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

martedì 2 agosto 2011

Market Comment - August 2

(Marco Bonelli) With the overall outlook deteriorating by the minute, investors probably wonder if they should just put on a parachute or if there is something out there to keep a little bit of hope alive...

While four weeks ago the Q2 earnings season was the an event investors could hang on to, which even turned out to be a positive surprise, this time nothing but macro-economic numbers are on the horizon. Many market participants are probably still shocked about the recent weak economic numbers and a lot of them haven't changed their opinion but still stick to the consensus view of a recovery in the second half.

Therefore each positive surprise from the economic calendar will get gratefully embraced. This week, the July ADP Employment Change Index, Weekly Jobless Claims and the July BLS Labor Report pose as the big questions mark. Looking at multiple layoff announcements in past week and also at the employment component of the July ISM Manufacturing Index (which dropped sharply from 59.9 to 53.5), the outlook for the labor market clearly appears challenging. Nevertheless, predicting the upcoming numbers is impossible. They could badly disappoint and confirm the continued deterioration of economic activity or they could surprise and offer a little bit of hope that keeps the recovery scenario alive.

Another ray of sunshine could come from the July retail same-store-sales where expectations point towards healthy seasonal sales due to the hot summer temperatures in the past.

Finally QE3 moves more and more on the radar screen of many market watchers. Particularly following the dismal GDP report for Q1 and Q2, many investors hope for any kind of announcement soon, at the same time, those who actively comment on QE3 rather emphasize the risks than the benefits and don't sound convinced that it will help the economy this time. Well, that shouldn't be a big surprise but as long as it helps the stock-market everything is fine, isn't it. It's a tough call. Several Fed members already expressed critical reviews regarding QE2 in the past weeks (lack of real growth drivers and risk of elevated inflation). Typically the Fed prefers to gather more information to confirm any kind of trend, especially a new trend (don't forget, the Fed basically initiated the view that the current slow down is temporary and that the economy will resume its growth in the later part of this year) at the same time, the Fed and Ben Bernanke in particular is under tremendous pressure. Just to cite an example, a negative payroll number on Friday might pull the trigger. Either way, the FOMC meeting next week (August 9) will be very interesting!

The rest of the day-to-day business remains unchanged. The Dow Jones Industrial, the Dow Jones Transportation and the SPX closed slightly below their two-year uptrend. The Dow Jones Transportation and Russell 2000 Index also broke their 200day MA. The rest of the major indexes still closed above the mentioned support levels but. Looking at the VGY Value Line Index, the 361.50 level is very critical (June 2011 low and April 2010 high) as a break would point to an extended decline in the upcoming future.

Finally, the strength of the Dollar yesterday and today is interesting. Unfortunately the "strength" can - once again - mostly get contributed to the weakness outside the US than real strength of anything underlying the US Dollar. The mediocre compromise for the debt-ceiling doesn't really send a strong signal; nevertheless it prevents the United States from defaulting.

Let's keep on watching the erratic intra-day trading activity and patiently wait for the next economic statistics to get released. Using any strength to lighten up exposure and concentrating on special situations might still be a good strategy.

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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