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 13 settembre 2011

Market Comment - September 13

(Marco Bonelli) It is hard not to compare the 2007/2008 subprime crisis in the United States with the 2010/2011 Greek/European sovereign debt crisis!

The similarities are striking: While subprime borrowers should never have been able to buy a Million Dollar mansion on their middle-class yearly income, Greece should never have been able to join the European Monetary Union - both events happened because financial reality became unreal and inflated. Once the first problems arose (late payments and isolated insolvency), they got ignored or denied. When more problems became apparent, a few smart studies got conducted that showed that there was no general problem, only single, one-time events. Reassurance statements got issued. Then, when problems became too apparent and ignorance and denial no longer worked, official statements, announcements and other comments appeared from each side. Everybody who felt he knew something or not, expressed his opinion and came up with research and comparisons. "...contained...", "...isolated..." or "...under control..." followed by even smarter statements "...that everything has to be done..." to avoid blabla or "...we cannot allow..." blabla. Banks issued press releases that their exposure to these kinds of assets is very limited, almost to ignore. While the financial markets already freaked out and drove spreads and default bets into the sky, the central banks felt the pressure and started some artificial and real action, playing with a range of liquidity tools. On the fiscal side some apathetic assistance programs got started, at a later stage some one-off bail-outs got launched to keep the problems contained. During the whole time good and bad headlines and good and bad rumors came up on a daily base (with China supposedly making "substantial" investments in the Italian bond market as the dominant story late yesterday) and dictated the financial markets. Some time down the road, systematic rescue packages and combined brutal effort got launched, but at that point the damage is already done. Unfortunately, Europe is still stuck right in the middle of the developments to handle the crisis.

Europe remains as divided in solving the crisis as the developments within the European Monetary Union and as little as European leaders knew how to operate a single currency region from the beginnings more than a decade ago, they know even less how to approach serious problems in that context, up to the break-up of the union, which of course will not happen. At least Berlin and Paris call each other on the telephone, then they plan calling Athens but decide not to and so on.

Technology was the best performing sector yesterday, mainly lead by semiconductor. Interestingly, semiconductors started outperforming after TXN warned on their sales and earnings. The MSFT Developer Conference followed by an analyst meeting tomorrow and CSCO's analyst day today could produce more headlines in the sector. BBY reported weak earnings and guided the current quarter down this morning. Today, CMI and tomorrow, UPS will talk a bit more about the state of the economy in general at their analyst days. So there could be a lot of little noise while the major indexes trade somewhere in the middle of the consolidation range after they tested some short-term support at the lows end of August.

Headlines and rumors will continue to occupy investors and short-selling and short-covering will make the daily action unpredictable. It's probably better to ignore the noise and look past the daily headlines and rumors at the moment instead of getting caught in some insane intraday trading rollercoaster. Any short-covering rally may be short-lived as investors will soon get reminded that the domestic economic situation continues to look very bleak with the outlook for earnings becoming less and less clear.

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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