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

venerdì 9 settembre 2011

Market Comment - September 9

(Marco Bonelli) . . . and why did the market sell off after Ben Bernanke's comments that were a lame copy-paste product of his lame Jackson Hole speech?

As the Fed Chairman once again talked extensively about the "range of tools" that the Fed has and will discuss at the next FOMC meeting, maybe a tool-box would be appropriate the next time he makes a public appearance. He might be more credible wearing a handyman outfit.

One last serious comment in general: As long as economists, politicians, the Fed and other officials keep on blaming everything else for the economic weakness (from "temporary" factors like Japan, domestic natural catastrophes and sky-rocketing commodity prices or "isolated, contained" factors like Europe to "one-time" events like budget debate, rating downgrade and as Ben Bernanke expressed yesterday, housing and financial volatility) but acknowledge the deep, structural changes in the economy, domestic and globally, the struggle to get the economy going will last a bit longer!

Short-term speaking the market had difficulties getting out of the gates from the beginning as weak market breadth prevented any buying to be sustainable. For most major indexes, the highs from the first rebound middle of August and the MA of the Bollinger bands posed as resistance too difficult to overcome at that time.

How about the outlook? Short-term sentiment even seemed to support a continuation of the rebound but I'm not sure if observations and comments like "stocks no longer react to negative company headlines or negative analyst reports", "hedge-funds are the most negative in four years", "the momentum and risk is to the upside" or "higher highs and higher lows for the major indexes is positive" is mirroring reality or more talking reality positive and markets higher. Other comments also point out the relative strength of the Nasdaq and the technology sector in particular. However you turn it, short-term sentiment is mixed at best and probably leans more to the negative but longer-term sentiment continues to embrace the upside.

Negative sentiment only works as a good contrarian indicator if the fundamental picture is known and here is the risk. The macro-economic environment has been discussed; some think the US economy is already in a recession, others favor the slow-growth / recovery-into-2012 scenario. Something that hasn't been discussed at all are Q3 earnings, which is not too surprising as we just finished the Q2 reporting season and analysts are still busy incorporating all Q3 guidance into their models. Having said that, we are entering the Q3 pre-announcement season and the latest examples are ALTR and TXN in technology sector as both companies cited "lower demand across wide range of products, markets and clients". If profit and revenue warnings pick up in speed and causes the fundamental picture to change, this will undoubtedly dominate any sentiment picture.

Any market-trends could be derailed by changes in liquidity! If the Fed (alone or in a concerted move with other central banks) decides to massively inject liquidity into the financial system, there is only one direction for stocks and other asset classes, which is up, no matter how the fundamental or sentiment picture looks like. But we are not there yet.

Overall, the market don't appear overly excited after President Obama's economic stimulus speech (although it was labeled as "job creation" speech), also lost momentum as it closed around the lows of the day yesterday but at the end it moves within the "bottom-building" range. Over the next few weeks, Q3 earnings probably pose the biggest risk and if the majority of headlines are negative, the market might not have seen the lows in the bottom-building process!

Trade well and have a good weekend.

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

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