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 9 agosto 2011

Market Comment - August 9

(Marco Bonelli) Alright, the market has reached a level where it is probably worth starting to buy and build a position in selected stocks!


Ø  Is this a desperate attempt to call the bottom? - No

So what is it? - It's a call saying that the market could start a bottom-building process from current levels and going forward it may be more rewarding for investors to buy the dips instead of selling any rebounds!


Ø  Did we reach the lows of the crash? - Probably no.

Ø  Will the market recover fast and regain the levels from June/ July within a few weeks? - Most likely not.

Ø  Will we see lower lows even if we see a decent rebound from current levels? - Yes

Ø  Is the global slowdown discounted in the prices? - To a certain degree, probably yes, but not fully. There are more and more comments about another recession but at the end nobody can really say how everything develops and how events like the budget debate, the credit rating downgrade, the Europe debt crisis and the recent correction in stock prices will affect consumer and business sentiment.

I also would like to point out that this call is not based on


Ø  ...that the market is oversold (it was already oversold on Thursday and Friday last week!)

Ø  ...that the valuation is very attractive (the forward earnings component and other indicators became highly unpredictable. In times of fundamental changes, the valuation argument is very difficult!)

So the reason I think that the market might enter a bottom-building process and why it might be worth starting to buy here are:


Ø  Substantially lower energy prices in particular but also other commodity prices (which will help each part of the economy down the road)

Ø  Sentiment can be described as a mix of negativity, fear, confusion and .... waiting for the real panic selling (I believe that we already saw some spotty panic selling a few times in the past three days and looking at numerous single-stock action, panic selling did take place!)

Ø  The major indexes corrected about 1/3 of the two-year rally that started at the panic lows in March 2009. The SPX for instance even gave back 35% and the Value Line Index 39.6%. (While the lows in 2009 mirrored more the end of the world, the highs from a few weeks ago anticipated a rosy world with record earnings, so being closer to the middle of these two scenarios appears sort of appropriate right now)

Ø  The Dow Jones, SPX and Nasdaq Composite trade close to their 20-year (!) uptrend, that started in 1987 (SPX) and 1990 (Dow, Nasdaq), respectively (I know it's difficult to draw a line for a 20-year plus old trend, but the 10750 level in the Dow, 1100 in the SPX and 2300 level in the Nasdaq Composite is part of one of the trend lines!)

Ø  The Fed is under tremendous pressure and today's FOMC could reveal at least a statement that keeps investors hoping. It's unlikely that any kind of QE3 will be announced but not doing anything would be extremely disappointing, so there is a chance the Fed will give investors something to calm the nerves.

Ø  Although China's Industrial Production and Retail Sales for July came in below expectations, it only showed some slowing, not as much as probably feared after the weak readings for the PMI index. So let's call it some relief in string of negative global economic data.

It was interesting to see that obviously a high degree of confusion joined the bearish sentiment as a lot of market comments lack to embrace the "big picture". When I hear statements like "Is a sell-off of this magnitude rational as a response to the downgrade?" / "The sell-off in bonds and the weakness in the Dollar didn't materialize, so why are stocks down?" or counter arguments that the rating downgrade is "unjustified", "meaningless", "ludicrous" and "unfair" or even better "The rating downgrade doesn't affect equities because stock-market validations are cheap" shows, that a lot of market participant are focused on the one event and almost see these (rating change, Europe etc.) as isolated. So the whole combination of negativity, fear and confusion could be the right sentiment to start buying from a contrarian point of view.

In terms of energy prices, crude oil dropped 6.8% yesterday, 19.4% since the highs in July and 30% since the highs beginning of July. Natural gas dropped 14.5% since July, gasoline 15% and heating oil 13%. More recently, also metals like copper and aluminum started rolling over and reflecting a weaker economic environment. Many commodity prices dropped to levels where consumers will benefit from lower gasoline prices and other consumer prices and companies will feel less pressure from input costs down the road.

Anyway, the Dow Jones lost 15.2% from the highs in July, the SPX 17.5%, the Nasdaq Composite 18.1%, the Russell 2000 24.3% and the ValueLine Index 23.3%. Sector indexes like the BKX lost 25% since July and 33.8% since the highs in February for various reasons. Having said that, we are in the middle of discussing a number of domestic and global issues and a stock market correction between 15% and 25% certainly doesn't reflect the full extent of all uncertainties but at least a good part of the issues. Hopefully the Fed doesn't disappoint and delivers at least a promising statement or introduces some minor accommodative action.

Trade well.


(Marco Bonelli is the Managing Director - International for CL King & Associate in New York. The opinions expressed are his own)

1 commento:

  1. S&P +71 punti in 1 ora e mezza: Alì Babà ha parlato ai ladroni e oplà...
    Cordialità
    Riccardo

    RispondiElimina

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