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 18 agosto 2011

Market Comment - August 18

(Marco Bonelli) The power of words in a fragile environment!

Some comments from Philadelphia Fed President Charles Plosser and Dallas Fed President Richard Fisher about their dissent of the Fed's decision to keep interest rates exceptionally low until summer 2013, some statements from the NY Fed regarding a closer look at US affiliates from European banks and a comment from Lars Frisell, chief economist at Sweden's financial regulator referring to the vulnerable interbank lending system don't fit well on barely calmed down investor's nerves.

The power of inaction or inability to do anything in a fragile environment!

Europe's denial that the sovereign debt crisis is a real problem and the fact that current austerity measures (or in most cases: hollow promises) are more accelerating the ride on the death spiral than calming it down, doesn't fit well on investor's nerves either. It's almost like 2007, when a lot of people, including the Fed's Chairman, denied that the subprime crisis is a real problem. You add a few zeros and you talk about the sovereign debt crisis. It feels like the pressure won't stop until something major happens, like one or more countries leaving the Eurozone.

In the US, the inability of the government to help to struggling economy due to budget constraints and the inability of the Fed to help the struggling economy due to lack of options (that's why QE3 will probably come unless the economy miraculously recovers within the next few weeks) also doesn't help investor's nerves.

Overall, the degree of opposite opinions is striking these days! Guidance and comments from companies is sending a very confusing message as some haven't seen any slowdown and change of customer behavior while others mentioned that business activity literally came to a halt in the last weeks of July. Forecasts and comments from strategists, analysts and investors are also embracing the extremes. Of note is that most strategists continue to keep their 1400 to 1500 SPX year-end targets while economists slowly reduce their global GDP forecasts. In the last days, many investors eagerly tried to believe that the correction is over and it's time to start buying again. Unfortunately the strong opening yesterday met a lack of follow-through buying and probably a lack of interest overall, as the indexes failed to really break through the highs from Monday and Tuesday. The result was a classic intra-day reversal that left the Dow Jones as the only major index where the 50dayMA didn't cross the 200day MA to the downside.

Still upcoming are the Philadelphia Fed Index from August and Existing Home Sales from July with the Phili Fed Index almost certainly falling substantially, similar to other sentiment indexes in the past days. A big percentage of market participants who remain or recently turned positive and the August option expiration tomorrow also doesn't help cool investors' nerves. Let's see if we revisit the recent lows this week or next?

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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