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 5 gennaio 2012

Market Comment - January 5

(Marco Bonelli) So why wouldn't the market like the labor data today?

The initial reaction in the futures following the strong December ADP Employment Change figure was rather muted. Is it the unusual high beat compared to expectations, is it skepticism that the highest number since December 2000 might have been artificially inflated, is it uncertainty regarding the sustainability of the gains as the month December turned out to deliver the highest report of the year in the past two years or is it the disbelief that tomorrow's report from the Bureau of Labor Statistics may not match this positive surprise?

Stupid questions! Look at today's developments in Europe (the Hungarian government denying that it's at the edge of default, mediocre bond auctions, including the $3Bln for the EFSF, rising bond yields, mixed to weaker economic numbers, the Euro falling to a new 16-month low versus the Dollar), look at a very mixed picture for December same-store sales with more prominent negative surprises and profit warnings than upside surprises and add LLY's profit warning that reminds investors that the Q4 reporting season that starts next week may bear more negative surprises, and you have more to worry than being cheerful about, right?

Wrong! The ADP Employment Change figure and the weekly jobless claims demonstrate further improvement in the labor market which might indicate an overall improvement in the economic activity. This is what investors were hoping for but only hesitantly embraced due to the well-known global issues. The statistics from the labor market are positive for the stock market and the stronger Dollar is also a reflection of the widening macro-economic gap between Europe and the United Stated (the close correlation between the SPX and the Euro already came to an end middle of December). Regarding earnings, instead of looking at unsurprising mixed results from retailers or company specific disasters from LLY and BKS, let's have a look at a surprise higher guidance and positive outlook from STX, which might help the technology sector a little bit!

The market overall showed a lot of positive signs yesterday, a few intra-day indicators already indicated a recovery from the lows in the first hour of trading, the Dow Jones Industrial and Transportation Indexes continue to log in higher closing highs in this rally and the SPX and NDX firmly stay above its 200day MA.

Given continued cautious short-term sentiment, another intra-day reversal to the upside on back of surprisingly strong ADP data is a valid possibility. Therefore accumulating positions in any weakness and holding long positions into the earnings season might turn out to be a profitable strategy over the next couple of months!

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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