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 22 settembre 2011

Market Comment - September 22

(Marco Bonelli) You talk significantly more bearish about the economy and you suggest lowering already historically low interest rates another few basis points by swapping some pocket-money size blocks of government bonds each month to fix it? In the current economic environment, this is pretty much a joke, but at least Ben Bernanke had fun digging in his tool-box.

The effectiveness of the latest tool was already doubted before the Fed officials sat together, so the only sort of new information that came out of the FOMC meeting was, that the Fed is even more concerned about the economy ("...significant downside risk...") and that the Fed intends to invest maturing housing debt more into mortgage-backed securities (if this eventually involves more action in the mortgage market, including refinancing tools remains to be seen).

Anyway, end of last week, the short-term rally already started waning as the rally was built on relatively weak breadth without any real leading sector (unless you call AAPL an industry sector!) and major indexes faced multiple technical resistance levels. In addition, negative headlines got pushed to the background or interpreted as "positive" which created a bit of a fake environment. In this setting, two sectors showed significant weakness in the last few trading days:

Ø Cyclicals (transportation, basic materials and industrials in particular) already showed significant weakness from Monday on. The Dow Jones Transportation Index lost 8.15% this week and has less than 2% to challenge the lows from August. Deteriorating transportation data (like monthly rail car loads) and negative outlooks from companies like UPS and FDX already created a gloomy environment in the past weeks.

Ø Financials (banks and brokers), with the BKX (banks) loosing 8.53% since Monday and the XBD (broker) giving up 7.99% in the same timeframe. Margin pressure as a result of "Operation Twist" and Moody's rating downgrade of a few major banks play are just two of the drivers.

So the market staged a classic intraday reversal (to the downside) on Tuesday and resumed selling right after the FOMC statement got published yesterday. The Dow Jones dipped below the psychological 11000, the SPX broke 1200, the Nasdaq Composite fell again below 2600 and the NDX broke the 100day and 200day MA again to the downside (although the technology sector, AAPL, HPQ (another management shake-up), ORCL & ADBE (after earnings) and semiconductor stocks fought hard to keep the index in outperformance territory!). The small and mid-cap indexes already have a chance this morning to test the lows from August.

Interestingly the focus shifted a little bit away from Europe and more towards the stage of the global economy and here investors got (once again) disappointed by disappointing PMI data out of China and Europe, both numbers cover the month of September. So the question "Have we seen the worst?" after the August Philadelphia Fed Index and the preliminary September Michigan Consumer Confidence recovered a bit from depressed levels in the prior month, may not have been clearly answered, yet.

Finally, the US Dollar continues its run as a result of many factors but mostly due to the implosion of the Euro and the British Pound. I only mention it because a rising Dollar historically bodes negative for stocks as is demonstrated in the inverse relationship over the past decade. This is just on top of everything else, and we didn't even talk about Q3 earnings and Q4 outlook yet...

Trade well

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

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