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

lunedì 12 dicembre 2011

Market Comment - December 12

(Marco Bonelli) Does the market really face a wall of worry?

In the tradition since November 28 of interpreting every piece of news or development out of Europe positively, the reaction after last week's European Summit was quite positive with only a few critical comments of those who used to embrace extremely negative positions over the last few months.

So if coming up with proposals that sound nice but are basically ineffective is better than proposing nothing at all and if a recession is better than a break-up of the Eurozone, how far does the resulting relief rally carry the market? Obviously the market sees light at the end of the tunnel but is there really light? Does avoiding a disaster automatically mean that fundamental trends will show up again? Does the proposal of steps (strengthening of the ESFS/ ESM bail-out mechanism and greater fiscal union as the latest), whose implementation and efficacy remains questionable really restore confidence that has been gradually and effectively destroyed over many months? Why doesn't the Euro strengthen more if the future of the Eurozone is suddenly so much brighter?

Was the market on Thursday following a little piece of reality from the ECB or the market on Friday following a big piece of make-believe future outlook the true market we are currently in? Is it symbolic that Friday's market was strong but didn't fully offset the sell-off from Thursday? The charts show that Friday's move lifted the SPX, Nasdaq Composite, NDX and Russell 2000 Index back above their highs from September, which is positive but all of these indexes already broke the mentioned levels on Thursday and the Value Line Index remains below the critical 340 level and with that below its September high.

If you look at the bright side it is easy to interpret the slightly better than expected economic data in recent weeks, particularly the sudden and surprising strength of the consumer as a sign that the US economy will not only avoid sliding into another recession but even accelerate the currently slow growth trend. But how should we treat the recent cautious statements from DD, TXN, ALTR and LSCC that cited weak demand for their profit and revenue warnings? Do we look beyond that "short-term" noise and hope for a continuation of better economic reports and a better future?

It looks like the casino-like environment hasn't changed, only that the operators changed the decor and hung up signs that the chances of winning have dramatically increased in the weeks until Christmas, so place your bets! Despite many comments that the upside appears to be the road of least resistance, being careful might still be a wise strategy. In this context, as the technology sector and with that the Nasdaq indexes had trouble outperforming for longer than a day in the past week and a half and appeared quite vulnerable, 2600 in the Nasdaq Composite and 2300 in the NDX will be important levels to watch!

Trade well and happy Monday!

(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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