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 1 settembre 2011

Market Comment - September 1

(Marco Bonelli) What do you do between a rock and a hard place?

It's too literally too hard to figure out in what stage the market currently is and which direction it will go over the next few weeks.

Investors recently got some relief from slightly better than expected economic numbers although durable goods orders, personal spending and factory orders just covered the month of July, only the Chicago PMI was data from August (which raises questions, how this number could stay almost unchanged while all other manufacturing surveys across the country fall off a cliff).

However you turn it, better economic data show that there is still life somewhere as it eases recession concerns and helps confidence. Stocks react positively but usually (and this time is not any different), previous concerns quickly move to the background and speculation returns as fast as you can write a buy-ticket. Technology and financials lead the rally since Friday, industrials joined Monday, all indicating that the recession risk seems to be behind us and even suggesting that the market may have finally hit/ built a bottom. On top of that President Obama joins the party and will present his latest plan to reduce unemployment to the Congress on September 7 (so everything will be fine - or not?).

All this perception got nursed by confidence (that almost turned into complacency) that more monetary stimulus is on its way. Various Fed officials expressed that more accommodation is needed, the statement and minutes from the last FOMC meeting and Ben Bernanke himself also leave the impression that something is coming.

Ø  So what happens if the market doesn't see a QE3 announcement at the September 21/22 FOMC meeting because the Fed is confused by the latest economic data (would that be surprising?) and has to further monitor the situation?

Ø  And what happens if President Obama's plan is just another package out of the economic advisor lab, filled with unrealistic and ineffective proposals?

Ø  Will the market be happy with a few better than expected numbers that don't change the big macro-picture.

Maybe all questions aren't worth the paper of the buy-ticket because retracing 50% of the correction and investors jumping into the speculation pool, buying the internet or biotech sector or single stocks like RIMM is just a normal counter-reaction to all developments and events from the past five weeks. Maybe all analysis is not necessary because the momentum will only last until the major indexes reach critical technical resistance levels (11860, 11993 for the Dow/ 1250, 1266 for the SPX/ 2600, 2704 for the Nasdaq Composite/ 2286 for the NDX/ 772 for the Russell 2000) and then succumb again to the forces that caused the correction at the first place.

At least the excitement was put on hold yesterday as the market almost gave up all window-dressing gains from the first hour, even if the Dow Jones made it into positive territory for the year by the end of the day. The 50% retracement levels for almost all major indexes, the 2600 mark for the Nasdaq Composite and the 50day MA for the NDX were a bit too difficult to jump over. Ironically, technology, financials and industrials, those sectors that indicated that the recession fears are exaggerated, lead the decline, small and mid-caps first, then followed by the rest of the market (in regard of industrials/ cyclical, the Dow Jones Transportation Index broke out but fell back below the high of the first rebound attempt (4687.30) from early August - a symbol for what is coming up for the rest of the market?).

Speculators still have plenty to play with: Retail same-store-sales for August look fairly good on average, Q2 Nonfarm productivity was the lowest since 2008, jobless claims continue to disappoint, the National ISM Manufacturing Index for August comes up later and all eyes will be on the Nonfarm Payroll number and unemployment rate tomorrow. In addition economic data out of Europe continues to be weak and the austerity process in Greece and Italy seems to stall before it even started, but that's all old news, or isn't it? Speculation is still on, the air gets thinner and we are getting close to "over-shooting" territory but that doesn't matter because that's what speculation is all about, right? The only question is if you want to participate or not...

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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