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 15 agosto 2011

Market Comment - August 15

(Marco Bonelli) If you just came back from vacation and didn't bother reading the news in the past 10 days, you might think that things look pretty good. A huge Merger-Monday with GOOG, TWX and RIG as the biggest players, companies aggressively buying back their own shares, insider buying at a two-year high, after a volatile week, the last two trading days showed strong gains, the industrial sector even lead the gains on Friday, indicating that any recession fears are probably way exaggerated (as by the way is also imbedded in a partial recovery of energy prices) and finally the market trades at a two-year low relative to earnings. So it is time to buy the market again if you missed it on Thursday and Friday last week, right?

Well, how should investors then treat the worst Michigan Consumer Confidence in more than 20 years (according to the August number as reported on Friday) or the sharp decline in the Empire Manufacturing Index for August? One answer would be that all this is no surprise after all the events in the past two or three weeks and given the sharp decline of stock prices, most if not all the negative news is already in the prices.

It's highly likely that a lot of upcoming economic and sentiment numbers will come in below expectations due to the major developments in the past weeks. Somehow it's surprising that this is not more reflected in the consensus expectations for these numbers. And doesn't a comment expressing that these bad numbers are no surprise, have the underlying message that the events that triggered the drop in consumer confidence and the Empire Manufacturing Index (where future conditions dropped to the lowest level since February 2009) are behind us and everything will recover in the upcoming months? What if the events are not behind us, what if the events lead to changes in behavior and confidence that feed into the global economic downward spiral and what if the events and any upcoming events are not reflected in the numbers yet? What if a contracting economy in many regions around the world (with Hong Kong's surprisingly negative Q2 GDP the latest example) tells a bigger story than temporary factors putting a brake on the expansion train?

Anyway, last Tuesday's high in the SPX at 1172.50 was and probably remains the key level to watch in the short term. A lot of hope is put into the tomorrow's meeting of French and German leaders to further calm down the European debt crisis and early morning market activity already reflects the positive bias as outlined above. Just to outline some numbers: so far, major indexes already recovered more than one third of the losses since July. A 50% recovery would lift the Dow Jones to 11672, the SPX to 1224, the Nasdaq Composite to 2600 and the Russell 2000 to 750, all reasonable targets from a short-term momentum point of view!

If we get there or not, I believe from a fundamental point of view, the reasons why the market came down in the first place and from a technical point of view, the completion of a major classic head-and-shoulder top formation in almost all major indexes should not get ignored!

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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