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 8 settembre 2011

Market Comment - September 8

(Marco Bonelli) Stepping back from daily volatility and the happy "open-the-gap/close-the-gap" game the Nasdaq plays, there are a few contradicting stories developing:


- Not only economists and investors are torn between recession and slow growth / recovery scenarios (during the sharp rebound yesterday one of the questions that got asked was "Are recession fears subsiding?"), the Fed's view of the economy seems to be more divided than ever. Yesterday, the Beige Book showed that the economy is expanding "at a modest pace" (with some "mixed to weakening activity") and stated that consumer spending was slightly up (although flat to declining ex automobiles). While not overly bullish but the description didn't paint a really gloomy picture. At the same time Chicago Fed's President Charles Evans reiterated his view that "very significant amounts of policy accommodation" is needed to bring unemployment down and the economy back on track. Let's see if Ben Bernanke boring speech at 1.30pm EST today and the FOMC meeting in less than two weeks from now delivers any different message or if everything and everybody gets basically dictated by the economic numbers.


- Picking one particular sector, the projection and perception of the consumer sector shows some enormous contradictions. Consumers continue to spend and the high-end consumer in particular appears to be in fine shape, at the same time consumer confidence drops to a multi-year low. The average consumer is in the middle of a long deleveraging process and the lack of any meaningful stabilization of real-estate prices as well as destroyed values of basically all investment portfolios doesn't leave any cushion to escape. You see quite healthy monthly retail same-store sales but then companies like JCP, TLB and URBN reduce guidance and talk cautiously about the current environment. You see energy prices continually rising since the Aug 9th lows (gasoline and heating oil -yes, it's coming up, soon- are not too far away from the highs beginning of May) and hear about a mixed back-to-school season that only managed to become no disaster thanks to the help of major mark-downs but at the same time the general S&P retail index is less than 10% off the all-time-highs (other retail indexes are off by 12 and 13%).


- Finally, my favorite topic: Q3 earnings. Almost everybody mentions that valuations are the most attractive in a long time and earnings will continue to be strong. This is also reflected in an expected 14.8% earnings growth for Q3 with little revisions to the downside, which is also backed by a below average number of profit-warnings so far. You hear that "companies have demonstrated an ability to generate profits despite lackluster growth". Then you look at the rising trend in labor costs (+3.3% in Q2) and the falling trend in productivity (-0.7% in Q2) and take into account that global economic growth severely slowed in Q3 (which is already reflected in the first round of revenue warnings from July and August) and you wonder if enterprises are still able to beat expectations only with cost-cutting and share-buy back activities.

In the meantime the major indexes closed at the top of the day, closed at or slightly above the MA or the Bollinger bands, a level at which the last rebound from end of August failed but overall, worked it way back towards the top of the current bottom-building range. Market internals were positive but had a few flaws: overall market breadth was bullish, but the new 52week high to low ratio on Nasdaq showed twice as many new lows than highs. This ratio was positive on NYSE but here the upside volume was below average compared to other rallies. I guess this is more micro-analyzing than producing anything valuable; nevertheless, some imperfection could turn into something bigger once the market runs into resistance levels or gets confronted with negative headlines which could jeopardize any sustainable rebound.

With that, trade well, don't get distracted by all contradicting stories and go with the flow.


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

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