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 12 gennaio 2012

Market Comment - January 12

(Marco Bonelli) Is it really riskier not to own any stocks than being invested in this environment?

The biggest surprises that also triggered the latest rally on December 20, signs of a housing recovery and no imminent liquidity crisis in Europe, are still very well intact and provide the right environment to stay invested!

LEN's encouraging Q4 order backlog and comments along with higher construction activity in Europe for December keep hopes for a recovery from the homebuilding depression alive. And surprisingly (or not?) strong bond auctions in Spain and Italy demonstrate that European countries are currently able to meet their funding needs (certainly helped by the ultra-easy policy of the ECB). With that, two major concerns are apparently quite diminished, at least for the foreseeable future.

Then you add general hopes of a more broad-based economic recovery and ...get presented with disappointing December Retail Sales (the ex-auto number was reported as the weakest since June 2011) and Weekly Jobless Claims are back up to 400k. Given mostly better than expected economic data throughout Q4 and more positive comments from the Fed ("...economy expanded at modest to moderate pace..." - according to the latest Fed Minutes / additionally, ECB Chairman Mario Draghi talked about "tentative signs of stabilization"), the latest US data probably qualify for the famous exception of the rule!

At least investors get presented with some data points, which is better then drifting in a no-news and tight trading-range environment, where everybody desperately waits for the Q4 earnings season to start before more profit warnings and cautious comments about the past quarter run across the tape. The last two trading days were a classic example of that and the technical picture of the market became subject of the some fierce psychological battlefield like the rest of the market. Skeptical and cautious market participants point to the overbought levels of several technical indicators and get confirmed in their hesitance, while market bulls (who still appear outnumbered by the bears and semi-bears) also get confirmed in their view when the Russell 2000 also broke the neckline (765.50) from last year's h+s formation to the upside and confirmed the break above its 200day MA (as did the S&P400 Midcap). Furthermore the Value Line Index confirmed its break above the critical 340 level, while the SPX (more or less) closed at the highs from October 27 (1292.66) and the NDX is closing in to the highs from February, May and July last year. One of the more compelling developments is that market breadth remains remarkably strong: over the past seven trading, the adv/decl ratio steadily improved intraday after a weaker opening but the ratio also didn't come down too much after a stronger opening, even if some profit taking kicked in.

Overall, lots of headlines and data-points but the main event will be the Q4 earnings season: JPM reports tomorrow and the season will see the full force starting next week. With estimates still getting reduced across the board, chances are good that actual earnings come in higher and than "expected" which will keep the SPX on track for breaking above the highs from last year!

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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