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 10 novembre 2011

Market Comment - November 10

(Marco Bonelli) Does anybody know why the market sold off yesterday?

It must have been a black-out. Greek's new "unity" government will be sworn in on Friday, Italy's new PM will soon be announced, Italy's bond yields drop sharply (partly as a result of an ok bond auction), CSCO reported strong earnings (including an ok outlook) and jobless claims continue to fall. So what's the problem?

The only comment that makes sense is that this extreme flip-flopping cannot be healthy and good.

No leadership (while consumer and technology lagged the last days, consumer "outperformed" yesterday, technology was in line and will probably be among the leaders to the upside on back of CSCO's report last night), the past three trading days, industrials and cyclicals (lead by the Dow Jones Transportation Index) were among the worst performers and a very weak market breadth on the upside will be obstacles going forward. This along with the fact that the Dow Jones and Nasdaq Composite broke its 200day MA, the SPX plunged through 1250 and 1240 support levels and that the Russell 2000 and S&P Mid Cap broke their 100day MA , will probably pose as a serious resistance when it comes to the sustainability of this morning's rebound.

These days, it's probably also worth watching the Value Line Index closely as this index turned out to be the poster-boy and sort of pre-cursor for the overall market development in the past months. On October 27 and November 8, the VGY briefly broke above the September highs, only to fall right back into the trading range the next day. So far, most other major averages managed to stay (slightly) above their highs from September or the lows from November. It will be interesting to find out if the VGY keeps its pre-cursor role going forward.

Although it shouldn't be anything new but eventually the European Commission sharply slashed its 2012 growth forecast for the eurozone to 0.5% from 1.8% previously. "...the economic recovery has come to a standstill..." and "...a stagnation of GDP is now expected in the current and coming quarters...". Given that all budget and austerity calculations are based on highly unrealistic estimates, which now officially get slowly revised to the downside, already demonstrates that all government budgets, spending and saving plans on the table (which were certainly based on the official, but unrealistic estimates) are not worth the paper they are written on.

But why do I mentioned that as yesterday was only a blackout and a big misunderstanding and everything is fine, isn't it?

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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