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 23 agosto 2011

Market Comment - August 23

(Marco Bonelli) Rebound Version 1.0 and 2.0 failed, so will the updated Version 3.0 perform better?

The lack of news and the (resulting) highly exaggerated focus on Ben Bernanke's Jackson Hole speech on Friday probably hurts the market more than it does any good.

The disappointing Rebound Version 2.0, that was lead by small-caps and the financial and energy sector in particular basically left the entire market picture unchanged, in other words, if the trading day didn't happen, nobody would have really noticed. All major indexes trade at or slightly above the lows from earlier this month, while almost all sectors in the technology space, most financials and a number of cyclical sub-sectors continue to trade below these levels.

This morning, a "surprising" rise in the HSBC Flash China Manufacturing PMI for August, coupled with slightly better than expected manufacturing surveys in Germany lifts the spirit a little bit but yesterday's performance clearly shows that many market participants are literally sitting on their hands and don't do anything, which is more than fair as you can flip a coin where the market trades tomorrow, next week or next months.

The inactivity is also shown in earnings estimates for Q3 and Q4 as the numbers almost didn't change at all and still reflect a healthy 15%+ earnings growth (in each quarter) for the S&P500 companies and a 17% growth for 2011. The interesting part is that economists are actively revising down GDP growth estimates for the rest of the year and 2012 but industry sector analysts so far left their estimates basically unchanged which results in the biggest disconnect between top-down and bottom-up estimates since 2007. The next weeks and months will show who is right and ironically there is even the chance that both groups are right: the history of the recession shows that despite a severe contraction, earnings rose to record levels due to aggressive cost cutting and if it turns out that the US economy is able to avoid a recession but keep on growing slowly, history in general shows that this is usually a good environment for earning growth. Ongoing aggressive share-buy backs will also help (artificially) lift earnings. On top of that, companies likely have more cost-cutting opportunities up their sleeves (and the recent re-acceleration of lay-offs is one of the apparent first steps). Having said that there is one major headwind: companies are facing a global economic slowdown, so the international business might not be enough any more to offset domestic weakness going forward.

The next real highlight will be tomorrow's Durable Goods Orders for July before the world tunes in to Jackson Hole, Wyoming. While it almost feels like that Rebound 3.0 could be another disappointment, the chance of a snap-back short-covering rally out of the blue should not get underestimated (the trigger will still be the charts and hopes for a more sustainable double-bottom formation). While traders might jump on the momentum train, long-term investors might get another chance to buy positions at lower levels.

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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