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

mercoledì 25 gennaio 2012

Market Comment - January 25

(Marco Bonelli) Does weak earnings/ revenue guidance or a recovering economy weigh more? - Oh, and by the way, AAPL is still cheap!

It's already hard to keep track with all earnings reports and a multiple of that number in comments on each report. Some of the highlights are that generally, technology earnings come in mostly better than expected and even guidance gets confirmed or raised (lower guidance in the semiconductor sector is an exception here, however, Q1 is a seasonally weak quarter and some companies like TXN express that they see "the bottom of the downturn"). Financials reported weak numbers as expected but there were quite a few exceptions to the upside; this in combination with favorable loan growth data paints this sector in a favorable light. Another sector I would like to highlight is industrial/ capital goods where investors get a very mixed picture with a bit more disappointing than positive surprises, mostly due to the effects from weak or no economic growth in Europe and decelerating growth in Asia, including China.


So especially in the economic sensitive industrial sector, investors have to decide between the earnings picture and the economic picture. So far the economy is prevailing and if economic growth in the US further improves, in Europe stabilizes (according to the latest economic data like the January PMI survey) and in China picks up again (at least that's the predominant hopeful thinking theme), it should result in better fundamentals on the micro-level than managements currently forecast. Having said that, the Dow Jones Transportation Index (as one representative among the cyclical) is torn between the camps, outperforming the market, underperforming, leading the rally, dragging the market down, etc. The short-term uptrend from beginning of October runs at 5117.40 and the index trades above the October and December highs at 5067, so despite two weaker trading days, the chart is still ok.

So is the intraday reversal to the upside yesterday encouraging where we can build onto or do the last trading days show that the rally is running out of steam, something many market participants and chart technicians in particular try to read into it? Market breadth remains quite strong, the Nasdaq averages (driven by the technology sector) continues to outperform and every piece of negative news or negative developments confirm the many who are still cautious on the market. So on each consolidation day that starts with some profit taking, you see calls like "...the market looks tired...", "...is ripe for a correction...", "...the danger of complacency..." or "...the dark clouds are still present...". That shows that the psychology still works and as long as there is a significant amount of negativity in the air, positive earnings and positive economic numbers will get rewarded. The next big test will be December Durable Goods Orders and New Home Sales tomorrow and Q4 GDP on Friday!

Will the FOMC statement change anything? Although the Fed will start announcing a Fed Funds forecast, the statement will probably confirm an improvement of the macro-economic picture (which itself should already be supportive for the market!) and won't mention anything regarding QE3 without shutting  the door completely (which might disappoint those who expected more but won't be a credible reason to sell the market off). In other words, as exciting as any announcement from the Fed always is, today will most likely be nothing more than a nicely worded non-event!

While a seamless continuation of the rally over the next days and weeks will possibly be the least expected outcome (and therefore holding long positions might continue to get rewarded), any consolidation or weakness (if it happens) should be used to further accumulate positions in the technology and financial sector and selected position in the industrial sector to be positioned for the next leg to the upside.

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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