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 27 gennaio 2012

Market Comment - January 27

(Marco Bonelli) "After a 20% run, some profit-taking and a little pause is not surprising at all...", right?

With many of the major indexes within 1 or 2% or the highs from last year, Q4 earnings quite a mixed picture - despite dramatically reduced expectations, Greece and Portugal on the brink of default and many macro-economic challenges still posing as an uncertainty (including the question, whether the latest commitment by the Fed to keep interest rates low for longer than anybody could forecast anything, is a positive or a negative), the prediction of a pull-back is not very difficult!

While I indeed expect the rally to run out of steam another 5% (roughly) higher from here, a pullback which would represent anything more than a couple of days profit-taking appears almost too easy to materialize, although a shift in direction in the middle of an earnings season is almost a regular routine.

Even if earnings no longer provide an extra boost for the market (it actually already supported the rally longer than many expected), the economic outlook still appears quite favorable. You could call Q4 GDP basically in line with expectations and as other data showed so many times, there is always a bit of positive news behind even neutral or slightly negative news. You could say that the latest December data (Durable Good Orders, CFNAI (cool short-form for the Chicago Fed National Activity Index) looks very promising, so the quarter obviously ended on a strong note. Sub-components of many other economic data show some improvement. In light of a favorable economic outlook, you could also say that the fundamental environment including earnings might have seen a low in Q4 or will see a low in Q1, either way, facing an improved picture looking out six months from now.

Having said that, there are a few new developments that require close attention: The stronger Euro (middle of December, the SPX de-coupled from the Euro), recovering bond prices and lower yields (a flat to weaker bond market over the last few weeks that didn't draw too much attention and obviously saw some outflows in favor of stocks) and some deteriorating market breadth, especially during the last days (according to the daily adv/decl ratio)!

Anyway, broadening expectations for a more serious pull-back or even a correction just plays into the cautious and hesitant sentiment that accompanied the rally during the last weeks. This in combination with a favorable economic outlook should keep any downside limited and even help the rally resume. And who knows, maybe an "unexpected" agreement on the Greek debt delivers the trigger the market needs to move higher.

Trade well and have a great weekend.

(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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