3 isn't already happening. While the Fed's reinvestment and other programs may not be called POMO, the description "ROMO" (Regular Open Market Operation, compared to Permanent Open Market Operation) could be accurate as the Monetary Base expanded another 1.5% in July, half the pace from May and June but we are still talking a healthy $40Bln. Nevertheless, investors may have to wait a bit longer for any kind of announcement as Ben Bernanke probably doesn't have "a clear read yet", why the US economy grew only 0.4% in Q1 and 1.3% in Q2, with the outlook not a lot better. Surprisingly, I haven't heard or read any comments on Friday that mentioned QE3, something investors probably don't have to wait too long.

Not surprisingly, once the SPX tipped at its 200day MA on Friday, a technical support line that was tested and held twice in June, some buying/ short-covering kicked in which was eventually also helped by new hopes from Washington. Most of the gains didn't hold and the Dow Jones officially closed below its two-year uptrend (something that will apparently be reversed this morning) while the SPX closed right at the support line. The reason why the two-year uptrend is psychologically important in particular is that the trend basically mirrors the economy officially coming out of the Great Recession in 2009. A break of the trend would symbolize a break of the overall recovery. The levels to watch are (although there is some wiggle room) 12203 for the Dow Jones, 1293 for the SPX, 2715 for the Nasdaq Composite, 2242 for the NDX and 786.50 for the Russell 2000.

What else is going? Oh, I almost forgot, the debt ceiling debate got resolved... The one and only benefit that really matters is that this uncertainty is off the table. The market was obviously very sensitive to news from Washington in the past weeks and is now able to concentrate on the real stories. With that the question looms whether the relief rally will last a few days, a few hours or even less. Other pending questions are (among others) if the powerful rally in bond will take any kind of break (10year yields collapsed from 3.04% to 2.78% in three days), if the rally in gold will take a breather, if the Dollar will benefit from the debt deal and if the financial sector will profit and outperform as it did on Friday.

Today the national ISM Manufacturing Index for July will be the data to watch (although the Chicago PMI and national PMI index no longer show the close correlation they did in the past, the Chicago PMI from July at 58.8 was the lowest since December 2009 if you ignore two dips in May this year and August last year), after that focus will quickly shift towards the end of the week, when various labor data for July gets released.

Comments on Friday, that the market "could have been worse" and the fact that the debt deal from the weekend "lifts stock markets around the world" can be read in every tabloid paper this morning gives an odd taste to the event. Some uncertainty also remains how the rating agencies will react but at the end, the direction of the week will be determined by the economic numbers as the weak macro environment clearly took center-stage again.

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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